Nielsen Grabs Gracenote In $500M+ Deal
The data and technology “that underpins the programming guides and personalized user experience” for top video, music, audio and sports content” has been acquired by the company responsible for the Portable People Meter (PPM) and the March 2017 rollout of Total Content Ratings.
Nielsen has agreed to purchase Gracenote, the provider of media and entertainment metadata, from Tribune Media Co. for $560 million.
The deal is designed to “extend Nielsen’s footprint with major clients by including Gracenote’s global content database, which spans across platforms including multichannel video programming distributors (MVPDs), smart televisions, streaming music services, connected devices, media players and in-car infotainment systems.”
Gracenote provides reference information for over 12 million movie and television listings and 200 million music tracks. It drives the interfaces of many streaming digital media services, as well as the connected technology systems in more than 75 million vehicles.
According to Nielsen, bringing Gracenote’s capabilities into its measurement framework gives it the ability to provide clients with deeper analytics on consumer behavior, in addition to offering “an unprecedented view of audience engagement from discovery to consumption.”
Gracenote will be incorporated into Nielsen’s Watch segment after an anticipated Q1 2017 deal closing, as part of the Nielsen Total Audience measurement framework.
“Gracenote’s metadata and content recognition technology fuels the interfaces of the major video, music and in-car infotainment systems that consumers engage with every day,” Nielsen President of Expanded Verticals Karthik Rao said. “This acquisition provides Nielsen with a significant asset in our mission of measuring and understanding consumer behavior.”
Gracenote CEO John Batter added, “For the past decade, Gracenote has connected millions of people every day to the TV shows, sports, movies and music they love, making entertainment more accessible and discoverable. We are excited for the opportunity to take the next step with Nielsen and expand our global reach by continuing to deliver innovative, insights-based solutions to clients.”
Nielsen’s purchase of Gracenote is expected to be financed through a combination of cash and debt; the company was advised on the transaction by PJT Partners and worked with Baker & McKenzie as legal advisors.
Nielsen investors did not react to the company’s Gracenote acquisition: Shares of NLSN were off 0.1%, to $43.25. Nielsen shares are at their lowest level since August 2015. Meanwhile, Tribune Media shareholders are cheering the divestment of the financially strapped company. Just after 2 p.m. Eastern, shares of TRCO were up 3.3%, to $35.57.
Tribune Media expects to use the $500 million in after-tax proceeds from the transaction to repay existing debt, with the remainder to be reinvested in the business.
Nielsen expects the acquisition of Gracenote to be neutral to 2017 GAAP EPS and slightly accretive in 2018. Gracenote was not included in Nielsen’s 2017 outlook provided on Dec. 8, 2016 at its Analyst Day. Nielsen will provide more details on the expected impact of Gracenote when it reports results for Q4 2016.
Gracenote will operate as a business unit within Nielsen, with operations continuing at its Emeryville, Calif., headquarters.
GRACENOTE SALE CREATES ‘STREAMLINED,’ BETTER-FOCUSED COMPANY
With Gracenote gone, Tribune Media intends to declare and pay a special dividend of approximately $500 million during the Q1 2017 to stockholders and warrant holders.
This special dividend would be paid from existing cash — not the sale of Gracenote.
The company plans to continue its existing $400 million share repurchase program, authorized earlier this year, which has approximately $168 million of remaining capacity.
“We are extremely proud to have grown our digital and data business into a vibrant global enterprise, with talented and creative people who deliver outstanding service to blue-chip clients around the world,” said Tribune Media President/CEO Peter Liguori. “From a strategic standpoint, however, we are pleased to be streamlining our company so that we can focus even more intently on seizing future opportunities for our local television and entertainment business.”
Tribune Media acquired Gracenote in 2014 and merged with its existing Tribune Media Services, a provider of television and movie metadata.
Since then, Gracenote has expanded into Europe, India, Latin America and Australia. Gracenote also acquired a digital sports data business in 2015 and launched Gracenote Sports.
Moelis & Company and Guggenheim Securities acted as financial advisors and Debevoise & Plimpton acted as legal advisor to Tribune Media Company.