Viacom Inc reported a steep fall in quarterly earnings, hit by poor advertising revenue and a dropoff in sales of its Rock Band video game.

The owner of MTV Networks and Paramount film studios reported second quarter profit of $277 million, or 46 cents a share, down from $406 million, or 64 cents a share, in the same period a year ago.

Excluding 3 cents a share in severance charges, adjusted earnings per share were 49 cents, which was slightly ahead of average analyst estimates of 48 cents, according to Reuters Estimates.

Revenue declined 14 percent to $3.3 billion, the company said, and short of analyst estimates calling for revenue of $3.49 billion in the quarter.

Revenue was hit from several sides. The prolonged slump in advertising spending continued to undercut Viacom's earnings, as did lower sales of the video game Rock Band and DVDs.

While Viacom is not as dependent on advertising as some other media companies -- such as corporate sibling CBS Corp -- the company still gets about 30 percent of annual revenue from ads.

As a result, its results have been hampered by the prolonged downturn in ad spending, with sectors like automotive cutting way back on their marketing budgets over the past year.

Viacom Chief Executive Officer Philippe Dauman predicted several months ago that advertising was finally stabilizing, and noted on Tuesday that U.S. advertising revenue had actually increased from the first to the second quarters of this year.

Meanwhile, Viacom's Paramount Pictures pulled out two big hits during the quarter -- Star Trek and Transformers: Revenge of the Fallen. Still, the combination of the two films could not surpass the results of Iron Man and Indiana Jones and the Kingdom of the Crystal Skull in the same period a year earlier, so Viacom's theatrical revenue dropped 27 percent.

Home entertainment revenues also declined, dropping 29 percent and underscoring the industry's broader struggles with a depressed DVD market.

(Reporting by Paul Thomasch; Editing by Derek Caney)

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