Nickelodeon is thriving as it battles the Disney Channel for tween viewers
TMC
“NO kicking. No spitting. No hitting,” said Cyma Zarghami, the
president of Nickelodeon, at the start of a staff meeting in late
September. It was a playful admonition suitable to her line of work,
but the tone in her voice meant business. On the agenda was the
release of “BTR,” the first album from the cast of “Big Time Rush,” a
new Nickelodeon series about a boy band.
Ms. Zarghami immediately expressed concern about a promotional concert
at the Mall of America in Minnesota. Major advertisers would be on
hand. What if the event was sparsely attended? “We need hundreds of
fans there,” she said.
She didn’t need to worry. On Oct. 16, more than 7,000 near-hysterical
teenage girls turned out at the mall to watch the show’s floppy-haired
quartet perform. “I thought I was witnessing the beginning of the
Monkees,” says Mark Addicks, chief marketing officer at General Mills.
“It was a very good sign for the show.”
For the first time in years, Nickelodeon has heat. Ratings are up
across the board, powered by buzzy new live-action hits like
“Victorious,” centered on life at an elite performing-arts high
school, and “iCarly,” a series about an everyday girl with her own Web
show. A new animated program, “The Penguins of Madagascar,” is a solid
success. Even the decade-old “Dora the Explorer” has perked up, thanks
to a yearlong birthday celebration.
Nickelodeon’s spinoff channels are also spiking upward, albeit from
smaller bases. For Nicktoons, ratings among the target demographic of
boys 6 to 11 are up 33 percent so far this year, compared with the
year-earlier period, according to Nielsen Media Research. Nick Jr.,
aimed at preschoolers, is up 12 percent. And TeenNick has climbed 10
percent among its target audience, ages 12 to 17.
“We’re winning in a way that we haven’t been in a very long time,” Ms.
Zarghami says. “That sounds braggy, but we’ve worked really hard, and
we’re pleased it’s finally paying off.”
Pleased is an understatement. Philippe Dauman, C.E.O. of Viacom, which
owns Nickelodeon, struck a giddy tone about the children’s business in
a recent note to employees: “The Nick family of channels now captures
more than half of all kids’ viewing on TV — the highest share in more
than a decade!”
Not that Mr. Dauman is content. “Nickelodeon is perhaps our most
important asset,” he said in an interview. “It needs to retain its
leadership position, and it needs to grow.” Viacom does not break out
numbers for Nickelodeon.
For all the momentum, enormous puzzles remain for Ms. Zarghami to
solve. Pre-teenage viewers, once a loyal age group, are starting to
become more fickle as parents unleash them onto the Web at an earlier
age. Some analysts criticize Nickelodeon’s digital efforts,
particularly when it comes to entertainment on mobile devices as
unfocused. Neopets, its once-booming online gaming world, has waned.
ADVERTISERS are under pressure to cut back on marketing to children —
a problem to which Nickelodeon is particularly exposed because its
primary rival, Disney Channel, does not accept traditional
advertising. Last month, a children’s advocacy group asked the Federal
Communications Commission to investigate a new Nickelodeon series,
“Zevo-3,” whose characters are named after Skechers shoes.
“We believe that the show violates several of the few existing rules
we have to protect children from over-commercialization,” said Susan
Linn, director of the Campaign for a Commercial-Free Childhood, a
nonprofit group. Nickelodeon said in a statement that it was confident
the show did not violate the Children’s Television Act, which limits
advertising in shows aimed at kids.
Nickelodeon has also struggled to come up with a new generation of
cartoons to replace aging stalwarts like “SpongeBob SquarePants” and
“Dora the Explorer.” Animated series are much more valuable than live-
action programs like “iCarly” because they are easier to export
overseas and generate a larger array of merchandise. But while
Nickelodeon has poured tens of millions of dollars into the
development of new animated hits, a parade of efforts — “El Tigre,”
“The X’s,” “Catscratch,” “Mighty B,” “Back at the Barnyard” — have
failed to catch substantial wind.
