Monday, June 20, 2005

VNU Investor Day: quick take-aways

The VNU Investor Day in New York, last Friday, was visited by 83 analysts from a wide variety of countries. Here are my quick take-aways for the day.

What we do
Much time was devoted to explaining the business, that is: Marketing Information (MI) and Media Measurement & Information (MMI). It is complicated as it is, so this was a welcome part.
MI made a very loud point of not being afraid of IRI. IRI is focused too much on technology (whereas MI is technology agnostic and has a heavy consumer focus) and cost containment (VNU's top priority is revenue growth and thus market share - and MI impressively has results to back this up). The BRIC countries present even more of an opportunity for revenue growth.
MMI on the other hand is all about technology in a changing market place (audience fragmentation, VoD, digital, time shifting and place shifting, etc.). 'No threat but an opportubity'. Delaying full support for Arbitron's PPM must not be seen as a way of protectiing the investments in the LPM; rather it is a wholy different instrument ('clients tell us: stay focused on TV'), much like the A/P meter (for digital, such as the DVR), each with its own use. Anyway, Arbitron is expecting to report test results for the PPM in the Houston market by the end of the year. Nielsen Outdoor may be a new currency, one for the outdoor marketplace, and is backed by an impressive array of companies and organizations.
The third division, Business Information, was left out of the day altogether, possibly because of the day's focus. Still, apparently it has to be regarded non-core.

The focus of the day was on synergies between MI and MMI. 'One VNU', 'Working Together for Growth and Innovation'. The most important assets, the MegaPanel and the new Data Factory, will be leveraged (they also constitute a high entry barrier for the business). MI has the VNU Advisory Services unit and MMI has Nielsen Ventures (thanks, Ron Schneier) to help making all this happen.

No targets
After having abandoned margin targets for MI last December, no targets are left. MI will not reach 15% any time soon, because of developing costs: the Project Apollo joint-venture with Arbitron; the extension of the consumer panel into a MegaPanel in the US, and extension too in Europe; the transition to a new data factory in Europe. No news here, except that the third of these (data factory) will produce extra (double) costs of less than the originally projected 20m EUR/yr through 2007. Management was reluctant to admit, but there must also be pricing pressure from the weak market conditions in the European retail markets, with hard discounters now counting for 20% of the market.

Acquisition or payback to shareholders
No news here, except that a decision will be reached 'soon' about spending the EUR 1bn war chest. Now what is that: weeks rather than months?
No comment on NetRatings (60%) or Arbitron (several joint-ventures). There will be no further debt reduction.

US listing
'Rather sooner than later'.

Rob van den Bergh was conspicuously absent. 'Family matters'.
Nobody seemed to mind, really. All the 'really important people' were there. But still.

Next reporting: mid July for the 2004 results under IFRS, August 10 for the H1 numbers.

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