The media business of Viacom (VIAB) is seeing solid growth, and the company is also growing its content distribution in the United Kingdom with the acquisition of Channel 5. The company's global footprint puts it in a great position as it continues to invest heavily in programming that resonates deeply with households around the world.

Viacom is seeing growth in earnings with aid from its large share-repurchase program. The stock is a good buy for investors with a long-term  investment strategy because of the dramatic reduction in outstanding shares, growth in ratings and earnings, and a nice dividend yield. 

Nickelodeon and MTV are very strong
In the last quarter, Viacom's media revenue grew 6% year-over-year to $2.4 billion, driven by a healthy double-digit increase in affiliate fees. The company's media revenue is growing faster abroad than it is in the U.S. Viacom has seen stellar increases in newer channel roll-outs and subscribers, and along with higher rates this led to international revenue growth of 10% year-over-year while domestic revenue increased 6% year-over-year. The company's high-quality programming from various networks continues to wow viewers in more than 169 countries across the world. 

Nickelodeon remains the leading network for kids 2 to 11 and has 390 million viewers worldwide. Highly viewed shows like Dora the Explorer and SpongeBob SquarePants are driving the network's ratings, which increased 4% in the last quarter. The company's CEO stated on the earnings call that Nickelodeon's ratings have increased year-over-year for 15 months straight. Nickelodeon introduced 10 new series for the next season, and it already has eight out of the top 10 shows for kids in the current season as well. 

In addition, MTV has started to exercise more control over its distribution, with full ownership in key markets that include MTV Brazil, Russia, and Italy in 2013. This will provide more upside in the future from ratings increases and revenue growth. MTV is seeing stellar increases in viewership from the Asia-Pacific region, and has more than 540 million viewers globally.  

Paramount's movie pipeline is great
Viacom's Paramount had a significant release in Noah, which had a No. 1 debut at the box office and pulled in $338 million worldwide. In the last quarter, Viacom's filmed-entertainment segment saw its revenue decline 12% year-over-year to $831 million, and the segment just barely broke even with operating income of $7 million. The decline in the company's theatrical revenue occurred because it released fewer movies during the quarter.

However, the film studio might have better luck during the rest of 2014 as it has three movie franchises lined up, each of which could be a big hit for the company -- Teenage Mutant Ninja Turtles, Transformers, and Hercules. Since these are adaptions from books and comics, these movies should perform very well at the box office. 

Acquisition of Channel 5
Viacom acquired Channel 5 for $757 million recently and this will substantially broaden the company's household reach. Viacom already reaches more than 700 million households worldwide, and Channel 5 gets more than 42 million viewers monthly. The company's management disclosed that Channel 5 earns $600 million in annual revenue, mainly from advertising. Also, Channel 5's margins are similar to the ones earned by Viacom's international segments as well.

So the acquisition was at a very attractive price and should be accretive to the company's earnings right away. The channel 5 buyout will also enable the company to tap into the UK's media and content production capabilities. Viacom will also be able to distribute its content through Channel 5's networks as well and in the process this will create a lot of synergies.

Other leading content creators like Time Warner (TWX) are also increasingly ramping up their distribution by acquiring complementary networks or fully owning partners. Time Warner's HBO bought out its partners in Asia to tap into the growth from that region as it has a large customer base of more than 130 million worldwide, and this will enable the company to enjoy more of the future upside. Content creators are leaning toward broadening their distribution as distribution magnifies the value of content. 

Leveraged share repurchases
Viacom continues to buy back large quantities of shares by ramping up its borrowing capacity and adding more leverage to its capital structure. At the end of the last quarter, the company's net debt stood at $10.8 billion. Viacom had $8 billion left in its $20 billion share repurchase program. 

The company's operating income in the last quarter increased 3% year-over-year and this will enable the company to continue its big repurchase program. Viacom's CEO stated that the company will be buying back another $850 million worth of shares in the current quarter, and more than $3.25 billion in its fiscal year ending September 2014. 

Going forward
Viacom's highly valuable media networks are attracting and engaging consumers worldwide. The company plans to increase its investment in programming by more than 5% per year, and with broader distribution the amount of revenue and earnings it can generate will increase substantially. In addition, Viacom's large share repurchase program will continue to drive stable increases in EPS over the long run, and in the process drive stellar upside.