NBCUniversal Is Building Its Own Children’s Channel

Brook Barnes
All Hail King Julien
Source: DreamWorks Animation

LOS ANGELES — In a new salvo in the children's television wars, NBCUniversal is creating its own Disney Channel.

Starting on Sept. 9, NBCUniversal will turn one of its smallest cable properties, Sprout, into a network called Universal Kids, said Deirdre Brennan, who will oversee the effort. She said NBCUniversal wanted to create an "umbrella brand" for its family offerings — television cartoons made by the Universal-owned DreamWorks Animation, Universal-Illumination films and attractions at Universal theme parks.

Sprout is solely aimed at preschool viewers, but Universal Kids will concentrate on children 2 through 11. The revamped channel's first series will be "Top Chef Junior," a spinoff of the cooking show on NBCUniversal's Bravo.

"Reality programming is a real white space in the U.S. children's market — food, pets, dancing, even news," said Ms. Brennan, who will be general manager of Universal Kids. "Look at how sophisticated 11-year-olds are these days. They want more than the same sitcoms."

At its start, Universal Kids will also show reruns of DreamWorks Animation cartoons like "All Hail King Julien," which is connected to the "Madagascar" movie franchise. NBCUniversal bought DreamWorks Animation for $3.8 billion last year, an acquisition that hinged in large part on the boutique studio's television cartoon business.

"We're connecting our businesses in a way that's never been done before," Bonnie Hammer, chairwoman of NBCUniversal Cable Entertainment, said in an email. Ms. Hammer added that the goal was to create "an even richer entertainment experience and a new strategic business model."

Continuing as it is now would have been perilous for Sprout, which has low ratings and reaches only about 59 million homes in the United States. (Nickelodeon, in comparison, is in more than 90 million.) As more consumers look for slimmed-down cable packages or forgo a cable connection entirely, bottom-rung channels are not expected to survive.

Comcast, which owns NBCUniversal, may see a robust children's television business as important to its goals with its Xfinity TV service, which includes a Netflix-style streaming component. Cartoons — many supplied by DreamWorks Animation — have been crucial to Netflix's emergence as an entertainment home base for families. (DreamWorks Animation will continue to make cartoons for Netflix.)

Universal Kids may also be aimed at taking advantage of marketplace tumult: Ratings have recently tumbled for some children's television stalwarts.

Viacom's Nickelodeon held steady among viewers 2 through 11 in the first quarter compared with the same period a year ago, but Time Warner's Cartoon Network fell 15 percent, according to Todd Juenger, a media analyst at Sanford Bernstein. Disney Channel, which does not accept traditional advertising (and focuses on children as old as 14), declined 20 percent, while the ad-supported Disney XD plunged 27 percent.

There is no guarantee that Universal Kids will fare any better. One cautionary example: After pouring resources into a children's channel called The Hub in 2010, Discovery Communications and Hasbro retrenched in 2014. But analysts say there is too much potential value on the table not to try. Each year, children's TV generates billions of dollars in ad revenue, subscriber fees and toy sales for Disney, Time Warner and Viacom.

(Disclosure: NBCUniversal is parent of CNBC.)