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Owner of Facebook and Instagram plans to spend up to US$10B on AI infrastructure investments

Neilsen Expands Watch Segment with Gracenote Acquisition

Zacks Equity Research
Updated

Nielsen Holdings plc NLSN accelerated its audience measurement efforts with Gracenote buyout. The company will purchase Gracenote from Tribune Media Company TRCO for $560 million cash.  

Established in 1998, Emeryville, CA-based Gracenote is a leading provider of media and entertainment metadata. The company provides reference information for more than 12 million movie and television listings and 200 million music tracks. Its connected technology is used in over 75 million cars.

Gracenote was first acquired by Sony in 2008 and then by Tribune in 2014. The company has big names such as Apple AAPL, Spotify, Amazon AMZN, Tesla BMW, Toyota, Ford and Time Warner Cable on the list of its customers. It is the only global company to provide data in the four largest and popular entertainment categories viz. TV show, song, movie and sports. 

How is Neilsen Poised to Benefit?

Nielsen has long been criticized for usage of outdated measurement methodologies. We believe this acquisition is a step on its part to adopt the latest methodologies to keep up with shifting media habits.

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We believe that by leveraging Gracenote’s global content database, Neilsen will be able to develop more expansive and detailed tracking methods.

Gracenote will merge with Neilsen’s Watch segment and continue to operate from its Emeryville headquarters. In the last reported quarter, Neilsen’s Watch business revenues were $761million (48%), up 6.4% year over year or 6.7% on a constant currency basis.

The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 8.5% and 31.8%, respectively, on a constant currency basis.

Neilsen expects the acquisition to be neutral to 2017 GAAP earnings per share and slightly accretive in 2018.

NIELSEN HOLDNGS Revenue (TTM)

NIELSEN HOLDNGS Revenue (TTM) | NIELSEN HOLDNGS Quote

Our Take

Nielsen has been supplementing organizational growth with strategic acquisitions. The company has spent millions on acquisitions to enable broader measurement of consumer media as well as buying behavior of consumers. In March this year, the company completed its acquisition of eXelate, a provider of data and technology, enabling clients to make better and faster marketing and media decisions.

In late 2013, Nielsen completed the purchase of Arbitron, an international media and marketing research firm, for about $1.3 billion in cash. The acquisition enabled Nielsen to introduce audio measurement capabilities in new markets.

In 2011, the company acquired NeuroFocus, a leader in developing neuroscience to better understand how consumers engage with advertising, messaging, packaging, product development and entertainment content.

Nielsen is leaving no stone unturned to provide clients with greater insight and understanding of the factors that drive consumer behavior across media platforms and retail channels.

Zacks Rank and Share Price Movement

Currently, Neilsen has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, the stock has underperformed the Zacks Business Information Services industry. It has lost 7.1% compared to the industry’s gain of 0.30%.

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NIELSEN HOLDNGS (NLSN): Free Stock Analysis Report
 
AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
TRIBUNE MEDIA (TRCO): Free Stock Analysis Report
 
APPLE INC (AAPL): Free Stock Analysis Report
 
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