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Owning Nielsen

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As Nielsen meets with private equity firms for go-private talks, Scatterplot looks back at its history of ownership. Wisconsin fraternity brothers, New York City bootleggers, and Dutch media conglomerates all figure into the company’s almost century-long run.

Nielsen might go private again. After reporting a disappointing Q2 last summer, Nielsen announced that Europe’s GDPR privacy law and other changes to the consumer privacy landscape had an unexpected impact on revenues. The nonagenarian cut its annual outlook by 36 percent, announced its CEO Mitch Barnes would depart, and promised to explore a sale of its Buy business. Its share price fell 25 percent in one day.

That led the largest activist fund in the world, Elliott Management, to take an 8 percent stake in the market research goliath, and attempt to pressure Nielsen’s board to take the company private.

Reportedly, the board rebuffed by asking for time to appoint a new CEO first, which it has since done. David Kenny, the former SVP of IBM’s Watson and Cloud platform, started in early December. Prior to running IBM Watson, Kenny was CEO of The Weather Company (TWC). He joined IBM when it acquired TWC in 2015.

With Kenny at the helm, Nielsen’s board was set to begin talks in January with private equity firms Blackstone, Bain Capital, and Hellman & Friedman. Should a go-private deal get inked, it would be one of the biggest leveraged buyouts in years.

That said, the move wouldn’t be unprecedented for Nielsen. Throughout the course of its 96-year history, Nielsen has changed hands as many as seven times already. Here’s a rundown of important changes in Nielsen’s ownership status over the course of the past century:

1923 Pricetag: $45,000.

In 1923, 26-year-old electrical engineer Arthur C. Nielsen asked his University of Wisconsin-Madison fraternity brothers to pool together $45,000 and invest in his new market research company,One of A.C.’s friends not only invested but also loaned him money so he could buy some of the stock himself. A. C. Nielsen Company which would conduct performance surveys for industrial manufacturers.

The surveys provided clients independent economic and engineering analyses of the performance of their products in the plants of their customers. While the company managed to sell the surveys to hundreds of clients, after five years it remained unprofitable. Two of Nielsen’s customers, General Electric and DuPont, asked Nielsen to conduct carefully planned interviews with their customers and prospective customers. This line of business helped drive sales to a peak of $205,000 in 1930. Shortly thereafter, however, the Great Depression crushed the business. It laid off nearly all of its 45 employees and posted sales lower than those of its first year of operation.

1931 Pricetag: $15,000 and one bootlegged drink.

In 1931 at the midpoint of the Great Depression, Nielsen’s company was about to go bankrupt. A.C.’s last hope was a good friend, a widow who held a fortune in Woolworth and AT&T common stock. He asked an advisor Ralph B. Johnson at Smith, Barney and Company for some advice on how to convince her to invest. Here’s how A.C. recounted the story in 1964:

Ralph Johnson’s advice was to the effect that the less I said about the virtues of Nielsen stock, the better would be my chances — and that I had better stake everything on giving the lady a very pleasant evening and pray that we should reciprocate by purchasing a bit of my stock. Then he asked, ‘How are you fixed for liquor for the evening?’
I replied that the subject of liquor had never entered my head — because its use would be illegal under the Prohibition Law.

Ralph Johnson then explained patiently that, illegal or not, big Wall Street deals like the one I was contemplating (involving as much as $15,000) were invariably aid by a bit of conviviality. And so, with some misgiving, but having complete faith in my friend’s judgment, I bought a hip flask at Woolworth’s, filled it with a potent liquid provided by Johnson’s bootlegger and set off on my stock-selling campaign.

The dinner went satisfactorily although my guest consumed only one drink. Perhaps the quality was a bit low.
But the soundness of our banker’s advice was demonstrated by the fact that the charming lady handed me her check the very next day. I’m happy to say that she was eventually repaid in full.

1958 Pricetag: $5 million.

In 1958 Nielsen also repaid his friend at Smith, Barney and Company by tapping the bank to put The A.C. Nielsen Company stock on the over-the-counter public market. The bank priced the company’s shares at $26 a pop, and the offering ended up valuing the company’s shares at $5 million in total. Less than six years later, during a speech A. C. Nielsen gave on his company’s first 40 years, he noted that his original investors from 1923 had enjoyed a 700-fold increase in the value of their investment. Investors in the 1958 stock offering had already seen a seven-fold appreciation by 1964, he said.

A.C Nielsen Jr in 1964.

1984 Pricetag: $1.1 billion.

In the evening on May 17, 1984, business services goliath Dun & Bradstreet, best known then for its credit information services, announced its intent to merge with Nielsen in an all-stock deal valued at $1.1 billion. A.C. Nielsen Jr, who had taken over his father’s company in the mid-1950s, retired as CEO of the company just weeks before the announcement. At the time he said he and his father had considered D&B as their only viable merger partner in the past 15 years. Nielsen posted revenues of $680 million in 1983, while D&B’s revenues had topped $1.5 billion that year. While D&B denied it, some critics of the deal suggested it was an elaborate way to fend off potential acquirers of D&B, which was sitting on $940 million in cash at the time. D&B denied the speculation, but the Nielsen merger made it a much more expensive target.

1999-2000 Pricetag: $4.8 billion.

D&B held onto Nielsen for nearly 12 years before deciding it should split itself up into three public company spinouts in 1996. That maneuver separated Nielsen Media Research from its consumer packaged goods research business, which D&B dubbed A. C. Nielsen. One of the three spinouts D&B glommed together was called Cognizant, which included Nielsen Media Research, IMS Health, and Gartner. In late 1999, however, Dutch media company VNU acquired Nielsen Media Research from Cognizant for $2.5 billion. A year later it reunited NMR with its roots by acquiring A. C. Nielsen for another $2.3 billion.

2006 Pricetag: $9.8 billion.

After VNU tried and failed to acquire IMS Health for $6.8 billion, six private equity firms successfully acquired VNU for $9.8 billion. At the time VNU’s other high-profile businesses were the magazines The Hollywood Reporter and Billboard. The PE consortium included AlpInvest Partners, the Blackstone Group, the Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts, and Thomas H. Lee Partners. VNU changed its name to The Nielsen Company the next year because of its better brand recognition.

2011 (Partial) Pricetag: $1.8 billion.

The Nielsen Company finally goes public on the New York Stock Exchange with an IPO that raises about $1.8 billion. Valuations of the company at the time ranged but went as high as $14.5 billion for full enterprise value.

2019 Pricetag: Still under negotiation.

Scatterplot will update this article with any news related to Nielsen’s reported go-private talks.

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