Viacom (VIAB) owns 200 television channels, including MTV, VH1, CMT, and BET. The focus here will be on Nickelodeon. Overall, Viacom has 700 million global subscribers, and Nickelodeon hits roughly 100 million households. This is massive exposure, which means that Viacom must deliver quality content in order to keep all those subscribers pleased. Viacom is over-delivering with Nickelodeon which is great news for investors.
Nickelodeon continues to strengthen
Nickelodeon has been around for 34 years and yet it continues to grow. The only way this is possible is for top-notch management to make excellent decisions, which has been the case.
In the third quarter, Nickelodeon showed its highest quarterly gain in 16 years, with new shows driving ratings momentum. The two-to-11 age demographic saw 12% growth year over year, with the two-to-five demographic growing at a 32% clip. If you look at the bigger picture, total viewers have increased 6% year to date, with total viewers for two-to-11 improving 8%. That's the what, but what about the why? Below is a quick overview:
- Sam & Cat: Averaging 2.9 million viewers
- Sanjay & Craig: Averaging 2.9 million viewers
- The Haunted Hathaways: Averaging 2.4 million viewers
- Paw Patrol: Averaging 783,000 viewers (only targeting ages two to five)
The good news doesn't end there. Do you remember when Teenage Mutant Ninja Turtles was cool? Well, retrieve your nunchakus from the attic and order a pepperoni pizza, because it's cool again. The series launched on Nickelodeon in September 2012, and it had 12 million viewers during its first weekend. Last August, the finale for the first season also ranked No. 1 for boys. Season Two launched October 12, and similar results should be expected. Once a brand is established and kids associate with the characters, it's easy for momentum to continue until a new generation comes along and sees it as aged. This is why Teenage Mutant Ninja Turtles needed a bit of a rest in the early 2000s.
Additionally, Nickelodeon's Peter Rabbit generated interest from 6.3 million preschoolers in the third quarter. That's why Nickelodeon has opted to greenlight the show for a second season. This looks to have been a brilliant show selection based on the book's storied success. The show is based on Beatrix Potter's The Tale of Peter Rabbit, which was published in 1902 and is now sold in 35 languages. When a story can withstand the test of time in such a way, the odds of the televised version succeeding are good.
Nickelodeon should continue to help drive growth for Viacom. Let's see if one of Viacom's peers offers more investment potential.
Viacom versus peers
Time Warner (TWX) is a larger company than Viacom and sports a market cap of $63.63 billion, versus Viacom's market cap of $40.16 billion. It owns popular networks such as TNT, TBS, CNN, HBO, Cinemax, and more. It's likely to see increased viewership thanks to its "TV Everywhere" initiative. Currently, this initiative has led to 80 million consumers having access to television anywhere at any time.
In May, Time Warner's Turner Entertainment was the first network to stream TNT and TBS content live across multiple platforms at all times of day and night. You can now watch through the company website or on one of the following apps: "Watch TNT" and "Watch TBS".
In June, Time Warner also made HBO Go available on Apple TV, in addition to its previous availability on Apple mobile devices.
An even larger company, Twenty-First Century Fox (FOXA), with a market cap of $79.93 billion, has impressed in almost every way imaginable. 21st Century Fox reaches nearly 1.5 billion subscribers daily. Fox has been No. 1 in the adult demographic for eight consecutive years, which is a record. Additionally, Fox News has been the most watched cable news channel for 12 consecutive years. Fox Sports has been the top-rated network for sports for 16 consecutive years. (
If you compare these three companies on the top line, you will see that all have demonstrated growth:
FOX Revenue TTM data by YCharts
The same can be said for the bottom line:
VIAB EPS Diluted TTM data by YCharts
21st Century Fox is the most impressive overall, but all three are likely to be long-term winners. And Nickelodeon's ever-increasing popularity should help drive growth for Viacom. If you're looking for yield, then 21st Century Fox shouldn't be your first choice because it only yields 0.70%. Time Warner would be the best option in that regard, yielding 1.70% versus Viacom at 1.40%.
The bottom line
While there could be bumps and bruises along the way, Viacom offers immensely powerful brands in MTV, VH1, BET, Nickelodeon, and more. These channels resonate well with viewers, and that should continue. The company's Nickelodeon performance is a good example. Also notice how these channels hit different ages and demographics, which leads to broad diversification -- something every savvy investor appreciates.
