Viacom Inc. (NASDAQ: VIAB, VIA), the parent company of the Nickelodeon brand, has today, Wednesday 6th August 2014, reported in the a press release, on
Business Wire, the company's financial results for the fiscal third quarter of 2014 ended Monday 30th June 2014. Revenues were $3.42 billion, a decrease of 7%, with declines in Filmed Entertainment partially offset by an increase in Media Networks revenues. Operating income was $1.09 billion, as gains in Filmed Entertainment were offset by lower Media Networks operating income. Adjusted net earnings from continuing operations attributable to Viacom decreased to $618 million, and adjusted diluted earnings per share from continuing operations were up 10% to $1.42 per diluted share.
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom continues its mission to develop the world's most exciting media brands and compelling entertainment. As the industry landscape continues to evolve, our business is very well positioned."
Philippe Dauman, President and Chief Executive Officer of Viacom, said, "It was a solid quarter for Viacom. We delivered nearly $1 billion to shareholders through buybacks and dividends and continued to build on our success in creating outstanding content and focused brands that connect deeply with audiences across all platforms. Our Media Networks distribution relationships continue to expand, providing broader opportunities for fans to enjoy Viacom's content. Successful series and high-profile event programming on our networks create powerful experiences for audiences and valuable opportunities for advertisers, while driving industry-leading social engagement. We announced our agreement to acquire major British broadcaster Channel 5 in the quarter, which will increase our presence in an important global market. Paramount is poised for an outstanding summer, kicked off by Transformers: Age of Extinction which is already a record-setting global hit and the number one film of all time in China. In addition, the highly-anticipated Teenage Mutant Ninja Turtles premieres Friday for fans around the world."
You can read Viacom's press release announcing the company's earnings and growth during 3Q14 in full, including tables of Viacom's statements and balance sheets,
here on BusinessWire.com.
Also, below is Viacom's Q3 2014 Results Earnings Call Transcript, in which Viacom Management discusses the company's Q3 2014 Results and future plans for Nickelodeon, from
Seeking Alpha. Nickelodeon highlights include:
* A torrent of new programming, including 9 new shows launching from the current quarter through the first quarter of calendar 2015, including the premiere of "Dora and Friends" in August 2014 and new live action series "Henry Danger" and "Nicky, Ricky, Dicky & Dawn" in September 2014. Nick USA's preschool programming block is also slated to debut "Blaze and the Monster Machines"
from October 2014.
* In the period through the critical back-to-school and hard 8 [ph] selling seasons, Nickelodeon USA will have 12 straight weeks of premieres, many of which are returning hit series that powered the network to substantial gains last fall, including "Sanjay and Craig" and "Teenage Mutant Ninja Turtles".
* Following on the heels of the film, Nickelodeon is rolling out season three of "Teenage Mutant Ninja Turtles", featuring 26 brand-new episodes, and will continue to grow and build out new categories of the very successful "Turtles" consumer products lines:
Viacom's (VIAB) CEO Philippe Dauman on Q3 2014 Results - Earnings Call Transcript
Aug. 6, 2014 1:30 PM ET | [...]
Viacom (NASDAQ:VIAB)
Q3 2014 Earnings Call
August 06, 2014 8:30 am ET
Executives
James Bombassei - Senior Vice President of Investor Relations
Sumner M. Redstone - Founder and Executive Chairman
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
Wade C. Davis - Chief Financial Officer and Executive Vice President
Thomas E. Dooley - Chief Operating Officer, Senior Executive Vice President and Director
[...]
Operator
Good day, everyone, and welcome to the Viacom Third Quarter 2014 Earnings Release Teleconference. Today's call is being recorded.
At this time, I would like to turn the call over to Senior Vice President of Investor Relations, Mr. Jim Bombassei. Please go ahead, sir.
James Bombassei - Senior Vice President of Investor Relations
Good morning, everyone, and thank you for taking the time to join us for our earnings call for our June quarter. Joining me for today's discussion are Sumner Redstone, our Chairman; Philippe Dauman, our President and CEO; Tom Dooley, our Chief Operating Officer; and Wade Davis, our CFO. Please note that in addition to our press release, we have slides and trending schedules containing supplemental information available on our website.
