United States Securities and Exchange Commission Form
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended OR ☒ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from January 1, 2010 to September 30, 2010 Commission File Number 001-32686 VIACOM INC. (Exact name of registrant as specified in its charter) DELAWARE 20-3515052 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1515 Broadway New York, NY 10036 (212) 258-6000 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Securities Registered Pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered Class A Common Stock, $0.001 par value New York Stock Exchange Class B Common Stock, $0.001 par value New York Stock Exchange 6.85% Senior Notes due 2055 New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None (Title Of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of the close of business on June 30, 2010, the last business day of the registrant’s most recently completed second fiscal quarter, there were 51,970,772 shares of the registrant’s Class A common stock, par value $0.001 per share, and 556,179,499 shares of its Class B common stock, par value $0.001 per share, outstanding. The aggregate market value of Class A common stock held by non-affiliates as of June 30, 2010 was approximately $375.7 million (based upon the closing price of $35.66 per share as reported by the New York Stock Exchange on June 30, 2010). The aggregate market value of Class B common stock held by non-affiliates as of June 30, 2010 was approximately $17.4 billion (based upon the closing price of $31.37 per share as reported by the New York Stock Exchange on June 30, 2010). As of October 31, 2010, 51,972,965 shares of our Class A common stock and 552,566,126 shares of our Class B common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of Viacom Inc.’s Notice of 2011 Annual Meeting of Stockholders and Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, are incorporated by reference into this Transition Report on Form 10-K (Portion of Item 5; Part III). Table of Contents TABLE OF CONTENTS PART I Item 1. Business. 1 Item 1A. Risk Factors. 20 Item 1B. Unresolved Staff Comments. 26 Item 2. Properties. 26 Item 3. Legal Proceedings. 27 PART II Item 5. Market for Viacom Inc.’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 31 Item 6. Selected Financial Data. 32 Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition. 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 65 Item 8. Financial Statements and Supplementary Data. 65 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 110 Item 9A. Controls and Procedures. 110 Item 9B. Other Information. 110 PART III Item 10. Directors, Executive Officers and Corporate Governance. 111 Item 11. Executive Compensation. 111 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 111 Item 13. Certain Relationships and Related Transactions, and Director Independence. 111 Item 14. Principal Accounting Fees and Services. 111 PART IV Item 15. Exhibits, Financial Statement Schedules. 112 SIGNATURES 113 Table of Contents PART I Item 1. Business. OVERVIEW Viacom is a leading global entertainment content company, engaging audiences on television, motion picture, Internet and mobile platforms through many of the world’s best known entertainment brands. We manage our operations through two reporting segments: Media Networks and Filmed Entertainment. References in this document to “Viacom,” “Company,” “we,” “us” and “our” generally mean Viacom Inc. and our consolidated subsidiaries through which our various businesses are conducted. As previously announced, in 2010, we changed our fiscal year end to September 30 from December 31. We made this change to better align our financial reporting period, as well as our annual planning and budgeting process, with our business cycle, particularly the cable broadcast year. This Transition Report on Form 10-K reports our financial results for the nine-month period from January 1, 2010 through September 30, 2010, which we refer to as “fiscal year 2010” throughout this report. Following fiscal year 2010, we will report on a twelve-month fiscal year beginning on October 1 and ending on September 30 of each year. The years ended December 31, 2009 and 2008 reflect the twelve-month results of the respective calendar years. Media Networks Our Media Networks segment provides entertainment content for consumers in key demographics attractive to advertisers, content distributors and retailers. We create and acquire programming and other content for distribution to our audiences how and where they want to view and interact with it: on television, the Internet and mobile devices and through a variety of consumer products and themed entertainment. MTV Networks reaches approximately 635 million households in more than 160 countries and territories worldwide via its approximately 170 channels and multiplatform properties, which include MTV®, VH1®, CMT®, PalladiaHD®, Logo®, Nickelodeon®, Nick at Nite™, Nick Jr.®, TeenNick™, Nicktoons®, Neopets®, COMEDY CENTRAL®, Spike TV®, TV Land® and Atom®, among others. MTV Networks also has a casual games business that includes websites such as AddictingGames.com and Shockwave.com. BET Networks is a leading provider of entertainment, music, news and public affairs programming targeted to the African-American audience, and its channels and properties, which include BET® and CENTRIC®, can be seen in the United States, Canada, the Caribbean, the United Kingdom, Africa and the Middle East. In September 2010, the Company’s Board of Directors authorized management to proceed with a sale of our Harmonix business (“Harmonix”), which develops music-based games, including the Rock Band franchise. Management is actively marketing Harmonix for sale and is committed to a plan that management believes will result in the sale of the business within twelve months. Accordingly, the results of operations of Harmonix, which were previously included in the Media Networks segment, are presented as discontinued operations throughout this Transition Report. Our Media Networks segment generates revenues principally from advertising sales, affiliate fees and ancillary revenues. Revenues from the Media Networks segment accounted for 65%, 61%, 60% and 58% of our revenues for the nine months ended September 30, 2010 and 2009 and for the years ended December 31, 2009 and 2008, respectively. Filmed Entertainment Our Filmed Entertainment segment produces, finances and distributes motion pictures and other entertainment content under the Paramount Pictures®, Paramount Vantage®, Paramount Classics®, MTV Films® and Nickelodeon Movies® brands. Paramount Pictures has been a leading producer and distributor of motion pictures 1 Table of Contents since 1912 and has a library consisting of over 3,300 motion pictures and a small number of television programs. It also acquires films for distribution and has distribution relationships with DreamWorks Animation SKG, Inc. (“DreamWorks Animation”) and MVL Productions LLC (“Marvel”), a subsidiary of The Walt Disney Company (“Disney”). Paramount distributes motion pictures and other entertainment content on DVD and Blu-ray, television, digital and other platforms in the United States and internationally and has a presence in the games business. Revenues from the Filmed Entertainment segment are generated primarily from the theatrical release and/or distribution of motion pictures, sale of home entertainment products such as DVDs, and licensing of motion pictures and other content to pay and basic cable television, broadcast television, syndicated television and digital media outlets.