The nation’s dominant audience measurement and consumer data analysis company calls it “a broad-based optimization plan to drive permanent cost savings and operational efficiencies,” a move that is designed to position it for greater profitability and growth.
Others may simply call it Downsizing Day.
Nielsen is shedding some 3,500 jobs across the globe as it reassesses its “underperforming markets” and non-core businesses between now and the end of 2020.
In prepared comments released prior to Tuesday’s Opening Bell on Wall Street, CEO David Kenny elaborated on the move, designed to prioritize resources and place a focus on “key strategic initiatives, higher margin products and services, and greater efficiency.”
This will see Nielsen exit “several smaller, underperforming markets and non-core businesses” over the next six months.
But, Nielsen did not elaborate on what markets are on the chopping block, or what “non-core businesses” will be shed.
Could Nielsen Audio or any of its broadcast media measurement services in the U.S. be impacted? It is highly unlikely.
In response to a request for comment, Nielsen Chief Communications Officer Laura Nelson tells RBR+TVBR, “We won’t comment beyond the press release at this time. We will report earnings in a month and will likely have more color at that time.”
However, with Nielsen’s international markets totaling more than 100, this is on a definite path for reduction. Once complete, the restructuring actions are expected to drive roughly $250 million in pre-tax annual run-rate savings.
“Zero-basing” Nielsen’s cost structure as the company moves toward the planned separation of Nielsen Global Connect is crux to what Kenny says is Nielsen’s progress on “increasing our operational and financial discipline.”
And, today’s announcement of job cuts, Kenny says, is tied to what was shared in Nielsen’s most recent earnings call, held in April. “We have increased our focus on platform consolidations, further automation, optimizing our global footprint, and ensuring that our resource allocation aligns with high-margin essential services,” Kenny says. “Today’s plan encompasses, accelerates, and expands on those initiatives.”
He adds that the payroll slice “will further expedite” Nielsen’s transformation “to a more efficient, agile, and scalable organization” and are designed to drive sustained margin expansion and increased cash generation.
Regarding the departure from selected business and markets, which have not been publicly outlined, Kenny recognizes the impact they have on its people and expresses gratitude “for the important contributions made by these talented associates during their time at Nielsen.”
With 3,500 less employees globally, Nielsen now expects 2020 pre-tax restructuring charges of $150 million to $170 million, versus guidance of $120 million to $140 million provided in April 2020.
Approximately half of these charges were incurred in the second quarter and are mostly employee severance costs.
Nielsen also estimates $40 million to $50 million of non-cash, pre-tax impairment charges in the second quarter related to these planned exits.
Cash payments for the severance costs will continue into late 2021 for those losing their jobs within the next six months. That said, Nielsen in 2006, when VNU controlled it, was notoriously conservative with respect to severance packages. With the acquisition in August 2006 of Radio & Records, service was capped at 10 years, with two weeks of salary and benefits for each year served. As such, 30-year veterans of the company were offered the same package as a senior editor who exited the company at age 34.
Meanwhile, Nielsen expects overall Q2 financial results to be in line with commentary provided on the first quarter earnings call. The company will deliver its Q2 2020 earnings results, along with a fresh outlook on the full year, on August 5.