Ms. Zarghami concedes that Nickelodeon needs animated reinforcements
but points to promising shows like “Team Umizoomi,” a preschool series
centered on learning math; “Fanboy & Chum Chum,” about two science-
fiction aficionados; and “The Penguins of Madagascar,” based on the
DreamWorks Animation films.
Judy McGrath, chief executive of MTV Networks, which includes
Nickelodeon, also brushes aside concerns. “They’re experimenting, and
they’re figuring it out,” she says.
A PETITE woman with piercing eyes and a husky cackle, Ms. Zarghami,
47, is the daughter of an Iranian-born doctor and a Scottish-born
nurse. She started at Nickelodeon in 1985 as a scheduling clerk, a
year after leaving the University of Vermont three credits shy of an
English degree. (In 2000, the university gave her an honorary
degree.)
She rose up the scheduling ranks, taking on responsibility for things
like brand positioning and marketing, until she became general manager
of Nickelodeon. In 2006, she took over as president of Viacom’s Kids
and Family Group, becoming one of the top executive women in the media
industry.
In some ways, her ascent is a reflection of the usual attributes —
ambition and a knack for playing corporate politics. But over the
years, she also proved herself a highly talented programmer, with the
rare ability to zero in on what children want to watch and when. She
was not directly responsible for “SpongeBob” or “Dora,” but helped
nurture them into hits by deciding how to schedule them and overseeing
marketing partnerships. “Cyma is a deep thinker on a strategic level:
‘What pieces do I need to gather to get where I want to go?’ ” Ms.
McGrath says.
When Ms. Zarghami landed the top job, she had to fight a number of
fires. The Nickelodeon empire has tremendous muscle — ad sales and
affiliate fees of $2.2 billion a year, according to the research firm
SNL Kagan, and merchandising worth $5.5 billion — but two decades of
breakneck growth had created inefficient wiring.
While a bloated Nickelodeon was basking in its top-dog status, Disney
Channel cracked the code for the “tween” audience — ages 9 to 14 —
with “Hannah Montana” and “High School Musical.” That audience was
once the icing on the kids’ TV cake, but became hugely important as
younger children started to follow its lead. Although Nickelodeon has
been the top-rated children’s network for 16 years, by 2007, Disney
had started to regularly beat Nickelodeon by certain measures.
Nickelodeon, founded in 1979, had also become a mature business. With
the easy growth behind it — the flagship Nickelodeon channel, fully
distributed in North America, reaches more than 100 million homes —
Ms. Zarghami needed a way to kick-start overseas expansion while
broadening the audience at home to include families. “A full
generation of our viewers now have kids of their own, and we needed to
reflect that in more of our programming,” she said.
By her own account, she started off slowly. She was pregnant with her
third child at the time of her promotion and spent part of her first
year on maternity leave. Upon her return, she stepped cautiously,
putting into motion a grinding two-year brand review.
Inch by inch, changes started to click. The spinoff channels for
preschoolers and teenagers — then called Noggin and the N — were
rebranded Nick Jr. and TeenNick to improve consumer recognition, a
move that ratings growth indicates is working. Nick at Nite, the prime-
time block of programs for adults, was expanded by an hour and
scheduled with reruns families could watch together. (Out: “Murphy
Brown.” In: “My Wife and Kids.”) As a result, Nick at Nite has also
perked up in the ratings, reversing years of declines.
Ms. Zarghami also attacked Disney’s tween flank with “iCarly.” It is
currently the No. 1 show on television among children 2 to 11, as
measured by new episodes and not repeats, according to Nielsen Media
Research, and it has spawned at least one cultural craze: spaghetti
tacos, a dish created by an oddball character on the show.
“I probably care more than I should about popular culture’s
endorsement of things,” says Ms. McGrath, the MTV Networks chief, “so
I am very proud of how ‘iCarly’ has broken through.”
To find new hits fast, especially ones with powerful merchandising
potential, Ms. Zarghami somewhat controversially decided to abandon
Nickelodeon’s long-held policy of owning all its programming. She has
begun licensing franchises — a rent-a-hit model.
