The annual spree of ad space buying in the highly competitive U.S. kids TV market is approaching, and this year’s market is, in many ways, keeping pace with the events of the last three years. Media buyers and network execs forecast the upfront will likely break next month. Ad spending is expected to be consistent with the last three years, or perhaps lower, and buyers predict this year will be another buyer’s market. In a changing tide from last year, this season’s gains are almost entirely in cable. Recent fallouts in the dot.com biz haven’t diminished the Internet’s importance in the kids realm, and kidcasters are stepping up activity in the medium.

As they prepare to enter negotiations with networks, buyers are evaluating kidcasters’ performance over the last year. ‘Cartoon [Network] is continuing to do well,’ says Gary Carr, senior VP and associate director of national broadcast at Initiative Media. ‘WB is certainly down from last year because the Pokémon craze is over, but nevertheless, they’re still much better than they were before Pokémon came on.’ Nickelodeon ‘[does] a great job. Other people come and go, but Nick is the king,’ says Carr. ABC is ‘up and down.’ Starcom Worldwide’s executive VP and chief broadcast investment officer John Muszynski says Fox Kids and Fox Family both ‘have gotten a vision of where they want to go,’ and ‘the Nick Jr. lineup on CBS Saturday morning has been very successful,’ although it’s targeting a younger demo than its competitors.

After rocketing ratings for Kids’ WB! lost Nickelodeon its Saturday morning and weekday lead last year, the cable channel is back on top. Not only have Kids’ WB!’s ratings fallen from last year’s levels as Pokémania has subsided, but Nick has also made gains on Saturday morning and weekdays, up 20% and 26% among kids ages two to 11 respectively. Pokémon again nabbed the top spot in individual kids program rankings, but the remaining nine shows in the top 10 all air on Nick. The cable channel also grew its total ‘kids day’ ratings by 5% among kids ages two to 11 in 2000, and ratings for kids ages nine to 14 were up 11% for U.S. households subscribing to the channel, according to Nick.

‘When WB went up, a lot of it came from Nickelodeon,’ says Starcom Worldwide’s Muszynski. ‘That doesn’t surprise anybody. When you’re as big as Nickelodeon is, if there’s a big hit, a disproportionate amount will come from the big guy. Now, as WB’s numbers have softened, Nick has gotten some of that audience back.’

How Nick got its groove back

‘We’ve been launching what I think are some of our strongest shows,’ says Susan Danaher, executive VP/general sales manager for Nickelodeon, Nick at Nite and TV Land. New entrants since last summer are The Brothers Garcia, Taina, Pelswick, As Told by Ginger and, on Nick Jr., Dora the Explorer and Bob the Builder. Nickelodeon now has more than 2,000 hours of original Nicktoons. Rugrats, for one, is turning 10 this year, and two new Nicktoons are launching this month: Invader Zim and The Fairly Odd Parents.

‘It’s also the strength of the brand,’ says Danaher. ‘Kids [come] to Nickelodeon because it’s a place made for them.’

‘We are really the only full-service network for kids,’ says Cyma Zarghami, executive VP and GM, considering Nickelodeon’s range of programming, from live action and animation to preschool fare, game shows and Nick News.

Slime Time Live, launched in January 2000 as an interactive interstitial package for the Monday to Friday 4 p.m. to 6:30 p.m. block, brought ‘a freshness and a liveness to the afternoons that I think sort of permeated the whole channel,’ says Zarghami. The live hosted segments invite kids to vote for which contestant will get to go into the slime chair, and one kid is chosen from the show’s mailbox each day to play a matching game on-air over the telephone.

Tweens are an area in which Nick anticipates future ratings growth, says Zarghami. The kidcaster recently launched TEENick, a new two-and-a-half-hour Sunday night block for the nine to 14 set featuring shows like Taina and Caitlin’s Way, as well as music videos, concerts and special on-line content in conjunction with Nick.com.

In other developments, the channel is trying to do more when it comes to ‘finding innovative ways to bring the Internet and the television service together,’ says Zarghami. This spring, an episode of SpongeBob SquarePants will enable kids to vote on-line in real time for one of three possible endings, and last month, Nickelodeon also logged in with BubbleCast, a new on-line/on-air quiz show. While watching Rugrats at 4 p.m. during Slime Time Live (a slot which averages a 4.3 rating and nabs 1.3 million sets of kid eyeballs), kids can log-in to access a special virtual room on Nick.com. Competing against seven other players, kids must answer real-time questions about what’s going on in the Rugrats ep they’re watching on-air. At the end of the show, the names of the top 20 scorers will be broadcast on Slime Time Live. ‘The real definition of convergence is when interacting with one medium has a direct and circular impact on the next,’ says Zarghami.

