Nickelodeon USA Experiences Ratings Drop For "SpongeBob SquarePants"

From the Wall Street Journal:

Viacom's SpongeBob Crisis

Overexposed or Netflixed? Ratings Sag for Long-Running Cartoon Hurts Network's Ad Sales

Ratings data show the driving force behind Nickelodeon's sharp audience declines in recent months has been SpongeBob SquarePants. John Jannarone on The News Hub explains how Nickelodeon is reacting.

After 13 years on the air, SpongeBob SquarePants, the cartoon about a talking sponge, is losing its hold on children. Ratings are down sharply for the cartoon, which accounted for as much as 40% of the network's airtime late last year. The shift is hurting both Nickelodeon and parent company Viacom.

Photo: Nickelodeon/Everett Collection.
Best known for getting laughs, Nickelodeon's "SpongeBob SquarePants" has become a wet blanket.

After 13 years on the air, the cartoon about a talking sponge is losing its hold on children. The average number of viewers aged 2 to 11 watching Spongebob at any given time dropped 29% in the first quarter from a year earlier, according to Nielsen.

Getty Images / SpongeBob SquarePants and Patrick Star in a scene from the first season.
And because "Spongebob" is the backbone of Nickelodeon—accounting for as much as 40% of the network's airtime late last year—it is dragging down the whole network. Nickelodeon's ratings fell 25% in the quarter, after a more-modest fall-off in the second half of last year.

Sanford C. Bernstein analyst Todd Juenger notes that "SpongeBob" could affect the ratings of other Nickelodeon programming because children often change channels to find their favorites program, then stay tuned in to that network.

'SpongeBob' Finally Sinks

Yanina Manolova/Associated Press / SpongeBob at the New York Stock Exchange in 2009
View SpongeBob SquarePants Slideshow

"SpongeBob" still averages two million viewers in the 2-11 age group during its top Saturday-morning showtime, according to Nielsen data provided by Nickelodeon. A Nickelodeon spokesman says "'SpongeBob' and the rest of our network were performing consistently well as it has for years until the sudden ratings decreases that we experienced in September. It remains the number one rated animated series in all of kids' television and there is nothing that we have seen that points to 'SpongeBob' as a problem."

Nickelodeon's recent ratings declines pose a serious challenge for parent company Viacom Inc. [VIAB] The channel accounts for about 15% of Viacom's operating profit, estimates RBC Capital Markets analyst David Bank. The ratings slide it suffered in the December quarter contributed to a 3% dip in Viacom's ad revenue for that period. Analysts are watching closely to see the impact of the latest ratings declines on the March quarter, which Viacom reports on Thursday.

So what is turning kids off Spongebob? Partly it may simply be age. "SpongeBob" ranks among the longest-running cartoons to hold onto top ratings. "Rugrats," another Nickelodeon cartoon that aired in the 1990s and early 2000s, ended after running about as long as "SpongeBob" already has.

That shouldn't matter to a kids program, however, as the audience is constantly being refreshed. "Every year you've got a new crop of six-year-olds," says Mr. Bank. "That ought to work in their favor."

But the show may be suffering from overexposure. In recent years, Nickelodeon has expanded Spongebob's place on its schedule. For all of 2011, "SpongeBob" accounted for 31% of the network's programming, and even hit 40% toward the end up the year, according to Nielsen That's up from 23% in 2007.

Reruns traditionally have been seen as ideal for kids because, television executives say, children are often happy to watch the same programming over and over.

Paul Debenedittis, senior vice president of programming strategy at Disney Channels Worldwide, says his networks sometimes play their most successful shows more frequently, but only to a limit. "There's definitely a risk in relying on one or two shows to fuel your entire channel," he says.

Moreover, Viacom last year licensed the show and other Nickelodeon programs to Netflix, [NFLX] increasing its availability beyond the TV. While the shows became available on the site in May, Netflix introduced a "just for kids' section of its site in August using pictures to display program selections. The severe ratings declines began in September.

"This is pretty close to a smoking gun on SpongeBob getting worn out," says Mr. Juenger. He published a study last week showing that ratings for children's channels were lower in households with Netflix, even though those households are more likely to have children.

Another factor may be stricter parental attitudes. In September, the journal Pediatrics published a widely circulated study linking shows like "SpongeBob" to kids' poor performance on tests of skills such as following rules. And some parents say they don't let their kids watch the show. Ian Guarnieri of Maplewood, N.J., says he started letting his son watch the show when he was five years old, but quickly pulled the plug. "Once we started to watch it, we decided it wasn't something we wanted him to be watching. It's very low brow."

Nickelodeon decline to comment on criticism of "SpongeBob."

Nickelodeon recently has reduced its exposure to "SpongeBob." In the first quarter, the channel cut back on the number of episodes it aired by 16% compared with a year earlier. The network also aired far fewer episodes of "iCarly," another highly rated and long-running show.

It is also putting more effort into new shows. At its recent "upfront" presentation to showcase new shows, Nickelodeon announced the largest ever package of new programming, with 650 episodes over 2012 and 2013, including some "SpongeBob" episodes.

Also, from Investorplace.com:

Investors awaiting Viacom Inc.’s (NYSE:VIAB) earnings tomorrow and Walt Disney Co.’s (NYSE:DIS) and News Corp’s (NASDAQ:NWSA) results next week shouldn’t breathe easy, however. New York-based Viacom has seen huge ratings declines at Nickelodeon and MTV, which for years have been reliable cash cows.

The declines have baffled many industry pundits. Expectations for the corporate home of SpongeBob SquarePants are muted. Revenue is expected to rise 2.2%, to $3.3 billion, in the first quarter and drop in the current quarter and fiscal year.

Also, from Contactmusic.com:

Are Nickelodeon Shows On Netflix Cannibalizing Its Own Ratings?

Analysts are divided over just how much harm the decision to make Nickelodeon programming available to Netflix has harmed the ratings of the kids cable channel. The issue came up at a panel discussion at The Cable Show in Boston on Monday when UBS cable analyst John Hodulik observed that Nickelodeon's ratings fall since it began selling programs to Netflix could be the catalyst to encourage other cable networks to stop selling programs to the streaming service. But, as reported by MultichannelNews.com, Deutsche Bank media analyst Doug Mitchelson observed that Viacom chief Philippe Dauman has acknowledged that Netflix viewing only represents about 2 percent of Nickelodeon's total viewership, while ratings for the channel have fallen 30 percent. "Nickelodeon has issues well beyond cannibalization from online," Mitchelson said.

22/05/2012