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Media giant Viacom

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[VIA  Loading...      (%)   ] beat Wall Street expectations with strong profits driven by its cable networks (including MTV) and its "Rock Band" video game franchise.

Net income grew 33 percent over last year's quarter (excluding an investment write down) to $270 million, while revenue was up 15 percent in the period to 3.12 billion. The company, led by Chairman Sumner Redstone and CEO Philipe Dauman, projected low double digit growth for earnings from continuing operations through 2010. Not bad, but the stock didn't move much on hearing the news.

MTV, Comedy Central, Nickelodeon and the company's other cable networks were looking good--showing an eight percent increase in ad revenue worldwide. Great news, since the cable networks division is responsible for nearly all of the company's profits.

Thanks to runaway hit shows like "The Hills" overall ratings are up five percent in the first quarter, a nice rebound after networks like MTV foundered for a while. The networks didn't suffer from the Writers Guild Strike--if anything the networks benefited during the first quarter.

And what about the industry-wide advertising slowdown? Dauman said that the major categories that advertise on MTV's youth-driven networks--namely the movie studios--aren't affected by the economy. And that is making some people think that Viacom should be able to weather a recession.

Another big winner--Viacom's "Rock Band" video game which has sold about three million game units. The successful music video game helped the networks division post a 16 percent increase in revenue. With MTV's ratings up and "Rock Band" rocking out, maybe Viacom has its music mojo back.

However, the company's filmed entertainment business, Paramount and DreamWorks SKG

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[DWA  Loading...      (%)   ] , was a mixed bag. Revenue grew 12 percent, but higher expenses meant the division posted a $63 million loss--though narrower than last year's $108 million loss.

This coming quarter the studio will have some big costs from "Iron Man" and "Indiana Jones," both coming out this summer, but they also promise some big returns later in the year. I'm sure Paramount has its fingers crossed that "Iron Man" brings in $90 million its opening weekend, showing that it'll make another good franchise.

This morning's conference call was peppered with questions about Viacom's new pay cable channel it's offering: a partnership between its Paramount Pictures, along with MGM and Lions Gate.

Announced nearly two weeks ago, it's a pretty dramatic break from sister company CBS' Showtime, through which Paramount used to distribute its movies. Dauman made it clear that they've got high hopes for the channel and are making progress in getting cable distribution, calling interest "very encouraging." The company's CFO said that over the live of the channel Viacom would spend less than $100 million. Considering the success of cable networks lately, that seems like it would be encouraging to investors.

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