Entertainment Industry

Category: Philippe Dauman

Worries linger about Nickelodeon's ratings slump

Nickelodeon's audience levels have fallen nearly 30% this season
Wall Street analysts peppered Viacom management Thursday with questions about the mysterious ratings slump at the company's premier children's television network Nickelodeon.

Nickelodeon's audience levels have fallen nearly 30% this season, prompting much speculation about the reasons behind the troubling drop. The issue is far from child's play. Nickelodeon is one of the most valuable channels in television as well as within the Viacom universe. 

Some analysts have theorized that the weak ratings could be attributed to shifts in viewing behavior. More children are watching Nickelodeon shows on demand through Netflix and Amazon.com digital streaming services, rather than watching the channel. 

Earlier this week, Time Warner Inc. Chief Executive Jeffrey Bewkes added his support to that theory, noting that his company's Cartoon Network, which competes with Nickelodeon, doesn't have that issue. In fact, Cartoon Network's ratings were up 14%.

 "We think part of the reason is that we don't have our programs sitting on an SVOD [subscription video-on-demand service] where parents can park their kids," Bewkes told analysts during Time Warner's earnings call Wednesday. "Obviously, that's taking some viewing away from some of the other animated channels."

Viacom executives pooh-poohed the theory.

"Netflix is present in less than a quarter of television households, and since we get the streaming data on our content, I can tell you that the time spent on Nickelodeon content on Netflix is approximately 2% of the time spent on our Nickelodeon channel," Viacom Chief Executive Philippe Dauman told analysts Thursday during his company's second-quarter earnings call.

"It would have a minimal impact here," Dauman said.

Instead, Viacom traces much of the ratings nosedive to a September change in the composition of the audience panel that Nielsen uses to derive its ratings. New participants in the Nielsen panel apparently watch less Nickelodeon than those they replaced.

Still, analysts are concerned.

"Nickelodeon has fallen to levels that you've never seen before," said one prominent analyst, Michael Nathanson of Nomura Securities, observed during Viacom's call. 

Nickelodeon's problems failed to dent investors' enthusiasm for Viacom's stock. The company's widely traded B-shares closed Thursday at $49.02 a share, up $1.59 a share.  Viacom reported a profit increase of 56% over the year-earlier period.  Revenue was up 2% to $3.33 billion.  

"We're going to focus on ways in which we can affect the Nickelodeon brand positively," Dauman told analysts before the opening bell. "Our pipeline is extremely strong. We're developing more new [episodes] of our popular series and more exciting new series. And of course, we're particularly excited about the revival of the [Teenage Ninja] Turtles franchise."

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Photo:  A scene from an older episode of "SpongeBob SquarePants." Credit:  Nickelodeon 

Viacom profit up 56%, boosted by higher cable fees

 EddieMurphyAThousandWords
Viacom Inc.'s second-quarter profit soared 56%, thanks to higher fees from pay-television operators and lower expenses at the company's Paramount Pictures movie studio.

For the quarter ended March 31, Viacom earned $585 million, or $1.07 per share, up from $376 million, or 63 cents a share, in the same period in 2011. Revenue grew 2% to $3.33 billion.

"Across our divisions we sharpened our focus on execution and efficiency while continuing to invest in programming that connects with audiences worldwide," Viacom Chief Executive Philippe Dauman told analysts in a Thursday morning conference call.  "Distribution continues to be a strong and steady driver for Viacom."

The New York-based media company's earnings exceeded analysts' estimates while revenue was largely within expectations. The company, controlled by billionaire Sumner Redstone, also spent about $700 million during the quarter to repurchase 14.7 million shares.

The bulk of the company's earnings came from its Media Networks unit, which includes cable channels MTV, Nickelodeon, Comedy Central, BET, VH1 and TV Land.  Revenue generated by cable channels grew 5% to $2.2 billion, driven by an increase in affiliate fees paid by cable and satellite television operators.  Affiliate fee revenue was up 17%. 

Media networks' operating income climbed 11% to $893 million. Domestic advertising revenue inched up 1%, while foreign advertising revenue remained flat. 

