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Viacom Strikes Deal With Amazon to Stream Children’s Shows

June 4, 2013 by Leave a Comment

On Tuesday, Viacom and Amazon announced an extensive, multiyear deal that includes granting Amazon exclusive rights to Nickelodeon’s preschool shows. The agreement — which one analyst estimated to be worth several hundred million dollars — signals that the heated battle for online streaming rights has increasingly moved to television’s youngest viewers.

In April, Netflix said it would allow its deal with Viacom to expire. Then last month Netflix struck a deal with the Walt Disney Company to gain exclusive rights to stream Disney Jr. series like “Jake and the Never Land Pirates” and Disney XD’s “Tron: Uprising.” In 2011, Netflix introduced its “Just for Kids” menu with a selection of shows and movies aimed at children, or parents looking to entertain them.

That put pressure on Amazon to secure children’s programming for its Amazon Prime subscription service, which it hopes will compete with Netflix and Hulu in the streaming video market.

As part of the deal announced on Tuesday, Amazon also secured the rights to stream shows that are first broadcast on Viacom’s Comedy Central and MTV, including some episodes of “Jersey Shore” and “Teen Mom 2.” But the key to the agreement is making Amazon’s Prime Instant Video subscription service the exclusive outlet for preschool-aged children to watch old episodes of shows like “Dora the Explorer,” “Go, Diego, Go!” and “The Backyardigans.” Since children do not mind reruns as much as adults do, deals for these types of shows often cost less than series aimed at adults.

Bill Carr, Amazon’s vice president of digital video and music, said in a statement that children’s programming was “one of the most-watched TV genres on Prime Instant Video.”

In a letter to customers, Jeffrey P. Bezos, Amazon’s chief executive, said the deal gave Prime Instant Video more than 250 TV seasons and more than 3,900 episodes from Nick Jr., Nickelodeon, MTV and Comedy Central. “We have increased by 55 percent the number of episodes available to top Prime shows for kids,” Mr. Bezos wrote. The deal, he said, added “400 episodes of new shows such as ‘Team Umizoomi,’ ‘Bubble Guppies,’ ‘Victorious,’ ‘Big Time Rush’ and ‘Drake Josh.’”

Amazon Prime members pay $79 a year for two-day free shipping, monthly Kindle e-book rentals and video streaming. The company has said it has millions of Prime subscribers but has declined to give an exact figure. Netflix has 27 million streaming subscribers in the United States. Hulu’s subscription service, Hulu Plus, has about four million.

“Amazon has created a unique, brand-friendly environment for streaming entertainment and consumer products,” said Philippe Dauman, chief executive of Viacom. He added: “We are excited to work with Amazon to bring customers shows they love.”

In the past, Viacom has had a complicated relationship with subscription video on-demand services like Netflix. After an unexpected ratings drop at its Nickelodeon channel last year, Viacom partly blamed a glut of old episodes available to Netflix for cannibalizing the cable channel’s ratings. Children increasingly watch shows via streaming, but revenue from digital syndication deals still doesn’t come close to that provided by advertisers who pay to reach viewers the old-fashioned way.

In the quarter that ended March 31, advertising revenue at Nickelodeon and Nick. Jr. rose 2 percent as the network rebounded with preschool audiences. Mr. Dauman said a fresh pipeline of shows had improved Nickelodeon’s ratings. As advertising revenue grows on the cable channel, Mr. Dauman has defended deals with digital subscription streaming services as good for both parties. “We’re getting nice revenues through these subscription” video-on-demand deals, he recently told analysts.

Viacom will need to make an additional $125 million to $150 million in streaming deals in fiscal year 2013 to meet its goal of 10 percent affiliate growth, according to Bernstein Research.

Amazon has rapidly built its streaming service to compete with more established services, namely Netflix and Hulu. The Viacom deal is the latest example of the online retailing giant’s swooping in to gain streaming rights after deals with Netflix expire.

