Nielsen Navigates Industry Challenges
As Nielsen Struggles to Address a Rapidly Changing Measurement Environment, Debt Investors Reprice Risk
Observations and Recommendations
February 2025: Nielsen has been on quite a rollercoaster ride for the past five years. It was only 2020 when Nielsen was a publicly traded company that owned not just the TV ratings business but also the largest global database of retail POS data. The original thesis that connecting these two giant data sets would lead to an unrivaled consumer attribution business just never materialized. After 15 years of pursuit, Nielsen’s stock price languished, activists entered the picture and the retail POS business (now NielsenIQ) was spun out. The hope was that the high margin TV measurement business would be appealing to investors given its strong, repeatable revenues and cash flows. But by 2020, the pandemic was accelerating a massive consumer shift to connected television (CTV) and streaming. Nielsen’s measurement systems were not up to the task to provide MRC-accredited ratings to support this new market. Adding to this was Nielsen’s panel starting to show its cracks by underreporting audiences for several key clients and events. After a lengthy sale process, Nielsen was finally taken private by a pair of private equity investors. Bonds and notes were sold to help fuel the buyout price.
Bondholders loaned Nielsen cash because let’s face it, in 2020 (and maybe today), Nielsen is a virtual monopoly. Its panel TV ratings for linear TV have almost no match in the U.S. They possess the most approved set of solutions by the Media Ratings Council (MRC), had the blessing of the 4As, and almost every media buyer at an agency used Nielsen TV ratings as part of their operational workflow for their advertising clients. Predictable, secure revenues and EBITDA made loans to Nielsen a relatively low risk endeavor.
This has all changed and as of last week, some of Nielsen’s bonds and notes were trading significantly lower. A large price decline typically occurs when bondholders feel that the company’s ability to pay the full amount of the note is at risk or where there is a likely default (payment or covenant) that will cause a restructuring of the company’s debt. For purposes of this article, we will not speculate on any potential restructuring, but the market price says that bondholders are no longer comfortable with Nielsen and its prospects compared to the loans that it underwrote just a few years ago.
It might be helpful to dive into the likely factors driving bondholder discomfort with Nielsen:
Stage18 - Nielsen Observations
Lingering Dispute with Paramount. Paramount is one of Nielsen’s oldest, most loyal and largest customers. In 2024 it announced that it had not reached a renewal agreement with Nielsen and industry sources reported that most of the dispute was tied to price. Only a year earlier, NBCU (another loyal and large Nielsen client) had been rumored to have extracted a 10-20% price reduction from Nielsen, and Paramount was next at bat. Since Nielsen no longer measured the full 95% of Paramount’s viewing audience via linear due to migration to streaming and CTV, Paramount most likely believed that the value of Nielsen’s ratings only covered about half of their audience since half were now regular CTV viewers. As a result, Paramount seeks a massive price cut on renewal, perhaps as much as 50%. This would be disastrous for Nielsen as it would likely lead to a reprice of their entire portfolio and their ability to generate cash flow in keeping with their debt covenants. While we believe that Paramount and Nielsen will ultimately settle on an agreement, we also believe that it will be at a material discount to current rates and that over time other clients will ask for price reductions.
Compounding the matter is that Videoamp and Paramount have been working together and openly promoting their relationship. In the long run, we see Nielsen back as the predominant supplier but the public dispute has planted seeds of renegotiation with all Nielsen customers. [Since publishing this article we have learned that the parties have settled. This does not mitigate this issue as a repricing of the portfolio is underway and Time Warner Discovery is likely up for a similar renegotiation this year.]Videoamp Rising. Paramount has turned to Videoamp as a replacement metric while it battles Nielsen. This has given Videoamp new credibility with one of the most important legacy TV companies in history. Videoamp has expanded and extended its contract with Paramount and are flexing that they intend to use Videoamp at the 2025 upfronts. While Videoamp’s measurement revenues are likely less than 5% of Nielsen’s, their name keeps coming up and there has been a clamor for Videoamp (and Comscore and iSpot) to become an equal alternative to Nielsen, cracking the Nielsen monopoly and creating uncertainty for bondholders who invested in a dominant market leader. [Disruptors will continue to use Videoamp as a threat to Nielsen.]
Disney’s Compass Launch. Disney is one of Nielsen’s biggest customer collaborators. They have been a pilot customer and co-designer of NielsenOne. NielsenOne is still not released since its announcement in 2020 although it is encouraging to see the MRC approval of Nielsen’s hybrid panel plus big data. Despite this, Disney announced its Compass ad buying platform last month. Compass is a simplified ad buying platform that includes a measurement stack that brings Nielsen, Videoamp and other measurement providers into the same platform. It democratizes access to measurement at the publisher level. Compass is a logical step for Disney to build its own walled garden given the success of Disney’s online streaming platform, but it is also an indication that even Nielsen’s most loyal customers need to diversify away from Nielsen to continue to grow ad revenues.
