Measurement behemoth Nielsen is preparing to spin off its Global Connect business into a separately run company – while the Global Media business will stay put. After more than a year of takeover rumors and the completion of a strategic review, the underlying and perhaps unfortunate message is that activist investor Elliott Management is singlehandedly orchestrating more disruption in the US entertainment landscape right now than any technology company.
The New York-based hedge fund says the separation of Nielsen’s contrasting divisions will “unlock the substantial valuation upside of both businesses, which today trade at a meaningfully depressed level after a year of uncertainty.”
Faultline’s immediate thought was what the move will mean for our friends over at Gracenote, which was acquired by Nielsen in early 2017 for $560 million. Since the dust settled from this deal, we have credited Nielsen for giving Gracenote the R&D freedom it needed to thrive, while retaining the well-known brand. Now, however, under pressure from Elliott Management, Gracenote’s integrity again hangs in the balance and it’s no coincidence that long-term Gracenote CMO Graham McKenna departed the company only last week.
A Gracenote representative could only tell us, “I can confirm that Gracenote currently resides under Nielsen Global Media where we will continue to be following any changes.”
In the meantime, Nielsen Global Connect – the business being spun-off – is a comprehensive data and predictive analytics toolkit serving insights into specific business needs through access to granular data in self-service applications. Hosted on Microsoft Azure, Nielsen Connect claims to be the only truly open, cloud-native measurement and analytics platform for retailers and manufacturers.
Nielsen Global Media, on the other hand, includes the total content ratings audience measurement system, the SVoD content ratings program and the fan insights connected sports platform, as well as the Gracenote metadata business. Only a few weeks ago, Nielsen added Amazon Prime Video to its SVoD Content Ratings platform, two years behind Netflix which was included from the get-go in October 2017. Nielsen’s SVoD Content Ratings platform provides a portal to content viewing patterns and other useful metrics for customers – giving content owners invaluable insights into how their titles are performing as well as the types of audiences being reached – where the likes of Netflix and Amazon don’t provide data directly.
One standout feature is allowing clients to gauge the impact of traditional linear TV advertising in driving viewers to SVoD programs.
But while Nielsen itself has been the topic of takeover speculation, the company hasn’t stood still. Back in February it made an $11.25 million swoop for dynamic ad insertion technology vendor Sorenson.
Essentially this bulked up Nielsen’s existing automatic content recognition clout from the Gracenote purchase, incorporated into millions of smart TVs, and combined it with Sorenson’s local DAI technology to fix problems that plagued the Sinclair contract. This was a bargain deal given the financial stress Sorenson was under from Sinclair Broadcast Group.
In exchange for selling Sinclair impressions through its addressable ad platform, the firm had to make minimum guaranteed payments to Sinclair. It was acting as a broker but with a commitment to pay the supplier irrespective of how much it made, and it turned out the impressions sold only made a fraction of the revenue needed to meet those minimum payments.
“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. 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,” said a statement.
Faultline will be seeking some additional detail from Gracenote at the soonest possible chance but we seriously doubt this part of the Nielsen business will be going anywhere.