• by Wayne Friedman , April 8, 2013

Although Nickelodeon ratings have stabilized, the kids cable sector has been hit with some lower advertising in a key area.

Michael Nathanson, media analyst of Nomura Securities, says there has been a 13% decline in overall kids spending -- with "underlying weakness in film and toy spending." Still, he predicts that at least film advertising spending should pick up over the second half of the year.

More recently, Nickelodeon -- a big piece of Viacom's business -- had average viewership in the first quarter in the 2-11 demo up 1% year-to-year. This means "TV viewing is increasing on a per capita basis." This is materially better than the second quarter and third quarter of 2012, which both declined 5% -- and the 8% drop in the first quarter 2012 due to unusually warm weather.

Starting in August 2011, Nickelodeon witnessed a massive decline in ratings -- as high as 33%. Viacom executives initially questioned Nielsen's TV methodology. Some analysts pointed to a rise in Netflix viewing of Nick shows, which company officials dismissed as a theory.

Nathanson says Nick did lose some "500 basis points of ad share to Cartoon Network in 2012."

Still, going forward, things look brighter. All this is good news for those interested in owning Viacom as a stock, he says.

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