Viacom Reports Results For Second Quarter 2013

Viacom Inc., the parent company of the Nickelodeon brand, reported on Wednesday 1st May 2013 in the following Press Release, from PRNewswire, their financial results for the fiscal second quarter, which ended March 31, 2013. You can read Viacom's full "Viacom Reports Results For Second Quarter 2013" news release, which includes tables, balance sheets and statements, here on PRNewswire:

Viacom Reports Results For Second Quarter 2013

-- Media Networks Revenues Increase 2% to $2.23 Billion, Driven by Higher Advertising, Affiliate and Ancillary Revenues

-- Operating Income of $847 Million, Adjusted Diluted EPS of $0.96

-- Stock Repurchase Program and Dividend Returned $1.7 Billion to Shareholders in the First Half of the Fiscal Year

NEW YORK, May 1, 2013 /PRNewswire-FirstCall/ --

Fiscal Year 2013 Results

Viacom Inc. (NASDAQ: VIAB, VIA) today reported financial results for the fiscal second quarter, which ended March 31, 2013. Revenues decreased 6% to $3.14 billion, primarily due to lower Filmed Entertainment revenues and partially offset by an increase in Media Networks revenues as advertising revenue increased over the prior year. Operating income declined 9% to $847 million, reflecting lower Filmed Entertainment results and an increase in Media Networks programming investment expense, partially offset by the increase in advertising and affiliate revenues. Adjusted net earnings from continuing operations attributable to Viacom were $481 million, and adjusted diluted earnings per share from continuing operations were $0.96 per diluted share.

(Download Image - Viacom Logo: http://photos.prnewswire.com/prnh/20110811/NY51392LOGO)
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom continues to build momentum by developing unparalleled entertainment content for audiences throughout the world. I am fully confident that our proven executive team will deliver even greater success, by driving Viacom's vibrant businesses and returning outstanding value for shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Viacom's ongoing strategy of focused investment in creative content and broad multiplatform distribution of our brands accelerated improvement in our business in the quarter. Viacom's media networks are continuing to develop innovative new original programming for all of our audiences, and building unique experiences for our established brands that move beyond the television screen. As a result, ratings are up at several networks, and advertising revenues have returned to year-over-year growth, up two percent, with eight points of sequential improvement over the December quarter. Paramount is also executing on its strategic plan, and successfully positioned G.I. Joe: Retaliation, Hansel and Gretel: Witch Hunters and Pain & Gain for global success, and the year ahead remains strong, with audiences eagerly awaiting our upcoming tentpole releases - Star Trek Into Darkness and World War Z."

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Quarterly revenues of $3.14 billion represented a 6% decline from the prior year. Media Networks revenues rose 2% to $2.23 billion, due to an increase in advertising, affiliate and ancillary revenues. Domestic and worldwide advertising revenues both increased 2%, benefitting from recent improvements in ratings at select networks. Domestic affiliate revenues increased 3%. Excluding the impact of digital distribution arrangements, which are affected by the timing of available programming, the domestic affiliate revenue growth rate was in the low-double digits. Worldwide affiliate revenues increased 2%.

Filmed Entertainment revenues declined 20% to $941 million. Worldwide theatrical revenues decreased 15% from the prior year, principally reflecting lower carryover revenues in the quarter compared to carryover contributions from Mission Impossible – Ghost Protocol in the fiscal second quarter of 2012. Revenues from current quarter releases Hansel and Gretel: Witch Hunters and G.I. Joe: Retaliation were higher than revenues from titles released in the prior year quarter. Worldwide home entertainment revenues declined 38%, due to the number and mix of titles released, and lower carryover and catalog revenues.

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Quarterly operating income decreased 9% to $847 million in the quarter, reflecting lower home entertainment and theatrical revenues and increased Media Networks programming expenses, partially offset by higher Media Networks revenues.

Quarterly adjusted net earnings from continuing operations attributable to Viacom were $481 million, a decline of 10%, principally driven by the decline in operating income. Adjusted diluted earnings per share from continuing operations for the quarter were $0.96, a 2% decline from the prior year's comparable quarter.

