Nielsen Holdings, CBS Radio Renew Audio Ratings Agreement

Nielsen Holdings plc (NYSE:NLSN) renewed its Nielsen Audio agreement with CBS Corporation’s (NYSE:CBS) CBS Radio.

Per the renewal program, Nielsen will continue to deliver its local market insights and currency ratings to the broadcast media operator across all the Portable People Meter (PPM) metros. Additionally, the duo will continue to leverage Nielsen's radio diary measurement service in a few local markets.

Nielsen Data Management Platform (DMP), the company’s marketing cloud application, will also be offered to CBS Radio to help the latter connect with listeners via digital channels. DMP, for the first time, encompasses Nielsen Audio data from Nielsen's PPM.

Rob Hill, EVP, Retail Services at Nielsen stated, "Nielsen Audio provides CBS Radio with trusted and industry-leading solutions that allow them to measure the total audience and reach of their content."

How Is Nielsen Poised to Benefit?

We believe that the move will help Nielsen expand its client base and boost its Watch segment revenues. This segment provides viewership and listening data and analytics across radio, television, online and mobile screens, primarily to media and advertising industries. The performance of the segment was particularly strong in the last quarter.

In the last quarter, Watch business revenues were $769 million (50.4% of total first quarter revenue), up 10.8% year over year and 11.1% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 13.3% and 14%, respectively, on a constant currency basis.

Excluding the acquisition of Gracenote, Watch revenues increased 5.9% or 6.2% on a constant currency basis.

Nielsen N.V. Revenue (TTM)

Going forward, strengthening Watch segment revenues could boost its share price as well that depreciated 21.8% in the last year in contrast to the Zacks Business - Information Services industry’s gain of 4%.

What’s on CBS Radio’s Platter?

Proceedings for the merger of CBS Radio and Entercom are underway and are expected to be completed in the second half of this year. The combined entity will own CBS Radio’s 177 stations along with Entercom’s 127 stations, leading to the formation of what the duo claims to be the second-largest radio broadcaster in terms of revenues in the U.S.

The merger is aimed mainly at tapping marketers and advertisers who seek effective alternatives to digital advertising.

Just as CBS radio leverages Nielsen’s audio data in its stations to show the reach of its service, Entercom can also make use of the same going forward.

Again, as Nielsen Audio provides measurement services to CBS’s 177 radio stations, following the merger, that could extend to Intercom’s 127 stations.

Key Takeaway

The deal is a prime example of how Nielsen is utilizing its strong position in viewership data and analytics across media and advertising industries and focusing on innovation to gain new clients and retain the existing ones.

Zacks Rank and Stocks to Consider

Currently, Nielsen is a Zacks Rank #3 (Hold) stock. Better-ranked stocks in the broader technology sector include Marchex, Inc. (NASDAQ:MCHX) and Monolithic Power Systems, Inc. (NASDAQ:MPWR) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected earnings per share growth rates for Marchex and Monolithic Power are 15% and 17%, respectively.

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