January 23, 2015
Dear Fellow Stockholder,
Viacom delivered a record performance in fiscal year 2014, engaging audiences worldwide with
more original content on more screens than ever before. Our strong results demonstrate the power of our
brands and continuing momentum for our strategy of investing in creativity, focusing on growing
demographic and geographic markets and embracing new distribution platforms. With our diverse portfolio
of media brands and an expanded global footprint, notably with the acquisition of Channel 5 in the United
Kingdom, Viacom is uniquely positioned to thrive during this transformative time within the media and
entertainment business.
Our media networks are driving the cultural conversation for audiences around the world. From
MTV to Comedy Central to Nickelodeon and more, we create shows and characters that resonate with
viewers on every screen. And on the big screen, Paramount Pictures is consistently delivering hit franchises
for international theatergoers. The studio dominated the global box office with its summer blockbuster,
Transformers 4: Age of Extinction, and successfully launched a new tentpole franchise, Teenage Mutant
Ninja Turtles.
We continue to generate strong cash flow and are committed to investing in great content and
expanding our global presence, as well as to returning capital to shareholders. In fiscal 2014, we returned
$3.9 billion to shareholders through the repurchase of more than 40 million shares and more than $540
million in dividend payments. Viacom has returned over $16 billion to shareholders over the past five years.
Financial Results1
In fiscal 2014, Viacom grew adjusted operating income 5% to $4.13 billion and EPS 15% to $5.40 –
strong results representing all-time records for the company. Revenues were $13.78 billion, largely
unchanged from the prior year, and supported by solid 10% growth in worldwide affiliate revenues. Fullyear adjusted net earnings from continuing operations rose 3% to $2.38 billion.
More Original Content than Ever
Viacom’s business is driven by a commitment to creativity and innovation. In fiscal 2014, our media
networks invested over $3 billion in differentiated content that crosses platforms and reflects the diversity of
our audiences.
Nickelodeon launched more new programming in 2014 than ever before and regained its long-held
spot as the #1-rated network with kids 2-11. Wallykazam debuted as its highest-rated preschool series
joining a strong lineup including Paw Patrol, Dora the Explorer and Bubble Guppies. Nickelodeon also
launched a new tentpole, the Kids’ Choice Sports 2014, which was a hit with both viewers and advertisers,
many of which are already committed to the 2015 show. The Teenage Mutant Ninja Turtles reboot pulled in
big audiences and its consumer products line remains the #1 boys action property.
1
Adjustments for results in fiscal year 2014, as well as reconciliations for non-GAAP measures, are detailed in our
Fourth Quarter and Full Year 2014 Earnings Release and our Earnings Presentation, which are available in the
“Investor Relations” section of www.viacom.com.
2014 was a big year for Comedy Central, which had the biggest original content push in its history
and earned more Emmy nominations than ever before. The mix of enduring hits like South Park and Tosh.0
and new shows featuring up-and-coming talents like Broad City is fueling an unprecedented run at the
network. Comedy Central continues to strengthen its late-night block with the runaway success @midnight
and the debut of The Nightly Show with Larry Wilmore.
MTV, the cultural home of the Millennial Generation, continues its reinvention. The network
launched its Always On initiative to connect with audiences in new ways, resulting in an 84% boost in
worldwide traffic to MTV digital. MTV also added scripted fare in 2014, launching several hit shows
including Finding Carter and Faking It, both renewed for second seasons. Several popular series returned to
air including Awkward, Catfish: The TV Show and Teen Wolf, which debuted to record numbers. MTV was
once again the #1 global youth media brand in 2014, according to Interbrand.
In 2014, Spike worked aggressively to broaden and expand its audience. Anchored by hit series Bar
Rescue and Ink Master, and joined by new hits like Catch a Contractor, the network continued to develop
engaging non-scripted programming. Spike plans to debut scripted programming and launch its brand in the
U.K. in 2015.
More original programming is launching across all our networks. VH1 debuted two new hits with
Dating Naked and Candidly Nicole, and expanded its VH1 Original Movie franchise with Drumline: A New
Beat. BET aired new episodes and announced additional season pickups of sitcoms The Game and Real
Husbands of Hollywood and original drama series Being Mary Jane. CMT saw more original launches from
its CMT Docs unit and a new CMT Crossroads with Katy Perry and Kacey Musgraves. TV Land
announced the end of its first original scripted series and breakout hit, Hot in Cleveland, as it builds out its
2015 comedy slate. 2014 marked Logo’s most watched and highest rated year ever.
Innovating in Measurement and Marketing
The greatest challenge – and opportunity – in our business today is accelerating the evolution of
measurement systems. Overall viewership outside traditional measurement is growing rapidly, and our
networks experience dramatic ratings lifts when factoring in time-shifted and on-demand viewing, as well
as unrated platforms.
Viacom is leading the conversations for innovation in cross-platform measurement. We believe that
our future will be built on a foundation of comprehensive metrics that fully recognize the value of our
content to partners and advertisers.
We are aggressively seeking new ways to monetize the strength of our content through proprietary
research and data. Viacom Velocity, our full-service integrated marketing and creative content solutions
team, is growing its client roster and earning a greater share of marketing budgets as it develops more
custom campaigns and content for advertisers. These campaigns connect advertisers to our huge social
media footprint and wealth of data and insights on our audiences. Velocity also broke new ground in the
measurement and monetization of our social media reach through Viacom Echo.
Looking ahead to 2015, we will increase the amount of digital advertising inventory on our websites,
apps and new mobile products. We will also develop premium, professionally produced video content in a
safe, branded environment animated by our unparalleled marketing capabilities.
