Bob's Gutsy Leadership Blog

A Lesson from Viacom About Avoiding Reality

Over the years Viacom has been highly successful with its popular cable networks including Comedy Central, BET, VH1, Nickelodeon, and MTV. On the other hand, more recently, and specifically in this current television viewing season, Viacom is seeing double digit declines in its ratings. For example, at MTV, the company’s flagship network, prime-time ratings are down 22% versus last year and 25% among 18-34 year olds, the network’s demographic target.

While it is the case that the whole industry of paid TV is suffering, with cable TV ratings among 18-49 year olds in prime-time viewing down 7% from last year, Viacom dropped 19%. In response, Viacom recently announced that it would write off $785 million to cover the cost of older shows whose value has declined. They have also eliminated a large number of jobs. This is in response to their weak ratings and their third straight quarterly decline in ad revenue.

The surprising thing here is that the changing viewing habits of consumers have been very obvious for the last 2-3 years and Viacom seems to not notice. The fact is consumers are shifting their viewing from live television to various on-demand options, as well as a variety of entertainment alternatives available on the internet. The explosive growth of You Tube, Netflix, and Hulu should have sent a obvious signal to Viacom years ago that their traditional model was becoming outdated. In what appears to be a clear case of ignoring reality, the CEO of Viacom was speaking to an analyst group recently and claimed that they are not losing viewers; it is simply a problem of the industry’s measurement devices! His claim is that those organizations simply aren’t doing an adequate job of counting the Viacom viewers.

Many Viacom competitors are strengthening their connections with younger viewers and capturing more of the ad dollars flowing online by acquiring multi-channel networks that have large and loyal followings on You Tube. They are also scrambling to purchase digital advertising technology firms and investing in online video companies such as Hulu and Vice Media.

Viacom’s behavior of standing around and not facing reality is not new. We’ve seen it over and in the business world. The lesson is very clear:

The minute you meet up with success you must immediately begin searching for the great new idea which will enable you to continue success in the future.

Anyone that doesn’t abide by that rule, but instead sticks to protecting the status quo (like Viacom has done), will find themselves in the same situation as this media giant that is really struggling.

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