Stock Repurchase Program

For the quarter ended March 31, 2013, Viacom repurchased 11.7 million shares under its stock repurchase program, for an aggregate purchase price of $700 million. As of March 31, 2013, Viacom had 487 million shares of common stock outstanding. As of April 30, 2013, Viacom had $3.13 billion remaining in its $10 billion stock repurchase program.

Debt

At March 31, 2013, total debt outstanding, including capital lease obligations, was $8.93 billion, compared with $8.15 billion at September 30, 2012. The Company's cash balances were $1.26 billion at March 31, 2013, an increase from $848 million at September 30, 2012.

About Viacom

Viacom is home to the world's premier entertainment brands that connect with audiences through compelling content across television, motion picture, online and mobile platforms in over 160 countries and territories. With media networks reaching approximately 700 million global subscribers, Viacom's leading brands include MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, COMEDY CENTRAL, TV Land, SPIKE, Tr3s, Paramount Channel and VIVA. Paramount Pictures, America's oldest film studio and creator of many of the most beloved motion pictures, continues today as a major global producer and distributor of filmed entertainment. Viacom operates a large portfolio of branded digital media experiences, including many of the world's most popular properties for entertainment, community and casual online gaming.

For more information about Viacom and its businesses, visit www.viacom.com. Keep up with Viacom news by following Viacom's blog at blog.viacom.com and Twitter feed at www.twitter.com/Viacom.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect the Company's current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause future results, performance or achievements to differ. These risks, uncertainties and other factors include, among others: the public acceptance of the Company's programs, motion pictures and other entertainment content on the various platforms on which they are distributed; technological developments and their effect in the Company's markets and on consumer behavior; competition for audiences and distribution; the impact of piracy; economic conditions generally, and in advertising and retail markets in particular; fluctuations in the Company's results due to the timing, mix and availability of the Company's motion pictures and other programming; changes in the Federal communications laws and regulations; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company's businesses generally; and other factors described in the Company's news releases and filings with the Securities and Exchange Commission, including but not limited to its 2012 Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this document are made only as of the date of this document, and the Company does not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. If applicable, reconciliations for any non-GAAP financial information contained in this news release are included in this news release or available on the Company's website at http://www.viacom.com .

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SOURCE Viacom Inc.

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Also, below is a transcript of Viacom's Q2 2013 Results Earnings Call, featuring only the excerpts which talk about Nickelodeon, from Seeking Alpha:

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Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

Thank you very much, Sumner. And good morning, everyone. Thank you for joining us today to discuss the second quarter of Viacom's 2013 fiscal year.

Our results for the March quarter were highlighted by our return to positive advertising revenue growth driven by continued ratings' momentum at our Media Networks. Nickelodeon posted solid year-over-year gains, with ratings up 7% and up 11% at Nick at Nite, in their respective key demos, marking the strongest ratings growth we've seen from Nick in 2 years. We're achieving ratings growth and revenue improvement through increased investment in content. We continue to invest in new original programming, diversified creative formats and marquee and emerging talent, both on and behind our screens.

Even as we invested in on-air programming, Nickelodeon took the leading edge of a sweeping effort across Viacom to reinvent how we deliver content and connect with fans. In March, Nickelodeon launched the Nick app for the iPad, the first of several dynamic apps to come from our individual brands. Nick app will debut for the iPhone later this quarter. And a number of our other brands will launch standalone apps this summer.

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Our Media Networks segment had a solid quarter, with revenue up 2%. Advertising revenue also grew 2%, thanks to ratings improvement at our networks and strong demand. Growth represents an 8-point sequential improvement from the December quarter. We expect to achieve further sequential improvement in advertising revenue growth in the current quarter.

Affiliate revenue grew 2% in the quarter. Similar to the previous quarter, our core domestic affiliate revenue grew in the low-double-digit range, but the overall affiliate line was moderated by the timing of content availability for digital distribution partners in the quarter. We expect total domestic affiliate growth of 10% for the full fiscal year. We are in constructive discussions with several parties, including Netflix, concerning digital distribution of various portions of our rich portfolio of content beyond the expiration of our Netflix agreement later this month. We continue to see such distribution to be a growing and complementary avenue for our affiliate business.