"We are seeing encouraging signs of a strengthening ad market," Dauman noted.

At the Los Angeles-based Paramount Pictures, which is celebrating its 100th anniversary this year, revenue dropped 5% to $1.17 billion.  The company attributed the lower revenue to a "less widely distributed mix of releases during the quarter," which included the highly profitable "The Devil Inside" and DreamWorks Pictures'  Eddie Murphy vehicle, "A Thousand Words," which flopped.

Theatrical revenue was down 19% to $326 million for the quarter.  The division was helped during the quarter by carry-over receipts from "Mission Impossible: Ghost Protocol," with Tom Cruise, which was released in the previous quarter.

Operating income at the film studio nearly tripled to $115 million, up from $39 million in the year-earlier period. The company said the studio's higher margin came from lower distribution costs.

"We are being disciplined in managing our expenses," Chief Operating Officer Thomas Dooley told the analysts.  

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Photo:  Eddie Murphy plays a cad named Jack in the DreamWorks comedy "A Thousand Words," released during the first quarter by Paramount Pictures.   Credit: Bruce McBroom / DreamWorks Pictures

 

CBS Chief Leslie Moonves collected nearly $70 million last year

Les Moonves

"Two Broke Girls" and one rich CEO.

CBS Corp. Chief Executive Leslie Moonves catapulted to the top of the media pay ladder in 2011 with a compensation package valued at $69.9 million, according to documents filed Friday with the Securities and Exchange Commission.

The 62-year-old executive's package jumped about 21% over the $57.7 million that he reaped in 2010, which included a $27.5-million bonus.

“CBS significantly outpaced the industry in 2011 in terms of shareholder return," the media company said in a statement. "In fact, the company is the second best performing stock in the entire S&P 500 since March of 2009... The vast majority of this year’s pay is once again keyed to performance-based measures, closely aligning the overall value of the compensation with that of the company’s shareholders.”

CBS stock has been on a tear, soaring 42% last year. The stock closed Friday at $32.50 a share, an eye-popping increase over the $4 a share that it was trading for in 2009, following the market collapse. Investors have bid up the stock, in part, due to the anticipation that CBS will rake in hundreds of millions of dollars in political advertising dollars this year as candidates and political action committees try to influence the outcome of elections.

The company's assets include the CBS broadcast network, home to such hit shows as "Two Broke Girls," "NCIS" and "Survivor," local TV and radio stations and billboards. CBS also owns premium pay cable channel Showtime and Simon & Schuster publishing house.

Sumner Redstone, the executive chairman of CBS Corp., received compensation of $20.3 million in 2011. That means the 88-year-old mogul, who has been slowing down in recent years, collected more than $41 million in 2011 for his executive position at CBS Corp. and Viacom Inc. (Redstone received $21 million as executive chairman of Viacom).

Viacom Chief Executive Philippe Dauman made $43 million in 2011, considerably less than his 2010 package of $84.5 million.

Viacom and CBS traditionally lead the media pack because of the dual-stock structure of the two companies. Redstone controls nearly 80% of the voting stock, making it difficult for other shareholders to mount a successful protest over governance issues, including executive compensation.

Though not in the same stratosphere of Apple Inc.’s new chief executive, Tim Cook, whose compensation totaled $378 million in 2011, Moonves’ pay still is considerably higher than his peers in the media world. 

For example, Moonves received more than twice that of Walt Disney Co. Chief Executive Robert Iger, who collected $31.4 million in fiscal 2011, and nearly three times the amount of Time Warner Chief Executive Jeffrey Bewkes, who took in $25.9 million.  Both Disney and Time Warner are much larger than CBS.

News Corp.’s Chief Executive Rupert Murdoch raked in $33.3 million in 2011 running his global empire.  Discovery Communications Chief Executive David Zaslav collected a package valued at $52.4 million last year.

