Viacom’s MTV Winning Fight Against Irrelevancy - For Now

NEW YORK (TheStreet) -- As the media industry moves to consolidate through multi-billion dollar mergers, the pressures surrounding one of Viacom's (VIAB) prime properties, MTV, forces the company to make some drastic changes.

With consumers streaming and demanding more content, companies like Netflix (NFLX) and Hulu that provide on-demand TV, are being aggressive in acquiring popular shows, ratcheting pressure on Viacom. 

Now 33 years old, Viacom's MTV has continued to find ways to keep people watching. Although Viacom doesn't explicitly state how much revenue the channel generates for the company, Barclays Media Analyst Kannan Venkateshwar suggests MTV and Nickelodeon, two channels catering to the company's largest demographics -- ages 2 through 12 and 18 through 34, generate roughly 44% of the company's U.S. media network revenue and 27% of the company's overall revenue. 

"MTV, they are working off a cache that has worked for them in the past and will most likely continue to work for them in the future," Roger Entner, founder of Recon Analytics, said in a phone interview. "They continue to look for content that will knowingly create drama, have that shock value and keep people coming back." 

Viacom generated roughly $3.2 billion dollars during its second quarter ending on March 31, with $2.8 billion dollars in revenue from its Media Networks and the remaining $831 million courtesy of Viacom's filmed entertainment, including Paramount's The Wolf of Wall Street and Transformers: Age of Distinction. Advertising across all divisions generated $1.1 billion for the company. 

From its pledge in 1981 to be the "world's first 24 hour stereo video channel" to shaping our definition of reality television with seasons of The Real World, Viacom's MTV has provided consumers with music videos and drama reality television for three decades.

The network has developed and tweaked a formula to keep it afloat while seemingly defying the odds of a dwindling music industry and the inevitable pitfall of its core youth demographic outgrowing its service. 

"[MTV] is one of the core flagship companies that they have and it's disproportionately so. Sure, the music industry has big stars, publicity and things but the mobile industry is a $170 billion dollar industry and growing whereas the music industry is a $10 billion dollar industry and shrinking. Moreover, the impact that music has is very disproportionate to what it is actually worth," says Entner.

Alongside a shrinking industry, Venkateshwar notes the volatility of MTV's demographic.

"While the demographic that these networks cater to provides an opportunity from an advertising perspective, given advertisers tend to pay a premium for this base, this demographic is also susceptible to the biggest shift in consumption patterns caused by changes to technology and viewing habits," Venkateshwar said.

Uncharted Territory

In the past five years, MTV has veered away from its mission in favor of original, scripted content; a move that has undoubtedly shocked viewers and actors alike. MTV rebranded itself in 2010 after officially dropping Music Television from its logo back in 2010. Viewers can still find music on the channel's sibling sites, MTV Hits and MTV Jams, while the main channel focuses on reality and drama programming.

MTV is currently airing more than four original scripted programs, with additional shows slated to debut this year. These original shows will air alongside 26 reality-based television shows, award shows and other specials starring popular public figures including professional skateboarder Rob Dyrdek. As a brand MTV's programming has a reputation for quality and for ground-breaking entertainment.

Awkward actress, Greer Grammer, was instantly attracted to the role of Lissa- a quirky, off-the-walls character she portrays on the American teen comedy.

"It was a scripted show for MTV," she said. "I auditioned for the pilot and when I received the script, I was surprised by how good the writing was. It was really funny, and didn't sound like anything I had read at the time. It also didn't look like anything we have seen on television before."

As MTV lost its monopoly on the music video, most recently to Web sites such as YouTube and Vevo, it was forced to create its own niche of scripted and reality-based programs. A large share of MTV's scripted content continues to push the envelope, delving into matters of sexual and gender orientation, werewolves lurking in quaint towns and other issues that appear to be on the minds of millennials.

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