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