Continued Delay of NielsenOne. It has been four years since the announcement of NielsenOne for content but it is still not available. It’s unclear if this is due to Nielsen or customer acceptance, but the lack of this product in the market gives the industry reason to doubt that the company will be able to replicate its monopoly-like dominance in the CTV and streaming realm. Its recent MRC approval of a big data solution is a fantastic development, and its timing right before the upfronts and during a Paramount solution could be the catalyst it needs to resolve Paramount and potentially put bondholders at ease. But it’s also unclear whether its new product is “enough” for the market given all that has transpired over the past year.
Implications of Kantar Media sale to HIG.
It’s easy for Americans to forget that there is TV outside of the USA. Nielsen competes head to head with Kantar Media for TV ratings mandates in more than a dozen countries outside of the US. Margins are lower because non-US markets are controlled by Joint Industry Committees (JICs) that RFP measurement services between Kantar and Nielsen, and the lowest price usually wins. Kantar Media agreed to be sold last month to HIG Partners. The process was believed to take over a year and included more than a dozen bulge bracket private equity firms, plus market research powerhouse, Ipsos. After a year, only one bid was submitted and HIG took the business. We believe the reason so many buyers passed on Kantar Media was because of the near-term binary risk associated with CTV, as evidenced by diligence they did on Nielsen, which they believe is a few years ahead of Kantar Media in this cycle. This will inevitably bleed into concerns about Nielsen and how its existing owners will be able to exit at some point in the next year or two.
In addition, HIG is more than likely to bring Kantar Media to the US market. It is unclear if they will dare to take on Nielsen more directly, but with the market finally opening up, there’s little question that they will be here. Our belief is that Kantar Media will continue to build its relationship with the Association of National Advertisers (ANA) and will likely partner with or acquire Videoamp or iSpot (maybe Comscore) to gradually enter the market indirectly.
In summary, we believe that even with Nielsen’s new MRC-approved hybrid product, the dynamics of the market have changed. Nielsen may still “win” but there will be new competitors chipping away at both market share and margins. We believe Nielsen must take strategic actions to both advance its product strategies and improve its reputation in market.
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Stage18 Recommendations for Nielsen
We do not have visibility into whether any of the following recommendations have been considered or are in the works for Nielsen, but we would recommend that it pursue the following actions to shore up its cash, pay down debt and place 100% of its focus on CTV/NielsenOne, which we believe will be the reason investors will buy it and lenders will lend to it.
Collaborate or Prepare to Defend Against Kantar Media. The Kantar Media sale will bring Kantar in some form to the USA. We believe that all of the “alt currency” disruptors (CIMM, OpenAP and others) will welcome Kantar Media to the US market whether directly or indirectly. We expect they will enter via a partnership or acquisition. They will have HIG backing and are strongly cash positive. That makes them quite different from the current slate of VC-backed, cash-hungry competitors of today’s market. Kantar Media will not want to compete directly with Nielsen, but will start to test the waters by enabling Comscore, Videoamp or iSpot. Nielsen must be prepared for this and potentially seek collaboration with Kantar (if antitrust permits) or do anything to try to distract them from a partnership with Videoamp in particular. Nielsen should also consider partnering with ANA.
Shut Down Oldsmar. Nielsen historically operated an enormous signal gathering campus outside of Tampa, Florida. If not commenced already, it should shut it down. Transition to fiber data collection vs. satellite, and reduce footprint and staff further to reduce costs and increase cash.
Sell Gracenote. It’s a great business and an accidental win for Nielsen’s pre-split M&A but it has no relation to the measurement business and the cash could be better used to pay down debt and invest in NielsenOne improvements.
Sell the Local TV Business. - Local TV is expensive to collect and does not yield the same EBITDA as national TV. Local TV programmers are not thrilled with Nielsen as the dynamics of local TV are very different from national TV and national TV will always be Nielsen’s priority. Both Videoamp and Comscore are far more hungry for local TV wins. Sell it to them or to private equity. Use the cash to pay down debt and continue to improve NielsenOne.
Divest Nielsen Audio (Arbitron). We do not know what has happened to the top line since its acquisition by Nielsen 10 years ago and whether it has held steady or started to decline. Arbitron made strategic and financial sense when Nielsen was a public company, and the synergies generated were close to $100M/year. We assume it continues to generate cash but at lower margins and lower growth. If it still generates cash as we expect, get a good price for it and sell it. Pay down debt and continue to improve NielsenOne.
Resolve Paramount - Acknowledge a New Price Base for All Customers. Paramount has been a difficult negotiation and a reputational mess. Nielsen must resolve this dispute immediately and move on. Give Paramount what NBCU received and call it a day. A repricing of the portfolio is inevitable and it's time to accept it, manage costs and business unit distractions and move on. We believe it will be resolved before the upfronts and we would applaud this.
No AI Press Releases But Integrate AI to Reduce Panel Costs. Use AI and other predictive technologies to reduce the size of the panel by 50% and lower recruiting and maintenance expenses. The rest of the market research industry is aggressively pursuing this. We would advise Nielsen to refocus efforts to integrate AI solutions to streamline the panel.
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