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Thursday, January 31, 2013

Nickelodeon USA's Ratings Shortfall Hurts Viacom's 1Q13 Revenue; Nickelodeon May Hold Annual Upfront Presentation In Late February 2013

According to the following Nickelodeon News articles, despite the ratings for Nickelodeon's flagship channel, Nick USA, showing recovery after a rocky 2012, Nickelodeon USA still experienced a decline in advertising revenue, which has hampered down Viacom Inc.'s first quarter 2013 total revenue. However, the media company's 1Q13 profits came in slightly ahead of expectations, and, with Nickelodeon's significant and sustained investment in fresh, original content, Philippe Dauman, President and Chief Executive Officer of Viacom remains optimistic that Nickelodeon will continue to drive future ratings growth and revenue improvement. Nickelodeon's brand new CGI-animated "Teenage Mutant Ninja Turtles" television series is also starting to show promise for Nickelodeon. The New York Times' 'Media Decoder' column has also announced the Nick News that Nickelodeon is expected to hold their annual upfront presentation, Nickelodeon Upfront 2013, during late February 2013, where Nickelodeon will pitch a slate of new animated and live-action series to advertisers. One of the areas of Nick's focus is speculated to be Nick's preschool programming — the idea being that very young viewers will stick with Nickelodeon throughout their childhood.

From The New York Times' 'Media Decoder - Behind the Scenes, Behind the Lines' news column:
Ratings Shortfall at Nickelodeon Hurts Viacom Revenue

Hampered by ratings shortfalls at Nickelodeon and an unfavorable film release schedule, Viacom on Thursday reported a 16 percent decrease in revenue in the fourth quarter of 2012, a somewhat steeper drop than analysts anticipated.

But the company’s profits came in slightly ahead of expectations, and the chief executive, Philippe Dauman, pleased Wall Street with positive news about progress at Nickelodeon and Viacom’s other cable networks.

Mr. Dauman said the company was making an “unprecedented investment in content” that was paying off for Nickelodeon. The dramatic ratings declines that began to be visible in late 2011 are moderating, and new shows are premiering. Mr. Dauman said the ratings momentum “confirms our view that our significant and sustained investment in fresh, original content is working, and will continue to drive future ratings growth and revenue improvement.”

Viacom reported revenue in the fourth quarter of 2012, its fiscal first quarter, of $3.3 billion, down from $3.95 billion in the same quarter a year ago. Analysts had forecast $3.48 billion in revenue.

Profits rose to $470 million, or 92 cents a share, compared with $212 million, or 38 cents a share, in the same quarter a year ago. But the year-ago quarter was hurt by a settlement with the original shareholders of Harmonix Music Systems, the makers of the “Rock Band” video game series. After adjustments, Viacom earned 91 cents a share in the quarter, a penny higher than analysts had predicted, from $1.06 in the same quarter a year ago.

The damage done by Nickelodeon’s ratings drop was evident in the total revenues for Viacom’s cable networks, by far the biggest part of its business. Revenue dipped 2 percent at the networks overall, largely because advertising revenue decreased 6 percent, even as affiliate fees paid by cable and satellite distributors grew.

Mr. Dauman said on a conference call with analysts that the “lingering effects of the ratings softness” at Nickelodeon masked growth elsewhere at the cable networks. Excluding its children’s channels, Viacom’s networks group “returned to positive ad growth in the quarter,” he said.

David Bank, a media analyst for RBC Capital Markets, said Nickelodeon’s ratings for the last few months were showing recovery after a rocky 2012. “All they need to do is continue to deliver the audience they are already delivering — without growth — and the year-over-year comparisons virtually assure growth,” he said.

Nickelodeon will pitch a slate of new animated and live-action series to advertisers at a presentation in late February. One of the areas of focus is preschool programming — the idea being that very young viewers will stick with Nickelodeon throughout their childhood.

Mr. Dauman says Viacom has found that its viewers of all ages want more new shows, and they want more episodes of those shows on “faster cycles,” so it has sped up the development and production processes at Nickelodeon and elsewhere.

Mr. Dauman spent some time on Thursday’s earnings call praising MTV, another one of its flagship networks, which he said had started to answer the question “What comes after ‘Jersey Shore?’” That infamous reality show had its series finale earlier this winter.

“‘Jersey Shore’ was a game-changing hit,” he said, “but it also precipitated an overemphasis on one night,” which was Thursday. MTV is trying to spread its new shows — “Catfish,” “Washington Heights,” “Buckwild” — across the weekly schedule.

Viacom's film studio, Paramount, saw revenue drop 37 percent in the quarter, to $975 million. The company attributed this to the fact that its films in the quarter weren’t as successful as year-ago hits like “Mission: Impossible – Ghost Protocol” and “Puss in Boots.” The company also had one fewer release in the home video marketplace this time around.

Television, Bank, David, Buckwild (TV Program), Cable Television, Company Reports, Dauman, Philippe P, MTV Networks, Nickelodeon, Paramount Pictures, Television, Viacom Inc
Also, from Reuters:
Nickelodeon drags down Viacom but ad sales to improve

(Reuters) - SpongeBob SquarePants and the Teenage Mutant Ninja Turtles could not lift ad sales at Viacom's (VIAB.O) stable of cable networks, which dragged down first quarter total revenue.

Specifically, it was Viacom's Nickelodeon - home to the undersea goofy character and fighting reptiles - that was responsible for the six percent decline in advertising revenue for the quarter ending December 31.

Viacom Chief Executive Philippe Dauman singled out Nickelodeon during a quarterly earnings call on Thursday explaining that ad revenue would have been positive during the quarter excluding the network targeted to kids.

And yet he also offered some uplifting news to investors: Viacom is climbing out of the advertising slump that started last year because of weak ratings at its cable networks including MTV and Comedy Central.

Advertising revenue is expected to be flat and then turn positive during the year, Dauman said on a call with analysts.

"The results were pretty much on target," said Alan Gould, an analyst at Evercore Partners. "The fact of improving ad sales going forward that would be a positive."

Shares of Viacom rose 1.8 percent to $60.36 in morning trade on Thursday.

In the past year, Viacom has been struggling with declining cable ratings and is trying to gain a steadier foothold with its programming.

Ratings are the currency for TV commercials that set prices based on the popularity of programs. The more people that watch, the higher the cost of the ad.

"All of our groups are focusing intently on developing more new compelling programs," Dauman said.

The decline in ratings has multiple roots including intense competition from Walt Disney (DIS.N) and that younger audiences watch TV shows on demand, which are not always captured in ratings.

Still, after the wild success of "Jersey Shore," Viacom is rapidly trying to revive its status as a destination for young audiences. It has invested in a new slate of TV shows, including "Teenage Mutant Ninja Turtles," "Catfish" and "Buckwild," which are beginning to show promise.

"At the end of the day, I have been optimistic on Viacom," said Pivotal Research analyst Brian Wieser. "It's a hit driven business and hits are cyclical."

Viacom reported total revenue fell 16 percent to $3.3 billion, shy of analysts average forecast of $3.48 billion, according to Thomson Reuters I/B/E/S.

While its film entertainment revenue, which includes Paramount Pictures, dropped sharply, down 37 percent, it is the company's cable channels that represent more than 70 percent of Viacom's revenue.

Net income fell to $473 million, or 93 cents per share, from $591 million, or $1.06 per share, a year earlier.

Earnings before special items were 91 cents a share, beating analysts' average forecast by a penny.