Taking Distribution Partnerships to the Next Level
The distribution landscape continues to evolve, and we will continue to be early adopters of new
platforms as we maintain our strength on existing screens. In 2014, we struck lucrative, multi-year deals
with Time Warner Cable, Verizon, Frontier Communications and more than 800 NCTC member
distributors. We also inked agreements with Google Play, Hulu and Amazon, as well as distribution for
EPIX on AT&T U-Verse. Under our current agreements, 70% of our subscribers are covered by affiliate
agreements with terms extending for at least another three years and out as far as eight years.
Our landmark deal with Sony for their forthcoming cloud-based TV service marks Viacom’s firstever agreement to provide content for an Internet-based live TV and VOD service. Our programming will
also be featured on Verizon’s upcoming mobile video service, another example of our commitment to
collaborating with distribution partners as they introduce new, innovative products to subscribers.
We continue to drive value for our distribution partners with a steady rollout of immersive, branded
apps across our channels. In fiscal 2014, we launched the Logo, Spike, BET Now and Nick Jr. apps, as well
as our Comedy Central app, which amazingly has been downloaded over 2 million times.
Growing and Expanding Around the World
The acquisition of Channel 5 in the U.K. in September was the biggest deal in Viacom International
Media Networks’ history. Channel 5’s diverse programming slate complements Viacom’s popular networks
and is a significant opportunity for us to grow our business in the strong U.K. market. Channel 5 also
facilitates Spike’s upcoming launches in the U.K. and around the world.
The MTV EMAs attracted its largest audience ever in the U.K. in 2014 and continues to be a highly
profitable cross-border and cross-platform tentpole. Hit reality series Geordie Shore delivered its highest
ratings in MTV U.K. history and the Shore franchise traveled to new destinations including Mexico and
Poland.
We continue to increase our content investment abroad to capture attractive growth opportunities. In
2014, we broadened our presence in Africa, gaining increased distribution for MTV and launching Nick Jr.,
Nicktoons, and BET International in South Africa. Adding to the strong performance of our existing
Paramount Channels in Spain and France, we added new channels in Russia, Hungary, Romania Latin
America and Brazil in 2014. Viacom will continue a steady pace of channel launches in 2015 as we
continue to broaden our international platform.
Delivering Global Box Office Hits and Building Blockbuster Franchises
Paramount kicked off fiscal 2014 with several critically-acclaimed releases, including Oscarnominated films Wolf of Wall Street and Nebraska. The studio’s megahit of the summer, Michael Bay’s
Transformers 4: Age of Extinction, surpassed $1 billion at the worldwide box office. The film also became
the highest grossing theatrical release of all time in China, which is now the world’s second-biggest film
market behind the U.S. The new tentpole franchise Teenage Mutant Ninja Turtles, a highly successful
collaboration between Paramount and Nickelodeon Films, earned more than $477 million at the global box
office and became the #1 performing home entertainment title of 2014.
In 2015, Paramount will release more major film tentpoles with Terminator: Genesis and the next
installment of the blockbuster Mission: Impossible franchise. Paramount Animation will debut its first
feature films in 2015, including SpongeBob Squarepants: Sponge Out of Water and Monster Trucks. The
studio has a strong pipeline, with the next chapters in the Star Trek and G.I. Joe series underway.
Paramount’s new television unit has been steadily growing its portfolio of projects and partners,
collaborating with renowned producers, directors and writers including Jerry Bruckheimer, Martin Scorsese,
Steven Spielberg and Robert Zemeckis. In spring 2015, Paramount TV will debut its first straight-to-series
order on Nickelodeon based on the studio’s 2003 musical comedy School of Rock.
Impact That Creates Value
Through the power of our strong bond with audiences and leading entertainment platforms, Viacom
reflects viewers’ interests and concerns and gives voice to those who need it most. Viacommunity, the
company’s social impact umbrella, channels the strength of our brands to help drive social change. For our
pioneering efforts in 2014, Viacom was named to the Bloomberg Civic 50 list of the most communityminded companies in the country for the third year in a row.
Among many other initiatives in 2014, Viacom raised its spotlight to help end the silence and stigma
around domestic violence and sexual assault with the Joyful Heart Foundation. Get Schooled, the education
foundation co-founded by Viacom, saw a 154% increase in visitors to its website during the 2013-2014
school year. The VH1 Save the Music Foundation provided $1.4 million in musical instrument grants to 44
schools in 20 communities, and employee volunteers in Paramount’s Kindergarten to Cap and Gown
continued to mentor students from kindergarten through high school.
Promoting healthy living is another important focus for Viacommunity. The MTV Staying Alive
Foundation has awarded 488 grants to HIV-prevention projects run by young leaders since 2005.
Nickelodeon’s Worldwide Day of Play included 16 national youth organizations that mobilized more than
4,000 events in all 50 states. And Spike launched its new initiative, Veterans Operation Wellness (VOW), to
address veterans’ health concerns.
As we look at the year ahead, we are committed to keeping our brands strong across all platforms
with sustained investment in programming. We are actively driving measurement solutions to deepen our
valuable relationships with our advertising partners. Our relationships with an ever-growing list of
distributors are also expanding as we develop innovative solutions to strengthen subscriber loyalty.
Thank you for your ongoing investment and support. We look forward to building on our success and
delivering even greater value for shareholders.
SUMNER M. REDSTONE
Executive Chairman of the Board of Directors and Founder
PHILIPPE P. DAUMAN
President and Chief Executive Officer
This letter should be read in conjunction with Viacom’s Fiscal Year 2014 Annual Report on Form 10-K,
including the risk factors discussed therein.