From the
Los Angeles Times:
Worries linger about Nickelodeon's ratings slump
Photo: A scene from an older episode of "SpongeBob SquarePants." Credit: Nickelodeon
Wall Street analysts peppered Viacom management Thursday with questions about the mysterious ratings slump at the company's premier children's television network Nickelodeon.
Nickelodeon's audience levels have fallen nearly 30% this season, prompting much speculation about the reasons behind the troubling drop. The issue is far from child's play. Nickelodeon is one of the most valuable channels in television as well as within the Viacom universe.
Some analysts have theorized that the weak ratings could be attributed to shifts in viewing behavior. More children are watching Nickelodeon shows on demand through Netflix and Amazon.com digital streaming services, rather than watching the channel.
Earlier this week, Time Warner Inc. Chief Executive Jeffrey Bewkes added his support to that theory, noting that his company's Cartoon Network, which competes with Nickelodeon, doesn't have that issue. In fact, Cartoon Network's ratings were up 14%.
"We think part of the reason is that we don't have our programs sitting on an SVOD [subscription video-on-demand service] where parents can park their kids," Bewkes told analysts during Time Warner's earnings call Wednesday. "Obviously, that's taking some viewing away from some of the other animated channels."
Viacom executives pooh-poohed the theory.
"Netflix is present in less than a quarter of television households, and since we get the streaming data on our content, I can tell you that the time spent on Nickelodeon content on Netflix is approximately 2% of the time spent on our Nickelodeon channel," Viacom Chief Executive Philippe Dauman told analysts Thursday during his company's second-quarter earnings call.
"It would have a minimal impact here," Dauman said.
Instead, Viacom traces much of the ratings nosedive to a September change in the composition of the audience panel that Nielsen uses to derive its ratings. New participants in the Nielsen panel apparently watch less Nickelodeon than those they replaced.
Still, analysts are concerned.
"Nickelodeon has fallen to levels that you've never seen before," said one prominent analyst, Michael Nathanson of Nomura Securities, observed during Viacom's call.
Nickelodeon's problems failed to dent investors' enthusiasm for Viacom's stock. The company's widely traded B-shares closed Thursday at $49.02 a share, up $1.59 a share. Viacom reported a profit increase of 56% over the year-earlier period. Revenue was up 2% to $3.33 billion.
"We're going to focus on ways in which we can affect the Nickelodeon brand positively," Dauman told analysts before the opening bell. "Our pipeline is extremely strong. We're developing more new [episodes] of our popular series and more exciting new series. And of course, we're particularly excited about the revival of the [Teenage Ninja] Turtles franchise."
Also, from
Reuters:
UPDATE 3-Viacom profit beats, but Nickelodeon worries loom
* Q1 EPS $.098 vs Street view $0.89
* Cable network revenue up 5 percent
* Nickelodeon ratings improving, unhurt by Netflix - execs
* Epix to stay on Netflix under any circumstance - CEO
* Shares up nearly 5 percent
May 3 (Reuters) - Viacom Inc posted a higher-than-expected profit on Thursday, boosted by an increase in revenue from cable network fees and digital licensing of its TV shows and movies, and its shares rose nearly 5 percent.
The parent of MTV and Comedy Channel benefited mainly from an increase in affiliate fee revenue paid by cable and satellite distributors. This helped offset relatively flat advertising revenue growth in a quarter that has been dominated by concerns of weak viewer ratings at the company's flagship children's network, Nickelodeon, and also at MTV.
Advertising revenue at TV networks typically rise or fall in step with the estimated number of viewers watching programs as reported by independent companies like Nielsen.
Ratings were improving at both networks, executives told analysts.
However, Nielsen ratings for Nickelodeon have fallen 30 percent this year. Viacom is disputing the measurements' methodology.
Viacom's Chief Operating Officer Thomas Dooley told analysts, "We are seeing the strengthening in the overall tone of the marketplace in terms of the (advertising) volume coming into the marketplace that has offset the impact of the ratings deficiencies that we've had primarily on one of our larger channels, and that would be Nickelodeon."
The ratings issue has not had a significant impact on Viacom's ability to attract or satisfy the advertising demand it has had at its big four networks, he said.
Viacom cautioned that affiliate fee revenue would fall in the current quarter from a year earlier due to the timing of deals, but said it would return to double-digit growth in the September quarter.
There has been strong speculation and some research claiming that Nickelodeon's ratings are being hurt by the availability of its children's programming on the online video service Netflix Inc.
