Viacom Inc. (NASDAQ: VIAB, VIA), the parent company of the Nickelodeon brand, has reported, in the following press release, from Business Wire, the company's revenue, earnings and EPS growth for the fiscal second quarter of 2014, ended Monday 31st March 2014.
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Original Viacom Press Release:
Viacom Reports Results for Second Quarter 2014
* Adjusted Diluted EPS Increased 13% to $1.08 Per Share
* Media Networks Revenues Up 6% and Operating Income Rose 9%, Driven By Higher Affiliate and Advertising Revenues
* $2 Billion Returned to Investors in First Half of Fiscal 2014 Through Share Repurchases and Dividends
May 01, 2014 07:00 AM Eastern Daylight Time
NEW YORK--(BUSINESS WIRE)--Viacom Inc. (NASDAQ: VIAB, VIA):
Fiscal Year 2014 Results
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* Adjusted measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.
Viacom Inc. (NASDAQ: VIAB, VIA) today reported revenue, earnings and EPS growth for the fiscal second quarter of 2014, ended March 31, 2014. Revenues of $3.17 billion increased 1%, reflecting higher affiliate fees and advertising revenues, partially offset by declines in Filmed Entertainment. Operating income rose 3% to $872 million, primarily due to higher Media Networks revenues. Adjusted net earnings from continuing operations attributable to Viacom increased to $482 million, and adjusted diluted earnings per share from continuing operations were up 13% to $1.08 per diluted share.
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom's solid results were driven by pioneering content and outstanding leadership. Our management team is committed to building on this success and capturing the exciting long-term opportunities in our industry."
Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Viacom posted another strong quarter, resulting from our relentless focus on developing quality creative content and delivering it around the world in innovative ways. Our Media Networks remain in high demand, commanding a premium position with advertisers and achieving significant continued growth with both traditional and emerging distribution partners. In addition, Paramount kicked off its highly-anticipated summer slate with the successful release of Noah at the end of the quarter, to be followed by Transformers: Age of Extinction, Hercules and Teenage Mutant Ninja Turtles in the coming months.
"In the first half of the fiscal year, Viacom returned another $2 billion to investors through our share buyback and dividends, highlighting our continued focus on delivering value to shareholders."
Revenues
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Quarterly revenues were $3.17 billion for the quarter. Media Networks revenues increased 6%, to $2.38 billion in the quarter, driven by higher affiliate fees and advertising revenues. Domestic affiliate revenues grew 11%, driven by rate increases, and worldwide affiliate revenues increased 10% in the quarter. Domestic advertising revenues increased 2%. Worldwide advertising revenues increased 3% to $1.12 billion in the quarter. Filmed Entertainment revenues declined 12% to $831 million, primarily due to lower carryover revenues from prior period releases. Theatrical revenues decreased 17% from the prior year, as strong domestic carryover revenues from The Wolf of Wall Street were more than offset by lower international theatrical revenues. Worldwide home entertainment revenues decreased 30%, primarily driven by fewer current quarter releases and a decrease in carryover revenues.
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Quarterly operating income increased 3% to $872 million in the quarter. Media Networks adjusted operating income increased 9%, reflecting higher revenues partially offset by an increase in programming expenses. Filmed Entertainment adjusted operating income declined to $11 million reflecting the number and mix of current fiscal year releases.
Quarterly adjusted net earnings from continuing operations attributable to Viacom increased to $482 million. Adjusted diluted earnings per share from continuing operations for the quarter were $1.08, a 13% improvement from the prior year's comparable quarter.
Stock Repurchase Program
For the quarter ended March 31, 2014, Viacom repurchased 10.0 million shares under its stock repurchase program, for an aggregate purchase price of $850 million. As of April 30, 2014, Viacom had $8.01 billion remaining in its $20 billion stock repurchase program. As of March 31, 2014, Viacom had 432 million shares of common stock outstanding.
Debt
At March 31, 2014, total debt outstanding, including capital lease obligations, was $13.38 billion, compared with $11.89 billion at September 30, 2013. The Company's cash balances were $2.58 billion at March 31, 2014, an increase from $2.4 billion at September 30, 2013. Subsequent to the end of the quarter, the Company redeemed $600 million of outstanding 4.375% Senior Notes due September 2014.
About Viacom
Viacom is home to premier global media brands that create compelling television programs, motion pictures, short-form video, apps, games, consumer products, social media and other entertainment content for audiences in more than 160 countries and territories. Viacom's media networks, including MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, Comedy Central, TV Land, SPIKE, Tr3s, Paramount Channel and VIVA, reach approximately 700 million households worldwide. Paramount Pictures, America's oldest film studio, is a major global producer and distributor of filmed entertainment.
For more information about Viacom and its businesses, visit www.viacom.com. Viacom may also use social media channels to communicate with its investors and the public about the company, its brands and other matters, and those communications could be deemed to be material information. Investors and others are encouraged to review posts on Viacom's company blog (blog.viacom.com), Twitter feed (www.twitter.com/viacom) and Facebook page (http://www.facebook.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 our 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 our programs, motion pictures and other entertainment content on the various platforms on which they are distributed; technological developments and their effect in our 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 our results due to the timing, mix and availability of our 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 our businesses generally; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our 2013 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 we do 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 our website at http://www.viacom.com.
