SpongeBob Says No to Junk Food

It looks as though Viacom (NYSE: VIA  ) is feeling the pressure of the health zeitgeist. According to reports, the media concern plans on keeping a close eye on its licensing deals with food companies for its very valuable stable of Nickelodeon characters. It wants to ensure that the edibles that SpongeBob SquarePants and others promote aren't too junky for kids to consume.

It seems like every company these days is worried about how closely brand equity and unhealthy eats are tied together, especially when it comes to the younger set. McDonald's (NYSE: MCD  ) has been beefing up a health-conscious image the past few years, and soda companies such as PepsiCo (NYSE: PEP  ) have responded to current trends by focusing on healthier Frito-Lay snacks and uncarbonated fare such as vitamin-infused waters. Kraft (NYSE: KFT  ) is also getting serious about more body-friendly grub.

And then there's Kellogg (NYSE: K  ) , which I recently wrote about -- the cereal giant doesn't want to market anything that isn't wholesome and nutritious to kids younger than 12. In fact, if you read that Kellogg article, you'll note that Viacom has been under some pressure to change its licensing practices vis-a-vis the Nick portfolio. Now, starting in January 2009, fresh licensing deals will come with stipulations that the foodstuffs that Nick characters are involved with must comply with sensible dietary standards. (I wonder how sensible a Krabby Patty is.)

This is a good move for Viacom, because as they say on Wall Street, you can't fight the tape. The uproar over childhood obesity is in full force, and it will continue moving forward. Getting on the wagon, in this case, is nothing more than good business -- it's going to improve Nick's image in the minds of the movers and shakers in the watchdog world, and it will allow Viacom to pursue licensing opportunities sans pressure.

If Viacom can convince parents that the company is on their side, they'll be more than happy to buy their kids some Viacom-licensed goodies. The kids, of course, don't care about all of the hubbub -- they just want to extend the experience of the Nick brand into snack time. And make no mistake -- licensing is important not only to generate incremental revenues, but also to keep engaging the mindshare. Disney's (NYSE: DIS  ) cable outlet, the Disney Channel, is offering up some tough competition these days, so Viacom wants to put its parental concerns behind it.

Viacom is obviously not doing this out of the goodness of its corporate heart, but it doesn't matter -- the fact that it is responding to the demand for healthier food products for children is something that shareholders should applaud. It should be noted that Nickelodeon apparently wants to reserve the right to a bit of leeway when it comes to marketing junky stuff on holidays such as Halloween, although critics will probably want to blast that little hedging tactic. And while I won't necessarily argue against such an inclination, I do believe Viacom is nevertheless headed in the right direction.   

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Fool contributor Steven Mallas owns shares of Disney. As of this writing, he was ranked 7,894 out of more than 60,000 investors in Motley Fool CAPS. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.


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