Analysts at Bernstein Research published their proprietary set-top box findings last week, which showed children's programming in particular had taken "a clear and sizable hit" from Netflix.
But Viacom Chief Executive Philippe Dauman rejected the premise and pointed out that Netflix, with 23 million subscribers, is in fewer than a quarter of U.S. television households.
"Since we get the streaming data on our (Netflix) content, I can tell you that the time spent on Nickelodeon content on Netflix is approximately 2 percent of the time spent on our Nickelodeon channel," said Dauman.
"It would have a minimal impact here."
He was similarly supportive of Viacom's Netflix deal with its pay-TV channel Epix. Reuters reported last week that Epix is holding talks with Apple Inc for when the two-year exclusivity clause of the Netflix/Epix five-year deal expires in September.
Dauman said there is a lot of interest in new Epix distribution deals but they would remain in the partnership.
"We will continue to be on Netflix under any circumstance," said Dauman.
RISING PROFITS
Net income from continuing operations rose to $588 million, or $1.08 per share, in the second quarter ended on March 31 from $376 million, or 63 cents per share, a year earlier.
Excluding items, earnings from continuing operations were 98 cents a share. Analysts on average expected 89 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 2 percent to $3.33 billion.
Cable network revenue rose 5 percent, primarily because of an increase in money from fees from cable and satellite TV distributors.
Those fees rose 15 percent in the United States and 17 percent worldwide, also benefiting from digital distribution deals.
Advertising revenue rose by 1 percent in the United States and was flat internationally.
At Viacom's Paramount movie studio, revenue decreased by 5 percent to $1.17 billion due to a weak box office performance at the theaters.
Shares of Viacom were up 3.3 percent at $49 in afternoon trade.
Also, from
The Hollywood Reporter:
Viacom CEO Defends Nickelodeon's Netflix Deal Again
Nickelodeon
Discussing the kids TV network's ratings declines, he tells analysts that the channel is "poised to become bigger and better than ever."
Viacom CEO Philippe Dauman on Thursday defended digital licensing deals that his company has struck with the likes of Netflix for its cable networks, particularly Nickelodeon, amid suggestions that they have affected ratings.
Just on Wednesday, Time Warner CEO Jeffrey Bewkes had cited ratings gains for his Cartoon Network and became the latest to argue that Netflix availability of Nickelodeon content, such as iCarly and SpongeBob SquarePants, was hurting the network.
When analysts questioned Dauman about the issue during Viacom's quarterly earnings conference call, he said, "We are getting nice revenues through these subscription VOD deals."
Dauman pointed out that Netflix is in fewer than a quarter of U.S. households, and time spent on Nickelodeon content on Netflix is about 2 percent of the time spent on the Nickelodeon TV channel. The CEO said that this viewing "of course" is not "completely cannibalistic," has promotional value and serves audiences on new platforms. And he highlighted that Nickelodeon only has "some library content" on the streaming service.
Asked to explain what alternative reasons he sees for Nickelodeon's ratings declines, Dauman said things are "complicated," but he mentioned strong programming from competitors as one factor and reiterated that Nielsen ratings problems are also a key contributor.
One analyst asked if the Nickelodeon ratings declines aren't unprecedented. “We’ve seen this level of impact on other major networks in the past, and we have overcome it," Dauman said.
How will the network look to grow viewers again? While there is no silver bullet, Dauman said his team is investing in new original episodes and shows to reverse the Nickelodeon viewership slide. In the current fiscal year, Viacom's media networks are launching and developing more original programming than ever before, he said.
Nickelodeon has remained the number one cable network despite its challenges, and it is "poised to become bigger and better than ever," the Viacom CEO vowed. "The [content] pipeline is extremely strong."
Discussing the upcoming upfront advertising selling season, Dauman predicted "we will do quite well in the kids upfront."
Also, from
Bloomberg:
Viacom Earnings Exceed Estimates on MTV, Nickelodeon Fees
Viacom Earnings Beat on Higher Pay-TV Fees
Viacom Inc. (VIAB), owner of the Paramount film studio and MTV, Nickelodeon and Comedy Central cable channels, reported fiscal second-quarter earnings that exceeded analysts’ estimates on higher fees from pay-TV systems.
Excluding items, profit jumped to 98 cents a share, New York-based Viacom said today in statement. Analysts predicted 89 cents, the average of estimates compiled by Bloomberg. Sales rose 2 percent to $3.33 billion, in line with projections.