‘We are residing in a very healthy sales environment,’ says Danaher. Nickelodeon has been ‘growing the pie’ by focusing over the last two years on non-traditional kid advertisers, and formed a division about a year ago to address this. In the past 12 months, Nick has announced a three-year agreement with Ford Motor Company and a three-year, US$20-million ad and promotional deal with Embassy Suites Hotels. The Brothers Garcia, Dora the Explorer and Taina all feature Hispanic leads and are drawing Hispanic viewers, which has proven to be an advertising opportunity. Restaurant chain Chuck E. Cheese signed on to run bilingual copy on Nick’s air. The success of Taina on Sunday nights opens a door to attract tween advertisers. And the Nick Jr. block on cable has begun marketing to advertisers who want to reach mothers. Despite a discouraging year 2000 for the toy business, Danaher reports that toy dollars this year are stronger over last year. All told, says Danaher, ‘I would say that demand is healthier for us than it was last year.’

Spending predictions

Buyers don’t dispute that new players are coming into the market, but given the ad spending cuts by toycos, they don’t believe this increase in demand will drive spending above last year’s US$750-million to US$800-million market. ‘[The advent of new players has] been a trend for the last couple of years,’ says Initiative Media’s Carr. ‘But they’re not spending that much money, and it’s been offset by the fact that toy advertising, the main staple of kids advertising, has been decreasing over the last few years,’ amounting to ‘drops of millions of traditional toy spending.’ As for the possibility of cost per thousand (CPM) increases by any of the networks, Active International’s senior VP of media services Tom Horner says ‘not a chance this year. I don’t think demand is going to warrant it.’

On the supply side of the equation, buyers say overall gross rating points appear (GRPs) to be stable or slightly up. A Horizon Media analysis of Nielsen data reports that GRPs are up 5% for kids two to 11 in Q4 2000 versus Q4 1999 (Oct. 2, 2000 to Dec. 31, 2000 and Sept. 20, 1999 to Dec. 26, 1999). These increases could be driven by Nickelodeon extending its daypart by an hour on Friday nights, and by growing cable penetrations, particularly Cartoon Network’s addition of more than eight million households in the past year, says Brad Adgate, Horizon Media’s senior VP, corporate research director. Active International’s Horner says Toon Disney, which began airing advertising last September, has a ‘minimal’ impact on increasing total GRPs because the channel is not in a large percentage of households. Whether GRPs are flat or up, buyers expect neither scenario would push prices up.

While Active International’s Horner pegs total spending at US$750 million to US$800 million last year, Initiative Media’s Carr believes dollars fell to roughly US$700 million, in light of the poor toy biz results, after being flat in the range of US$740 million to US$760 million for two or three years prior. Carr adds that Nickelodeon ‘lost about US$40 million in sales.’ But Nick’s Danaher says ‘there was not a loss.’

Cartoon still drawing more toonsters

Again this year, Cartoon Network hasn’t skipped a beat in maintaining ratings growth, climbing by 20% among kids ages two to 11 on Saturday morning and 30% on weekdays. Total-day ratings are also up by 10% among kids ages two to 11 and in prime time by 15% for 2000 versus 1999, and in kids ages nine to 14, by 20% in total day and 38% in prime time for U.S. households subscribing to the channel, according to Cartoon.

This ratings growth is outpacing distribution growth, says Karl Kuechenmeister, senior VP for kids sales and syndication for Turner Broadcasting Sales. ‘We really think we’re on such a roll due to the strength of our original programming,’ says Tim Hall, executive VP at Cartoon Network. Over the summer, the channel had the critical mass of episodes to strip The Powerpuff Girls, Ed, Edd, n Eddy, Dexter’s Laboratory and Johnny Bravo. Sheep in the Big City, the only launch this season, has performed well since its November debut. Prime time (from 8 p.m. to 11 p.m. daily), the daypart when Cartoon’s originals air, is its most popular area, and weekday action-adventure block Toonami has shown the ability to pull in kids ages nine to 14. Also, says Hall, ‘we’ve kind of set a beachhead with Friday nights’ being the destination for new episodes or series premieres. In addition to its originals, Cartoon Network became the exclusive home for Looney Tunes last October, and for the full series runs of Warner Bros. Animation’s Batman and Superman shows this year.

