Ratings Fall, But Nickelodeon Keeps Advertisers Happy

Sponge-Bob-SquarePantsNickelodeon may have its problems with sudden declining ratings, but the good news is it has taken care of virtually all its advertising clients -- with little danger of having to take the more dire position of giving back cash to marketers.

Shelly Hirsch, chief executive officer of media agency Beacon Media Group, who buys TV commercial time for many toy advertisers, says of Nickelodeon that "as soon they noticed the problem, they started [making adjustments], taking care of it from the get-go." The move occurred near the start of the fall season in September.

The kids' network quickly gave makegood inventory to make up for guaranteed ratings, which sank anywhere from 15% to 20% in the fourth quarter, according to Nielsen. "SpongeBob Square Pants" and  "Kung Fu Panda" are among its shows.

Hirsch believes Nickelodeon is in little danger of having to take the more drastic step of giving back cash to TV advertisers because of the decline. Media-buying executives also note that virtually all of the makegood inventory has been given to marketers in the fourth quarter.

Philippe Dauman, president and chief executive officer of Viacom, alerted Wall Street investors about the sudden viewership declines of Nickelodeon back in November. He said data from other sources -- those derived from set-top boxes -- do not show as severe a decline. Some of that viewership data shows a nominal 4% to 5% drop.

Nielsen has stood by its numbers as it concerns Nickelodeon. But it has more recently made an adjustment when looking at the overall kids' TV viewing -- now showing a slight decline versus a slight increase.

Other media executives surmise that Nickelodeon may have been a bit undersold in the kids' upfront market that took place earlier in the year. That is why it might not have had problems in giving kids' TV advertisers makegood inventory.

Credit Suisse's media analyst Spencer Wang says Nickelodeon sold 70% of its inventory in the upfront at price increases averaging 9.5%. Early on, some reports suggested Nickelodeon was getting stronger double-digit price increases, similar to what adult prime-time networks were inking.

The downside is that Nickelodeon has little inventory to sell in the scatter market -- an area that has been a big revenue generator for TV networks, due to heavy kids' TV marketing around the holiday season.

Because of this, Wang has downgraded Nick advertising prospects in the period -- to indicate that Nick’s ad revenue would drop 9.3% in the fourth quarter, compared to an early estimate that ad revenues would rise 8%.

Nickelodeon executives did not respond to messages by press time.



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