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TheStreet Open House

Viacom Fields Nickelodeon Stores to Grow in Emerging Markets

NEW YORK (TheStreet) -- Nickelodeon is a key property for media company Viacom  (VIA). Nickelodeon is available in 100 million households in the U.S. and has remained the most watched basic cable network for 18 consecutive years. To help with international growth of the Nickelodeon brand, Viacom has teamed up with Summit Resources International to open retail stores in emerging markets.

The first store opened in Panama back in November of 2013 and has exceeded company expectations. A second Panama store will be opening in June. Two stores are set to open in Saudi Arabia, the first in April and the second in September. Another store is planned to open in Moscow in 2015. 

Nickelodeon and parent company Viacom will get final approval on what products are carried in the stores. This gives the company prime opportunity to promote new shows and find out how strong international demand is for its products. As a royalty, Viacom will gain percentage of sales from the stores' totals.

The launch of the international stores also follows up Nickelodeon's opening of a retail shop inside a Toys 'R' Us in New York. The flagship Times Square Toys 'R' Us has housed over 1,000 square feet dedicated to the Nickelodeon brand since May of 2013. Viacom has no current plans to open standalone retail stores in the U.S.

Back in 1987, Walt Disney (DIS) opened the first Disney branded store in California. Since that time, the company has launched stores in malls, airports and international territories. After licensing out the brand, Disney now owns 340 stores under the Disney Store name in North America, Japan and Europe. At last count there was over 200 stores in the United States, 40 in Japan, and more than 100 in Europe.

Disney continues to expand the retail presence across the United States and internationally. In 2015, Disney will open their biggest Disney Store yet in Shanghai. The world's largest Disney Store will be 53,000 square feet. This first Chinese Disney store will also coincide with the opening of the first mainland China Disney resort, also set to open in 2015.

Viacom saw full-year revenue fall 1% in 2013, due to declines in the filmed entertainment segment. The company's media segment saw revenue rise 5% to $9.7 billion. Filmed entertainment posted revenue of $4.3 billion, a decline of 11% for the full year. Media brings in more than twice the film segment's business, making up the majority of Viacom's revenue.

Nickelodeon remains the prized possession in a Viacom portfolio that also includes MTV, VH1, Comedy Central, BET, and SPIKE. Nickelodeon has posted 13 straight months of year-over-year growth. The channel also re-claimed the top spot with kids in the fourth quarter. The network recently announced a large backlog of new shows that will cover every genre.

The international stores will not have an immediate impact on Viacom's overall revenue. However, when it comes to growth through advertising and subscription fees, the presence of the Nickelodeon stores and built-in brand recognition should help Viacom in the long run. The ability to bring popular Nickelodeon characters to new territories should help boost media, film and consumer product revenue going forward.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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