After Netflix declined to renew its rights to popular cable series like “Pawn Stars,” Amazon jumped in. In December, Amazon struck a deal with Time Warner to gain the exclusive streaming rights to TNT’s “The Closer” and “Falling Skies.” Netflix got exclusive rights to TNT’s “Dallas.”

Amazon and CBS have a deal that will let Prime subscribers watch “Under the Dome,” a new science fiction series based on the Stephen King novel, four days after episodes are broadcast on CBS beginning June 24.

Article source: http://www.nytimes.com/2013/06/05/business/media/viacom-strikes-deal-with-amazon-to-stream-childrens-shows.html?partner=rss&emc=rss

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Media Decoder Blog: Cablevision Sues Viacom Over Bundling of Little-Watched Channels

February 26, 2013 by Leave a Comment

1:30 p.m. | Updated In the escalating battle between media companies and cable and satellite providers, Cablevision filed a lawsuit against Viacom on Tuesday, accusing the media company of forcing it to carry 14 little-watched cable channels.

The lawsuit filed in federal court in Manhattan alleges that Viacom illegally bundled its channels, forcing Cablevision to pay for Palladia, MTV Hits and VH1 Classic, in order to offer consumers the company’s more popular cable channels like MTV, Comedy Central and Nickelodeon. The cost of carrying those smaller channels is passed on to customers’ cable bills, Cablevision said.

“The manner in which Viacom sells its programming is illegal, anticonsumer and wrong,” Cablevision said in a statement. “Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want.”

In a statement, Viacom said it would “vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two-month-old agreement.”

Viacom said that like other programmers, it does not explicitly require distributors to bundle all of its channels together; rather, the company provides financial incentives to bundle by offering lower prices when smaller channels are grouped together with bigger channels.

In its statement, Viacom said that it had “long offered discounts to those who agree to provide additional network distribution” and that most distributors view these arrangements as “a win-win and pro-consumer.” Federal courts have upheld these arrangements in the past, Viacom said.

Cablevision, which is controlled by Charles F. Dolan, said in a statement the dispute would not result in an immediate disruption in programming. The company said the lawsuit was filed under seal, so it will not be accessible to the public.

The lawsuit represents a turning point in the debate over “bundling,” or the practice of selling channels to cable and satellite providers in a package. Partly because of the rising cost of cable, pressure has been mounting on the bundling system for years. But there has been little if any structural change — both channel owners and distributors have found it in their best interests to keep it intact.

Class action lawsuits against bundling have failed in the courts to date. But the lawsuit on Tuesday was different, since it was filed by a distributor. Antitrust experts could not immediately recall a similar suit.

Time Warner Cable, the second biggest cable company in the country behind Comcast, supported Cablevision in a statement on Tuesday that read, “We frequently have pointed out that there are serious problems with the current programming environment. We think this lawsuit raises important issues, and we look forward to their resolution in the courts.”

For Cablevision, the lawsuit may be a way to garner public support for its point of view and simultaneously tar Viacom. Cable distributors like Cablevision have been trying to portray themselves as pro-consumer and resistant to price increases, even while carrying out those very same price increases. They have argued for years — more and more loudly of late — that channel owners like Viacom are the ones requiring them to raise the monthly cost of television service.

The channel owners rebut that position by pointing to the big profits that distributors report on a quarterly basis.

The number of disputes between the two sides have increased in recent years, partly due to concerns about the aforementioned price increases. Last summer DirecTV pulled Viacom’s channels for nearly three weeks after the companies could not agree on a new contract. Around the same time the Dish Network took down AMC, IFC and WE tv, all channels owned by AMC Networks. Dish claimed that AMC required the company to carry its low-rated channels in order to get AMC, the channel that televises “Mad Men” and the zombie thriller “The Walking Dead.” Dave Shull, the senior vice president for programming at Dish, said at one point during the nearly four-month programming blackout that “AMC Networks requires us to carry low-rated channels like IFC and WE tv to access a few popular AMC shows. The math is simple: it’s not a good value for our customers.”

But AMC said the blackout was due not to a bundling dispute, but rather to an unrelated lawsuit involving allegations of breach of contract between Dish and VOOM, a former subsidiary of Cablevision. That suit was settled in October, and the channels were restored at that time.

