Viacom CEO Plans End-Run Around Nielsen As It Looks To Digital Growth

Viacom CEO Philippe Dauman laid into Nielsen this morning, announcing a major effort to make the entertainment company less dependent on the ratings company to measure its audiences. Like many moguls, he says the steep recent drop in cable ratings is partly due to Nielsen’s slowness to count people who watch TV on mobile and gaming devices — a big concern for Viacom because its networks, including MTV and Nickelodeon, appeal to young audiences. He wants to use alternative systems, including in-house audience analysis units, to negotiate 50% of its ad sales over the next three years, up from 30% in the fiscal year that ended in September. He also anticipates more sponsorships, dynamic ad insertion, and novel ad sales deals.

Nielsen Logo“We are in a transitional moment where the existing measurement services have not caught up to the marketplace,” the CEO told analysts in a conference call. “They are trying to catch up. I’m sure they will eventually catch up. In the meantime we are not waiting for that. We are moving forward.” Viacom will do that by expanding ad inventory on digital, including Sony’s soon-to-launch PlayStation Vue, and selling spots based on info from Viacom Velocity and Viacom Echo. The benefit “will start showing up as we get into 2015 and beyond,” Dauman says. “There will be some kinks along the way. … But we do expect it will get better.”

Dauman tried to dispel Wall Street’s growing concerns about the health of the ad market generally. Viacom is “seeing this quarter a pickup in demand,” he says. While warning that “it’s hard obviously to prognosticate the full quarter,” he says Viacom’s domestic ad revenues will be “comparable” to those in the last quarter “and we expect to see improvement from there as the year progresses.”

Meanwhile, Dauman says he’s not concerned about the decision by a few small cable operators led by CableOne to drop Viacom’s channels. Those were “isolated situations,” not harbingers of things to come. He re-affirmed his prediction that Viacom will see affiliate revenues increase by high-single to low-double-digit percentages over the next few years. The distributors without Viacom “are continuing to lose video subscribers. We are really core services. That’s why we are the first stop for any new distributor out there, and the first stop for existing distributors want to launch new services.”

While enthusiastic about new distribution initiatives, Dauman says that Viacom’s EPIX partnership with Lionsgate and MGM isn’t preparing a direct-to-consumer offering similar to the ones that HBO and Showtime are discussing. “Of course we’ll watch what HBO and others might do. But right now we’re focused on growing distribution” within the pay TV ecosystem. “As time goes forward we’ll look at the pay television marketplace and decide what to do.”

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