Fight with DirecTV creates headaches for Viacom on Madison Avenue

With its ratings in free fall because its programming is no longer available on DirecTV, Viacom’s kids channel Nickelodeon is having to provide frustrated advertisers extra commercials to make up for its shrinking audience.

“I’d be lying to you if I said clients haven’t contacted us and said what’s our game plan,” said Shelly Hirsch, CEO Beacon Media, an advertising firm that specializes in children’s TV and has almost 50 clients on the network. “I wish this thing settles quickly; we do a lot of business with Nickelodeon.”

Since DirecTV stopped carrying Nickelodeon in its roughly 20 million homes July 10, ratings have dropped more than 20%. Last weekend was particularly brutal as Nickelodeon’s total day audience was down 56% on Friday, 44% on Saturday and 45% on Sunday.

“It’s not surprising that the ratings are down given the size of DirecTV,” said Denise Denson, Viacom’s executive vice president of content distribution.

Typically advertising is sold with a ratings guarantee and when the guarantee isn’t met than the network provides additional advertising or so-called make-goods to cover the gap between what was promised and what was delivered. That doesn’t mean there are more commercials on a network that are in make-good mode. Networks usually hold some commercial inventory back for such situations.


One thing working in Nickelodeon’s favor on Madison Avenue is that its biggest rival Disney Channel doesn’t carry advertising. While other channels such as Cartoon Network, Hub and Sprout could pick off some advertising, none have the power of Nickelodeon with or without DirecTV.

“I don’t think people will pull the panic button unless this goes on for two weeks,” said Jason Maltby, a media buyer with Mindshare.

Because Nickelodeon has such a niche audience, it is easy to determine which channels are picking up disgruntled DirecTV subscribers. Besides Disney Channel and Disney Jr. The Hub, Cartoon Network and Sprout have all seen their numbers grow.

Viacom’s other channels including MTV, Comedy Central and VH1 are also taking hits in their ratings but it is too soon to determine if ratings growth at other outlets can be attributed to the DirecTV spat.

“It’s not as easy to say MTV’s ratings are down and this channel got that audience,” Maltby said.

At the moment, DirecTV and Viacom are not negotiating a new deal. On Wednesday afternoon, Viacom said it was walking away from talks with DirecTV charging that the satellite broadcaster had rejected numerous proposals and was not interested in making a deal.

DirecTV countered that it was prepared to accept an offer earlier in the week when at the last moment Viacom attempted to broaden the deal by including distribution of its premium movie channel Epix.

Viacom responded that it has offered deals to DirecTV with and without Epix.


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