Meanwhile, some customers continue to agitate for the right to pick and choose which channels they receive from distributors, an idea sometimes called “a la carte,” while others say they are content with the buffet of channels they currently receive. The issue came up again just last month, when Suddenlink, the No. 11 distributor in the country in terms of subscriber base, proposed to Fox Networks, the cable unit of News Corporation, that Fox could set prices for each of its channels, big ones like FX and tiny ones like Fox Soccer and Fuel, and then customers could choose to pay for only the ones they wanted.

The two companies were at odds over the terms of a new contract. Suddenlink publicized the offer, calling it “an attempt to respond to what our customers have said they wanted.” But Fox refused the offer. Four hours later, the companies said they had reached an agreement in principle to keep all the channels — and thus keep the system intact.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/26/cablevision-sues-viacom-over-bundling-of-little-watched-channels/?partner=rss&emc=rss

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Nickelodeon Hopes App Wins Hearts

February 19, 2013 by Leave a Comment

That response posed a problem and an opportunity for Nickelodeon, a top-rated children’s cable channel that is home to “SpongeBob SquarePants,” “Victorious” and “iCarly.” Instead of simply making its programs available on tablets, Nickelodeon designed its first app as a noisy, colorful smorgasbord of animated clips, irreverent music videos and the occasional deluge of the network’s trademark green slime. Or, as Nickelodeon executives describe it, the app is designed to be a “ginormous grid of everything Nick.”

As fun as it is supposed to be for children, the Nick app has serious implications for its parent company, Viacom, and for the entire television distribution business. The app represents the first attempt by a Viacom channel at TV Everywhere — the concept that paying customers can stream live and on-demand shows on all devices — that many television executives hope will keep viewers tied to their cable and satellite contracts. It is expected to be available in the Apple App Store on Thursday.

The Nick app features free games, interactive polls and slide shows floating against a bright orange background. A less obvious feature also allows users to watch full-length Nickelodeon shows on tablets as long as they (or, more likely, their parents) authenticate that they are paying subscribers.

Nick arrives late to the app store. A main rival, Disney, already offers authenticated apps for the Disney Channel and Disney Junior that allow children to stream shows like “Good Luck Charlie” and “Mickey Mouse Clubhouse” and to participate in interactive “appisodes.”

Cyma Zarghami, president of the Nickelodeon Group, said she preferred to wait until the cable channel had more information about how its audience used mobile devices. Research showed children preferred to play games and watch short clips on apps, rather than catch up on complete episodes. Nickelodeon already has individual branded games available as apps.

“TV Everywhere is a given. It’s not special anymore,” Ms. Zarghami said. “Being first wasn’t important to us. We took our time to combine these two ideas” of interactive games and snippets of shows.

A brief video instructs children to “grab an adult” to enter a password that shows they subscribe to Nickelodeon before gaining access to the last five episodes of series like “Teenage Mutant Ninja Turtles,” “Big Time Rush” and “Kung Fu Panda: Legends of Awesomeness.” This fall, Nickelodeon will introduce a separate app for Nick Jr. intended to serve as an “interactive play date” for its preschool-age audience.

Nickelodeon’s strategy — based on extras rather than episodes — signals how Viacom may approach apps for its other cable channels, including MTV, Comedy Central and VH1. Until this week, Viacom had not introduced authenticated apps for its channels, unlike Time Warner’s HBO and its popular HBO Go app.

“This is a creative sandbox for kids but it’s also a creative sandbox for the company,” said Steve Youngwood, Nickelodeon’s executive vice president for digital.

The Nick app represents an evolution in Viacom’s thinking about its audience. Nickelodeon has long been a powerhouse in children’s programming, but its ratings suddenly plunged in 2011. Viacom in part blamed Nielsen for not counting children who streamed shows via “unmeasured platforms” like Netflix. (The company also conceded that it had aging series like “SpongeBob” and “iCarly”.)

Viewers who watch shows on the Nick app will not be counted in ratings data, but the cable channel can at least sell advertisements. Nickelodeon will introduce the app to marketers at its upfront next week in New York.

