Nickelodeon hoping to be rescued by the 'Ninja Turtles'

By Meg James

Los Angeles Times (MCT)

Published: Sunday, Sept. 30 2012 8:53 p.m. MDT

Disney's revitalized cartoon studio produced the TV network's first $1-billion animated franchise, the abstractly drawn series "Phineas and Ferb." The show, about two step-brothers who create fanciful machines, rolled out in 2007.

While competitors ramped up, Nickelodeon continued to rely on old stalwarts, including its famous squid, sponge and starfish.

"More than 40 percent of Nickelodeon's schedule has been 'SpongeBob,'" said Brian Wieser, senior analyst at Pivotal Research Group, an equity research firm. "A workhorse would be a charitable definition of the situation, but we would call it dependency."

Three years ago, "SpongeBob" attracted 2.8 million viewers an episode during its daytime runs, including nearly 1.5 million children in Nickelodeon's target audience of children aged 2 to 11, according to Nielsen. This year, the "SpongeBob" audience had fallen to 2.1 million viewers in daytime, including 1.1 million in the 11 and under set.

Declines for "SpongeBob" in the evening, when more adults were watching, were even greater. Two years ago, "SpongeBob" episodes attracted 3.5 million viewers in the Nick-at-Nite programming block. By this year, 1.75 million viewers were tuning in at night.

Some analysts worry that Nickelodeon's declines signal a fundamental shift in viewing behavior. Many young viewers are as likely to watch streamed episodes of cartoons on their game consoles, smartphones and tablets as they are on cable TV channels. Currently, the industry's profitability depends on cable subscription revenue, a source that is threatened by the incursion of online video services such as Netflix and Hulu.

Juenger, the Bernstein analyst, made waves earlier this year when he suggested that Nickelodeon's ratings erosion was caused, in large part, by more children watching "SpongeBob" reruns on Netflix.

He and his colleagues began scrutinizing children's networks because their ratings declines were more pronounced than for channels targeting broader audiences.

Young viewers are a bellwether of future trends.

Viacom and others disagreed with Juenger's conclusions, saying he relied on too narrow a data sample.

Wieser, of Pivotal Research, doesn't buy into the "Netflix effect" as the primary cause for the network's troubles.

"It's the programming. Nickelodeon's programming just hasn't produced the ratings," said Wieser. "They have been overly reliant on just a few hits. 'SpongeBob' and 'iCarly' have gotten a bit stale and now the issue becomes whether this is a fixable problem."

© Los Angeles Times. Dist. by MCT Information Services

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