Ryvicker on Viacom addressing Nickelodeon ratings slide


NickelodeonMarci Ryvicker, Senior Analyst at Wells Fargo, provided some takeaways from Viacom CEO, Philippe Dauman’s presentation at Goldman Sachs’ 21st annual Communacopia Conference in New York 9/19.

Dauman said he preferred to look forward rather than back at the ratings slide. Nickelodeon spent much of the year rethinking what it is doing, he told the audience. As a result, Viacom has focused more resources on the network, beefing up production and reorganizing: “We have over 70% more original shows than the comparable period last year. That shows the extent of production and development we’ve done.”

The ratings slide (stabilizing as of late) has also been blamed on carriage disputes such as Viacom’s standoff with DirecTV earlier this summer that caused a nearly 10-day blackout of Viacom channels such as MTV and Comedy Central.

Noted Ryvicker: “Nickelodeon has at least 70% more original shows airing next quarter vs. the comparable period last year. This is particularly important for Nickelodeon as it leads into the holiday season, which is the network’s strongest quarter for ad revenue. The CEO noted the ”avalanche” of new shows begins this Saturday, with new programs launching almost every week. Furthermore, Nick at Nite is introducing original content as well, and NickMom launches October 1 on the Nick Jr. network, which has already been getting a lot of ad support.

Scatter is up teens over the upfront. While the Olympics took some volume out of the market, the CEO noted demand is good in the categories VIAB deals in, and he is optimistic now that the Olympics is behind them.

Management expects to hit LDD affiliate fee growth in the near term, following its recent deal with DirecTV. CEO, Dauman reiterated guidance of high single to low double-digit affiliate fee growth for the foreseeable future, but noted VIAB could hit the upper end of that range after renegotiating its new deal with DirecTV.

Shareholder returns remain a priority – $2.8B in buybacks expected at the completion of FY2012E. This indicates another $700M in repurchases for FQ4E, which is in line with our estimate. We would note that leading into FY2012E, VIAB guided to ”at least” $2.5B in buybacks, and the CEO noted today ”at least” $2.5B for FY2013E as well. He also noted his commitment to maintaining consistency in capital returns.

International margins goal of over 20% is likely by FY2013E. VIAB continues to expand its footprint overseas, with the CEO noting several Paramount Channels to launch over the next year. Asia was an area he highlighted as having good potential, particularly in India where the company already has a significant asset that should become ”materially significant” over time.”

RBR-TVBR observation: Part of Nickelodeon’s problem may have been (and could continue) cannibalization of its own network by fragmenting viewership to sister networks like NickToons and Nick Jr. Certainly, as well, Nick’s daily metamorphosis to Nick at Nite has not seen the success that competitor Cartoon Network has accomplished with Adult Swim. Perhaps Nickelodeon should focus more on the adults as well as revamping for the kids.