Nielsen may have overestimated the decline, but Nickelodeon's ratings did suffer a drop over the last couple of months, forcing the Viacom-owned network to burn up advertising inventory on make-goods, an analyst said Friday.
In lowering the forecast on Viacom's fourth-quarter ad growth to 3% from 6%, Credit Suisse analyst Spencer Wang said set-top box data suggest a smaller drop than the 17% reported by Nielsen, as Viacom has vocally argued. But the percentage drop was still in the mid- to high-single digits, Mr. Wang wrote. Besides, he said, the discrepancy between Nielsen ratings and set-top box data means little to Viacom's bottom line.
"At the end of the day, Nielsen ratings remain the currency for TV advertising," Mr. Wang wrote. Using ad inventory to compensate to advertisers for ratings shortfalls is leaving Nickelodeon with less commercial time to sell in the so-called scatter market, he said.
Nickelodeon can't blame the drop on its content's availability on Netflix, Mr. Wang added. "Using third-party data, the majority of new avails on Netflix debuted in February, which does not coincide with the ratings decline that became pronounced in the fall," he wrote. "Rather, it appears that declines in overall viewership in the P2-11 demo and ratings share shift to Disney Channel are the main reasons."
A Nickelodeon spokeswoman did not have immediate comment.
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