“Power Rangers,” the martial arts series, is a prime example. Ms.
Zarghami made a deal in May with the investor Haim Saban, who owns the
series, to bring 20 new episodes and 700 reruns to Nickelodeon and
Nicktoons starting early next year.
The deal was a jab at Disney, which had just sold “Power Rangers” to
Mr. Saban. Disney was under the impression that he planned to license
the show not to the rival Nickelodeon but to the Hub, a less-
threatening children’s channel that is a joint venture of Discovery
Communications and Hasbro.
Mr. Saban says he is impressed with how quickly Ms. Zarghami acted
when he approached her about a deal. “The conversation took two
minutes,” he says. He describes her as “very tough” but also “super
professional” in negotiations. “I always ask for some compassion,” he
adds, “but I don’t get very far.”
Nickelodeon’s array of future shows and initiatives is dizzying. A
partnership with the owners of “The Tale of Peter Rabbit” is to result
in an animated preschool series in 2012, the same year “Teenage Mutant
Ninja Turtles” is slated to come back to life on Nick. “House of
Anubis,” a live-action mystery series planned for early 2011, is a
bold experiment in bringing the daytime soap opera format — a new
episode each day, instead of once a week — to teenagers.
In January on the Web, Nickelodeon will introduce MonkeyQuest.com, an
online game in which players in disparate locations play together.
(Players are cast as young monkeys swept up in an epic quest to
uncover the secrets of the lost Monkey King and to defeat the Shadow
Monsters.) And Nickelodeon is rolling out an ambitious line of
educational merchandise related to the math program “Team Umizoomi.”
IN the meantime, the children’s television business — always cutthroat
— is growing more competitive.
After falling off a ratings cliff, the Cartoon Network, owned by Time
Warner, is trying harder to get its act together; it has a new “Looney
Tunes” series in the works and this month announced plans to turn the
DreamWorks Animation film “How to Train Your Dragon” into a television
show.
On Oct. 10, Discovery Communications and Hasbro introduced the Hub,
stocked with shows tied to Hasbro toy lines like Transformers, My
Little Pony and G.I. Joe. Borrowing a trick from Nick at Nite, the Hub
is showing reruns of “Happy Days” in the evenings.
At first glance, Disney Channel is showing signs of cooling. Miley
Cyrus, the 17-year-old “Hannah Montana” actress, has a controversial
new sex-kitten persona. A series built around the Jonas Brothers is a
dud. And the executive who turned Disney Channel into a juggernaut,
Rich Ross, left television last year to run Disney’s movie studio.
But Disney is preparing a renewed programming attack, including a
“High School Musical” spinoff, a TV movie called “Sharpay’s Fabulous
Adventure.” Disney also has high hopes for the movie “Lemonade Mouth,”
the story of five high school students who meet in detention and form
a band, and “Shake It Up,” a dance-driven sitcom. Over all, Disney
plans to expand its content pipeline by 30 percent in 2011.
On the animation side at Disney, “Phineas and Ferb,” guided by an
executive poached from Nickelodeon, is a breakout hit. In 2012, Disney
will go after Nick Jr., introducing Disney Junior, a channel for
preschool children.
“I guess I could make an imitation-is-flattery joke,” Ms. Zarghami
says dryly.
She has done her share of co-opting the competition’s playbook.
“Victorious” is an aspirational, music-infused program that shares DNA
with “Hannah Montana.”
Even “Big Time Rush,” a co-production with Sony Music Entertainment,
nods to the Disney formula, says Rob Stringer, chairman of the
Columbia/Epic Label Group at Sony. “You take what Disney has done,” he
says, “and make it more interesting — quirkier, a little cheeky,
polite anarchy.”
WHATEVER the model, it’s working. “BTR” made its debut on the
Billboard Top 200 chart at No. 3, and the band has sold more than one
million digital tracks.
“When I saw the sales numbers and looked at how well the show is doing
in the ratings,” Ms. Zarghami says, “I thought to myself, ‘Oh my God,
it doesn’t get much better than this.’ ”