Nielsen running on all cylinders in Q1


All three divisions of Nielsen Holdings posted Q1 gains in both revenues and profits in Q1. That’s good news for people who bought shares in the company’s January 26th IPO. Those shares are up more than 25% so far.

Total revenues were up 8.9% in Q1 to $1.3 billion. Since The Nielsen Company operates in so many countries the quarterly reports always include an adjustment to filter out the impact of currency fluctuations. For Q1 total revenues were up 7.3% on a constant currency basis. The figures to follow in the report, unless otherwise noted, are also on a constant currency basis.

Of most interest to RBR-TVBR readers is the “Watch” segment of Nielsen’s business, which is primarily its North American TV ratings business. Q1 revenues were up 5.4% to $431 million and profits rose 12.4% to $183 million.

The “Buy” segment, which tracks consumer behavior, saw revenues rise 7.9% to $815 million. And while that’s bigger on the revenue side than Watch, it provides a smaller portion of the company’s profits. Still, they were up 3.9% in the quarter to $134 million.

Even the “Expositions” segment is now in growth mode, having shed most of the former trade publications to focus on trade shows. Q1 revenues were up 14.3% to $56 million, which included the acquisition of a trade show, with profits up 26.9% to $33 million.

Adjusted EBITDA was up 10.3% (8.5% constant currency) to $320 million.

It was the second quarterly conference call for CEO David Calhoun, pictured, since he’d reported final figures for 2010 shortly after the IPO pricing, but he was effusive about the success of the stock offering and how the company has performed since then.

“With respect to the IPO, it’s a big event for us. We retired $1.75 billion in debt. It helps unleash what we think is a very strong cash flow, natural cash flow,” said Calhoun, adding that the IPO had accomplished all of the company’s objectives, “and then some.”

And while Nielsen has some relatively stable business operations, the company is looking to future growth in its most profitable division, Watch. In his Q&A session, Calhoun said “all the content interests are looking for three screen measures simply to broaden the audience and get more advertising revenue associated with it.” That three screen – TV, computer, mobile device – mantra has been heard from Nielsen for some time now.

“I would say the use of a three-screen metric is still very, very small. There are certain clients who I think are getting really good at how to use three-screen metrics. There’s no single metric they rely on. They’ve got great research folks and they use it to their advantage. I would call the use of three-screen metrics, I’d call it nascent at this time, but it really does offer a lot of advantage going forward and, as you know, we’re very focused on providing a broad set of metrics that allows them to do this well,” Calhoun told the analysts. “So, I don’t think you’ll see big revenue moves in the measurement world for any of the players, not in the near-term, but I think in the long-term it’s going to be very important for all of us and it will provide for double-digit growth.”

RBR-TVBR observation: This is exactly what Wall Street wants to see with a young IPO. The strong pricing was justified, as the revenues and profits so far have exceeded expectations. So, the stock price has continued to move up, making for very happy shareholders.

The next move that Nielsen needs to focus on is consistent growth in all three divisions (Watch – Buy – Expositions) as the media landscape continues to change quickly. Since they cut their old media trade publications (R&R, Media Week, Ad Week etc) they will need to establish a contemporary information vehicle that is in daily touch with those respective divisions. In short – ‘Content is King’ but ‘Only when you Control the Content’.