I want to refer you to Page #2 in the web presentation and remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Today's remarks will focus on adjusted results. Reconciliations for non-GAAP financial information discussed on this call can be found in our earnings release or on our website.
And now I'll turn the call over to Sumner.
Sumner M. Redstone - Founder and Executive Chairman
Thank you, Jim. Good morning, everyone. Viacom continues to build its leading brand and build outstanding value for its shareholders. As our industry continues to evolve, our management team is keeping right on position for even greater success.
Now I'd like to turn the call over to Viacom's CEO, my great, great friend, the wisest man I have ever known, Philippe Dauman.
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
Thank you very much, Sumner, and good morning, everyone. Thanks for joining us to discuss the third quarter of Viacom's 2014 fiscal year. Viacom is in great shape. Audiences are enjoying our programming in more ways than ever across screens and around the world. Paramount Pictures delivered the global mega hit of the summer in Transformers: Age of Extinction, the highest-grossing film of all time in China, and we continue to return significant capital to our shareholders.
Let's look at a snapshot of our financial performance for the quarter. Tom and Wade will go into greater depth in a moment. Revenues decreased 7% to $3.42 billion, reflecting revenue declines in Filmed Entertainment, partially offset by increases in Media Networks. Operating income rose slightly to $1.09 billion. Adjusted net earnings from continuing operations decreased to $618 million. Adjusted diluted earnings per share were up 10% to $1.42.
As always, we maintain a strong balance sheet, allowing us to invest consistently in content across platforms and capture growth opportunities worldwide. And as I mentioned, we remain steadfast in our commitment to returning substantial capital to our shareholders. In the June quarter, we repurchased $850 million in stock under our ongoing stock repurchase program. In the current quarter, we plan to repurchase another $850 million in stock, and expect our buyback for the September-ending fiscal year to total $3.4 billion. Including dividends, we will have returned nearly $4 billion in capital to our shareholders by the close of fiscal 2014.
Speaking of growth opportunities, a quick update on our acquisition of Channel 5 in the U.K. We're well along in the regulatory process, and we expect the transaction to close by the end of this quarter. In the meantime, we continue to identify content and marketing synergies between Channel 5 and our current network portfolio. As we've said, this acquisition is a fantastic opportunity for us to grow our business in the strong U.K. market with a great free-to-air asset. We're looking forward to our bright future with Channel 5.
Returning to our results. At our Media Networks, domestic advertising revenue increased 1%, and worldwide advertising increased 2% in the June quarter. In the current quarter, which has a difficult comp against double-digit growth last fiscal Q4, we expect domestic advertising to grow low-single digits.
It's been widely reported that this year's Upfront selling season was relatively soft, with most networks seeing decreases in volume as a few major advertisers held back dollars. While the market generally was indeed challenging, our Media Networks outperformed, and we grew volume in the low to mid-single digits over last year. This positions us very well for next year. This is a credit to the strength and vibrancy of our brands and our ability to create value for our marketing partners in new, innovative ways. Our new Viacom Velocity Integrated Marketing unit has driven tremendous business for us this year as it develops more and more custom campaigns and content for advertisers and connects advertisers to our huge social media footprint and wealth of data and insights on our audiences. These programs will only grow in importance.
The recent BET Experience is another great example of how we're creating new opportunities to work with advertisers. In its second year, BET nearly tripled the number of sponsors for the LA-based festival and substantially grew advertising revenue.
On the distribution side, total affiliate revenue was flat in the quarter, largely due to the lapping of our Amazon Prime deal in the comparable quarter fiscal 2013. Domestic affiliate revenue for traditional distribution grew in the low-double digits. With a strong fourth fiscal quarter, we continue to expect affiliate revenue to grow in the high-single to low-double digits for the full fiscal year.
In the quarter, we struck a number of distribution deals reflecting the breadth of opportunities at hand for us to serve audiences and monetize content. As we've mentioned, we opened the quarter with a successful renewal of our agreement with the National Cable Television Cooperative, extending our partnership with nearly 800 cable operators and 4.8 million subscribers nationwide. We also struck an agreement with Google Play, covering a wide swath of library content from across our brands. We completed a great agreement with Hulu, renewing our existing deal and bringing the entire library of South Park to the streaming service. Finally, in the current quarter, we secured distribution for EPIX on AT&T U-verse, growing the footprint of the network to nearly 50 million homes nationwide.
