Jupiter, NetRatings Settle Suit, Swap Assets

Jupiter Media Metrix and Nielsen//NetRatings have settled a long-pending patent lawsuit in a deal that calls for NetRatings to provide struggling Jupiter with a much-needed capital infusion.

According to the settlement's terms, NetRatings will pay Jupiter US$15 million in cash to acquire two of Jupiter's technology patents for Internet audience measurement, which were the subject of the lawsuit filed in September 2000.

NetRatings will recoup some of that payout as Jupiter makes monthly or annual payments to continue using the technology under a license that will expire in June 2005.

Moving Past Distraction

Sean Kaldor, vice president of marketing and analytics at NetRatings, told the E-Commerce Times that settling the lawsuit enables the company to focus on growing its business.

"It's something that's a potential distraction for our entire company," Kaldor said. "Instead of thinking about how to position ourselves for depositions and planning strategy for the lawsuit, we can get back to the real business at hand."

Jupiter CEO Robert Becker expressed similar sentiments. "We are pleased to put this matter behind us so that we may continue to focus our resources on our core Jupiter analyst research and domestic Media Metrix audience measurement businesses," he said.

Cash and Carry

Milpitas, California-based NetRatings announced it also has paid Jupiter another $2 million in cash to acquire its European contracts for measuring Internet use.

The European contract acquisition enables NetRatings to immediately grow revenues overseas "while our costs stay the same," Kaldor added.

Good Timing

The deals come at a time when Jupiter is struggling to stay afloat.

The once-mighty Web measurement firm has been on the ropes since a proposed $71 million takeover by NetRatings was called off early this year. The merger faced dim approval prospects because federal regulators were concerned about antitrust issues.

According to Kaldor, Jupiter's AdRelevance unit was the "crown jewel" of the business and a main driver behind NetRatings' acquisition attempt.

"They are recognized as an extremely strong business in that sector, with over 150 clients and very high renewal rates," Kaldor said. "We had been wanting to grow that business and this was a way for us to do it through acquisition."

NetRatings purchased AdRelevance last month in a standalone $8.5 million deal.

Jupiter Shrinking

Meanwhile, Jupiter's core business is shrinking. The company reported that it lost $11 million in the first quarter on revenue of $10.8 million, down 64 percent from revenue of $29.6 million in the first quarter of 2001.

In addition to the AdRelevance sale, Jupiter also announced last month that it would pay $1.5 million to escape from a $67.6 million lease it held on an Astor Place building in New York. Jupiter will remain at that site until August.

"Throughout the quarter, we focused on pursuing strategies to benefit our shareholders, employees and customers," Becker said, adding that the lease termination will help "decrease our future operating expenses."

Buying Spree

Meanwhile, NetRatings is continuing its acquisition spree. The company recently purchased all of eRatings.com, a division of ACNielsen. NetRatings already owned more than 80 percent of the firm and bought the remaining portion of the company for $9.6 million in stock.

A week earlier, NetRatings said it intends to pay $18.5 million to acquire DoubleClick's (Nasdaq: DCLK) @plan advertisement measurement division.