It remains, thanks to a sizeable head start, the leader among companies that
measure Internet traffic for Web sites and their advertisers.
But ever since it began tracking Internet audience usage in January 1996, Media Metrix has
worn a bulls-eye on its back. With a market capitalization of well under $1
billion for most of the 13 months since it went public, MMXI has been a
lightweight market front-runner, vulnerable to a challenge from a competitor
with deep pockets.
That challenge emerged in the form of NetRatings , its
chief rival among providers of ‘Net audience analysis. Though it’s far
behind Media Metrix in terms of revenue (with $3.1 million in Q1 versus
MMXI’s $10.2 million), NetRatings has more cash, more assets and a higher
market capitalization ($886 million) than MMXI (about $500 million). Even
more important, NTRT is 59 percent-owned by television audience measurement
giant Nielsen Media Research.
Thus, facing a competitor better-positioned for a war of attrition (both
MMXI and NTRT are losing money), Media Metrix did the inevitable Tuesday and
joined forces with another Silicon Alley company, Internet analysis provider
Jupiter Communications .
The $414 million merger is designed to provide a one-stop service for
companies seeking information on Web site traffic (MMXI’s specialty), as
well as data and projections on the growth of any number of Internet sectors
(Jupiter’s forte).
That’s fine as far as it goes, but there appears to be little synergy here.
And that’s what’s needed for a merger to transform the competitive
landscape. In other words, this ain’t AOL-Time Warner.
Jupiter, while generating more revenue ($16.4 million in Q1) than either
NetRatings or Media Metrix, has a market cap of $355 million and less than
$50 million in cash through the first quarter.
Add all that together with what Media Metrix brings to the merger, and what
do you have? Two things: 1) A deal that does little to transform the
competitive landscape for Web audience measurement and analysis, and 2) a
merged entity that itself should be bought out within a year or so.