In the June quarter, many networks across television experienced rating softness, including a number of our own. Even in this landscape and amidst heavy competition from sports programming, we did have 2 of the strongest stories in cable in the quarter.
SPIKE marked its fourth straight quarter of year-over-year ratings growth with Adults 18-49 with increases in every key daypart. In fact, SPIKE achieved the largest year-over-year net ratings gains of any non-sports cable network in the demo. Bar Rescue led the way for the network. Remarkably, the show recorded its highest-rated cycle yet in this, its third season, establishing itself as appointment viewing even among a very crowded Sunday night field. Ink Master also continued to perform well, along with newcomers Catch A Contractor and Hungry Investors.
VH1 had the second-largest year-over-year net ratings gain of any non-sports cable network in the demo, right behind SPIKE. The network's hit series Hit The Floor and Love & Hip Hop: Atlanta were key drivers of that growth. More recently, VH1 successfully launched a new Thursday primetime lineup, highlighted by the solid performance of Candidly Nicole and the network's complex meditation of romance, vulnerability and human connection in the modern age, Dating Naked.
As we move forward, we're consistently investing in original content and bringing more and more new programming to air. Nickelodeon has a torrent of new programming for us coming, including 9 new shows launching from the current quarter through the first quarter of calendar 2015, including the premiere of Dora and Friends this month and new live action series Henry Danger and Nicky, Ricky, Dicky & Dawn in September.
In the period through the critical back-to-school and hard 8 [ph] selling seasons, Nickelodeon has 12 straight weeks of premieres, many of which are returning hit series that powered the network to substantial gains last fall, including Sanjay and Craig and Teenage Mutant Ninja Turtles.
Nickelodeon also launched a new tentpole in the current quarter with the solid debut of the Kids' Choice Sports awards, which delivered on our expectations and BBSP's in total viewership. Advertisers loved it too with a number of the inaugural, as well as new sponsors, already committing to next year's show.
MTV just debuted its highly anticipated, scripted drama, Finding Carter, which is currently cable's #1 new series of the year with teens and the network's best scripted launch in more than 2 years. Carter is one of the many MTV shows that benefit remarkably from nonlinear viewing. Last week, the show saw a 104% lift in live-plus-3 playback.
Finding Carter joins the recently renewed Faking It in MTV's lineup of new scripted originals this year, along with the forthcoming Happyland. In addition, MTV has new episodes of hit series, including Teen Wolf, Teen Mom 2 and Ridiculousness this quarter. And of course, the 2014 Video Music Awards air live on August 24. The VMAs have confirmed fantastic performers like Usher and Ariana Grande and already booked greater ad revenue than last year's show.
In the current quarter, Comedy Central is in an all-time high in volume of original programming, which now accounts for more than 50% of its schedule. In fact, Comedy is hitting its peak in terms of quantity and quality. It recently earned 21 Emmy nominations, a new best for Comedy Central, which also had more shows nominated than ever before. Remarkably, 4 out of the 6 nominees in the Outstanding Writing for a Variety Series category are Comedy Central shows. One of those series, Key & Peele, returns in the fall, as does the enduring hit South Park . The sheer volume of original programming we're producing now and the ever-multiplying ways in which we're delivering it to audiences underscore the ongoing transformation of the viewing landscape.
When we look at video consumption across the many screens we program, Linear TV, DVR playback, VOD, apps and streaming services, we see overall viewership outside traditional measurement is growing strongly. This aggregated growth speaks to the continuing demand for high-quality content and the vitality of our brands. It also points to the yet untapped potential we see as new measurement tools are introduced, some as early as next quarter.
Across Viacom's networks, total video consumption of our full episode programming has grown year-over-year, with a number of our series seeing dramatic lift when you factor in time-shifted and on-demand viewing. Take MTV's Teen Wolf for example, a show with a very tech-savvy audience, an entire online and social media culture onto itself. Live-plus-same-day ratings for the just-completed cycle of Teen Wolf were up 18% among all viewers over the show's debut season in 2011. But when you factor in all measured screens, the total audience of the show is up 38% over the same time frame.
