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Wunderlich Likens Rentrak/comScore Deal To 'Next iPhone In Media Measurement'

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  • Rentrak Corporation (NASDAQ: RENT) shares have plummeted 30 percent since June 30, down significantly from the $70s in August to below $50 in September.
  • Wunderlich’s Matthew Harrigan maintained a Buy rating on the company, with a price target of $72.
  • The combined entity formed by the merger of Rentrak and comScore, Inc. (NASDAQ: SCOR) would have access to 1.8 trillion monthly digital interactions, Harrigan said.

Rentrak has announced a merger with comScore worth $2.4B, following five years of transient discussions. comScore will purchase Rentrak and its big data set-top box expertise for 1.15 SCOR shares for each RENT share, valuing the deal at $47.69, implying a 9.9 percent premium.

Analyst Matthew Harrigan wrote, “The deal addresses an imperative need for a flexible and trusted metric for cross-platform media buying and selling, with siloed TV and digital analytics no longer adequate.”

Harrigan said that the deal implies multiples that are “especially compelling” in view of the duopoly character of the business relative to that of Nielsen N.V. (NYSE: NLSN).

The analyst expects media companies to react “very favorably,” especially network groups, such as Viacom, Inc. (NASDAQ: VIAB) [Rated: Buy], “whose ratings issues have been especially exacerbated by inadequate Nielsen assessment of time-shifted and mobile viewing.”

The Wunderlich report stated that the combined entity would evaluate consumer behavior by assessing more than 1.8 trillion monthly digital interactions, with data from 120mm TVs and devices.

The merged entity’s offerings will include Media Metrix Multi-Platform, vCE + AdEffx, and Xmedia from comScore and TV Everywhere, On Demand Everywhere, and Movies Everywhere from Rentrak.

comScore CEO Serge Matta would retain his position in the new entity, while Rentrak CEO Bill Livek will become President and EVP and Rentrak COO/CFO David Chemerow would be a strategic advisor to the CEO. The company would have more than 30 offices across the global, which “should further advance Rentrak's international effort,” Harrigan said.

The analyst expects the deal, which has already been approved by both boards, to get regulatory clearance and close in early 2016. Harrigan estimates synergies of at least $20mm for 2016, which is expected to increase to more than $35mm in 2017, with “very high sales pass-through to EBITDA.”

Latest Ratings for RENT

Dec 2015Avondale PartnersTerminates
Sep 2015Albert FriedUpgradesMarket Perform
Sep 2015NeedhamDowngradesStrong BuyBuy

View More Analyst Ratings for RENT
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Posted-In: Matthew Harrigan WunderlichAnalyst Color Reiteration Analyst Ratings


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