The introduction of the Nick app comes as the channel’s ratings are slowly climbing back after the unexpected plunge that started in 2011. A daily average of 2.9 million viewers ages 2 to 11 watched Nickelodeon this month, up 12 percent from February 2012, according to Nielsen.

Ms. Zarghami said the Nick app could help the channel develop new series and stars, based on which clips, actors and characters drew the most attention. Nickelodeon commissioned 12 short films for the app, including one called “Dance Party in a Port-A-Potty” that featured meerkats partying in a portable restroom. Nickelodeon has greenlighted five for the channel. “Our aim is to get more content faster,” Ms. Zarghami said.

Tablet use among children 11 years old and younger is projected to grow faster than almost any other age group. Half of households in the United States with children own a tablet and 70 percent have some sort of smart device, according to Nickelodeon’s research.

“The tablet has come of age particularly among our audience,” Mr. Youngwood said.

Nickelodeon has struck deals with eight cable or satellite providers including Time Warner Cable, Verizon FiOS, Cablevision and DirecTV to make the streaming feature of its Nick app available in nearly 50 million homes. The nonstreaming offerings will be available to viewers who do not subscribe to those companies.

Paul Verna, a senior analyst at eMarketer, said the authentication model could pose challenges for Viacom. He pointed to the media company’s dispute with DirecTV this last summer, which prompted the satellite provider to suspend Viacom’s channels.

“How do you explain to a little kid that your friend on Comcast can watch Nick Jr. and ‘iCarly’ on their iPad but you can’t?” Mr. Verna said.

Article source: http://www.nytimes.com/2013/02/20/business/media/nickelodeon-hopes-app-wins-hearts.html?partner=rss&emc=rss

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Media Decoder Blog: Ratings Shortfall at Nickelodeon Hurts Viacom Revenue

January 31, 2013 by Leave a Comment

1:34 p.m. | Updated Hampered by ratings shortfalls at Nickelodeon and an unfavorable film release schedule, Viacom on Thursday reported a 16 percent decrease in revenue in the fourth quarter of 2012, a somewhat steeper drop than analysts anticipated.

But the company’s profits came in slightly ahead of expectations, and the chief executive, Philippe Dauman, pleased Wall Street with positive news about progress at Nickelodeon and Viacom’s other cable networks.

Mr. Dauman said the company was making an “unprecedented investment in content” that was paying off for Nickelodeon. The dramatic ratings declines that began to be visible in late 2011 are moderating, and new shows are premiering. Mr. Dauman said the ratings momentum “confirms our view that our significant and sustained investment in fresh, original content is working, and will continue to drive future ratings growth and revenue improvement.”

Viacom reported revenue in the fourth quarter of 2012, its fiscal first quarter, of $3.3 billion, down from $3.95 billion in the same quarter a year ago. Analysts had forecast $3.48 billion in revenue.

Profits rose to $470 million, or 92 cents a share, compared with $212 million, or 38 cents a share, in the same quarter a year ago. But the year-ago quarter was hurt by a settlement with the original shareholders of Harmonix Music Systems, the makers of the “Rock Band” video game series. After adjustments, Viacom earned 91 cents a share in the quarter, a penny higher than analysts had predicted, from $1.06 in the same quarter a year ago.

The damage done by Nickelodeon’s ratings drop was evident in the total revenues for Viacom’s cable networks, by far the biggest part of its business. Revenue dipped 2 percent at the networks overall, largely because advertising revenue decreased 6 percent, even as affiliate fees paid by cable and satellite distributors grew.

Mr. Dauman said on a conference call with analysts that the “lingering effects of the ratings softness” at Nickelodeon masked growth elsewhere at the cable networks. Excluding its children’s channels, Viacom’s networks group “returned to positive ad growth in the quarter,” he said.

David Bank, a media analyst for RBC Capital Markets, said Nickelodeon’s ratings for the last few months were showing recovery after a rocky 2012. “All they need to do is continue to deliver the audience they are already delivering — without growth — and the year-over-year comparisons virtually assure growth,” he said.