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SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile our results for the quarter and six months ended March 31, 2014 and the six months ended March 31, 2013 to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including discrete tax benefits. We use consolidated adjusted operating income, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted earnings per share ("EPS") from continuing operations, as applicable, among other measures, to evaluate our actual operating performance and for planning and forecasting of future periods. We believe that the adjusted results provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare Viacom's results with those of other companies and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"), they should not be considered in isolation of, or as a substitute for, operating income, net earnings from continuing operations attributable to Viacom and diluted EPS as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies. There were no adjustments to our results for the quarter ended March 31, 2013.
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(1) Adjusted results for the quarter and six months ended March 31, 2014 exclude $20 million of discrete tax benefits, principally related to the recognition of capital loss carryforward benefits. Adjusted results for the six months ended March 31, 2013 exclude $12 million of discrete tax benefits, principally reflecting the release of tax reserves with respect to certain effectively settled tax positions.
Contacts
Viacom Inc.
Press:
Jeremy Zweig, 212-846-7503
Vice President, Corporate Communications
[...]
Mark Jafar, 212-846-8961
Vice President, Corporate Communications
[...]
or
Investors:
James Bombassei, 212-258-6377
Senior Vice President, Investor Relations
[...]
Pamela Yi, 212-846-7581
Director, Investor Relations
[...]
###
Also, below is Viacom's Q2 2014 Results Earnings Call Transcript, in which Viacom Management discusses the company's 2Q14 Results, from Seeking Alpha:
Follow NickALive! on Twitter, Tumblr, Google+, via RSS, on Instagram, and/or Facebook for the latest Nickelodeon and Viacom News!
Original Viacom Press Release:
Viacom Reports Results for Second Quarter 2014
* Adjusted Diluted EPS Increased 13% to $1.08 Per Share
* Media Networks Revenues Up 6% and Operating Income Rose 9%, Driven By Higher Affiliate and Advertising Revenues
* $2 Billion Returned to Investors in First Half of Fiscal 2014 Through Share Repurchases and Dividends
May 01, 2014 07:00 AM Eastern Daylight Time
NEW YORK--(BUSINESS WIRE)--Viacom Inc. (NASDAQ: VIAB, VIA):
Fiscal Year 2014 Results
* Adjusted measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.
Viacom Inc. (NASDAQ: VIAB, VIA) today reported revenue, earnings and EPS growth for the fiscal second quarter of 2014, ended March 31, 2014. Revenues of $3.17 billion increased 1%, reflecting higher affiliate fees and advertising revenues, partially offset by declines in Filmed Entertainment. Operating income rose 3% to $872 million, primarily due to higher Media Networks revenues. Adjusted net earnings from continuing operations attributable to Viacom increased to $482 million, and adjusted diluted earnings per share from continuing operations were up 13% to $1.08 per diluted share.
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom's solid results were driven by pioneering content and outstanding leadership. Our management team is committed to building on this success and capturing the exciting long-term opportunities in our industry."
Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Viacom posted another strong quarter, resulting from our relentless focus on developing quality creative content and delivering it around the world in innovative ways. Our Media Networks remain in high demand, commanding a premium position with advertisers and achieving significant continued growth with both traditional and emerging distribution partners. In addition, Paramount kicked off its highly-anticipated summer slate with the successful release of Noah at the end of the quarter, to be followed by Transformers: Age of Extinction, Hercules and Teenage Mutant Ninja Turtles in the coming months.
"In the first half of the fiscal year, Viacom returned another $2 billion to investors through our share buyback and dividends, highlighting our continued focus on delivering value to shareholders."
Revenues
Quarterly revenues were $3.17 billion for the quarter. Media Networks revenues increased 6%, to $2.38 billion in the quarter, driven by higher affiliate fees and advertising revenues. Domestic affiliate revenues grew 11%, driven by rate increases, and worldwide affiliate revenues increased 10% in the quarter. Domestic advertising revenues increased 2%. Worldwide advertising revenues increased 3% to $1.12 billion in the quarter. Filmed Entertainment revenues declined 12% to $831 million, primarily due to lower carryover revenues from prior period releases. Theatrical revenues decreased 17% from the prior year, as strong domestic carryover revenues from The Wolf of Wall Street were more than offset by lower international theatrical revenues. Worldwide home entertainment revenues decreased 30%, primarily driven by fewer current quarter releases and a decrease in carryover revenues.
Quarterly operating income increased 3% to $872 million in the quarter. Media Networks adjusted operating income increased 9%, reflecting higher revenues partially offset by an increase in programming expenses. Filmed Entertainment adjusted operating income declined to $11 million reflecting the number and mix of current fiscal year releases.
Quarterly adjusted net earnings from continuing operations attributable to Viacom increased to $482 million. Adjusted diluted earnings per share from continuing operations for the quarter were $1.08, a 13% improvement from the prior year's comparable quarter.
