What Jon Stewart’s departure means for Viacom

Annie Baxter Feb 9, 2015
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What Jon Stewart’s departure means for Viacom

Annie Baxter Feb 9, 2015
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The stock of Viacom, the parent company of Comedy Central, fell about 1.5 percent Wednesday after “fake news” icon Jon Stewart announced he will leave the network’s marquee program, “The Daily Show.”

But some analysts said the situation could be worse.

“If the whole company was Comedy Central, you’d be looking at the stock price getting crashed today. I think the stock would be down over 25 percent, but it’s not,” says Matthew Harrigan, an analyst with Wunderlich Securities.

 

Comedy Central is only one piece of the Viacom enterprise. Harrigan estimates it pulls in less than 10 percent of the company’s overall revenue.

Still, the timing of Stewart’s announcement isn’t great. Ratings have been sliding at Comedy Central and at other big Viacom networks, like MTV and Nickolodeon.

“It would’ve been better to have had this happen when some of the other networks were hitting a little bit better,” Harrigan says.

Part of the problem? People are watching less traditional TV. As viewers move on, so do advertising dollars.

“Viacom is suffering the same way almost every major TV network is,” says Jonathan Taplin, director of the University of Southern California’s Annenberg Innovation Lab. “In the 12-to-17 age range and the 18-to-49 age range, the year-over-year declines in people watching traditional TV are in the 12 percent range. Now if you project that out for a few years, that’s pretty scary.”

“The Daily Show” has nevertheless had a certain allure for marketers, who want to reach viewers live – they stand a better chance of getting their ads seen. The program’s “fake news” content (where real issues are handled satirically) pulls in people live because the content is driven by current events.

“If they aren’t watching it live, they’re watching it pretty quickly thereafter, in an era when it’s hard to gather up anyone to actually watch anything,” says James Dix, an analyst at Wedbush Securities.

From a corporate perspective, Dix says he thinks Viacom had to anticipate Stewart’s retirement and make contingency plans. Comedy Central will end up fine, he says.

It’s unclear if the show will maintain the “fake news” format that’s made it such a success, spawning similar programs like “The Colbert Report.”

“Do they change the whole format of the show to fit a new personality or do they try to fit a new personality into the show?” asks Joe Bonner, a securities analyst at Argus Research.

Bonner says given “The Daily Show’s” brand equity, he can’t imagine Stewart’s departure dooming it.

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