• by Wayne Friedman , February 2, 2012

Viacom said it was recently hit by a weak quarterly advertising market.

Advertising revenue for its media networks, including MTV and Nickelodeon, decreased 3% on both a domestic and worldwide basis, driven by lower ratings and softness in the U.S. advertising market in the second half of the quarter.

The news was part of Viacom's release of its fiscal first-quarter 2012 earnings.

Better news came from domestic and worldwide affiliate fees, which each increased 16%, reflecting higher revenues from digital distribution arrangements, as well as rate increases, the company said.

Viacom's first fiscal 2012 quarter, for its media networks, posted 3% higher revenues to $2.4 billion and operating income up 7% to $1.1 billion.

Philippe Dauman, president and chief executive officer of Viacom, stated: "Despite short-term softness in the overall ad markets, Viacom's quarterly results benefited from strong affiliate fee revenue growth," which he attributed to TV brands continuing to "attract traditional distributors as well as emerging digital services."

Compounding lower advertising activity were some viewer measurements starting in the fourth quarter of 2011 for Nickelodeon: sudden declines of 15% or more in kids' viewing.

Overall net income for the media company was cut by more than half to $222 million from $619 million in the first quarter of 2012. Revenue was up 3% to $3.95 billion.

Viacom's film entertainment unit grabbed more revenues, improving 4% to $1.6 billion, but posted a net loss of $31 million versus a net profit of $68 million in the same period a year ago. Much of this came from declines in sales and rental fees of DVDs, as well as lower comparisons to the fiscal first-quarter 2011 business relating to of distribution rights of two future Marvel films.

The company touted big theatrical business during the period: Paramount Pictures' "Paranormal Activity 3" and "Mission: Impossible-Ghost Protocol" have generated approximately $575 million in worldwide box office revenues.