Stock Repurchase Program
For the quarter ended March 31, 2014, Viacom repurchased 10.0 million shares under its stock repurchase program, for an aggregate purchase price of $850 million. As of April 30, 2014, Viacom had $8.01 billion remaining in its $20 billion stock repurchase program. As of March 31, 2014, Viacom had 432 million shares of common stock outstanding.
Debt
At March 31, 2014, total debt outstanding, including capital lease obligations, was $13.38 billion, compared with $11.89 billion at September 30, 2013. The Company's cash balances were $2.58 billion at March 31, 2014, an increase from $2.4 billion at September 30, 2013. Subsequent to the end of the quarter, the Company redeemed $600 million of outstanding 4.375% Senior Notes due September 2014.
About Viacom
Viacom is home to premier global media brands that create compelling television programs, motion pictures, short-form video, apps, games, consumer products, social media and other entertainment content for audiences in more than 160 countries and territories. Viacom's media networks, including MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, Comedy Central, TV Land, SPIKE, Tr3s, Paramount Channel and VIVA, reach approximately 700 million households worldwide. Paramount Pictures, America's oldest film studio, is a major global producer and distributor of filmed entertainment.
For more information about Viacom and its businesses, visit www.viacom.com. Viacom may also use social media channels to communicate with its investors and the public about the company, its brands and other matters, and those communications could be deemed to be material information. Investors and others are encouraged to review posts on Viacom's company blog (blog.viacom.com), Twitter feed (www.twitter.com/viacom) and Facebook page (http://www.facebook.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 our 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 our programs, motion pictures and other entertainment content on the various platforms on which they are distributed; technological developments and their effect in our 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 our results due to the timing, mix and availability of our 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 our businesses generally; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our 2013 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 we do 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 our website at http://www.viacom.com.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile our results for the quarter and six months ended March 31, 2014 and the six months ended March 31, 2013 to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including discrete tax benefits. We use consolidated adjusted operating income, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted earnings per share ("EPS") from continuing operations, as applicable, among other measures, to evaluate our actual operating performance and for planning and forecasting of future periods. We believe that the adjusted results provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare Viacom's results with those of other companies and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"), they should not be considered in isolation of, or as a substitute for, operating income, net earnings from continuing operations attributable to Viacom and diluted EPS as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies. There were no adjustments to our results for the quarter ended March 31, 2013.
(1) Adjusted results for the quarter and six months ended March 31, 2014 exclude $20 million of discrete tax benefits, principally related to the recognition of capital loss carryforward benefits. Adjusted results for the six months ended March 31, 2013 exclude $12 million of discrete tax benefits, principally reflecting the release of tax reserves with respect to certain effectively settled tax positions.
Contacts
Viacom Inc.
Press:
Jeremy Zweig, 212-846-7503
Vice President, Corporate Communications
[...]
Mark Jafar, 212-846-8961
Vice President, Corporate Communications
[...]
or
Investors:
James Bombassei, 212-258-6377
Senior Vice President, Investor Relations
[...]
Pamela Yi, 212-846-7581
Director, Investor Relations
[...]
###
Also, below is Viacom's Q2 2014 Results Earnings Call Transcript, in which Viacom Management discusses the company's 2Q14 Results, from Seeking Alpha:
Viacom's CEO Discusses F2Q2014 (Qtr End 3/31/14) Results - Earnings CallTranscript
May. 1, 2014 3:14 PM ET | [...]
Executives
Jim Bombassei - SVP, IR
Sumner Redstone - Chairman
Philippe Dauman - President & CEO
Tom Dooley - COO
Wade Davis - CFO
Analysts
Doug Mitchelson - Deutsche Bank
Alexia Quadrani - JPMorgan
Michael Nathanson - Moffett Nathanson
Richard Greenfield - BTIG
Brian Weiser - Pivotal Research
David Wise - International Strategy & Investment Group
Doug Creutz - Cowen & Company
Vasily Karasyov - Sterne Agee
Ben Swinburne - Morgan Stanley
Barton Crockett - FBR Capital Markets
Anthony Diclemente - Nomura
Viacom, Inc. (VIA) F2Q 2014 Earnings Conference Call May 1, 2014 8:30 AM ET
Operator
Good day, everyone, and welcome to the Viacom Second Quarter 2014 Earnings Release Teleconference. Today’s call is being recorded. At this time, I would like to turn the call over to the Senior Vice President of Investor Relations, Mr. Jim Bombassei. Please go ahead, sir.
Jim Bombassei - SVP, IR
Good morning, everyone, and thank you for taking the time to join us for our earnings call for our March 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 Chief Financial Officer.
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 number two 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.
Now, I’ll turn the call over to Sumner.
Sumner Redstone - Chairman
Thanks, Jim. Good morning and thank you for joining us. It was another successful quarter for Viacom. Our leading media networks and Paramount Pictures continue to attract large audiences all around the world. We have an outstanding management team who (inaudible) every single day.
