Web site traffic measurement leader Media Metrix Inc., seeing opportunities to develop new products and expand overseas, announced last week it will buy Internet research company Jupiter Communications Inc. in a stock deal initially valued at $414 million. The combined company will be called Jupiter Media Metrix.
The deal doesn't appear to be a consolidation in the usual sense, in which costs would be saved by eliminating redundancies. Media Metrix produces data by tracking Web traffic; Jupiter analyzes Internet data.
"We aren't doing the same thing," said Tod Johnson, chairman-CEO of Media Metrix, who will have the same title at the new company. "Together, we'll be able to . . . enhance our services."
Jupiter and Media Metrix declined to define what sort of new products would be offered other than to say that the new company would provide a platform for creating new brands. "We've got an array of products on the drawing board," Johnson said.
Whatever products and services do come out of the new company, Jupiter Media Metrix plans to cross-sell them. Of the approximately 1,700 clients served by Jupiter and Media Metrix, they have only 200 in common, Johnson said.
Jeffery Baker, equity analyst with SunTrust Equitable Securities, said the acquisition makes sense, especially in terms of joint product development. "With access to Media Metrix's proprietary database, which nobody else has access to . . . there's a huge opportunity for Jupiter to go out and create Internet reports that nobody else can," he said.
"There's a gold mine of information that's beautiful for Jupiter analysts to analyze and provide products and services for our customers and take it to the next level," said Mary Ann Packo, who is currently president-COO of Media Metrix.
She will become co-COO of Jupiter Media Metrix with Kurt Abrahamson, currently president-COO of Jupiter. Gene DeRose, chairman-CEO of Jupiter, will become president-vice chairman of the combined company.
Beyond cross-selling, Jupiter and Media Metrix want to expand the market for their products and services across the oceans. The combined company would have operations in the U.S., Australia, Brazil, Canada, Denmark, France, Germany, Japan, Sweden, and the United Kingdom.
Lackluster share prices
Speculation surfaced that the languishing stock prices for both companies helped propel the deal. Both stocks are down significantly from their 52-week highs, and the market yawned earlier this year when Jupiter acquired b-to-b companies NetMarketMakers and Internet Research Group.
Media Metrix lost $21.9 million last year, while Jupiter lost $630,000.
Both companies insisted their market performance did not prompt the agreement. "On neither end did we need to do this deal," DeRose said.
In any case, the deal didn't immediately buoy either company's share price. Most important, Media Metrix's share price declined nearly 25% from $28.25 at the close on June 26, the day before the deal was announced, to $21.25 at the close on June 28. That decline drove down the value of the deal from $414 million to $312 million.
Media Metrix competitor NetRatings, which produces the Nielsen//Net Ratings service with Nielsen Media Research, took credit for inspiring the deal. "We have had an analyst and service focus from day one," said Tim Meadows, exec VP of NetRatings, which he said has 15 analysts on staff.
Jupiter's main competition is often seen as Forrester Research Inc., which declined to comment.