Jul 13, 2015

Viacom is Creative and Struggling - Here's Why

Viacom has failed to produce a new Ren, Cartman, or Bathead in the past two decades. (Photo: Tina Schula/©Bloomberg Businessweek.)

Viacom, the parent company of Nickelodeon, MTV, and Comedy Central, does not have a content problem; it has a monetization problem.

Ratings are not the problem.

The most popular series are those created or adapted from other shows as far back as the 80s.

These are among Viacom's recent excuses for declining ratings and an aging franchise: Bloomberg Businessweek's "Viacom Is Having A Midlife Crisis" The abominable cover story, titled "Viacom Is Having A Midlife Crisis," attempts to explain what is happening to the declining cable giant. Last year, the company earned a net profit of $2.4 billion on revenues of $13.8 billion. Viacom CEO Philip Dauman, a former lawyer, personally took in $44.3 million of last year's revenue.

Viacom also feels rich enough to give "South Park," still Comedy Central's most popular show among 18-34 year old males, three more seasons and a staggering 23rd season by 2019. At Comic-Con last weekend, Nickelodeon unveiled "Lost In Bikini Bottom," a new episode of "SpongeBob," which debuted in 1999. Meanwhile, MTV rebooted "Celebrity Deathmatch" following "Beavis and Butt-Head" and "Liquid Television."

Viacom, however, is digging deep to counter criticism that massive executive layoffs and a double-digit ratings drop in one year at its most famous channel are indicators of serious problems.

Philippe Dauman, president and CEO of Viacom, says that Nielsen's ratings are a miscalculation and do not accurately count how today's fragmented audience is consuming content online and on demand, through desktops, tablets, phones and streaming devices They even go so far as to say that they do not accurately count how they are consuming content online and on demand through desktop, tablet, phone and streaming devices. In a recent earnings call, Dorman said: "Inadequate measurement undermines innovation and disproportionately impacts leading programmers like us who are effectively delivering the multi-platform experience that viewers demand. The argument would have been more persuasive if Dorman had not repeated these words over the last five years.

Analysts disagree, noting that the demographic abandonment of ad-supported television does not bode particularly well for Viacom's future, as streaming services like Netflix gain momentum and aggressively gain share in former Viacom strongholds like children's programming. With the growing market share, satellite and cable TV bundles are going out of fashion.

Viacom's most popular original programming is sometimes more than a decade old, and much of it was planned during the reign of Tom Freston, a risk-taking savvy executive who was fired in 2006 primarily for his failed acquisition of Myspace.

The Nickelodeon side is most relevant to our interests, but the network currently consistently lags behind Disney and Cartoon Network in total daytime viewers. The network's advertising revenue plummeted from $816 million to $660 million between 2010 and 2014.

But there is nothing to see, going forward, the company said. ''This is a monetization issue,'' Kern Schireson, Viacom's marketing strategist, told Bloomberg. This is not a content issue."

It's a hard pill to swallow. Viacom's channels used to air an explosion of disruptive and engaging animation. Nick and MTV once led the way with The Ren & Stimpy Show, Liquid Television, Rugrats, Daria, and Beavis & Butt-head. Now, Viacom outlets are rehashing reality shows that redefine redundancy. Comedy Central still has "South Park," but it needs something else to fill the huge hole left by Jon Stewart and Stephen Colbert.

And while Nickelodeon-Harvey Beeks and Pig Goat Banana Cricket look solid, there is nothing that looks like anything new on this channel. Instead of delving deeper into the bottomless splendor of Avatar: The Last Airbender and The Legend of Korra, co-creators Michael Dante DiMartino and Brian Konietzko made it clear before and during Comic-Con that they were jumping ship for prose and comics.

"[Viacom] is unrecognizable to me now," former MTV executive Jason Hirshhorn told Bloomberg. 'There's no strategy, no culture, no risk-taking. They keep burning furniture for heat.

Nielsen ratings may not mean as much as they did before the Internet, but Nickelodeon, MTV, Comedy Central, and the rest of Viacom have also lost their role as arbiters of public taste.