Two new comedies-Time Squad for a June launch and The Grim and Evil Show for October-are in the works, as are two action-adventure series-Samurai Jack for July and Justice League for fall. Also planned are new episodes of originals The Powerpuff Girls, Sheep in the Big City, Dexter’s Laboratory, Courage the Cowardly Dog, Ed, Edd, n Eddy and Mike, Lu & Og, and of acquired program Dragon Ball Z, along with Gundam Wing subseries this spring and summer. Powerpuff Girls and Scooby-Doo films, to be released in summer 2002, will generate added interest in the properties.

Toonami Lockdown in September, a follow-up to the successful Toonami: The Intruder event last fall, will again drive kids between TV and the Internet. Also in the on-line realm, ‘AOL [now merged with Time Warner] has a strong kids brand with its kids-only site and some of its teen stuff. We’re actively speaking with them, and we want to mine as many cross-promotional opportunities as we can,’ says Cartoon’s Hall.

At press time, Turner Broadcasting Sales’ Kuechenmeister forecast that ‘sometime within the next couple of months, maybe as soon as February, we’ll hit the landmark of 70 million homes in the U.S., which is getting us towards full distribution at that point.’ In other potential ratings growth, should Fox Kids bump up its weekday block, ‘I think we’ll be able to take some viewership away from the Fox television network,’ he says. Kuechenmeister believes ‘there’s room for very modest growth’ in low single digits in Cartoon Network’s CPMs.

WB’s Pokémon paved the way for Chan and other new superhero fare

After hitting a high note in ratings growth last year, Kids’ WB! has seen lower numbers this year as Pokémon ratings have declined. The network saw drops of 26% among kids ages two to 11 on Saturday morning and 42% on weekdays. Nevertheless, Pokémon remained number-one in individual program rankings among kids ages two to 11. (The winning program was in the 10 a.m. Saturday slot.)

‘We feel like we accomplished what we set out to [do] this season,’ says Donna Friedman, executive VP at Kids’ WB! The first goal was ‘to use Pokémon to help us launch new hits. We have done that pretty successfully,’ with six of the 10 top-rated broadcast shows among kids ages two to 11, including X-Men: Evolution, Static Shock, Jackie Chan Adventures, Cardcaptors and Pokémon in its 8:30 a.m. Saturday slot. ‘The second goal was to broaden our audience to include more girls,’ says Friedman. To that end, the network worked carefully to build elements such as strong female characters and humor into shows.

About Pokémon’s decline, Jed Petrick, president and COO for The WB, admits, ‘I didn’t think Pokémon would fall off as much as it did.’ But, he adds, ‘every fire cools down a little, but that doesn’t mean it doesn’t stay hot.’

‘I expect Pokémon will have an important part in the schedule’ next season, Jackie Chan Adventures will return as a strip, and Static Shock has also been reupped, says Friedman. About 25% of next season’s lineup will be new. Kids’ WB! is also adding heroes to its key show ingredients of ‘high adventure, humor and heart,’ she adds.

‘I think we’re a marketer’s best alternative as a broadcast component when you’re looking for boys,’ [and] marketers ‘can take advantage of our improvements in girls,’ says Petrick. According to TN Media, while Kids’ WB! ranked behind Fox Kids in Q4 2000 weekday ratings, with a 1.4 rating among kids ages two to 11 versus Fox Kids’ 1.6, the two networks tied at 1.6 when ratings for Kids’ WB!’s 7 a.m. to 8 a.m. block are taken out of the weekday figures. (Fox Kids does not air weekday morning programming.) Petrick believes Fox Kids’ possible retrenching in the 4 p.m. to 5 p.m. slot would give Kids’ WB! ‘a good leg up,’ since both networks are boy-skewed and action-driven.

Now that the AOL Time Warner merger has been finalized, Kids’ WB! will be looking at more activity on the Internet to take advantage of the medium as a promotional vehicle and to drive ratings. With the merger, there is renewed enthusiasm to bring together all assets of the company, and Kids’ WB! and Cartoon Network are ‘starting to work together a little bit from a sales perspective,’ says Petrick, although the two are in very early discussion stages. Turner Broadcasting Sales’ Kuechenmeister says, ‘where it makes sense, we’ll do things.’

Fox Kids takes a weekday hit, while Fox Family scores with tweens

Fox Kids, whose strongest performer remained Digimon: Digital Monsters, has also seen ratings slide, dropping 11% among kids ages two to 11 on Saturday morning and 16% on weekdays. ‘We’re slowly rebuilding the lineup. It’s been kind of tough for the last couple quarters,’ says Joel Andryc, executive VP of kids programming and development for Fox Family Channel and Fox Kids Network, adding that Fox Kids is ‘not losing as much as some of the other networks.’

