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Nickelodeon sells families on cruises with SpongeBob


Dan Lieberman

USA Today
January 28, 2008

NEW YORK — Nickelodeon might as well call its latest launch Nick at Naut.

Viacom's (VIA) popular cable channel for children, eager to diversify its revenue stream, is about to sail into the cruise business with the introduction this week of its Nickelodeon Family Cruise with Royal Caribbean.

The network has rented the largest ship in the cruise industry, Royal Caribbean's Freedom of the Seas, for Aug. 10-17.

Beginning this week, it will sell tickets — figure at least $4,000 for a family of four — to take more than 4,000 passengers to Mexico, Grand Cayman, Jamaica and a private beach in Haiti.

"The cruise space is intriguing," says Nickelodeon President Cyma Zarghami.

Although only one trip has been scheduled, "We can ramp up really quickly to come back in February if all goes the way we'd like it to go," she says.

Nick-arranged games, shows and characters, including Dora the Explorer and SpongeBob SquarePants, will supplement the ship's usual activities and entertainment such as mini-golf and ice skating.

The venture fits with several recent initiatives to establish Nick in the family travel business. For example:

•Nick will open its first theme park at Minnesota's Mall of America on March 15.

•Two months later, it will break ground in San Diego on the first of 20 planned Nickelodeon Resorts By Marriott.

•Last month, the company, in partnership with Hertz, introduced Nick on the Go. It provides vacationing families with a portable touch-screen media player loaded with the channel's programming.

The goal is to have recreation account for about 10% of Nick's revenue within five years.

"We as a brand are still young enough that we have to prove that when you do family entertainment with Nickelodeon, there's something for kids — and something for parents," Zarghami says.

She's confident that her company can make a strong case for itself as it appeals to the first generation of parents who grew up watching Nickelodeon, even though the strategy pits her against the mighty Disney in the competition for family vacationers.

"There will be distinct differences between our brands," she says. "People will make decisions based on their relationships to the brands."

She also recognizes the need to expand as the cable network business matures.

Nick's cash flow will grow 4.7% this year, to $1.3 billion, on revenue of nearly $2 billion, up 5%, research firm SNL Kagan forecasts.

TV ads and subscriber fees account for about two-thirds of the revenue, with the remainder largely from license fees from consumer products, including toys, clothing and electronics.

Nick's expansion plans mesh well with Royal Caribbean's needs. "In the U.S. market, we are still in the mode of convincing parents that a cruise vacation with Royal Caribbean is a great idea," says Royal Caribbean (RCL) CEO Adam Goldstein. "The brand association is attractive to our marketing efforts."

The company's efforts to woo families already include alliances with Crayola and Fisher-Price.

As part of the deal, ads for the cruise will run throughout the day on Nick and sister channel Nicktoons, the company's various websites and in Nickelodeon Magazine and Nick Jr. Family Magazine.


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