Nickelodeon will pitch a slate of new animated and live-action series to advertisers at a presentation in late February. One of the areas of focus is preschool programming — the idea being that very young viewers will stick with Nickelodeon throughout their childhood.

Mr. Dauman says Viacom has found that its viewers of all ages want more new shows, and they want more episodes of those shows on “faster cycles,” so it has sped up the development and production processes at Nickelodeon and elsewhere.

Mr. Dauman spent some time on Thursday’s earnings call praising MTV, another one of its flagship networks, which he said had started to answer the question “What comes after ‘Jersey Shore?’” That infamous reality show had its series finale earlier this winter.

“‘Jersey Shore’ was a game-changing hit,” he said, “but it also precipitated an overemphasis on one night,” which was Thursday. MTV is trying to spread its new shows — “Catfish,” “Washington Heights,” “Buckwild” — across the weekly schedule.

Viacom’s film studio, Paramount, saw revenue drop 37 percent in the quarter, to $975 million. The company attributed this to the fact that its films in the quarter weren’t as successful as year-ago hits like “Mission: Impossible – Ghost Protocol” and “Puss in Boots.” The company also had one fewer release in the home video marketplace this time around.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/31/ratings-shortfall-at-nickelodeon-hurts-viacom-revenue/?partner=rss&emc=rss

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Viacom Reports 20% Rise in 2nd-Quarter Revenue

April 28, 2011 by Leave a Comment

The company, which owns cable channels like MTV, VH1 and Nickelodeon and the movie studio Paramount Pictures, said that its revenue was $3.27 billion in its second quarter, up from $2.73 billion in the period a year ago. Net income for the quarter was $376 million, or 63 cents a share. That was a 53 percent gain over the same quarter a year ago, when the company had net income of $245 million, or 40 cents a share. The company generally topped analysts’ expectations.

“Viacom has never been stronger financially,” the company’s chief executive, Philippe P. Dauman, said in a conference call with investors. Mr. Dauman said Viacom, which is controlled by Sumner M. Redstone, intended to accelerate its stock buyback program and increase its dividend.

The biggest part of Viacom, its cable channel arm, remains healthy. Together, the channels topped $2 billion in revenue for the quarter, up 11 percent over the same quarter last year.

Mr. Dauman credited “phenomenal” ratings for several shows, chief among them “Jersey Shore,” the reality show about hard-partying young men and women that had its third season during the quarter. The season averaged about 7.7 million viewers, making it the most popular show in MTV’s history. With the upfront season of advertising spending now under way, Mr. Dauman indicated that MTV would seek high premiums for future seasons of the show. “Next month,” he noted, the cast of the show “head to Florence” for a season set in Italy.

Shows like “Teen Mom” have also helped MTV’s performance. Over all, Viacom said it had posted an 11 percent gain in domestic advertising revenues, the fifth such quarter of sequential improvement in that growth rate.

Viacom has also nurtured shows that are considered hits for its other channels: “iCarly” for Nickelodeon, “Tosh.0” for Comedy Central, “The Game” for BET. Mr. Dauman implied that the company was seeking ratings improvements at two other channels, VH1 and Spike.

The revenue and profit for the company’s filmed entertainment arm fluctuate depending on the performance of its feature films and the sales of DVDs of those films. In the quarter that ended in December, Viacom’s earnings declined in large part because of weakness in this area. But in the quarter that ended in March, the filmed entertainment arm had $1.2 billion in revenue for the quarter, up from $638 million in the previous quarter and $886 million in the period a year ago.Both theatrical revenue and home entertainment revenue were up in the quarter, Viacom said, thanks to ticket sales for “Rango,” which was released in March, and DVD sales of well-regarded films like “True Grit” and “The Fighter.” Referring to the later films, David Joyce, an analyst for Miller Tabak and Company, said “the strength of Oscar contenders helped most of these revenue streams.”

Article source: http://feeds.nytimes.com/click.phdo?i=b334711483f0df1bec5ad02d9e7a5604

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