Comedy Central's Inside Amy Schumer is another great example. The show grew ratings in its recent second season over its first, but it doubled its total video consumption on nonlinear platforms, VOD, SVOD, and of course, the Comedy Central app. The show does particularly well in the day-4-plus window on VOD, which represents a great opportunity for us as dynamic ad insertion increasingly comes into play.
Moving on to international. We continue to expand and diversify our brand portfolio across the world. The June quarter saw the launch of a number of new networks, including the Paramount Channel in Romania. We've now launched 28 channels internationally since the beginning of 2013, and we will continue a steady pace of channel launches as we go forward and establish a platform for a much bigger international business.
We've also benefited significantly from the improved ad market abroad and the strategic moves we made during the economic downturn. International ad revenue increased 20% in the June quarter. MTV Italy continues to be a great story for us, with ratings up 20% since we acquired full ownership of the channel last fall. We launched the Paramount Channel in Spain 2 years ago and it has since grown to become the most-watched network in our international portfolio, with ratings up 50% in June. Currently available in 5 international markets, the Paramount Channel will take another big step forward when it launches in Latin America in November.
In Filmed Entertainment, the big story of Paramount Pictures is the biggest movie of the year thus far, Transformers: Age of Extinction, which recently surpassed $1 billion at the worldwide box office. The film now stands as the highest-grossing theatrical release of all time in China, a crowning achievement in its phenomenal international run.
Paramount announced last week that it has extended its first-look deal with film maker, Michael Bay, the visionary behind the multibillion-dollar Transformers franchise and many of the most popular films in the last quarter's century. Hercules is also off a strong start, with a solid debut domestically and internationally. The film will continue to roll out internationally over the next few months.
And this weekend, Paramount's Teenage Mutant Ninja Turtles hits theaters, which marks another milestone in our revitalization of the franchise since acquiring it in 2009. Following on the heels of the film, Nickelodeon is rolling out 26 new episodes of the animated series, and continues to grow and build out new categories of the very successful Turtles consumer products lines.
Speaking of Nickelodeon, we announced earlier this week that Paramount Television will produce a live-action TV series based on Paramount Pictures' 2003 musical comedy, School of Rock, for the network. This series, which debuts in the spring of 2015, marks Paramount TV's first foray into children's programming and its first straight-to-series order. This announcement is the latest in a flurry of activity at Paramount's new television unit. We also recently announced that Oscar-winning screenwriter, Dustin Lance Black, will script his forthcoming Lindbergh limited-series event. Additionally, Paramount TV announced a first-look deal with Oscar-winning director, Robert Zemeckis, who has a long and storied history with the studio from Forrest Gump to Flight.
To close, we see a lot of opportunity at Viacom. We continue to invest more than $3 billion a year in content and connect with audiences that are consuming entertainment in more ways, across more platforms than ever. We're investing to capture growth opportunities, both at home and abroad, whether it's distributing and monetizing our content on new platforms, building or acquiring new networks internationally, or building robust television production, film animation and consumer products businesses. As ever, our focus is to continue to deliver results, create value and return substantial capital to our shareholders.
Thank you, and now I'll turn it over to Wade.
Wade C. Davis - Chief Financial Officer and Executive Vice President
Thanks, Philippe. Before I take you through our operating results, I want to note that our earnings release and web presentation summarizing the results for our June quarter are available on our website.
Now let's take a look at our segment results. At our Media Networks segment, revenues in the quarter were up 1% compared with the prior year. Domestic revenues were up 1%, while international revenues grew 2%. Page 10 of our web deck provide the breakdown of our Media Networks revenue performance.
In terms of advertising, worldwide revenues were up 2% in the quarter. Domestic revenues were up 1% and international revenues increased 20%. The growth in international advertising reflects the impact of new channels, including MTV and other -- MTV Italy and other channels, as well as continued improvement in the European marketplace.
