(Update: Nickelodeon now says it erroneously reported that kids' viewership is up overall this season, and that overall viewership is in fact down. It still stands by its Nickelodeon data, however.)
Nickelodeon is down in the ratings, and in the dark about why.
After 16 years of dominating children's television, the network finds itself in the midst of a mysterious ratings slide serious enough to drive concerns about its parent company's stock and prompt an investigation with Nielsen.
In just-released November ratings, Nickelodeon was down 19 percent year-over-year in ratings for viewers age 2 and older. In October, its ratings fell 13 percent.
Wall Street is paying attention: This week, one analyst downgraded his rating on Viacom stock from buy to neutral and the other lowered his target price slightly. Both cited Nickelodeon ratings declines.
Viacom CEO Philippe Dauman calls the slide "inexplicable" and an "aberration" -- but so far, a coordinated effort by the network and Nielsen to find some glitch that might explain it has come up empty.
At least one Nick rival doesn't buy the idea that there's anything wrong with the way Nielsen tracks childrens' ratings -- and poked fun at Dauman's choice of words.
"We don't think there's a glitch in kids ratings," the Disney Channel said in a statement to TheWrap. "The ratings strength of Disney Channel and Disney XD is 'inexplicable' to some but we are very clear on what's happening -- it's the popularity of our programming."
Could SpongeBob -- gulp -- just be getting old?
(Update, Dec. 5: Nielsen initially said viewership was slightly up this season among viewers 2 to 11, but later corrected its numbers to say it is in fact down 2.9 percent. Nielsen stands by its Nickelodeon numbers, however.)
Nick's slide comes at a particularly bad time: The last three months of the year are especially important to the network because of ads for holiday films and toys.
The stakes are also high because no cable network earns higher total-day ratings than Nick, whose closest rival is The Disney Channel. Both benefit from young audiences with plenty of spare time during the day -- and parents who use it as a plug-in babysitter.
Though it trails them in total-day viewing, the Cartoon Network is the third-most-watched kids' network after Nick and the Disney Channel, and has shared some of Nick's ratings woes. But in the latest monthly ratings it seems to be digging itself out, while Nickelodeon's latest numbers have only gotten worse.
Nick believes the problem could lie with Nielsen's sampling of its audience, and has worked with the company behind the scenes to examine several possibilities.
"We've been doing this for 30 years, and we've been No. 1 for 16, going on 17 years, with 2-to-11 year-olds. This is a short-term problem," Nickelodeon spokesman Dan Martinsen told TheWrap. "The bottom line is whatever has happened with the sample, this is what we're working with now."
He said the network still expects to finish the year as the top network among viewers age 2 to 11, and that the network plans 500 new episodes in the next few months to increase ratings. Its new shows include "Kung Fu Panda: Legends of Awesomeness."
"We're moving more aggressively," he said.
Dauman said in a Nov. 10 earnings call that Nick's ratings are usually very predictable, and that set-top box data shows "meaningfully different viewership trends" than those Nielsen has recorded.
But Nielsen stands by its numbers. In a statement, it said it has worked with the network and the Media Rating Council, the industry's independent auditing organization, on an "exhaustive assessment" of its ratings.
"To date, the review process confirms that our measurement methodology, operations and related reporting processes are working as expected," it said.
Nick first noticed the drop in September. According to the latest numbers, Nick fell to an average 0.75 rating over each entire day in November, down from 0.91 in November of 2010. It reached about 1.4 million households this November, down from roughly 1.7 million in November of last year.
The Disney Channel posted a 4 percent year-over-year ratings increase in November, from 0.67 to 0.7. (Nick doesn't consider it a direct competitor since it isn't ad-supported.) The Cartoon Network was flat year-over-year in November, recovering somewhat from its own recent losses.
In October, Nick dropped 13 percent in the ratings while Disney gained 5 percent and the Cartoon Network dropped 12 percent. In September, Nick dropped 8 percent while Disney dropped 2 percent and Cartoon Network fell 5 percent.
The slide isn't a case of other networks eating Nick's lunch -- not all of it, anyway. Disney's small gains don't begin to account for Nick's losses. Neither does the fast growth of The Hub, which grew 40 percent year-over-year in November. (That isn't as impressive as it sounds when you consider that the growth reflects a ratings increase from 0.05 to 0.07, as the number of daily households grew from 56,000 to 76,000.)
Disney's XD, meanwhile, has posted ratings gains of 8 percent in October and 15 percent in November after a flat September. It climed to 223,000 households in November, up from 205,000 year-over-year.
On Monday, analyst David Joyce of Miller Tabak and Co. cut his rating on Viacom stock from "buy" to "neutral," citing the ratings pressure. On Wednesday, Nomura Securities' Michael Nathanson lowered his price target by $1, to $54 -- though he still rates the stock a "buy."
Viacom shares nonetheless climbed more than 5 percent Wednesday, fueled by the market's overall surge, to end the month of November at $44.76. At the end of August, three very volatile months ago, its shares were at $48.24.
Dauman will likely face more questions about the ratings drop when he speaks Monday at the UBS Global Media and Communications Conference in New York City.
Nickelodeon and Nielsen have looked at a host of possible explanations for the slide. Among them are whether Nielsen's sampling may have been thrown off by Cablevision starting to require customers to begin using converters for all TVs.
They have also looked into whether Nielsen has measured Nickelodeon's Hispanic viewers accurately, and whether Nielsen may have replaced cable households with non-cable homes.
But nothing in the data collection explains the ratings slide.