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Neilsen Completes Gracenote Buyout, Boosts Watch Segment

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Nielsen Holdings plc has recently completed the acquisition of Gracenote from Tribune Media Company for $560 million in cash.

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

Post acquisition, Gracenote will become part of Nielsen's Watch segment and continue to operate from its Emeryville headquarters. It will be referred as Gracenote, a Nielsen company.

Over the last one year, shares of Nielsen have underperformed the Zacks characterized Business Information Services industry. The stock has registered a loss of 12.48% compared with the industry’s gain of 14.29%.

Benefits of the Deal

California-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.

The deal is a step on Nielsen’s part to adopt the latest methodologies to keep pace with shifting media habits. We believe that by leveraging Gracenote’s global content database, Neilsen will be able to develop more expansive and detailed tracking methods.

Financial Impacts

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

The impact of Gracenote was not included in Nielsen's 2017 outlook issued on Dec 8, 2016.  More details on the expected impact of Gracenote will be reported with Nielsen’s fourth-quarter results on Feb 9.

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 2016, 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 2013 end, Nielsen closed the purchase of Arbitron, an international media and marketing research firm, for approximately $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.

Nielsen N.V. Price and Consensus

 

Nielsen N.V. Price and Consensus | Nielsen N.V. Quote

Currently, Neilsen has a Zacks Rank #5 (Strong Sell).

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

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