In terms of affiliate revenues, domestic revenues were flat year-over-year, while international revenues were down 5%. Excluding the impact from the timing of product available under certain distribution agreements, domestic affiliate revenues grew low-double digits in the quarter. The decrease in international revenues was due to the timing of product available under certain distribution agreements, partially offset by new channel launches, increases in subscribers and higher subscriber rates.
Expenses increased 4% in the quarter. Within operating expenses, programming expense grew 8%, while distribution and other expenses declined 17% year-over-year. SG&A expenses increased 3%. The decline in distribution and other expenses primarily reflects lower participations related to the timing of the product available under certain affiliate distribution agreements.
Media Networks adjusted operating income was down 3%, and the adjusted operating income margin was 43%, a margin decrease of approximately 180 basis points compared to the prior year. The decline in adjusted operating income primarily reflects lower revenues from certain distribution arrangements and the increase in programming expense during the quarter. The margin decrease was driven by top line growth of 1%, which was more than offset by the 4% overall growth in expenses.
Moving to Filmed Entertainment. Revenues were down 26% in the quarter, principally due to the declines in theatrical and home entertainment revenues. Page 12 of the web presentation provides a breakdown of Filmed Entertainment revenues. Theatrical revenues decreased 43%, reflecting the number and timing of titles in the quarter. We released Transformers: Age of Extinction at the end of the June quarter, while we released Star Trek Into Darkness, World War Z and Pain & Gain in last year's June quarter. Home entertainment revenues declined 24%, primarily due to lower revenue from carryover titles, as well as the current quarter's releases. The decrease in TV license fees of 21% primarily reflects the number and mix of titles available in syndication.
Filmed Entertainment generated adjusted operating income of $55 million in the quarter as compared to $17 million last quarter -- the last year. The increase principally reflects the number of current quarter releases.
Moving to taxes. The year-to-date adjusted effective tax rate was 32%, reflecting a 180-basis-point improvement as compared to the prior year. The reduction in the adjusted effective tax rate was primarily driven by the mix of domestic and international profitability. In terms of noncontrolling interest, the $43 million principally reflect -- represents the minority interest share of income associated with the renewal of a content distribution agreement.
And with that, I would like to turn the call over to Tom.
Thomas E. Dooley - Chief Operating Officer, Senior Executive Vice President and Director
Thanks, Wade. I'm going to talk about our cash flow and debt profile, as well as the return of capital to our shareholders. I'll also cover factors impacting our September quarter.
For the quarter, we generated $571 million in operating free cash flow compared to $728 million last year. Page 5 of the web deck presentation provides the components of free cash flow. Decline in operating free cash flow in the quarter was due to higher cash taxes, which was primarily due to the sunsetting of provisions allowing for accelerated deductions related to domestic film and TV production expense.
As for our debt, it is principally fixed rate with an average cost at quarter-end of 4.6%. In April, we completed the redemption of the $600 million outstanding of our 4.375% senior notes that were due in September.
In terms of our short-term funding, to the extent we had incremental borrowings, we are funding this in the commercial paper marketplace at an annual rate of approximately 25 basis points. We had no variable rate borrowings at quarter end.
As for our leverage, we ended the quarter with $12.8 billion of debt and capital leases outstanding. We had $1.6 billion of cash and cash equivalents. Our leverage ratio at the end of the quarter was 2.9x. At June 30, our $2.5 billion bank revolver was undrawn.
Our long-term commitment to return capital to shareholders continued in the June quarter. During the quarter, we returned a total of 980 million of capital back to our shareholders through our buyback and dividend programs, and we ended the quarter with 424 million shares outstanding. For the September quarter, we are on pace to purchase approximately $850 million of our stock, which means that for the fiscal year 2014, we will have returned a total of nearly $4 billion to our shareholders.
Now let's turn to some of the factors impacting the September quarter. In terms of our affiliate revenue, we continued to see long-term annual growth in the high single-digit to low double-digit range. However, quarterly affiliate revenue will fluctuate given the timing of transactions and the recognition of revenue related to certain distribution agreements, which are tied to product availability. Accordingly, for the September quarter, we anticipate that affiliate revenues will grow double digits as compared to the prior year.
