Viacom's plan to reduce ads to boost revenue draws skepticism

Thu Nov 12, 2015 4:16pm EST
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By Jessica Toonkel

(Reuters) - Viacom Inc is cutting the number of TV advertisements it airs in a bid to boost ratings. But the owner of MTV, Comedy Central and Nickelodeon has drawn skepticism by saying the move will also help it raise ad prices.

A cut in ads would not necessarily improve prices, in part because the media company shows more ads than average in the industry, media buyers and analysts said.

They added that a drop in ads would only put Viacom in line with rivals rather than turn it into a premium, low-ad destination.

By slashing ads Viacom is following some of its leading rivals in an attempt to reverse declining ratings and advertising revenues as 'cord cutters' abandon pay television, often for ad-free subscription services like Netflix Inc.

Domestic advertising revenue at Viacom fell 7 percent in the most recent quarter, the company said on Thursday.

Viacom in October began reducing the number of ads on a number of its networks. In some cases, the ad slots will be filled with short-form programming, promotional spots for other shows or in the cases of original content, longer shows, Jeff Lucas, head of ad sales at Viacom, told Reuters in an interview.

"We expect over time, as the viewing experience improves, that will improve ratings and we do believe there are some pricing opportunities," Viacom Chief Executive Officer Philippe Dauman told analysts on Thursday's earnings call.

The New York-based media company said ad rates can rise as it offers fewer ad slots, improves ad targeting with its new Vantage data service, and increases promotional "branded" content through a service called Velocity.   Continued...

A woman exits the Viacom Inc. headquarters in New York April 30, 2013.  REUTERS/Lucas Jackson