‘We always look for a nice pop in February with new shows,’ says Barbara Bekkedahl, executive VP of advertising sales for Fox Family Worldwide. Newcomers to the network last month are live-actioners Los Luchadores and Power Rangers Time Force.

But the biggest news by far is the network’s plan to advance its 3 p.m. to 5 p.m. weekday block to 2 p.m. to 4 p.m. starting in September. Fox Kids and its affiliates reached an agreement in December, but at press time, the deal, which puts the block in a school overlap sked spot, was pending being signed by all the stations. The move is a result of ‘softness in the local kids marketplace,’ says Bekkedahl. Says Starcom Worldwide’s Muszynski: ‘It’s very difficult to sell kids first through third quarters locally.’

Meanwhile, Fox Kids is readying its fall schedule. Next year will be Andryc’s first full development season for the network, and he’s sticking to action-adventure and prankster comedy as Fox Kids’ brand. ‘We’d like to bring more girls back into the network,’ shifting from its current mix of roughly 80% boys/20% girls to 65% boys/35% girls. In development are a spin-off of upcoming feature Evolution, The Ripping Friends and two series-What’s With Andy? and Da Mob (see sidebar, on page 47)-that could launch on either Fox Kids or Fox Family. Digimon will return, although Andryc would like to reduce its Saturday morning airings to just one or two slots from three, in order to ‘not be so reliant on just one show.’ He’s also looking for a Digimon companion series to create an hour-long anime block.

Fox Family Channel continued to see mixed ratings, rising 50% among kids ages two to 11 on weekdays, but falling 17% on Saturday morning. But in its strongest demos, girls ages nine to 14 and kids ages nine to 14, Fox Family reports that ratings are up 117% and 69% respectively in Q4 2000 over Q4 1999 for U.S. households subscribing to the channel. What’s drawing these tweens, says Bekkedahl, is a blend of live-action series like Big Wolf on Campus, a lot of music programs like S Club 7 and Great Pretenders, and animated fare like Kids from Room 402 and Angela Anaconda, all of which are returning for fall. Totally Spies and Braceface are kicking off this summer, and a new sitcom featuring the Olsen twins will also debut for fall (see sidebar below). While Fox Family is seeing increasing competition from Disney Channel and Nickelodeon for the tween demo, ‘I think one of the advantages we have is the word `Fox’ in our name,’ says Andryc. ‘Kids relate `Fox’ to the Fox network. They know shows like The Simpsons [and] Malcolm in the Middle are on Fox. They know Fox theatrical films. And it just ages it up a little bit.’

As to what all these developments mean for Fox Kids and Fox Family heading into the upfront, Bekkedahl says ‘we already estimate that [Fox Kids’] ratings will go down Monday through Friday’ because fewer children are available during that daypart. Still, she says, ‘we don’t sell Fox Kids in a vacuum,’ but as part of package of offerings that includes Fox Family Channel, Fox Kids Magazine, FoxKids.com and Fox Family Channel Countdown radio show. Bekkedahl anticipates kidcasters in general, including Fox Family and Fox Kids, will see CPMs increase in this year’s upfront, due to the tightening of the available GRPs in the marketplace that would result from Fox Kids’ move, downward marketplace adjustments over the last three upfronts, and new players coming into the upfront.

With Fox Kids’ afternoon block accounting for about 2% of all GRPs, ‘that would tighten supply to a degree, but not anything dramatic,’ says Initiative Media’s Carr.

Buyers and network competitors alike wonder what impact Haim Saban’s sale of Saban Entertainment’s 49.5% stake in Fox Family Worldwide to News Corp will have on the future of the two TV outlets. ‘At this point, we’re anticipating no impact’ for the kids upfront or once this financial transaction goes through, says Bekkedahl.

Disney looks to shore up skeds with proven mouse team talent

At ABC, which saw a 25% decline among kids ages two to 11, senior VP and GM of children’s programming Jonathan Barzilay is satisfied with the network’s performance given the sports preemptions its Saturday morning lineup faced in fourth quarter. Gary Montanus, senior VP of Disney Kids Network, which handles ad sales for Disney’s One Saturday Morning on ABC, syndicated Disney’s One Too on UPN and Toon Disney, adds, ‘we lost a little ground partly because we may have lost some of our promotional platform’ when ABC replaced the youth-oriented TGIF block on Friday nights with adult-oriented fare last fall. As well, ‘CBS performed a little better,’ says Montanus. ‘They probably took some audience.’

