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Nielsen to Split Into Two Separate Companies

Company has 3Q loss on big writedown

Author: Jon Lafayette
Updated: Nov 7, 2019
Nielsen Holdings said that it plans to split into two separate companies by spinning off its Global Connect business from its media measurement business.

The decision comes as the result of a strategic review that was conducted under pressure from large shareholders as the company's stock price declined.

David Kenny will serve as CEO of Nielsen’s Global media business.

Nielsen also reported a third-quarter net loss of $472 million, or $1.33 a share, compared to net income of $96 million, or 27 cents a share. The company took a $1 billion impairment charge as it wrote down goodwill in the Connect segment.

The company said adjusted earnings were 51 cents per share compared to 45 cents per share a year ago.

Revenue rose 1% to $1.6 billion in the quarter.

Audience Measurement revenue increased 4.2%, or 4.7% on a constant currency basis, primarily due to continued client adoption of its Total Audience Measurement system, partly offset by pressure in local television measurement, the company said.

Plan/Optimize revenue increased 3.3%, or 4.2% on a constant currency basis, driven in part by growth at Gracenote.

Nielsen said it was retaining its guidance for revenue and raising adjusted earning per share guidance to $1.77 to $1.83 a share from $1.70 to $1.80 a share.

Nielsen’s decision to split the company comes days after rival Comscore named vice chairman and former Rentrak head Bill Livek as its new CEO. Comscore also is conducting a strategic review and said all options are on the table.

"Since beginning the strategic review, Nielsen has evolved significantly. We are building a track record of execution, led by improved operational and financial discipline, and we have confidence in the path forward for each business," said Kenny.

Nielsen has begun a search for a CEO of the Global Connect business and will consider both external and internal candidates for the position. The global connect business provides consumer packaged-goods manufacturers and retailers with marketplace information.

“Following an extensive review process, which included an in-depth analysis of our businesses, strategies and market opportunities, the Board concluded that separating into two independent, publicly traded companies is the best path to position each business for long term success and maximize value creation," said James Atwond, chairman of Nielsen board, who led the strategic review. "As independent companies, both Nielsen—the Global Media business—and the new company consisting of Global Connect will enjoy added flexibility and further strengthen their paths toward a new phase of growth, productivity and industry leadership."

Analyst Todd Juenger of Sandford C. Bernstein was a bit more skeptical about Nielsen action.
“As any fundamental analyst will tell you, simply taking one thing and splitting it into two things doesn't create value in itself,” Juenger said in a research note. “The question remains, why no sale (at least of Connect)? If the opportunity is so great, where were the buyers? We believe most Nielsen shareholders would rather have cash for the Connect business, and be done with it, than have shares in it as a separate entity.

Nielsen said the split should be completed in between nine and 12 months.
The transaction will be in the form of a distribution to Nielsen shareholders of 100% of the shares of a new entity holding the Nielsen Global Connect business, which will generally be intended to qualify as tax-free to Nielsen and its shareholders for U.S. federal income tax purposes.