• by Wayne Friedman , February 3, 2011

Viacom grabbed double-digit increases for advertising for its domestic TV channels in its most recent fiscal first quarter -- but lost ground overall in revenues and income. Separately, it made a deal with Hulu to return its programming to the digital service.

Lower home-entertainment business -- DVD sales and rentals -- contributed to an overall 5% drop in revenue to $3.8 billion and a 14% fall in net income to $620 million for Viacom during its fiscal first quarter 2011.

Viacom media networks were one of the few bright spots with operating income up 7% to $1.1 billion and revenue 6% higher to $2.4 billion.

Philippe Dauman, president and CEO of Viacom, touted strong results from MTV, where he said the network had three of the top five original cable series in the quarter. In addition, BET finally broke major ground with the cable debut of new episodes of the CW castoff "The Game," which pulled in a big 7.7 million viewers in its initial episode.

Domestic advertising sales grew 10%; worldwide advertising was up 7% in the quarter. Worldwide affiliate revenues climbed 10% to $814 million.

Viacom's Film Entertainment division, which consists of theatrical releases, DVD sales and rentals, had a tough period. Filmed Entertainment revenues were $1.5 billion, down 16% from the prior year. Lower DVD sales and consumer products sank 18% to $173 million.

The drop is a result of difficult comparisons to the first fiscal quarter of 2010 in which "Transformers: Revenge of the Fallen," "Star Trek" and "G.I. Joe: The Rise of Cobra" produced strong results. Another contributing factor to the decline was that television license fees sank nearly 40% as a result of fewer titles.

Theatrical movies were another good story for Viacom. Paramount Pictures were up a massive $323 million to $416 million due to a big slate of seven films, including DreamWorks Animation's "Megamind," "The Fighter" and "True Grit." That compares to only four theatrical releases in the previous year's period.

In separate announcement late yesterday, Viacom announced that some of its shows would return to Hulu, the digital video platform owned by News Corp., Comcast Corp. and Walt Disney -- but not all to its free, ad-supported service.

Comedy Central programs "The Daily Show with Jon Stewart" and "The Colbert Report" will return to Hulu's regular free, ad-supported service.

But other programming from Viacom networks Comedy Central, MTV, BET, VH1, Spike TV and TV Land will be in Hulu Plus, Hulu's $7.99-a-month subscription service. These shows include "Jersey Shore," "Tosh.0," "Teen Mom 2," "Manswers," "Let's Stay Together" and "Hot in Cleveland." These shows will come onto Hulu Plus 21 days after they air on Viacom's networks.

Hulu Plus subscribers will also have access to more than 2,000 episodes of programming from Viacom's library. Financial terms of the agreement were not disclosed.

Viacom's Dauman stated: "The Hulu Plus service offers us the opportunity to connect with our audiences through an exciting subscription and ad supported platform that is complementary to our existing distribution arrangements."