Internet research rivals NetRatings Inc. and Jupiter Media Metrix Inc. last month called off plans to merge after the Federal Trade Commission indicated it would challenge the proposed $71 million deal.
When it was announced in October, advertisers and agencies applauded the proposed deal, in which NetRatings would have acquired Jupiter. They said it would help move measurement standards forward. NetRatings and Jupiter have different methodologies for reporting on Internet audience usage, and advertisers have long been seeking to make measurement more consistent. Net-Ratings provides the Nielsen/NetRatings measurement service in partnership with Nielsen Media Research.
Terms of the deal had included an agreement by Net-Ratings to lend Jupiter up to $25 million under a secured credit facility.
"We ran into some potholes as we moved forward, particularly as it pertained to the loan," said Jack Lazar, chief financial officer of Net-Ratings. FTC staff said it would recommend that the FTC challenge the loan, and it rejected alternate proposals. The companies made a joint decision to call off the merger.
"One of the things we have going for us is a very nice balance sheet with $300 million in cash," Lazar said. NetRatings is 64% owned by VNU NV, The Netherlands.
NetRatings scales down
Concurrent with the announcement to cancel the Jupiter merger, Net-Ratings said it would lay off 20 employees, or 15% of its staff. It also will discontinue AdSpectrum, an online advertising analysis service, and eCommercePulse, an e-commerce analysis service, in an effort to cut costs.
Jupiter has retained investment adviser Robertson Stephens to help it explore strategic options.
"The main goal is to keep the assets in the marketplace," said Susan Hickey, VP-investor relations at Jupiter. "It may not be under the Jupiter Media Metrix banner, whether that means selling parts of the business or the whole business, or bringing in strategic partners."
She said Jupiter is now in talks with a variety of potential partners, including some in the Internet research space as well as investors looking to get into the space.
But time is running out. Jupiter had $16.9 million in available cash at the end of the year, and it has earmarked $11 million to $12 million to explore options, Hickey said. "Obviously we want to do this sooner rather than later," she said.
Some Jupiter clients are concerned about the long-term health of the company. "Jupiter research has a definite value to us, because of the agency track," said Sarah Fay, president of media buying firm Carat Interactive. "I hope Jupiter can find another buyer."