By WILLIAM LAUNDER and SUZANNE VRANICA

Arbitron Inc. ARB +0.43% is best known for measuring radio's audience. But that is just part of the reason Nielsen Holdings NV NLSN -0.68% is willing to plunk down $1.26 billion to buy the company.

In addition to radio, Arbitron also has had some success at figuring out how to measure media usage across different outlets, including the Web and mobile devices, valuable expertise at a time when consumer's use of media is changing radically. It has a system, for instance, that measures media consumption both inside and outside a home. Nielsen, meanwhile, still relies heavily on a device inside viewers' home TV sets.

Nielsen said Tuesday it would offer $48 for each Arbitron share, a 26% premium over its Monday close. Arbitron's stock jumped 23% to $46.86 Tuesday. Nielsen's shares were up 4.4% at $30.92 Tuesday afternoon.

Nielsen Chief Executive David Calhoun said the deal reflected his company's confidence that radio listeners remain attractive to advertisers.

"We like this medium," Mr. Calhoun said in a conference call with analysts. "We like the fundamentals that underlie it."

Radio has had little growth in recent years: It faces competition from a host of online streaming services like Pandora. Radio ad spending in the U.S. is expected to grow 2.1% overall in 2012 to $16.7 billion, according to ZenithOptimedia, a media buying firm owned by Publicis Group PUB.FR -1.07% SA. The much larger TV advertising market, meanwhile, is expected to grow 2.7% during the same period to $62.1 billion.

But analysts suggested that Nielsenólong the primary source of television ratingsómay see value elsewhere in Arbitron, specifically its cross-platform measurement service. Television watching is fragmenting among various technologies, including online, prompting complaints from television executives that Nielsen's ratings aren't capturing their complete audience. Some media companies, like Walt Disney Co.'s DIS -1.83% ESPN and Comcast Corp.'s CMCSA -2.26% NBCUniversal, have already turned to Arbitron to supplement Nielsen data that critics say is too narrowly focused on traditional TV.

Among other services, Arbitron has developed a pager-like device known as a "portable people meter" that survey participants wear. It monitors codes embedded in radio and TV audio streams, which lets Arbitron capture audience for various media wherever the person isóboth inside and outside a home.

Such cross-platform measurement, "could be the Trojan Horse that Nielsen is interested in here," said Todd Juenger, senior analyst at Bernstein Research, in a note to investors.

While noting that the radio measurement was the primary appeal of Arbitron, Nielsen acknowledged the attractiveness of the cross-platform services.

"I don't think they [cross-platform and the PPM] are a major reason for us doing this deal," said Steve Hasker, Nielsen's president of media products and advertiser solutions. But "we would look if anything to accelerate" its role, he said in an interview.

"The ability to measuring out of home is huge for Nielsen," said Steve Lanzano, chief executive of the TVB, the trade group for the broadcast television industry. "If you look at big sporting events such as NFL games, we lose 20% of the audience because people are watching in bars but with Arbitron's PPM we can measure that audience and monetize it, "he added.

"Right now Nielsen's local TV measurement is terrible" and Arbitron's methodology which uses PPM "could help," said Kate Sirkin, executive vice president of global research at Starcom Mediavest, an ad buying unit of Publicis. Some ad and media executives said rolling out the PPM in local markets could be cost-prohibitive, though.

Nielsen has made efforts to address the concerns about its local-measurement methodology with the introduction of new technology.

Separately, earlier this year, ESPN joined forces with Arbitron and Web measurement firm comScore to create a cross-platform measurement tool that tracks consumption across multiple screens, such as TV, Web, and Mobile. But the effort is still young.

"I would love to see the PPM methodology seriously explored and see how it can dovetail with Nielsen methodology," said one broadcast TV executive on Tuesday. Analysts raised the possibility that the proposed merger could face a tough antitrust review. The "deal does face meaningful regulatory challenge," said Mr. Juenger.

A timeline to close the deal wasn't given, but Nielsen executives were quick to play down any antitrust concerns with the deal. "It really is as simple as Arbitron is in the radio business. We are in a TV world," said Mr. Calhoun. "And so the overlaps, I mean, frankly, you can barely find any." Mr. Calhoun said Nielsen was confident the deal would pass regulatory muster.

Arbitron and Nielsen had partnered earlier in a venture known as Apollo that aimed to correlate Arbitron's PPM ratings data with consumer purchase data from Nielsen. The project failed to gain traction with enough advertising clients, however. Mr. Hasker said more robust data and better technology would make such measurement effective in the future, he said.

óDrew Fitzgerald contributed to this article.

BUSINESS

Updated December 18, 2012, 7:15 p.m. ET

Nielsen to Branch Out With Arbitron