Viacom shares are down about 3.5% at midday on an otherwise up day for the market after CEO Philippe Dauman punted on the big question on the minds of analysts attending the UBS Annual Global Media and Communications Conference: What’s up with the steep decline in Nickelodeon’s ratings — which he said last month was due to a problem with Nielsen’s measurement system? “There’s nothing new” to report, he says. ”No one’s more frustrated than myself.” He didn’t continue his attack the ratings company, which said today that it made a mistake in calculating the number of kids who watch TV — but added that it’s unrelated to the double-digit change in Nickelodeon’s ratings. ”However imperfect Nielsen is, it’s the only game in town, so we have to live with it,” Dauman says. “It is what it is. We’re going to move on.” He acknowledged that the channel’s ratings dive is “unfortunate” because “this is by far the most important quarter for Nickelodeon” due to the number of toymakers who flock to the channel to advertise holiday gifts. But he says the Nick problem will become less significant after the holidays are over. ”One way or the other we’ll move forward” with growing profit margins. Viacom has “more new shows coming to Nickelodeon than we’ve ever had.” He adds that “next quarter we expect to see stronger ad sales growth because we won’t have that issue” with the ratings.
UPDATE, 3:50 PM: The folks at Paramount say that we misunderstood Dauman. He wasn’t trying to say that he plans to make cuts at home entertainment, they say. He was simply talking in general terms about being vigilant about all of Paramount’s costs. That’s not how it looks to me, but why don’t you decide for yourself? Here’s the transcript of Dauman’s response to a question about how he might “improve Paramount’s fortunes”:
There are some things you can control in the movie business…that is the
overhead. It doesn’t matter what movie you make. You can control that; that’s money in the bank if you can do that. And we have continuously improved that part of it. You continually have to adjust. For example, as the home entertainment stream is challenged, fewer DVDs are being sold, so you have to review your home entertainment overhead. That’s adjusting to the business model. We’re very focused on that. We continue to work on the overhead there.
PREVIOUS, 12:46 PM: This might be a good time to polish up your resume if you work at Paramount Pictures’ home entertainment unit. Viacom CEO Philippe Dauman plans to review the “overhead” — a bloodless synonym for “jobs” — there as DVD sales tank, he told an investor group today. The nation’s highest-paid executive last year said that cutting overhead is “money in the bank.”