Nielsen Holdings saw its fourth-quarter and full-year 2017 revenues increase due to significant growth within the Watch segment, comprised of its media audience measurement and analytics business, driven by its cross-platform and digital viewing services.
Meanwhile, the Buy side of the business, which is focused on consumer purchasing measurement, saw headwinds that CFO Jamere Jackson attributed to difficult conditions in developed markets that are expected to continue for the next few quarters.
Speaking during the company's Feb. 8 earnings conference call, Nielsen CEO Mitch Barns called out both Nielsen's Total Audience Measurement system, which measures viewing across platforms, and its Digital Content Ratings, which now measures viewing from key online platforms Hulu, Facebook and YouTube, as key drivers for the media audience measurement business.
"Ongoing media fragmentation continues to heighten the need for independent, comparable and the duplicative measurement across all platforms. Our Total Audience Measurement system solves for that," Barns said on the call, describing the cross-platform measurement system as "the foundation of our future in Watch."
Barns said Nielsen also is further expanding its C3 and C7 ratings data, which captures viewing in the three and seven days after a program airs, respectively, to facilitate linear and dynamic ad insertion in the same program.
Speaking about the decline in revenues Nielsen incurred in its consumer purchasing measurement business, Jackson said the company expected lower spending by some of its clients to continue into 2018. "We are investing in initiatives that will benefit both retailers and manufacturers and these investments will present opportunities for us in the back half of 2018 and beyond," he said.
Nielsen's fourth-quarter 2017 revenue was $1.76 billion, up 6.3%, or 4.2% on a constant currency basis, from $1.66 billion in the prior-year quarter. Revenues within the Watch segment improved 15.9%, or 14.8% on a constant currency basis, to $913 million, compared to the fourth quarter of 2016. Buy segment revenues for the fourth quarter of 2017 decreased 2.3%, or 5.3% on a constant currency basis, to $848 million, compared to the prior-year quarter.
The company was hit by a noncash tax charge of $104 million, or 29 cents per share, in the fourth quarter of 2017 due to the U.S. tax reform. As a result, net income attributable to stockholders was $81 million, or 23 cents per share, down 49.1%, or 50.6% on a constant currency basis, from $159, or 44 cents per share, in the prior-year quarter.
"We anticipate that the legislation will result in a 2018 effective tax rate of approximately 32% to 34%," Jackson said. "In 2018, we expect to reinvest a portion of these benefits in key initiatives to drive future growth and profitability. Over time, we expect the lower U.S. tax rate to boost Nielsen's GAAP EPS earnings and cash flow."
The fourth-quarter S&P Capital IQ consensus estimate was 80 cents on a normalized basis and 45 cents on a GAAP basis.
For full year 2017, Nielsen's revenues grew 4.2%, or 3.8% on a constant currency basis, to $6.57 billion from $6.31 billion. The Watch segment's revenue was $3.34 billion, up 11.9%, or 11.7% on a constant currency basis. Buy segment revenue came to $3.23 billion, down 2.7%, or down 3.3% on a constant currency basis.
Net income attributable to stockholders for the full year was $429 million, or $1.20, down 14.5%, or down 16.2% on a constant currency basis, from $502 million, or $1.39, in 2016. The decreases were driven by the $104 million noncash tax charge in the fourth quarter of 2017.
The full-year 2017 S&P Capital IQ consensus estimate was $2.64 on a normalized basis and $1.43 on a GAAP basis.