For the full year, we continue to expect that the growth rate for Media Networks programming expense will be in the mid- to high-single digits. In terms of non-programming expense, we will continue to drive efficiencies throughout the organization in order to preserve and enhance our margins. For 2014, we are now forecasting a booked tax rate of 32%, reflecting the mix of domestic and international profitability.
Looking ahead at Paramount's production and development pipeline, we are in production on the hybrid, live-action and CGI animated film, Monster Trucks, which is directed by Chris Wedge. We are also in production on a reboot of Terminator, which is a coproduction in partnership with Sky Dance and scheduled for release in July of 2015. And later this month, we will be going into production on Mission: Impossible V. The studio is also in development on a number of sequels to existing franchises including Star Trek, World War Z and Beverly Hills Cop.
In summary, we remain committed to investing in our brands, increasing the level of original programming on our networks and strengthening the connection with our audiences on every screen. Our industry is evolving and consumers have an ever-increasing array of choices and ways to consume our content. Our continued investment in our organization, in our infrastructure, as well as advancements in technology, is enabling us to monetize our audiences as in the industry evolves.
As we partner with distributors, we are increasingly able to deliver targeted ads to our viewers, both in our apps and on VOD through the use of dynamic ad insertion and first-party data. Advertisers are increasingly looking for new and innovative ways to reach their consumers. Our investment in specialized products within our ad sales offering, like Viacom's Velocity and Viacom's Echo, is enabling us to develop unique integrated marketing opportunities that create additional value for our advertisers. As Philippe mentioned, these were instrumental in helping us drive the increased volume in this year's Upfront. These investments and initiatives, combined with our continued focus on driving operating efficiency and on returning capital will drive value for our shareholders.
As a matter of fact, if you go back to when we restarted our share buyback program in 2010, through the end of this fiscal year, we will have returned a total of $15.7 billion of capital to shareholders over the full year period. Our market cap, when we restarted the current program was approximately $22 billion. So this represents a 70% return of capital as compared to our market cap at the start of the program. Our leverage ratio has gone from 1.9x during that period to 2.9x now within -- and it stays within our target range of 2.75 to 3.
With that, I want to turn the call over to your questions.
Question-and-Answer Session
Operator
[Operator Instructions] And we'll take our first one from John Janedis from Jefferies.
John Janedis - UBS Investment Bank, Research Division
Philippe, you spoke to the soft domestic ad market. On the Upfront, were there particular categories where you gained share? And on the international side, can you speak to profitability and channel launches going forward? Does the Paramount Channel launch plan slow given penetration?
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
Sorry, what was the last thing about the Paramount Channel brand?
John Janedis - UBS Investment Bank, Research Division
Does it -- does the Paramount Channel launch plan slow given the penetration increases?
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
Okay, so in terms of the demand on -- in the advertising marketplace, there were certain advertisers in the consumer goods sector and the automotive sector who chose to either defer or withhold dollars from the upfront marketplace. And at the same time, there were some softness in some of the same sectors in demand in the scatter market. We had strength with many of our traditional advertisers, whether it's the movie category, new -- all the many new devices that are coming out, fast food areas, things like gums and other categories that we are strong in. And as both Tom and I mentioned in our remarks, we were greatly helped by the -- the targeting, the integrated marketing solutions that we were able to offer as part of this Upfront, and we were able to capture dollars and, we believe, gain market share in the Upfront.
As far as our international launches, we are benefiting from an upturn in the advertising market, primarily in Europe. We're also benefiting from the channel launches we have done thus far. Paramount Channel being new brand that we are rolling out, obviously, as we achieve improving results in international, we are also absorbing the launch cost of Paramount Channels across our international footprint, but that will set a base for -- really enhance the growth as we go forward. So this is a good situation that we're in, in international because we're able to grow our aggregate profitability, while at the same time, investing a lot in our future growth. So we're going to have -- once we establish this brand, we're planning to launch another brand shortly. I've talked before about the SPIKE brand. We will have a much bigger platform, which we'll be able to monetize, both in distribution, in advertising, consumer products in the case of many Nickelodeon brands.
[...]
David Bank - RBC Capital Markets, LLC, Research Division
Two questions, I guess. The first one is, if you could you can give us an update on the sort of TV production-side initiatives at Paramount, both from a, maybe, kind of projects in the works and when we might expect to see some first kind of fleet of shows and financial impact from that.
