4 Lessons From Showbiz Earnings Season

Disney Enterprises Inc.

Nickelodeon craters, CW soars and nobody sweats the NBA lockout as THR analyzes third-quarter numbers.

Nickelodeon Down, Disney Channel Up

Viacom says it is investigating why ratings at kids channel Nickelodeon were down 15 percent in total viewers in September compared with 2010 and nearly 17 percent for kids 6-11. "The timing is inopportune for ad inflows given the primacy of September ratings," Wunderlich Securities analyst Matthew Harrigan wrote. Disney Channel, on the other hand, was up 11.6 in September among kids 6-11.  Notes Harrigan, "Disney Channel could be No. 1 for kids 6-11 for the first time in 20 years."

Digital Revenue Again Saves Studios

Media conglomerates continue to squeeze digital dollars out of their libraries. The CW's deal with Netflix to stream such shows as The Vampire Diaries and The Secret Circle was seen as a big plus for owners CBS and Time Warner going forward. In a report entitled "XOXO, Netflix," Nomura's Michael Nathanson estimates $100 million in CW-Netflix revenue for TW in the current quarter. The studio's profit should come in "north of $1.3 billion" for all of 2011, up from $1.1 billion in 2010," he says.

NBA? What NBA?

The cancellation of professional basketball games due to a labor dispute will reduce fourth-quarter ad growth by only about two to three percentage points, Time Warner said. "There will also be an offsetting reduction in programming expenses," said CFO John Martin, meaning the company won't have to pay hefty rights costs and all those pricey commentators. Still, Davenport & Co. analyst Michael Morris cautioned that "the NBA lockout looms as a longer-term ad-growth risk."

Watch Out: Ad Spending Weakens

Overall studio financials are strong, but Disney CEO Robert Iger told investors Nov. 10 that the scatter market for ads sold near airtime has "slowed slightly" in recent weeks. And Viacom reported only 7 percent ad growth in the latest quarter, down from 10 percent for the past 12 months. "National ad trends were modestly below our expectations," Morgan Stanley analyst Benjamin Swinburne said in a Nov. 14 report.

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