Now I would like to turn the call over to the leader of that team, my good friend, the wisest man I have ever known, Philippe Dauman.
Philippe Dauman - President & CEO
Thank you very much, Sumner, and good morning everyone. Thanks for joining us to discuss the second quarter of our 2014 fiscal year.
Viacom had a strong quarter. The company achieved steady growth in quarterly revenues, earnings and operating income. Our Media Networks delivered strong top and bottom line growth even as we grew our investment in original programming. Ratings were up for the majority of our networks and we saw the successful run of Paramount Pictures The Wolf of Wall Street and the number one debut Noah, a bona fide global hit.
Let's take a quick look at our financial performance for the quarter. Tom and Wade will go into greater detail in a moment. Revenues increased to $3.17 billion reflecting both higher affiliate fees and advertising revenues in our media networks. Operating income rose 3% to $872 million. Adjusted net earnings from continuing operations increased to $482 million. Adjusted diluted earnings per share grew 13% to $1.08.
Viacom's balance sheet is strong. We remain committed to returning significant value to our shareholders, while investing in great content and the growth of our business worldwide.
In the March quarter, we repurchased $850 million in stock under our ongoing stock repurchase program. This quarter we also plan to repurchase $850 million in stock and expect our buyback for the September ending fiscal year to exceed $3.25 billion.
We are very pleased to announce this morning that we have agreed to acquire the United Kingdom's Channel 5 broadcasting for £450 million to be funded by our international cash on hand. After we close, we expect the transaction will be accretive to Viacom on an operating income basis in the first year. Channel 5's diverse programming slate will compliment Viacom's popular pay TV network. We believe that we will be able to invest in more programming for Channel 5 that will make the channel even more vibrant and utilize from that programming on our UK pay channel and even more on our existing and future networks around the world.
We look forward to welcoming Channel 5's accomplished executives and employees into the Viacom family for the very exciting future ahead.
As I mentioned, our media networks had a great quarter. Ratings were up on a year-over-year basis at many of our networks including Nickelodeon, Comedy Central, VH1, CMT, SPIKE, and TV Land.
Our media network segment grew total advertising by 3% and domestic advertising by 2% in the March quarter. In the current quarter, we expect domestic advertising to grow mid single digits.
On the distribution side, total affiliate revenue increased by 10% in the quarter and we concluded with the successful completion of our deal with the NCTC, the National Cable Television Cooperative. We also continue to drive value for distributors by launching new branded apps for our channel including the recent Comedy Central and BET NOW apps. Across Viacom, our apps were downloaded at a rate of more than a million times per month in the March quarter.
For the second straight quarter, Nickelodeon was the number one network for kids 2 to 11. Ratings grew 4% while its two biggest competitors saw significant declines. Nickelodeon's ratings has now increased year-over-year for 15 consecutive months. Nickelodeon can lay claim to 8 out of the top 10 shows for kids in the current broadcast season. The network's continued dominance in preschool is a big part of the success. Wallykazam debuted in the quarter as Nick's highest rate of preschool series and strengthened a formidable line up which includes PAW Patrol, Dora the Explorer and Bubble Guppies.
Nickelodeon also had the top five animated series in the March quarter including the newly launched Breadwinners and of course SpongeBob SquarePants which is a strongest ever approaching its 15th birthday. Live action is strong for Nick too. Sam & Cat gave the network a top rated show with kids 2 to 11, and the Thundermans and the Haunted Hathaways followed closely on its heels.
The content pipeline in Nickelodeon is rich. At its recent upfront presentation, the network introduced 10 new series along with a new Temple with Kids Choice Sports 2014 to be hosted and executive produced by Michael Strahan.
MTV, more than any network, has an imperative for reinvention. The network must anticipate changing tastes and trends among its young audience. A bold period of reinvention is at hand in MTV. Even as the network continues to launch unscripted hits like Catfish, it is doubling down on scripted fair with a trio of smart complex new series coming to air this year.
Each explores the universally relatable youth theme of self-discovery through a different lens. Faking It just debuted as MTV's highest rated new scripted premiere in two years. The show gives a humorous high school take on evolving social attitudes towards sexual orientation. Happyland is a mother daughter comedy that touches on the Latino experience in America. And Finding Carter is a mystery drama with an absolutely gripping plot that we believe can connect with a very broad audience. These shows will appear not only to our younger audience but to their oldest siblings and young parents as well. Of course, this reinvention also extends how fans interact and connect with the brand.
MTV is undertaking an exciting new initiative to transform the viewer experience. The network is building a new team to focus on real time interstitial coverage of cultural and social media events each day. I think the Quick Hit video pieces invented by MTV was produced almost right throughout the day to reflect trending topics extending the network's always on dialog with its audience.
MTV is hiring top editorial and design staff including Richard Charlie, the award winning former creative director of Bloomberg Businessweek, and investing in upgrades to its tech infrastructure to get this concept up and running. It's a fresh new approach and, from a sales perspective, it will shorten commercial pause for advertisers and allow us to give A positions for multiple clients. It will also enable marketers to buy in some trending cultural conversation at the scale that only television can offer.