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Photo: CBS Chief Executive Leslie Moonves. Credit: Peter Foley / Bloomberg

David Zaslav is Discovery's $52-million man

OprahWinfreyandDavidZaslav

Discovery Communications Chief Executive David Zaslav might have had a rocky year in 2011 -- his joint ventures OWN: The Oprah Winfrey Network and the small kids' network HUB stumbled badly -- but the struggles didn't affect his compensation.

Zaslav's 2011 pay package, which included salary, stock, options and other perks, was valued at $52.4 million -- more than 20% over the 2010 level of $42.6 million. 

The large package propels Zaslav into the upper stratosphere of media compensation, and makes him among the highest paid executives in the nation.

In comparison, Robert Iger, chief executive of the much larger Walt Disney Co., collected a $31.4-million package last year. Viacom Inc.'s Philippe Dauman last year received $43 million (considerably less than Dauman's 2010 compensation of $84.5 million). Time Warner Inc. Chief Executive Jeff Bewkes took a slight pay cut last year, collecting $25.9 million.

Zaslav's base salary was nearly $3 million.  His stock and option grants were valued at $44 million, according to the company's proxy filed late Friday.  Some of the options were allocated in 2008, when Discovery's stock was trading at below $20 a share.  On Monday, Discovery's shares traded around $51.

A Discovery spokesman said 90% of Zaslav's compensation was due to stock appreciation.

In the proxy filing, Discovery said it had a strong year financially, with revenue climbing 12% to $4.2 billion. Net income from continuing operations jumped 75% to $1.1 billion.

But there were setbacks. Wall Street analysts have been discounting the value of OWN. Some are questioning whether the company will write down the network's book value this year.

Discovery, which owns 50% of OWN, has invested more than $312 million in the channel. Winfrey owns the other 50%.

Winfrey on Monday conceded that OWN has been trickier than she had anticipated during an appearance on "CBS This Morning."

According to Discovery's filings, its other highly compensated executives included founder and Chairman John Hendricks, who received a package valued at $8.9 million; Chief Financial Officer Bradley E. Singer, whose compensation was valued at $4.2 million; and Mark G. Hollinger, president of Discovery Networks International, whose compensation topped $5.5 million.  Former Chief Operating Officer Peter Liguori, who left Discovery at the end of the  year, received $4.8 million.

Discovery declined further comment.

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Photo: Partners Oprah Winfrey and Discovery Communications Chief Executive David Zaslav toast their joint venture OWN: Oprah Winfrey Network.  Credit: Robin Layton / OWN

 

Star sightings and Leslie Moonves at Sumner Redstone ceremony

  SumnerRedstoneStarPhilippeDaumanBradGreyLeslieMoonves

Two sides of Hollywood were on display Friday as billionaire Sumner Redstone, executive chairman of Viacom Inc. and CBS Corp., received his star on the Hollywood Walk of Fame.

Clustered outside the historic Hollywood Roosevelt Hotel were the industry's power brokers, all in suits: Redstone; CBS Corp. Chief Executive Leslie Moonves; Viacom CEO Philippe Dauman; Paramount Pictures Chairman Brad Grey and Vice Chairman Rob Moore; producer Brian Grazer; Viacom Chief Operating Officer Thomas Dooley and Entertainment Group President Doug Herzog, who oversees Comedy Central; and Cyma Zarghami, the head of children's channel Nickelodeon.

JulieChenAnother Hollywood contingent was there too: about 200 stargazers, many of whom began gathering more than an hour before the ceremony. They milled about in the street, separated from the power crowd by metal barriers.

"There's Julie Chen!" shouted one of the fans when the star of CBS' daytime talk show, "The Talk," strode into view.

"It is Julie Chen!" chimed in another fan, 20-year-old Jeremiah Miller, who lives in Hollywood and frequents the star-unveiling ceremonies. 

"Who's the guy in the gray suit next to Julie Chen?" Miller asked.

A reporter said the gray-suited man was Leslie Moonves, one of television's biggest titans -- as well as Chen's husband.

"Oh," Miller said, then turning to the other spectators:  "He runs CBS."

"I always hate the ceremonies where I never know people's names," Miller said. "You know who I would really like to see?  George Lopez."

