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The Incredible Shrinking Christmas

Nickelodeon's ratings woes and lackluster toy sales have clients saying, 'Bah, humbug'

Some analysts are growing impatient with the network's leadership.

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As anyone who’s ever cracked open an Econ 101 textbook will tell you, there’s something a little goofy happening at the moment in the kids television market. Despite flattened demand and a drag on volume largely driven by a massive ratings shortfall at Nickelodeon, pricing on kids-targeted inventory hasn’t budged.

A year ago at this time, Nickelodeon was in free fall, plummeting 18 percent in total viewers while losing nearly a quarter of its target demo (kids 6-11). And despite some particularly soft comps, the network’s current total-day ratings remain in the doldrums. Given that Nick generally produces three-quarters of the kids GRPs, it would seem that marketers should be scrambling to latch onto any leftovers. They’re not.

While it may be hyperbolic to suggest that Nick is dragging the entire kids market down with it, some analysts are growing impatient with the network’s leadership. “At Nickelodeon, changes have not been made at the very top, and any hopes that [former Disney wunderkind] Rich Ross may come to the rescue were dashed when he signed on with News Corp.,” said Todd Juenger, senior analyst, Bernstein Research. (For his part, Viacom CEO Philippe Dauman insists that “efforts to reinvigorate Nickelodeon…are yielding results.”)

Ratings for Cartoon Network, Disney XD and The Hub are all up to some degree, but despite growth at these microtargeted outlets, demand for preholiday buys remains stagnant.

“What is happening on the adult side of the market is also happening on the kids side,” said Starcom associate media director Darcy Bowe. “The networks sell so much of the Hard Eight (the eight weeks before Christmas) in the upfront, and this year…scatter premiums have been in the single digits. I can’t remember the last time that’s happened.”

A key contributor to the slump is a slackening toy market. Industry leader Hasbro was flat during the third quarter, with weak sales in toys targeted to boys. Video games are also on a downward trajectory. Per the NPD Group, U.S. retail sales of new hardware, software and accessories fell 25 percent in October, marking the 11th straight month of declines.

Bowe also pointed out that no big-ticket kids movies will open between Thanksgiving and Christmas. “There are certainly consumer products supporting toy lines,” Bowe said. “The Avengers will sell, Batman will sell and I’m sure there’ll be some product for Wreck-It Ralph. But there’s not a Cars. There’s not a tent-pole franchise driving multiple toy lines.”

In the midst of all this, Cartoon Network continues to try and work its way from out of the shadows cast by Nick and non-ad supported Disney Channel. And while Joe Hogan, evp of young adult ad sales for Turner Broadcasting, admits that there’s still some inventory to be sold, Cartoon’s holiday sales period is not only more bustling, but the window for activity is expanding into early autumn.

“September through December has become quite an active period for us,” said Hogan. “It was a Hard Eight, and for some, a Hard 10…and now it all starts in September.”