By Keach Hagey And Shalini Ramachandran 

Jon Stewart's fans will mourn his departure from Comedy Central's "The Daily Show." So will the channel's parent company, Viacom Inc.

The media giant is facing growing concerns on Wall Street that pay-TV providers will decide they can do without its bundle of channels, which also include Nickelodeon, MTV and smaller ones like TV Land and Spike. Being dropped by cable providers, whose subscription-fee payments power revenue and profit growth for all media companies, would be a significant blow for Viacom.

As ratings have sagged across all Viacom's major networks, Comedy Central has been a key element of the package in its discussions with distributions. The company's leverage was strengthened by having two marquee stars with passionate fan bases, Mr. Stewart and Stephen Colbert, who hosted "The Colbert Report." But Mr. Colbert left in December, and now Mr. Stewart has said he would be out the door later this year.

"The pay-TV content ecosystem is increasingly about having tent-pole programming, and Viacom has arguably lost their two biggest tent poles over the last few months," says Dan York, chief content officer at DirecTV, the nation's second biggest pay-TV provider after Comcast. DirecTV in 2012 signed a long-term deal with Viacom after a nine-day blackout battle.

Viacom spokesman Carl Folta rejected the notion that the twin stars of Comedy Central were so crucial.

"These are important shows, but they are two among many across the Viacom portfolio," he said, pointing to other successful franchises like "SpongeBob Squarepants" on Nickelodeon, "South Park" on Comedy Central and "Teen Wolf" on MTV. "The reason we are as widely distributed as we are is that we have the biggest share, in the most attractive, young demographic, of any content company."

Last year more than 60 small cable operators covering about two million subscribers dropped Viacom's channels, amounting to about 2% of U.S. pay TV households. The question is whether bigger distributors will do the same. On an earnings call in November, Dish NetworkCorp. Chairman Charlie Ergen brought up the Viacom problems with small operators and suggested not every pay-TV company will carry every channel in the future.

Viacom has played down the threat, saying it has long-term distribution deals covering 70% of subscribers. The company also has emphasized that no major deals are currently up for renewal.

A Viacom executive said the company is confident it can preserve the "Daily Show" franchise and that Mr. Stewart will play a vital role in picking his successor. The executive said fresh blood won't be a bad thing, pointing to Jimmy Fallon, who took over the "Tonight" show from Jay Leno and boosted NBC's ratings.

"Everybody was surprised by how well Fallon did," the executive said. "I think it's very possible to make a new franchise as big or even bigger."

The executive also noted the ratings for Larry Wilmore, Mr. Colbert's replacement. He has drawn over 1 million total viewers and 367,000 viewers in the 18-34 demographic so far this season, a respectable result for a new show, even if it is down from Mr. Colbert's 1.6 million total viewers and 502,000 18-34-olds.

"The Daily Show" has been a crucial franchise for Viacom in negotiations with carriers. An executive at one pay-TV company said it has even sought to time its contract extensions with Viacom to expire when Messrs. Colbert and Stewart typically took vacation. That way, if the carriage negotiations between the companies broke down, Viacom wouldn't be able to use blackouts of the Comedy Central shows as leverage.

An executive at a small cable operator said after the company dropped the Viacom channels last year, "Stewart at 'The Daily Show' came up over and over again" in interactions with upset customers. Though Mr. Stewart's primary audience consisted of "millennials," the executive said, there were complaints from people in their mid-40s and mid-50s. "He was that powerful in terms of his draw," the executive said.

Losing Mr. Stewart is just one of several problems. All of the big Viacom channels are suffering double-digit viewership declines. Nickelodeon, Comedy Central and MTV are down 32%, 16% and 25%, respectively, in their target demographics so far this season, according to an analysis of Nielsen ratings by Jefferies.

The entire cable-television industry has suffered ratings declines this season, but Viacom has been particularly affected, Viacom's Mr. Folta said, because its young demo is more likely to watch in nontraditional ways.

Viacom has pushed back on Nielsen's measurement system, saying it doesn't adequately account for online viewing. Viacom has said that it wants to make half of its revenue "non-Nielsen dependent," up from 30% last year.

Meanwhile, Viacom's future is the focus of intense speculation on Wall Street. Its executive chairman, Sumner Redstone, is 91 years old and didn't speak on Viacom's most recent earnings call last month, as has been his habit. Viacom said Mr. Redstone was listening in from Los Angeles. Mr. Redstone controls Viacom through National Amusements Inc., which has roughly 80% of Class A voting shares. Should he die, his holdings would be transferred to a trust, with Viacom Chief Executive Philippe Dauman as one of the trustees.

Some analysts say Viacom could become a potential acquisition target. Some analysts have begun calling for it to reunite with CBS, which it split from in 2006. Those who support the idea point to the pending mergers of Comcast Corp. and Time Warner Cable, and DirecTV and AT&T, noting that content providers probably need to bulk up to gain leverage. Backers also say benefits would come from combining CBS's growing broadcast subscription fees in the U.S. and content-licensing revenue with Viacom's reach internationally.

"I think there's a clear bias toward scale in today's media landscape, and putting CBS and Viacom together would make both of those companies much larger," said Brett Harriss, an analyst at Gabelli, who called for the merger in October.

Michael Nathanson, an analyst at MoffettNathanson, said Mr. Stewart's departure adds fuel to the recent pessimism: "There has been a wave of worry for Viacom. People are worried. They worry, 'Can Comedy Central now be dropped when you lose a passionate connection to Jon Stewart'?"

Nickelodeon long has been Viacom's powerhouse among the big networks, and it still is. The SpongeBob franchise remains a force in children's TV, evidenced by the strong box-office showing of the latest movie. But Nickelodeon's role is diminishing due to ratings declines and the proliferation of children's content on subscription video on-demand services like Netflix, pay-TV executives say.

"The Daily Show" averaged about two millions viewers last year, but its real strength has been its long-standing dominance over other late-night shows in younger viewers, including the 18- to 34-year-old demographic.

But the competitive landscape has gotten tougher. Jimmy Fallon's "Tonight Show" averaged 656,000 viewers ages 18 to 34 last year, beating Mr. Stewart's 522,000, after years in which Mr. Leno trailed him by a wide margin, according to Nielsen data analyzed by Horizon Media.

The average age of the audience of "The Daily Show" has begun to creep up. According to Brad Adgate, director of research for media buyer Horizon Media, the average age viewer was 29 shortly after Mr. Stewart joined in 2000 and had risen to nearly 45 by 2014.

Write to Keach Hagey at keach.hagey@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

Access Investor Kit for CBS Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1248571036

Access Investor Kit for CBS Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1248572026

Access Investor Kit for Comcast Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US20030N1019

Access Investor Kit for Comcast Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US20030N2009

Access Investor Kit for DIRECTV

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US25490A3095

Access Investor Kit for Viacom, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US92553P1021

Access Investor Kit for Viacom, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US92553P2011

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Lafarge North America (NYSE:LAF)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Lafarge North America Charts.
Lafarge North America (NYSE:LAF)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Lafarge North America Charts.