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Top photo: Viacom and CBS Chairman Sumner Redstone, seated, received his star on the Hollywood Walk of Fame. Behind him from left: Viacom Chief Executive Philippe Dauman, Paramount Pictures Chairman Brad Grey and CBS Chief Executive Leslie Moonves.  Credit: Alberto E. Rodriguez / Getty Images 

Bottom photo:  Julie Chen. Credit: John P. Filo / CBS

Sumner Redstone attends Viacom shareholders' meeting

Sumner Redstone Arrives Oscars

Who is the man behind the curtain at Viacom? Sumner Redstone, of course.

After much speculation about the health of the company's 88-year-old chairman, Viacom Inc. opened its annual shareholders meeting Thursday morning in New York by dramatically parting a curtain for the big reveal: the ginger-haired Redstone on stage, sitting at a table along with two other senior Viacom executives — Chief Executive Philippe Dauman and General Counsel Michael Fricklas.

Last week, Redstone — who lives in Los Angeles — made headlines after deciding not to fly across the country to attend the annual session with shareholders in New York. A company spokesman initially said that Redstone — who controls nearly 80% of Viacom's voting shares — had an "unavoidable conflict" that would prevent his attendance. Media reports about Redstone's decision to skip the meeting prompted inquiries from shareholders, leading Redstone to make the trip after all.

"To paraphrase my very good friend Mark Twain, who couldn't be here with us today ... reports of my absence from this meeting have been greatly exaggerated," Redstone said to open the meeting, after the curtain parted, according to a Viacom executive in attendance.

Redstone in recent years has been cutting back on public appearances as his mobility has become an issue. The mogul, who will turn 89 this spring, attended last month's 84th Academy Awards ceremony in Hollywood, and plans to participate in the festivities on Hollywood Boulevard when he receives a star on the Hollywood Walk of Fame later this month.

He also kicks off every Viacom and CBS Corp. (which Redstone also controls) quarterly earnings call with Wall Street analysts, via speaker phone, by boasting about Viacom and CBS' sunny futures and how much he adores his two handpicked lieutenants, Viacom's Dauman and CBS Chief Executive Leslie Moonves.

About 30 investors attended Viacom's meeting Thursday, along with about 90 Viacom employees. Two investors asked questions. One shareholder wanted to know whether Viacom's Hollywood movie studio, Paramount Pictures, was still in business with Steven Spielberg. Viacom's Dauman said "yes," noting that the celebrated director was an executive producer of the "Transformers" movies.

Another shareholder, an older woman, said that she thought the actor Timothy Olyphant ("Justified") was "very hot" and that he should appear in Paramount's movies.  

Instead, Katy Perry will star this summer in a 3-D concert movie called "Katy Perry: Part of Me," Dauman announced at the meeting.

"Across our divisions, we strengthened our operational efficiency while continuing to invest in programming and films that resonate with audiences around the world," Dauman said. "On the eve of its 100th birthday, Paramount Pictures finished the 2011 calendar year as the No. 1 studio at the domestic box office. The studio captured the top spot thanks to an unprecedented run of highly successful films, including an industry-leading six consecutive films that earned $100 million or more in U.S. theaters."

At the end of the 45-minute meeting, the curtain closed, preventing spectators from witnessing Redstone's departure.

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Photo: Sumner Redstone, center, arrives at the 84th Academy Awards ceremony in Hollywood on Feb. 26. Credit:  Paul Buck / European Pressphoto Agency

Viacom first-quarter profit drops 65% on weak advertising

LeadEven Tom Cruise wasn't enough for media company Viacom Inc. to pull off a nearly impossible mission: turning a crowd-pleasing first-quarter earnings.

The New York-based media company's profit plummeted 65% on lower advertising sales at its important cable television networks for the quarter ended Dec. 31. Advertising woes were particularly nettlesome at children's channel Nickelodeon, which has experienced a precipitous drop in ratings. 

Viacom's earnings were also dragged down by a $383-million charge for payments to former shareholders of the Rock Band video game franchise, part of the company's long-running legal dispute over Harmonix Music Systems. The payout was the latest sour note in Viacom's failed attempt to get into the video game business.

