The sudden stark ratings drop experienced by Viacom (s VIAB) kids channel Nickelodeon stems from a complicated series of factors and cannot simply be attributed to the cable channel’s young viewers choosing to watch its programming on Netflix (s nflx) instead of the linear Nick network.
At least that’s what Viacom CEO Philippe Dauman thinks, as his company announced a 56 percent rise in first-quarter net income to $585 million Thursday despite a 30 percent ratings drop on its flagship kids channel, as well as some floundering box-office performances by Paramount Pictures films.
Dauman said that the total time spent by viewers watching Nick content on Netflix was only about 2 percent of the time they spent watching shows like Spongebob Squarepants and Dora the Explorer on the cable channel. Any Netflix impact, he said, was “minimal.”
“The Nick issue is complicated,” Dauman told investors. “There are ratings measurement issues. There certainly has been some compelling programming on some of our competitors, which we can clearly address. We will do what we always do: We will research our audiences, we’ll review our pipeline, add more diversity in our programming.”
Speculation about a Netflix connection to Nick’s ratings woes began swirling late last year, when Nickeldeon’s numbers suddenly dropped double-digits in the fourth quarter. In Viacom’s fourth-quarter earnings call in February, Dauman also dismissed a Netflix connection, noting that the ratings drop might have had a lot to do with methodology on behalf of ratings tabulator Nielsen. (A separate audience measurement of Nick’s audience conducted by Rentrak found the viewership decline to be much less steep.)
But last week, Bernstein Research senior analyst Todd Juenger re-invigorated the debate, releasing the results of a study that compared viewership of homes that stream Netflix to those who don’t. The upshot: viewership of not just Nickelodeon, but all kids channels that license content to Netflix, was way down.
The outcome of this debate could have impact on Netflix’s future content deals, with media companies like Viacom possibly second-guessing future licensed streaming deals based on their impact to linear television performance.
Notably, however, Viacom officials said Thursday that Nick has yet to feel the impact of its ratings drop to its bottom line due to increased advertising demand.