Coming off six consecutive months of prime time ratings growth, VH1 is working to build consistent strength in Thursday Primetime and establish another solid night on Wednesdays to extend the success of its powerhouse Monday night lineup. The network is seeking loud fun shows with a high celebrity quotient. It has increased its stable production partners resulting in 10 new series coming to air through the beginning 2015.
Additionally, VH1 is building on its music movie franchise successfully launched with CrazySexyCool with Drumline 2 starring Nick Cannon. Like Being Mary Jane on BET we think Drumline could pave the way for an ongoing series if it connects with audiences.
CMT is building on major growth. Ratings were up 26% in the March quarter with more and more original programming including 20 hours of programming from its new CMT talks unit and a new CMT crossroads with Katy Perry and Kasey Musgraves.
Without a doubt Comedy Central is the place right now for young comedic talent. Thanks a successful investment the original series anchored by fresh voices at Key & Peele, Broad City and Inside Amy Schumer and Chris Hardwick of @midnight, a rethinking of the late night talk show that is growing its audience every month and attracting double the social media traffic of the tonight show. Much of this talent including Amy came up to what Comedy Central refers to as its farm team system, a roaster of young comics and nurtures with sponsor tours, records home video and its Sirius radio channel.
New originals had powered Comedy Central to its third consecutive quarter of year-over-year ratings growth. That success is fueling demand on all platforms from the new Comedy Central app, the newly re-launched sites for Daily Show and Colbert. Speaking of Colbert, Comedy Central looks forward to sending him off in style in his next eight months and we are excited about the opportunity to reinvent late night television again in the 11:30 slot beginning in 2015.
SPIKE also continues to see Stretch from its original, including its two biggest series Bar Rescue and Ink Master. To new extensions of the Bar Rescue franchise Hungry Investors and Frankenfoods are coming to SPIKE in the current quarter.
At BET Networks, the team is hard at works planning of second annual BET experience set for this June in Los Angeles. BET has created a number of new sponsorship opportunities around the festival which will again serve as a strong promotional platform for the BET Awards.
In the current broadcast season, BET has the top three sitcoms on cable among adults 18 to 49 with The Game, Real Husbands of Hollywood and Let's Stay Together.
And Centric, coming of is most watch quarter ever, recently announced plans to develop a lineup of new regional programming for African-American women in partnership with Queen Latifah.
Internationally, we are reaping benefits from our decision to move MTV Brazil, Italy and Russia to owned and operated models last year. All three have grown ratings, revenue and reach in the interim. Overall, our international ad sales grew double digits this past quarter. In the six months since its relaunch, MTV Brasil has risen from the 30th to the 16th (inaudible) network in its core demo in a very crowded marketplace.
Ratings for MTV Italy grew 31% year-over-year in the March quarter. The March quarter also saw MTV launch in the Philippines, as well as the launch of the Paramount Channel in Russia and Hungary.
And as I mentioned at the beginning of my remarks, we are truly excited by the potential Channel 5 will bring to us, not just in the UK but in our operations around the world.
Beyond our screens we are aggressively executing a low risk licensing strategy for stores and recreations to extent our brand pricings globally and continuing to expand our consumer products business to drive our bottom line.
Moving over to Filmed Entertainment, Paramount Pictures achieved success in the March quarter with the extended run of Martin Scorsese's The Wolf of Wall Street, and a number one debut of Darren Aronofsky's Noah. Noah continues to be a big hit and international theatergoers as well. The success of these films demonstrates not only their outstanding quality but also the continued ability of Paramount to connect broad audiences with challenging, creatively ambitious filmmaking.
Paramount also successfully launched PARANORMAL ACTIVITY: The Marked Ones in another very profitable film from it's in search label.
As we head into the summer temple season, Paramount's exciting release rate includes Transformers: Age of Extinction, Teenage Mutant Ninja Turtles and Hercules. There's great momentum at Paramount Television as well. The unit recently announced its new leadership team with production and development executives who worked on a wide rage of hits from Walking Dead to South Park. And just this week, Paramount Television announced its first major network production, a three-hour live broadcast of hit musical Grease for Fox. This gives you an idea of the kind ambitious and diverse projects the new unit intends to pursue. It also pulled back the curtain on a number of additional projects in development. We have projects inspired by Paramount hits, including the Truman Show and Narc, as well as the Terminator franchise.
We are also developing series based on the best selling mystery novel The Alienist with executive producers of Two Detective, and a limited one series based on a Scott Berg's Pulitzer-winning biography Lindbergh. We see a sellers market for these types of rich, character driven shows and we are excited to get them into production.
To close, Viacom is in great shape. We are positioned for an era of growth for our company. We continue to invest in programming and films that resonate with audiences worldwide and drive the businesses of our marketing and distribution partners. We remain focused on mining the many growth opportunities at hand for content creators, both at home and abroad and on new devices. As a result, we see sustainable, high-single to low-double digit growth in affiliate revenues, an improving environment for ad sales in U.S. and abroad, great potential for significant growth in our international business, consumer products revenue and new initiatives at Paramount and throughout our company. As all these initiatives bear fruit, we will continue to deliver results, create value and return substantial capital to our shareholders. Thank you.
