Nielsen will exit several smaller, underperforming markets and non-core businesses in the second half of 2020 as part of a plan to drive permanent cost savings and operational efficiencies. Nielsen operates globally and the exits are predominantly confined to its overseas markets, a company rep told Inside Radio. It’s unclear at this point how the restructuring may impact Nielsen’s U.S. radio business.
To position it for greater profitability and growth, the restructuring will reduce the measurement giant’s global workforce by about 3,500 employees and deliver roughly $250 million in annual savings.
As it prepares to split into two separate publicly traded companies, Nielsen says it is “prioritizing resources to focus on key strategic initiatives, higher margin products and services, and greater efficiency.” The company is getting closer to completing the spin-off of its Nielsen Global Connect consumer product measurement business. First announced in 2019, the spin-off will result in two separate companies—the Global Media business, formerly known as Watch, which measures radio, TV and other media; and the Global Connect business.
During its first quarter earnings call in April, company execs talked about consolidating platforms, automating more tasks and reallocating resources to high-margin services. “Today's plan encompasses, accelerates, and expands on those initiatives,” CEO Dave Kenny said in a news release. “These restructuring actions will further expedite our transformation to a more efficient, agile, and scalable organization and are designed to drive sustained margin expansion and increased cash generation. As part of the optimization plan, we have made the difficult decision to exit selected businesses and markets and permanently reduce our workforce. While these are important actions to take, I recognize the impact they have on our people, and I am grateful for the important contributions made by these talented associates during their time at Nielsen."
The company has raised its 2020 pre-tax restructuring charges to $150 to $170 million, up from the $120 to $140 million figures provided in April 2020. About half of the charges were incurred in the second quarter and are mostly employee severance costs, which will continue into late 2021. The guidance Nielsen gave in April already included the impact of the restructuring plan, except for the market and business exits announced today. Nielsen said it estimates $40 to $50 million of non-cash, pre-tax impairment charges in the second quarter related to the planned exits.
The company plans to provide a detailed update on second quarter results and a fresh 2020 outlook on its second quarter earnings call on Aug. 5.