Operating profit at the Entertainment Division that includes Paramount’s film studio almost tripled to $115 million on revenue of $1.17 billion. Photographer: Jonathan Alcorn/Bloomberg
Viacom’s media networks unit, which contributed 92 percent of operating profit in fiscal 2011, according to data compiled by Bloomberg, saw a 15 percent increase in domestic fees for its cable networks and 17 percent worldwide during the quarter. U.S. ad sales rose 1 percent from a year earlier following a 3 percent decline in the first quarter.
The lack of ad-sales growth was offset by rising rates for programming from pay-TV operators, which speaks to the attractiveness of the cable-network model, Brett Harriss, analyst with Gabelli & Co. in Rye, New York, said in a telephone interview after the report.
“Getting that dual source of revenue is key to their business,” he said.
Viacom, controlled by Chairman Sumner Redstone, rose 3.4 percent to $49.02 at the close in New York, the biggest gain in three months. The stock has climbed 7.9 percent this year.
‘Ratings Problems’
Viacom has chronically underperformed its peers in advertising, according to Paul Sweeney, senior analyst at Bloomberg Industries.
“They’ve had a series of ratings problems, first at MTV and now at Nickelodeon,” he said in an interview after the report.
Net income increased 56 percent to $585 million, or $1.07 a share, from $376 million, or 63 cents.
Media Networks operating profit climbed 11 percent to $893 million on $2.19 billion in sales. MTV airs “Jersey Shore,” while Comedy Central is home to “The Daily Show with Jon Stewart.”
Operating profit at the Entertainment Division, which includes Paramount’s film studio, almost tripled to $115 million on revenue of $1.17 billion. In the period, Paramount collected $227 million in U.S. box office sales led by “Mission: Impossible -- Ghost Protocol,” according to researcher Box Office Mojo.
The company said it repurchased 14.7 million shares during the quarter ended March 31, for an aggregate of $700 million. As of yesterday, Viacom had $5.9 billion remaining in its $10 billion stock buyback plan.
Also, from
RTT News:
Viacom Profit Rises, Tops Estimates
(RTTNews) - Media conglomerate Viacom, Inc. (VIA, VIAB) reported a sharp increase in second-quarter profit, driven by higher affiliate fees and ad revenues as well as lower distribution costs. Adjusted earnings per share surpassed analysts' expectations, while revenues missed their view.
The company's Media Networks segment, which runs cable networks such as MTV and Nickelodeon, grew revenues by 5 percent.
Filmed Entertainment division, which comprises the Paramount Pictures movie studio, saw its revenue drop 5 percent due to lower theatrical and television license fee revenues.
The business did not perform as well it did last year, as the performance of films released this year such as The Devil Inside and A Thousand Words did not match the same period last year.
However, adjusted operating income in the filmed entertainment segment soared 195 percent, helped mainly by lower distribution costs.
After Titanic 3-D, Paramount is now looking forward to the release of The Dictator, G.I. Joe: Retaliation and Madagascar 3: Europe's Most Wanted later in the ongoing quarter.
In the second quarter, net earnings attributable to the company increased to $585 million or $1.07 per share in the second quarter, compared to $376 million or $0.63 per share reported last year.
The results also reflect the company's $10 billion stock repurchase program, which returned $700 million in equity to shareholders in the quarter. As of May 2, Viacom had $5.90 billion remaining in the repurchase program.
Excluding one-time items, earnings were $0.98 per share, higher than $0.72 per share in the preceding year. On average, 31 analysts polled by Thomson Reuters expected the company to earn $0.89 per share. Such estimates typically exclude special items.
Revenues for the quarter increased 2 percent to $3.33 billion from $3.27 billion in the prior-year quarter, driven primarily by higher Media Networks affiliate revenues. Analysts estimated revenues of $3.34 billion.
Philippe Dauman, president and chief executive officer of the company said, "Driven by our popular programming, Viacom's media networks are also forging new and lucrative opportunities in digital distribution, while continuing to create increasing value with our traditional affiliate partners."
VIA closed Wednesday's regular trading at $51.04 on the Nasdaq. VIAB ended at $47.43. In the pre-market activity on Thursday, the shares are up 3.84 percent.
Also, from
Proactive Investors USA & Canada:
Viacom profit up 56%, film revenue slows on weak box office sales
Viacom (NASDAQ:VIA), the owner of Paramount Pictures, MTV and Comedy Central, Thursday reported an increase of 56 percent in its second-quarter earnings on higher pay TV fees, while movie earnings slowed revenue growth.