And with that, I'll turn it over to Wade.
Wade Davis - CFO
Thanks, Philippe. Before I take you to our operating results, I want to note that our earnings release and web presentation summarizing the results for our March 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 6% compared with the prior year, principally driven by increases in affiliate and advertising revenue. Domestic revenues were up 6%, while international revenues grew 10%.
Page 10 of our web deck provides a breakdown of our Media Networks revenue performance. In terms of advertising, domestic revenues were up 2% in the quarter and international revenues increased 14%. The growth in international advertising reflects the impact of new channels as well as continued improvement in the European marketplace.
In terms of affiliate revenues, domestic revenues increased 11% in the quarter while international revenues were up 7%. Excluding the impact from the timing of product available under certain distribution agreements, domestic affiliate revenues grew high single digits in the quarter. Growth in international revenues is due to increases in subscribers, new channel launches as well as higher rates.
Expenses increased 5% in the quarter. Within operating expenses, programming expense grew 5%. SG&A expense increased 6% reflecting advertising and promotion expense related to the marketing of original series and specials, as well as the impact of new channel in international markets.
Media Networks' adjusted operating income was up 9% and the adjusted operating income margin was 40%, an increase of approximately 90 basis points compared to the year. The margin increase was driven by top line growth of 6% partially offset by 5% growth in expenses.
Moving to Filmed Entertainment, revenues were down 12% in the quarter principally due to declines in home entertainment and theatrical revenues. Page 12 of the web presentation provides the break down for filmed entertainment revenues.
Theatrical revenues decreased 17% reflecting lower carryover revenues from prior quarter releases.
Home entertainment revenues declined 30% principally due to fewer leases in the quarter as well as lower carryover revenues.
Filmed Entertainment generated adjusted operating income of $11 million in the quarter as compared to $65 million last year. The decrease principally reflects the number and mix of current year releases.
In terms of taxes, the year-to-date adjusted effective tax rate was 33% reflecting a 150 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 versus international profitability.
And with that, I would like to turn the call over to Tom.
Tom Dooley - COO
Thanks, Wade. Good morning, everyone. We'll talk about our cash flow and debt profile as well as return of capital to shareholders. I'll also cover the seasonal factors that impact the remainder of our 2014 fiscal year.
For the quarter, we generated $524 million in operating free cash flow compared to $700 million last year. Page 5 of the web deck presentation provides the components of free cash flow. The decline in operating free cash flow for the quarter is principally due to higher cash taxes and cash interest. The increase in cash taxes was primarily due to the timing of cash tax payments during the year.
As for our debt, it is principally fixed rate with an average cost at quarter end of 4.6%. During the March quarter, we took advantage of favorable market condition to maintain our leverage ratio at our target level by issuing a total of $1.5 billion of senior notes and debentures in a combination of 5, 10 and 30-year maturity. April 3 a portion of the new issuance proceeds was used to redeem the $600 million of outstanding 4.375% senior notes that were due September, 2014.
The new debt was issued at an average rate commensurate with our overall cost of debt and taken together with the redemption allowed us to extend our weighted average maturity.
In terms of short-term funding needs to the extent we have incremental borrowing we are funding this in the commercial paper marketplace at an annual rate of approximately 20 basis points. We had no variable rate borrowing at quarter end.
As for our leverage, we ended the quarter with $13.4 billion debt and capital leases outstanding. We had $2.6 billion of cash and cash equivalents. Our leverage ratio at the end of the quarter was 3.1 times. Taking into consideration the April 3 redemption of the $600 million of senior notes, our leverage ratio was 2.9 times because our cash balance decreased to $2 billion. At March 31, our $2.5 billion bank revolver was undrawn.
Our commitment to return capital to shareholders continued in the March quarter. During the quarter, we returned a total of $850 million of capital back to our shareholders and we ended the quarter was 432 million shares outstanding. For the June quarter, we are in a pace to purchase approximately $850 million of our stock, which means that for the first nine months of the year we will have returned a total of approximately $3 billion to our shareholders.
Now let's turn to some of the factors impacting the remainder of the fiscal year. In terms of affiliate revenue we continue to see long term annual growth in the high single digit and low double-digit range. However, quarterly affiliate revenue will fluctuate during the time of the transaction and the recognition of revenue related to certain distribution payments which are tied to product availability.
Accordingly, for the June quarter, we anticipate that affiliate revenues will be flat compared to the prior year. However, we expect that affiliate revenue will grow double-digit in the September quarter.
For the full year, we expect that the growth for media networks programming expense will be in the mid to high single digit. In terms of non-programming expense, we will continue to drive efficiencies throughout the organization in order to preserve and enhance our margin.
For 2014, we are now forecasting a book tax rate of 33% reflecting the mix of domestic versus international profitability.
