VNU Issues 4,000-Plus Pink Slips, Plans 10% Workforce Reduction

VNU, the parent of Nielsen Media Research, ACNielsen and a variety of trade publications, Friday began part of a massive layoff that is expected to reduce its total workforce by about 4,100 jobs, or nearly 10% of its 42,000 worldwide organization during 2007.

The cuts were first made known via pink slips handed out among some top editors of its trade publications. On Friday, entertainment industry bible The Hollywood Reporter let go 10 editorial staffers, including many of its top editors.

It's unclear how much the organizational reduction will impact Nielsen, if at all. Nielsen currently is VNU's cash cow and is also embarking on a massive expansion of products, services and capabilities associated with its so-called A2/M2 (Anytime/Anywhere) measurement initiative, as well as new ratings systems for measuring audiences in media other than television.

It's also unclear whether the new round of cuts--which come months after VNU was acquired by a group of private equity firms and installed a new CEO, former GE executive David Calhoun--is tied to VNU's previously announced "Project Forward" initiative, or whether the new cuts represent a new round of downsizing and cost control. Calhoun reportedly joined VNU with a package worth an estimate $100 million if he delivers on certain corporate goals.

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Downsizing and cost containment, however, do not appear to be an issue for Nielsen--which continues to expand, not contract, by every conceivable measure: acquisitions, new start-ups, rollouts, and its biggest R&D initiative ever. Nielsen, for example, recently agreed to fund the release of new streams of average commercial minutes ratings data for a one-year evaluation period out of its own pocket. It has pledged about $5 million in support for a Nielsen-funded Council for Research Excellence to conduct primary research on media.

Despite those investments, Nielsen's businesses continue to be the stars with VNU. Its revenues are growing at the highest rates, and its margins are believed to be some of the best in the research industry.

During the first nine months of 2006, Nielsen's revenues rose 13.9%--more than twice the rate of VNU's overall 6.2% rate of growth--and the division is poised to expand into promising new areas of research, including out-of-home and in-store media outlets.

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