Nickelodeon continues to be a source of worry for Viacom (
). According to recent data compiled by an analyst from Pivotal
Research Group, Nickelodeon continues to suffer a ratings decline
compared to last year while viewership among children in general is
growing. This implies that the channel's viewership has declined
not only due to the proliferation of alternative video platforms
but also Nickelodeon's own problems. Nickelodeon's viewership is
directly related to quality of programming and its appeal to kids.
One of the channel's famous series,
, has seen a significant ratings decline. This figure stood at 29%
in Q1 of 2012 compared to the same period in 2011.
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The essence is that the SpongeBob is a long-running series and
perhaps it's time for Nickelodeon to invest in some new programming
with innovative ideas to lure kids back who have shifted to rivals
such as Disney Channel. The ratings directly impact advertising
revenues which we estimate to be slightly higher for Nickelodeon
compared to its subscription revenues. The ratings decline that we
discuss here applies to Nickelodeon U.S., which constitutes around
13%-15% of Viacom's value.
Besides investing in new programming, the channel could push
aggressively for streaming and online access. Viacom could also
think about creating a better ecosystem around its Nickelodeon
programming in order to better pull in children and give them a
reason to watch the programs every time. Such an ecosystem could
evolve in the form of apps, games and even movies based on some
Our current price estimate for Viacom which stands
, implying a premium of about 30% to the market price.
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