At filmed entertainment, we're very excited about our upcoming summer tempo releases including Transformers: Age of Extinction, Hercules and Teenage Mutant Ninja Turtles. Looking ahead at Paramount production and development pipeline we are currently in production on the hybrid live action and CGI animated film Monster Trucks which is directed by Chris Wedge and is scheduled for release in May of 2014. We have started production on a Terminator Reboot which is a co-production in partnership with Skydance and we recently wrapped production on The Gambler which stars Mark Wahlberg in the lead role.
The studio is also currently in development on a number of sequels to existing franchisees including Mission Impossible, Star Trek, G.I. Joe, and World Wars 8.
In summary, we continue to invest in our brands and franchises developing new revenue streams and diversifying existing ones. At media networks, we continue to grow our global footprint, launching new channels and apps in the international marketplace.
Nickelodeon continues to grow its consumer products and licensing businesses having developed Teenage Mutant Ninja Turtles into the number one live action figure in the United States. And the launch of the new animated series Dora and Friends this summer and Paramount's release of the SpongeBob movie early next year will create new merchandise and licensing opportunities for these enduring franchises.
At filmed entertainment, we will release the first titles from our in-house animation division in 2015 and in conjunction with this the studio will be developing merchandizing opportunities tied to these films. Paramount is also getting back into the television production business seeking to capitalize on the increasing demand for original content from broadcast, cable, and pay TV networks. These initiatives will enhance both our top and bottom line growth and combined with our focus on managing cost, returning capital will drive additional value for our shareholders.
With that, I'm going to turn the call over to your question. Operator?
Question-and-Answer Session
Operator
Thank you. (Operator Instructions).
Our first question will come from Doug Mitchelson of Deutsche Bank.
Doug Mitchelson - Deutsche Bank
Philippe, a couple of questions. First, can you talk a little bit more about the conversations you're having with advertisers allowing the upfront process on what your expectations might be for price or volume this year? And on the cable show there was a lot of discussion around putting Netflix and the other Xbox providers as a channel in the cable box. And as you approach your conversations and you're modeling around, since you guys are the arm suppliers for the likes of Amazon the licensees that you were charging, did you consider the fact or are you worried about the fact that there could be an increased viewership competition as broadcasters are getting integrated in the cable box over time? Thanks.
Philippe Dauman - President & CEO
Thank you, Doug. As far as our heading into the upfront, we've had some very successful presentations to advertisers. I mentioned in my remarks all the new series and events that we have planned across our networks including the major ones like Nickelodeon and MTV where we had blockbuster presentations, but also some of our other networks that people generally don't think much of CMT. So we are very well positioned based on the strength of the programming across the board. We see an improving environment as we go forward. So we anticipate very successful market for us.
And many of the categories that are showing strength are the categories that are squarely in our wheelhouse like electronics, wireless, the kids market place, the movie the way they're skewed for the rest of the year and it's in next year, the kind of franchises that are out there. So we see a lot of opportunity as we look forward.
As far as the (inaudible) distributors we always face competition, we live in a world where we are suppliers of programming as you so aptly put it, we are to some degree the arms merchants, we are going to selective in what we provide, what we make available when, how are the content that we put on the (inaudible) operator serve to promote new episodes, new seasons, new shows, drive our consumer products business, there are a lot of aspects to how we distribute our programming in different windows.
And as for as competition goes, we live in a competitive world. It is our core strength to build the brands and great programming and we are just continuing to step up the pace on that and the results show.
We see a lot of opportunities, you focus on the set top box, we see opportunities beyond that in the mobile environment not just in the U.S. but around the world and we have geared our whole organization to play successfully in that world.
Operator
Our next question will come from Alexia Quadrani of JPMorgan.
Alexia Quadrani - JPMorgan
Hi, thank you, just a couple of questions. The first one is on the acceleration of domestic advertising growth that you are seeing in the fiscal third quarter. I guess what specifically is driving that? Is it the healthier marketplace? Is it the better movie played in that quarter? Is it Easter to a certain degree, and will that continue to the rest of the year?
Philippe Dauman - President & CEO
Thank you, Alexia. Well many of the factors that you mentioned. We did see some movie releases move out of the March quarter into the next couple of quarters. So certainly that will help us giving with a strong category that is. You're quite right that Easter is in this quarter and certainly in particular for the Nickelodeon business that makes a difference as we had in this quarter.
And as I mentioned in answer to Doug's question, some of our key categories are strengthening categories. When we look at the competitive environment that exist in mobile, wireless and electronics and quick service restaurants, the breakfast meal wars and all these competitive categories do provide strength for us, and of course the strength of our networks as well as the integrated marketing capabilities that we are providing to our advertisers.
We are the leaders and that is exactly what advertisers are looking for. And we are going to them with those offerings. We are getting more deeply embedded with social media in providing entire packages. So that's serving us well currently and will service well as we look into the next broadcast here in the up fronts.
[...]
Michael Nathanson - Moffett Nathanson
Okay, thanks, and then I have two for Philippe on Channel 5. One is I believe in the UK Viacom uses BSkyB as a sales agent whereas Channel 5 sells directly to the market. How do you think you guys will integrate Channel 5 sales team into your (inaudible)? This the first one.
