By Jennifer Saba and Sruthi Ramakrishnan
(Reuters) - Viacom Inc said on Thursday it expects advertising revenue from its cable networks like MTV, Comedy Central and Nickelodeon to improve this quarter, sending shares up 2.4 percent.
The media company, which also owns movie studio Paramount Pictures, said higher ratings for its television shows are also helping coax money from advertisers.
Viacom is the first of the big media conglomerates to shed light on the U.S. advertising environment this year.
"It is positive news and that is why the stock is up," said Evercore analyst Alan Gould about the advertising forecast.
Earlier Thursday, Viacom reported domestic advertising revenue rose only 3 percent for the quarter ending December 31. While pullback was expected, investors were encouraged that demand for commercials is returning.
Viacom Chief Executive Philippe Dauman blamed the November budget crisis in Washington that spooked advertisers.
"That created a lot of uncertainty in the business community," Dauman said on an analyst call. "That dissipated once the deal occurred."
Advertiser demand is "back to normal" he added and Viacom expects domestic ad revenue to improve this quarter.
The company reported a 4 percent drop in total revenue for the quarter ending December to $3.2 billion, roughly in line with analysts estimates of $3.30 billion, according to Thomson Reuters I/B/E/S.
The drop off resulted from fewer movie releases from its studio Paramount Pictures, which reported a 30 percent decline in filmed entertainment revenue to $681 million.
Net income from continuing operations rose to $547 million, or $1.20 per share, from $473 million, or 93 cents per share, a year earlier.
Excluding items, the company earned $1.20 per share from continuing operations, above analysts' estimate of $1.16, according to Thomson Reuters I/B/E/S.
Viacom is controlled by media mogul Sumner Redstone, who serves as chairman of the company and its sister CBS Corp.
Shares of Viacom rose $2.60 to $83.50 in early trade on Thursday.
(Reporting by Jennifer Saba in New York and Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty, Don Sebastian and Sofina Mirza-Reid)