And the second is kind of more big picture on the advertising side, forgetting maybe fiscal 3Q or 4Q. But you guys have been more forward thinking, at least from the outside, it looks like in terms of integrated digital, as well as traditional, linear advertising. And a lot of what you read in the press about the softness of the Upfront seem to suggest that some advertisers were moving money from traditional into digital advertising. Did you see any of that across your platforms as you sort of observed where money was being spent? And I guess, in a related sense, do you think that there's been a shift in the intermediate-term trajectory, kind of sustainable rate of cable advertising? [indiscernible] of growth?
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
On the, David, on the TV production initiative, Paramount is making announcements as shows are gelling and getting distribution, so you will see a steady stream of announcements. The most recent one, of course, was the School of Rock with our very own, Nickelodeon. The nice thing about our production activity in the current environment, which is a very good one for production activity, is we're able to build up this entirely new business with a very low overhead and a very low cost and, also, very little capital employed. So it will not have a major financial impact right away, but I think, as we continue to build it out over the next fiscal year, it will produce meaningful results to Paramount after that and it will be a steady build from there. So this is an exciting new business that will create strong long-term value for us.
In terms of the big picture on the advertising side, in this Upfront, I think the major factor was really certain -- particularly large advertisers, who withheld dollars from the Upfront and every indication and it certainly seems to have been confirmed by remarks from some of our peers out there, every indication is that some of those dollars will come back in the scatter. And some of the other dollars may not come back, but it's more because of some difficult circumstances that an individual company or 2 out in their general business where they're trying to save some dollars in the short term.
At the same time, there are trends out there, which we are trying to and succeeding in participating in. There are a lot of dollars to capture by making use of data and putting our content out our new platforms and getting monetization. And monetization is, of course, facilitated once you get measurement and that is improving. We're getting it on our own apps, because we have the data ourselves. Nielsen is rolling out a new measurement of mobile devices next quarter. That will help. So all the trend lines are such as to favor monetization on other platforms. And we are moving in that direction because our audiences are adopters of these other platforms. Our content is already being viewed by them. We're not getting the full monetization today because of some lag in the measurement and that will catch up over time.
Thomas E. Dooley - Chief Operating Officer, Senior Executive Vice President and Director
David, just add to that, our -- Viacom's Echo product is a product where we joint venture with a company called Mass Relevance to measure Viacom's earned media across the social spectrum. So if dollars do move to digital, we're able to follow those dollars because a lot of the digital movement -- a lot of the activity in the digital space is consumption of our content and other big media companies' content. And we're now able to work with advertisers to measure that earned media, provide them with accurate statistics as to how their brand and their message travel across all those social platforms. And as Philippe said, the better we're able to measure that, the better we'll be able to -- and sooner we'll able to monetize that brand message being echoed across many platforms.
[...]
Brian W. Wieser - Pivotal Research Group LLC
Just following up on your comments on the strength of viewing on other platforms. I was wondering if you can give us any updated thoughts on how you think the inclusion of mobile-device-viewing data will impact reported viewership or ad revenues on Nick and kids' channels in the year ahead?
And secondly, I was curious about your thoughts about selling traditional TV inventory programmatically? Or otherwise, driving more data automation into the process of buying and selling.
Philippe P. Dauman - Chief Executive Officer, President and Not-Independent Director
Well, as far -- if I understood your question on Nickelodeon, the opportunity to monetize content appearing in apps, we've launched the Nick apps very successfully. We are able to add some advertising elements there. We're looking at other -- for some of our other Nick brands and other opportunities we might have to really mine additional advertising revenues, either directly on those or in connection with our television offerings. So that is showing an opportunity for Nick.
As such, programmatic advertising for -- in terms of the television product, we don't see much appeal for that right now. It is useful for certain digital product, what I'd call more commoditized inventory. And what we offer, we provide a unique offering, for which we get high CPMs, of premium inventory, integrated marketing opportunities, as Tom referred to, marrying that with social media. None of that is captured in programmatic buying, which really does not provide the value to advertisers as we're able to provide with our premium video content.
[...]
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