Viacom ratings tumble without DirecTV

TMC

2012-07-19 07:54:29 UTC

http://www.deadline.com/2012/07/viacom-ratings-nosedive-in-first-week...
Viacom Ratings Nosedive In First Week Of Dispute With DirecTV
By DAVID LIEBERMAN
Word is that negotiations are still moving slowly. And that could mean
Viacom’s in for a lot of pain based on Nielsen data from the first
week in which its 17 channels were dark on DirecTV. The black out
began on July 11, which means that Viacom networks didn’t have
DirecTV’s 20M subscribers for five days in the week that ended July
15. During that week, there was a 27% drop in the total day live
viewing for the target audiences of Viacom’s networks compared with
the same period last year, according to a compilation of ratings data
by Barclays Capital. The previous week the networks collectively were
-14%. Those with the steepest year-over-year drops were Nick at Nite
(-48.1%), Nickelodeon (-45.0%), VH1 Classic (-35.3%), Nick Toons
(-34.8%), and CMT (-32.0%). Viacom’s more resilient channels were VH1
(-1.3%), Teen Nick (-2.5%), Comedy Central (-5.5%), BET (-13.0%), and
TVLand (-18.1%).
The impact on DirecTV is hard to determine until it releases new
subscription data. But its rivals smell blood. Comcast, Cablevision,
and Dish Network are advertising for DirecTV subs to switch so they
can continue to watch Viacom’s channels, BTIG analyst Rich Greenfield
reports. While he doesn’t expect a lot of customers to jump just yet,
“it will be very challenging [for DirecTV] to sign-up new subs with so
many channels missing,” he says. And the impact on DirecTV could be
long-lasting because customers will be “far harder to recapture given
DirecTV’s lack of a broadband offering.”
How long will the fight last? Even the experts disagree. Barclays’
Anthony DiClements says that “a near-term resolution to the conflict
is likely, given the value of Viacom’s programming, and the sheer
number of networks at stake for [DirecTV] subscribers.” But Cowen and
Co analyst Doug Creutz says he’s “concerned that the DirecTV carriage
fight could persist for an extended period of time” — resulting in as
much as 40% in lost earnings for Viacom “across the length of the
blackout.”

http://www.nytimes.com/2012/07/19/business/media/dispute-with-directv-aids-viacoms-rivals-in-childrens-programming.html?_r=1&smid=tw-nytimes&seid=auto

By BRIAN STELTER
Published: July 18, 2012
Threats of television programming blackouts have become begrudgingly
accepted by adults who know what these financial fights are all about.

But children accustomed to their daily dose of SpongeBob SquarePants
are proving to be a bit more restless.

For the second week, Nickelodeon and its two smaller siblings Nick Jr.
and Nicktoons, owned by Viacom, have disappeared from DirecTV’s
lineup, affecting would-be viewers across the country.

The two companies have not been able to agree on the amount of money
that Viacom should receive from DirecTV for a bundle of its channels,
including Nickelodeon, MTV and Comedy Central.

For the Disney Channel, Cartoon Network, the Hub and Sprout, it is the
equivalent of a baby boom after a hurricane or a snowstorm. After all,
while adults may have 500 channels at home, children only have a
handful to choose from.

“The first two days were rough on my toddler,” Mary Pedone Howard
wrote on the Facebook wall for Viacom, where hundreds have posted
angry rants against the company (and against DirecTV). Now, though,
when it is TV time, she said her daughter asks for the Disney Channel
instead. “Leave it to a 3-year-old to show mom that adaptation is a
great thing,” she wrote.

It will take months to determine whether there are long-term effects
to this “forced sampling,” as another irritated parent, Brian
Chisholm, called it on Facebook.

First, the blackout has to end, and on Wednesday, there was no new
sign of light. On Wednesday afternoon Derek Chang, an executive vice
president of DirecTV, said that “we’re exchanging ideas” with Viacom
in “multiple calls every day.” But Denise Denson, his counterpart at
Viacom, said in a telephone interview a few minutes later that the two
companies were at an impasse. Her daily calls with Mr. Chang, she
said, are short and insubstantial. “We don’t see an end in sight to
the blackout,” she said.

Blackouts of cable channels are rare, and when they do happen, they
tend to be resolved within hours, not days.

“I’ve never seen a situation like this. The outage has lasted so long
and it’s so broad,” said Sandy Wax, the president of Sprout, a channel
for children backed by NBCUniversal and the Public Broadcasting
Service. DirecTV made Sprout, which was already available to most of
its subscribers, available to all after the blackout started.

“We don’t relish this happening to anyone,” Ms. Wax said in an
interview. But “the idea that more customers are going to be able to
sample us,” she admitted, “that’s a positive for us.”

She added, “Hopefully they’ll come back after all the dust settles.”

About 2.5 million people are typically watching Viacom’s children’s
channels at any given time, according to Nielsen. The flagship
Nickelodeon started to see a drop-off in viewership late last year,
causing alarm at the highest levels of Viacom. The reasons for the
declines continue to be debated, with some citing a lack of new hit
shows and others blaming the Web streaming of shows like “SpongeBob
SquarePants.” But it is clear that the dispute with DirecTV has
deepened the channel’s ratings decline.

On July 10, the day before the blackout started, 1.76 million viewers
were watching Nick during the day, according to Nielsen. On July 11,
that average dropped to 1.23 million, a drop of 30 percent overnight.
DirecTV distributes TV to about 20 percent of the households in
America that pay for cable or satellite TV.

The Disney Channel, which had already been gaining on Nickelodeon,
seemingly picked up some of the disappearing audience, though it is
hard to draw a direct connection between the DirecTV blackout and the
Disney gains.

“Disney has been gaining share, anyway,” Todd Juenger, an analyst at
Sanford C. Bernstein & Company, wrote in a note to investors on
Tuesday. “Certainly some percentage of kids (and moms/decision makers)
will get hooked on Disney programming and stay with it.”

In the first six months of the year, the Disney Channel had about 1.64
million viewers at any given time. In the first five days of the
DirecTV blackout of Viacom programming, it had about 2.27 million
viewers.

Smaller channels for children have seen sharp gains, as well. The Hub,
a relatively small player in the space co-owned by Discovery
Communications and Hasbro, had about 88,000 viewers at any given time
earlier this year, and about 159,000 viewers since the blackout took
effect. Sprout had about 153,000 viewers before the blackout, and
about 264,000 since.

A few days after the blackout began, DirecTV announced carriage of
another channel for children, Disney Junior. Representatives for
Disney declined interview requests on Wednesday. But they were more
than happy to share ratings data about the success of their channels.

Mr. Chang, too, noted in an interview that “Disney is obviously
gaining quite a bit from Nick.” DirecTV has helped, by replacing
Nickelodeon in its lineup with interactive links to alternative
channels for children. “A lot of viewers are saying, ‘I found stuff I
didn’t know existed, and this is great,’ ” Mr. Chang said.

Ms. Denson of Viacom said she was not surprised that Nickelodeon and
the other channels had sagged in recent days. “In the short term, we
will endure ratings issues,” she said. “But in the long term, DirecTV
will endure long-term asset loss from customers leaving or customers
never coming on in the first place.”

Maybe, maybe not. In the meantime, just try explaining a corporate
spat to a 5-year-old.