Philippe Dauman - President & CEO
Michael, our current intention is to continue with business as usual in the ad sales team. They have operated very successfully. Of course, we just signed the agreement yesterday; we are moving forward. Our real focus of making this acquisition was the combined programming opportunities, distribution opportunities, the cross marketing opportunities as that we see here. For example, there is a very successful children's block on Channel 5 called Milkshake. It has some Nickelodeon programming on it now. We think by marrying milkshake with some of the Nickelodeon capabilities and programming there is up ended growth both sides of the house once we are able to close this transaction. So yeah, that is really been our focus. And again, it's a broadcasting asset, they can work well our pay channels but it has its own characteristics.
[...]
Richard Greenfield - BTIG
Hi. A couple of questions. First off, when you look at calendar Q1, you mentioned that the movie schedule was light or things got pushed out but are there anything kind of uniquely when you look at calendar Q1 that seems to make it one of your slower quarters advertising-wise versus other quarters throughout the year?
And then, just a big picture conceptual question. Sports programming seems to be something that all of your peers seems to be focusing more of their time and attention on, you have obviously done a little bit for SPIKE. But just wondering, your appetite for increasing your overall exposure to sports programming to ensure or accelerate your subscriber fees? Thanks.
Philippe Dauman - President & CEO
Thank you, Rich. Yeah, there was some movies that did not move out of calendar Q1, our fiscal Q2. But also, if you look back on last year, even a year before, you do see in the general marketplace this time of the year end of first calendar quarter, beginning of second calendar quarter, you see a pattern of what the demand is in the marketplace for variety of reasons, many bill it as the calendar second quarter continues and we are seeing that, particularly in categories that we have particular relative strength in.
As far as sports related programming, one, yes, as you pointed out, we have some participation in that. But as you look at some of the programming that we have for example, the new event that we are going to have in -- on Nickelodeon, hosted by Michael Strahan the Kids Choice Sports 2014 that takes advantage of the vibrancy of sports. If you look at MTV 2, we have a programming tied in with Major League Baseball, that -- they are very interested in working with us.
So we are looking at opportunities where we can. There may be some opportunities internationally as well and that was one of the rationales behind our getting involved with Bellator here in the U.S. We see that as potential programming as we rollout of the SPIKE brand; if we roll that out internationally that would be a natural there.
So we look at those opportunities. But yeah, we are very focused on I think a broad range of programming that has that live events, that eventized appeal like sports does. So that could be the light of it, but it also mean fresh series that add and make social conversation. So it's really not so much of sports, it's really having fresh current vibrant content of all times, including sports related content that counts.
Richard Greenfield - BTIG
Thank you.
Philippe Dauman - President & CEO
You're welcome.
[...]
Operator
Our next question comes from Vasily Karasyov of Sterne Agee.
Vasily Karasyov - Sterne Agee
Hi. Tom, I've a two part question for you about consumer product licensing. In your prepared remarks, you have highlighted all these opportunities coming up in the next several quarters. So looking at your end year revenue in domestic looks best for the couple of years, but it looks pretty flattish though. Are those new opportunities are the result of something new focus on this revenue stream for you? And then after that can you tell us what competition is like in the market because I'm sure you know every peer of yours is hoping for growth in consumer product life and category Frozen and the Marvel characters and Star Wars and Disney Dreamer Termination, we got Dragon 2 and so on and so on. How do you see the market? Is there competition benign enough for you to count on the substantial success there? Thank you.
Tom Dooley - COO
It's a good question, Vasily, thank you for it. Yes, we do see this category both from a revenue and a bottom line contribution increasing both throughout the rest of this year and certainly into the future years. And it is competitive but that's why its important to have something a franchise like Teenage Mutant Ninja Turtles where you're number one, and I think that will continue to be our focus. And as I noted in my remark, we continue to focus on franchises that has very much a (inaudible) appeal that will put us as a very competitive player in that marketplace. Until those shows, movies get made and get up in on the air it will be hard to predict the outcomes but we're in this business for the long run. We see the tremendous success others have had in it. We put in place the organization to take advantage of it and we have great content and IT to drive that business into the future.
Vasily Karasyov - Sterne Agee
But you don't feel like that ship has sailed and you're late to the game and the market is taken over by competitors and there is just no room for your properties there?
Tom Dooley - COO
I mean, it's not a question of room, it's a question of which properties resonate with kids. And our goal, given our franchises and certainly having a very strong franchise in terms of being able to platform that product with children in channels like Nickelodeon that is a big opportunity for us.
And the rest of ancillary revenue though some of the growth that consumer products will drive will be offset by some of the declines in home entertainment ability to sell products in that marketplace as DVD sales related to the media networks side of the house continue to decline.
Philippe Dauman - President & CEO
Vasily, I would add on that is as you see some stabilization strengthening in European consumer market and growth of retail in emerging market that creates a bigger pie in consumer products as we look forward in the years ahead.
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