Viacom Inc's quarterly profit blazed past expectations, as holiday sales of hit DVDs like Star Trek and Transformers 2 helped make up for another three months of depressed advertising revenue.

Viacom, whose shares were up 2.5 percent in premarket trading, posted net earnings of $694 million, or $1.14 a share, up from the $173 million, or 28 cents a share, a year earlier.

Excluding special items, it earned $1.09 a share, well ahead of analyst forecasts of 88 cents a share. Rivals Time Warner Inc, News Corp and Walt Disney Co also posted stronger-than-expected results over the last two weeks.

Viacom's results did show some weak spots, however. Namely, revenue declined 3 percent to $4.1 billion, which was just shy of the $4.2 billion analysts polled by Thomson Reuters I/B/E/S had forecast.

Among the problems, advertising dropped by 3 percent worldwide and 4 percent in the United States, reflecting struggles selling commercial time across a cable TV business that includes MTV, Comedy Central and BET.

Viacom is not as dependent on advertising as some media companies -- such as corporate sibling CBS Corp -- but nonetheless gets about 30 percent of annual revenue from ads, so the slump has taken a toll.

While Chief Executive Philippe Dauman has said ad spending is stabilizing, the declines in Thursday's report suggest the market still has a ways to go before a recovery can be claimed. Moreover, the most recent quarter's comparisons stack up against a weak fourth quarter of 2008.

A solid quarter from Paramount helped make up for lower ad revenue. While revenue from the box office declined, the division's DVD sales jumped with the release of blockbuster hits Transformers 2: Revenge of the Fallen, Star Trek and G.I. Joe: The Rise of Cobra.

Shares were up 70 cents to $29.25 in light premarket trading.

(Reporting by Paul Thomasch; Editing by Derek Caney)

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