As I said earlier, our strategy is strong, sustained investment in original, wholly-owned content. We firmly believe that if we fuel the creative engines that drive our brands, we will continue to create hits that resonate with diverse audiences, keep audiences deeply engaged with our networks and increase viewership on new and emerging platforms as well as drive value for our marketing and distribution partners.

While we invest in programming, we're also investing in the future of content itself. We believe that apps are a critical piece of that future. The recently-launched Nick app is the first of several brand apps we're rolling out this year. Our guiding principle is that the app opportunity is greater than just online video. Apps give us the opportunity to deliver a total brand experience to fans. The Nick app, for example, is an interactive playground that offers not only short-form and full-episode video but also a rich offering of games, media and other features that allow fans to connect with Nick stars in the network's new Nick Studio 10 afternoon block of live programming. And advertisers are taking notice, with several studio clients on-board at launch and other marketers poised to join.

MTV is taking a similar approach with its forthcoming app which will feature its hit programming but also deep social TV integrations and original video content. And beyond the core brand apps, we continue to launch apps for individual franchises, like The Colbert Report and Teenage Mutant Ninja Turtles, extending the engagement that many of our shows have built with fans beyond traditional TV.

Additionally, our core brand apps drive value for our distribution partnerships and reinforce the subscription model through TV Everywhere functionality. Our authenticated apps and websites are currently available to more than 50 million pay TV subscribers with distributors including DIRECTV, Time Warner Cable, Verizon FiOS, AT&T U-verse and more.

Moving into programming highlights, I'm going to focus on 3 of our networks.

Things are going very well at Nickelodeon. The network had a great quarter in which its ratings built each month, finishing March up 21% year-over-year on its way to a 7% overall ratings gain among kids 2 to 11 for the quarter. A highlight was the 2013 Nickelodeon Kids' Choice Awards, which grew ratings over last year in the U.S. and continued its expansion into a true global franchise, with ratings up double digits in markets including the U.K., Brazil and Spain. In the current quarter so far, ratings at Nick are up 9%. We are gratified by the progress the network has made and the creative and strategic execution its team has undertaken to get back on top.

Nickelodeon has now completed the process of consolidating its West Coast development hub, allowing for greater consistency of creative vision and sharing of talent and resources across its programming teams. Throughout this quarter and beyond, Nick will bring a significant amount of new programming to the air, giving it ample time to establish new hits in advance of the critical holiday season for marketers.

Nickelodeon also continues to be strategic in maintaining demographic balance in its audience. The Kids' Choice Awards are a great example. After seeing an exodus of boys among the viewership of last year's show, the network loaded the 2013 show with talent having greater appeal for young boys, including host and Transformers star Josh Duhamel. As a result, ratings were up 19% with boys 2 to 11, the key driver of the show's overall ratings growth.

Nickelodeon rebounded with preschool audiences in the March quarter, thanks in part to the successful launch of Peter Rabbit, and continues to invest in preschool content. The network is also sharpening its focus on older girls, particularly with the upcoming launch of Sam and Cat in June, starring iCarly's Jennette McCurdy and Victorious' Ariana Grande.

Finally, animation remains a key focus for Nickelodeon. We're bringing more animated programming to the screen, including the new hit Monsters vs. Aliens; our newest series Sanjay and Craig launching later this month; the upcoming Rabbids and Breadwinners; and new episodes of Teenage Mutant Ninja Turtles, the Legend of Korra and SpongeBob.

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Richard Greenfield - BTIG, LLC, Research Division

A couple of questions. When you look at Teenage Mutant Ninja Turtles, you launched it last year, and I think there was, I think, among investors, a little bit of skepticism in your ability to reboot this franchise. And it seems like it's done pretty well in the network. And I -- it's like you're -- on iPad, you're like the #1 paid app. And I'm just kind of curious, why do you think this franchise has resonated so well? And what do you do from here to keep building its brand and making more out of it as you look out over the next couple of years?

Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

Well, Richard, thanks for bringing it up. We couldn't be happier with the way this franchise has been rebooted. And it has a long life ahead of it. The -- you have a lot of young dads who remember the old series fondly. And the execution on the new animated series on Nickelodeon is really great. It's visually beautiful, and it echoes the prior series but it's an improvement on it. And it resonates on a global basis. It's driving our consumer products business. Our -- in a difficult general environment, our ancillary revenues have grown in the past quarter, and that's really driven by the Teenage Mutant Ninja Turtles franchise. And a lot more opportunity there. And I'm really excited about the Paramount film that is -- has just started production, with Michael Bay as the producer. And when that gets released next year, that will be yet another step forward in building that franchise again on a global basis. And it just -- it works on our -- on all of our platforms and it will just add an important new leg on the stool of our consumer products business and reinforce our other properties, by the way.

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Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

We have -- certainly, a driver of the improvement is correlated to improving our ratings, but we are also seeing strong demand. Particularly if you look at our mix, we're seeing a better mix of advertising demand. So we've really made great strides in categories like autos, retail, quick-service restaurants, beverages, computer, hardware and software, but we're seeing strength in important categories to add to our traditional areas of strength that's been there. Then pricing is very strong. We're seeing -- in the last quarter, we had -- upfront-to-upfront pricing was up in the mid-single-digit area. Scatter-over-upfront, on average, for our networks was up about 20%. And if you look at scatter-over-scatter, that was up in the low double digits last quarter. So there's good demand, and we're feeling very good with the combination of our better performance, particularly the Nickelodeon family; and the general environment, which is positive. And that also bodes well for the upfront that we are entering into.

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

And just a follow-up on Nick At Nite where we've seen some improvements there. Is that just from a better lead-in from Nick? Or are you also feeling the programming there is where you want it to be?

Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

It's both. It's a good lead-in from Nickelodeon delivering a better audience. And we are seeing strength in Friends, for example, which has built up. And we're combining -- from an advertiser perspective, combining strong third-party content with our original content, it just provides an attractive mix for them. So it's a good story, and it's one that we worked hard on over the last several quarters and it's coming to fruition.

Operator

And we'll take our next question from Marci Ryvicker with Wells Fargo.

Eric Katz - Wells Fargo Securities, LLC, Research Division

This is Eric Katz, on for Marci. I was just wondering if you can comment on the tone or strength of the Nickelodeon upfront that recently took place?

Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

We had wonderful reaction at our presentation. I talked to a lot of advertisers. It was exceptionally well-attended. And they're very pleased with the progress Nickelodeon has made where we've already sold about 1/3 of our upfront inventory. And obviously, it's very early in the upfront season. So Nickelodeon should have a very healthy upfront this year.

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John Janedis - UBS Investment Bank, Research Division

A little bit more on kids, maybe more broadly. Can you give us an update on the kids market overall? Is this year's upfront healthier? And to what extent can you monetize the ratings in Nick ahead of the new upfront pricing?

Philippe P. Dauman - Chief Executive Officer, President and Not Independent Director

Well, as I said in response to a couple of questions ago, the kids upfront marketplace is shaping up well for us. Our marketers need to be on our Nickelodeon networks. And so they've been working very closely with us, they're rooting for us. And they're very gratified, as I am, by the new programming that's already on air and that's coming. So the -- really important is the holiday season coming up. We're seeing -- apart from the toy category, we're also seeing a lot of new video game launches, both on platform and games themselves, as we get into that holiday season. And we are growing our non-endemic business, such as automotive. Nickelodeon is a part of the house where automotive business has been growing, and other categories. And we're able to capture more adult dollars as marketers are realizing that there are a lot of moms and dads watching our Nickelodeon networks.

Thomas E. Dooley - Chief Operating Officer, Senior Executive Vice President and Director

Our aim to monetize in the marketplace. While a large percentage of Nickelodeon's inventory is sold in the upfront, much more so than our other networks, because of the liability bank, we had the turnaround in ratings, was able to be monetized by using the liability bank that we had in place. So the upside in ratings does that come back to us through that.