For the quarter that ended March 31, Viacom earned $588 million, or $1.08 per share, up from $376 million, or 63 cents per share, a year ago.
Adjusted earnings were $535 million, or 98 cents per share, exceeding Bloomberg analysts’ estimates of 89 cents.
Revenues climbed two percent to $3.33 billion, in line with projections.
"In the second quarter, Viacom continued its steady growth and delivered notably higher profitability, driven by relentless investment in our exceptional brands, and an ongoing focus on operational excellence," said Viacom's president and chief executive officer Philippe Dauman.
"MTV, Nickelodeon and Comedy Central remain the number one cable destinations for their audiences, and up-and-coming brands such as VH1 and CMT are adding viewers with exciting new original shows.
"Our international media networks continue to expand in scope and profitability, with this quarter marking the launch of the first of many Paramount Channels around the world."
Revenues for the company’s domestic cable networks increased 15 percent on domestic fees, and worldwide revenues grew 17 percent in the quarter, in each case reflecting higher revenues from digital distribution agreements, as well as rate increases, the company said.
Domestic advertising revenues increased one percent, while worldwide advertising revenues were flat at $1.07 billion for the quarter.
In Viacom’s filmed entertainment division, revenues decreased five percent, to $1.17 billion, reflecting lower theatrical and television license fee revenues, partially offset by higher ancillary revenues.
Worldwide theatrical revenues decreased 19 percent in the quarter, as movies like “The Devil Inside,” "A Thousand Words,” and “Jeff, Who Lives at Home,” did not do as well as last year’s “Rango” and “No Strings Attached.”
Viacom reported that its media networks division saw revenue growth of five percent, to $2.19 million, driven by an increase in affiliate fee revenues, partially offset by a decrease in ancillary revenues.
"Viacom's substantial EPS growth is the result of revenue growth, improved margins, and our $10 billion stock repurchase program, which returned $700 million in equity to shareholders in the quarter," said Dauman.
"In the second quarter we also reduced our debt costs, which further strengthened our rock-solid balance sheet."
As at the end of the second quarter, Viacom bought back 14.7 million shares under its stock repurchase program, for a total of $700 million.
The company’s shares were up 1.98 percent early Thursday to $48.38.
Also, from the Associated Press (AP) via the
Huffington Post:
Viacom 2Q earnings up 56 percent
NEW YORK — Viacom Inc., the owner of Paramount Pictures, MTV and Nickelodeon, on Thursday said its net income rose 56 percent in the latest quarter, even though a slate of movies that was lackluster compared with last year held back revenue.
Viacom earned $585 million, or $1.07 per share, in the January to March quarter. That compares with $376 million, or 63 cents per share, it earned in the same period last year. Viacom has bought back shares, reducing stock outstanding and boosting earnings per share.
Excluding special items, earnings were 98 cents per share in the fiscal second quarter, 9 cents above the average analyst estimate as polled by FactSet.
The New York-based media company said its revenue rose 2 percent to $3.33 billion, matching analyst estimates.
Revenue rose 5 percent at Viacom's TV networks, and fell 5 percent at Paramount, as movies like "The Devil Inside," "A Thousand Words," and "Jeff, Who Lives at Home," did not match hits from last year like "Rango" and "No Strings Attached."
However, the lower movie revenue was more than offset by lower distribution costs, so Paramount's operating income expanded, contributing to the overall profit increase.
Viacom's Class B shares rose $1.49, or 3 percent, to $48.92 in morning trading.
An issue that's been hanging over the company since the fall is a ratings decline reaching nearly 30 percent at Nickelodeon, one of the Viacom's flagship networks. Analyst Todd Juenger at Sanford Bernstein has pointed the finger at Netflix Inc., which streams some Nickelodeon shows, like "Dora the Explorer."
But Juenger acknowledges that Netflix can't explain the all of the decline. On a conference call with analysts, Viacom CEO Philippe Dauman said viewing of Nickelodeon content on Netflix is 2 percent of the time spent on watching the TV channel, so the "Netflix effect" is minimal.
"The Nick issue is complicated. There are ratings measurement issues. There certainly has been some compelling programming on some of our competitors, which we can clearly address," Dauman said. "We will do what we always do: We will research our audiences, we'll review our pipeline, add more diversity in our programming."
The ratings decline hasn't had an effect on Viacom's overall ability to sell ads, executives said, because the demand for advertising has been increasing.