New series Disney’s Teacher’s Pet and Disney/Pixar’s Buzz Lightyear of the Star Command have been growing steadily, says Barzilay, and ABC hopes to solidify its audience and recruit new viewers withDisney’s House of Mouse, which launched in January and February debut Disney’s Lloyd in Space. ABC is particularly excited about Lloyd in Space, from Paul Germain and Joe Ansolabehere, creators of Disney’s Recess, ‘our best performer for the last four years,’ in the month when the first Recess movie, Recess: School’s Out, hits theaters.

Typically drawing a roughly 60% girl/40% boy split and focusing on ages six to 11, ABC offers the ‘unique selling propositions’ of ‘100% penetration and an attractive gender balance,’ says Barzilay.

Toon Disney is signing up new cable systems, and Montanus expects it to be in 20 million homes-versus 17 million at press time-over the next year.

CBS makes in-roads with Nick Jr. traffic

This year’s biggest riser is CBS, which began airing a Nick Jr. block on Saturday morning last September, positioned as a sixth day of the preschool block airing Monday through Friday on CBS sister outlet Nickelodeon. Ratings among kids ages two to 11 jumped 143%, to 1.7 in Q4 2000 from 0.7-the second-lowest rating on Saturday morning-in Q4 1999. Among kids ages two to five, ratings rose 244% over prior-year levels since the block’s launch, according to Nickelodeon.

Zarghami attributes this success to the fact that ‘Nick Jr. has really built up a loyal and devoted audience over the years,’ allowing it to come ‘with built-in equity to CBS.’ Given the strength of Nick Jr. on cable, the initial strategy is to roll out new shows on the channel, then move them to CBS once they have attracted audience attention, likely within three to six months.

So far, Nick Jr. on CBS has been airing commercial-free. ‘We decided to conservatively approach the property and see what we had,’ says Danaher. She expects second quarter would be the earliest the block would accept advertising, although commercial time will be offered for the upfront. Danaher anticipates demand to be strong, and since the level of commercialization will be about half the industry norm, ‘that’s going to put a lot of demand against a very small supply.’ She admits there are fewer advertisers targeting ages two to five versus six to 11, but ‘there are loads of advertisers who target two to 11,’ and these advertisers may find Nick Jr. on CBS to be a complement to buys that bring in a more six to 11 audience.

Kids TV viewing is up

In other programming trends, kids television usage in Q4 2000 on a total-day basis was at its highest level in the past five years. Television usage (defined as the percentage of people within a demographic using television in a specific daypart-also referred to as Persons Using Television or PUT) climbed to 13.0 among kids ages two to 11 on a total-day basis in fourth quarter 2000 from 12.2 in fourth quarter 1999, and every daypart was up.

Kids ages two to 11 also spent more time watching both kids and non-kids programming in fourth quarter 2000-16.8 hours in total versus 14.6 hours in fourth quarter 1999. For kids fare, basic cable increased its share of kids’ viewing time. Of the 7.92 hours per week kids ages two to 11 spent watching kids shows in fourth quarter 2000, 7.01 hours were on basic cable, 0.9 hours on broadcast and 0.01 hours on syndication. That’s a shift from 5.02 hours on cable last year, 1.13 hours on broadcast and 0.09 hours on syndication in fourth quarter 1999. Outside of the fluctuations in broadcast and cable, is TV as a whole losing viewers and dollars to the Internet? ‘Going into last year’s upfront, we did not see a reduction in PUTs across most of your major kid demos. If anything, [viewership] was slightly up,’ says John Wagner, assistant media director at Starcom Worldwide. On major kids sites, ‘if you were to look at their monthly unique users [within ages six to 12], I think you would find that [their] reach potential is still very limited. You can buy a commercial on even a lower-rated kid player that’s going to reach more kids than [an] entire month’s worth of the web.’

Cartoon Network’s Hall estimates that spending against kids on-line overall falls at less than 5% of spending against kids on TV. Still, ‘I think [on-line is] more important than ever because that’s where the audience is expanding their time,’ says Hall, with research showing kids spend six or more hours a week on the web. And ‘we’ve shown that we can build our television audience and our on-line audience at the same time.’

The benefits of marrying TV and the Internet are becoming more apparent. Those companies that have dropped off the dot.com horizon often ‘didn’t have that link back to the core audience delivery system of television sets,’ says Hall. And you’ll find kids today who are active on-line while tuning in on-air. Starcom’s Wagner says the real opportunities ahead are to ‘capitalize on multitasking to reach somebody in your target with multiple messages at the same time.’

Nielsen ratings source: TN Media’s Kids 4th Quarter 2000 Review, published in January 2001