Net income dropped to $212 million, or 38 cents a share, compared to $610 million, or $1, during the same period the previous year. The earnings, reported Thursday, slightly beat analysts' forecasts.  Viacom's revenue increased 3% to $3.95 billion. Analysts, however, had expected slightly higher revenue.  

Hollywood-based movie studio Paramount Pictures delivered an admirable box office performance, boosted by the late-December release of "Mission: Impossible -- Ghost Protocol," starring Cruise and directed by Brad Bird. (The film has taken in $575 million worldwide.) The century-old Melrose Avenue film studio also thanked "Paranormal Activity 3" and "Puss In Boots" for its box office results. "The Adventures of TinTin" underperformed.

Paramount generated $1.6 billion in revenue, an increase of 4%.  Theatrical revenue was up 37% to $570 million.  Home entertainment sales dipped 6% to $598 million.  Overall, the expense-laden studio reported a $31-million deficit for the quarter.  

Viacom -- which is controlled by 88-year-old billionaire Sumner Redstone -- depends almost entirely on its collection of cable channels, including MTV, Nickelodeon, BET, VH-1 and Comedy Central, for income. Most alarming to analysts was Viacom's admission that advertising was off 3% to $1.35 billion for the quarter.  

The company's Media Networks unit took in $2.44 billion, which was a 3% increase over 2010.  Operating income for the media networks increased 7% to $1.1 billion.

"Despite some early headwinds, Viacom is off to a strong start in 2012," Viacom Chief Executive Philippe Dauman said during an early morning call with analysts. 

Dauman said the company would produce nearly 30% more hours of original TV programming this fiscal year to try to gain back lost ratings and boost advertising sales. The company expects to spend $3 billion on programming this year.

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Photo:  Tom Cruise in "Mission: Impossible -- Ghost Protocol." Credit: Paramount Pictures

Viacom executives again among America's highest paid

ViacomPhilippeDaumanSumnerRedstone

Billionaire Sumner Redstone got a 39% boost in compensation last year in his role as executive chairman of Viacom Inc. The 88-year-old media mogul and his top two lieutenants together collected compensation packages in 2011 totaling nearly $100 million.

Viacom Chief Executive Philippe Dauman was awarded $43 million in salary, stock and other benefits, according to the company's proxy filed late Friday with the Securities & Exchange Commission. While still sizable, Dauman's compensation was considerably less (a 49% decrease) than in the previous year when he earned the distinction of being the highest-paid executive in corporate America with a package totaling $84.5 million.

Viacom's second in command, Chief Operating Officer Thomas Dooley, collected $34 million -- an amount that exceeds the pay package of Robert Iger, chief executive of the much larger Walt Disney Co. Iger received a total package of $33.4 million in 2011.

Executives of Viacom, which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures, have long been among the highest paid in the media industry. The compensation awarded to Dauman and Dooley spiked in 2010 when the two executives signed new employment agreements and received generous one-time stock awards. Dooley's 2010 package was $64.7 million.

Redstone was awarded $21 million in 2011. That was nearly $6 million more than in the previous year when his Viacom compensation was $15 million. Viacom included 12 months in the compensation calculation last year, whereas 2010 was based on a nine-month period.

"Those are big numbers," said corporate governance expert Charles Elson. "Viacom seems to be paying their executives entrepreneurial returns rather than managerial wages to run an established company with long-term assets. There seems to be a disconnect there."

Viacom defended the compensation.

"Almost 90% of our senior executive compensation is performance or equity based, which aligns their interests with those of our stockholders," Viacom said in a statement. "Their 2011 compensation reflects achievement in outstanding operational results, including double-digit growth in operating income and adjusted net earnings and a significant outperformance of the S&P 500."

Viacom's common stock increased nearly 9% last year.

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Photo: Viacom Chief Executive Philippe Dauman and Chairman Sumner Redstone in Beverly Hills in 2007.  Credit: Mel Melcon / Los Angeles Times

 

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