Yes, there have been precipitous declines for the industries it serves, said CEO David Calhoun, but The Nielsen Company still managed to grow Q3 revenues by 6% – or 3% if you adjust for currency fluctuations. Revenues rose 6% for Nielsen Media Research (NMR), the North American TV ratings operation. Also, Calhoun answered a question many of you have been asking about Susan Whiting’s new role in the company.
Whiting was recently promoted to Vice Chairperson of The Nielsen Company, joining Calhoun in the newly created Office of the CEO. “This whole move was mean to unencumber her with all the day-to-day management around NMR and to allow her to help me on some bigger strategic objectives in integrating this company,” said Calhoun. “As we move down the path of integration, some of the decisions, some of the big strategic moves we make – like getting a media measurement established across the mobile phone opportunity around the world, it requires a lot of hand-holding and a lot of organizing and a lot of one-on-one calls with the CEOs of respective companies. That’s what I need Susan to help me do day in and day out,” he explained.
“We have a good operating team in the media research business. Dave Thomas [President of Media Client Services] does a wonderful job with our clients. Jim O’Hara [President of Media Product Leadership] does a great job managing the product delivery. And so, this is just a way to move down the integration path, have Susan help me on a broader agenda and a bigger agenda and allow our good operators at the lower levels [to] move up and do what they do best,” Calhoun said of how NMR is going to be run going forward.
Q3 revenues for the media research business, anchored by NMR, rose 9.9% to $435 million, which was a 9.5% gain adjusted for currency fluctuations. That was largely a product of 5.5% growth by NMR in North America, 10.4% for NMR International and 11.5% for online measurement revenues.
The consumer research business saw revenues rise 7.1% to $714 million, a gain of 2.3% on a constant currency basis. Emerging markets and Latin America grew double digits, while both Europe and North America managed growth only in the low single digits.
“Without a doubt the markets have seen a fairly precipitous decline in their world. For our consumer franchise its consumers and in the media, of course, it’s the advertising community,” Calhoun said. The Nielsen CEO said truly discretionary spending is being cut by clients in both the consumer and media businesses – a trend he expects to continue through the first half of 2009 and perhaps longer. But pricing analytics demand is strong in the consumer business – “if I could hire more people, we would” – and he sees retail measurement remaining solid. Discretionary products are not a big part of Nielsen’s media business, he said, so the core business is also solid for media measurement.
Business Media was the division hardest hit at Nielsen, with Q3 revenues down 11.7% to $113 million, a constant currency decline of 12.3%. The trade publications saw revenues decline 9% and the trade show business posted its first decline ever, falling 4%. Calhoun said he expects the “downward spiral” for the trade pubs to continue until reaching an equilibrium in two to two and a half years “where the digital pub will become the predominant part of our business” as opposed to print. “It will be a smaller business, but I think a good business,” he said. The trade show business is also expected to be down in 2009, but he noted that the bounceback for trade shows following an economic decline “is usually pretty good.”
All in all for The Nielsen Company, Q3 revenues rose 6.1% to $1.26 billion, or 3.2% on a constant currency basis. Operating income shot up 61.7% from a year ago to $124 million, but excluding special items (primarily severance costs in Q3 of both years) and adjusting for currency fluctuations, operating income rose 3.2% for the quarter.
RBR/TVBR observation: Calhoun is pretty optimistic about Nielsen’s main units being able to weather this economic downturn. So long as the clients for their consumer research and TV ratings stay in business, they have to have basic research data, although they’re cutting back on discretionary spending. Only the Business Media segment is seen as continuing to slide until it stabilizes as being primarily an online, rather than print business. Kind of like what RBR/TVBR has already done, huh?