New York  - Media conglomerate Viacom, the owner of MTV, Paramount Studios and the Rock Band video game, reported a 34 per cent drop in profits Thursday due to a drop off in advertising.

But the company said it believed the market had stabilized and that companies that had postponed advertising purchases were now buying again.

"Importantly, we are not seeing any further deterioration [in ad sales]," said Viacom CEO Phillipe Dauman. "While it is too soon to make a call, over the past several weeks, we have seen the advertising markets stabilize."

Viacom said it earned 177 million dollars in the first quarter compared with 270 million dollars a year earlier. Revenue fell 7 per cent to 1.87 billion dollars. Domestic ad sales declined 9 per cent, with worldwide ad sales down 11 per cent. Viacom's filmed- entertainment revenue declined 5 per cent as a decline in DVD sales outweighed a rise in theatrical revenue.