Nielsen Holdings
Nielsen Holdings, the TV-ratings giant, announced that it will aquire Arbitron, which tracks radio listeners  Reuters

Big data just got a little bit bigger -- and wider.

Nielsen Holdings (NYSE: NLSN) announced Tuesday that it will acquire Arbitron (NYSE: ARB), the audience-measurement company that tracks radio listeners, for $1.26 billion. The TV-ratings giant said it will acquire all outstanding common stock of Arbitron for $48 per share in cash -- a premium of 26 percent over the company’s closing price on Monday.

The deal, which still needs to be approved by regulators, will merge two of the country’s largest audience-measurement companies at a time when the business of data collection is undergoing the tectonic shift of the digital age. Along with its well-known TV ratings, Nielsen also tracks audiences for media such as music and books, with its SoundScan and BookScan divisions. Arbitron, meanwhile, is often regarded as Nielsen’s radio counterpart.

In a statement Tuesday, Nielsen’s chief executive, David L. Calhoun, noted that U.S. consumers spend almost two hours a day listening to the radio, and that the medium continues to be an important and powerful platform for advertisers.

“Arbitron will help Nielsen better solve for unmeasured areas of media consumption, including streaming audio and out-of-home,” Calhoun added. “The high level of engagement with radio and TV among rapidly growing multicultural audiences makes this central to Nielsen’s priorities.”

Despite major changes in the way Americans consume home entertainment, Nielsen ratings remain the gold standard of TV audience measurement, often deciding if a program lives or dies. The ratings are not without their critics -- including those who charge that they are inaccurate and obsolete -- even as Nielsen has attempted to innovate by adding new methods to track users’ viewing habits through computers and mobile devices. On Monday, the company went a step further, announcing a deal with Twitter to create a standardized metric for measuring chatter about TV shows on social media.

Either way, the deal with Arbitron wraps up a tumultuous year for Nielsen, which was accused over the summer of rigging its ratings data in India, where it manages that country’s Television Audience Measurement system, or TAM. In July, an Indian TV network sued Nielsen, saying TAM executives manipulated viewership statistics in exchange for bribes.

Radio, too, has struggled over the last decade in the face of competition from iPods and other mobile devices, which cut into listeners’ radio time. Still, Arbitron’s CEO, William Kerr, said in Tuesday’s statement that radio reaches more than 92 percent of all American teens and adults.

“By combining Nielsen’s global capabilities and scale with Arbitron’s unique radio measurement and listening information, advertisers and media clients will have better insights into consumer behavior and the return on marketing investments,” Kerr added.

The deal still faces antitrust hurdles, however. In an interview with Bloomberg Businessweek, analyst Rich Tullo said the Federal Trade Commission will be looking to “understand the transaction” in light of the fact that Nielsen already controls more than 80 percent of the TV ratings industry. Combining that with Arbitron’s 90 percent share of the ratings market for terrestrial radio will make allaying fears of an audience-measurement monopoly an uphill climb.

During the 12-month period ending Sept. 30, Nielsen and Arbitron generated a combined total revenue of $6 billion.