Alternatively, go Full-screen with VLC by pressing 'F' when playing the video - you should notice it covers the whole left - right panels.
The reason it is doing this is that the black bars are part of the 1080p vertical pixels. It'll be something like 140 pixels black bar at the top, 800 of the video in the middle, then 140 pixels black bar at the bottom. Because it is part of the video file, VLC is showing it.
Because you aren't in full-screen mode on the 1080p screen, it is restricted in the top and bottom in how much it can show (there is still plenty of space on the left and right it *could* display) (see below for an example)
Using a tool such as handbrake, you could remove the black bars that are built into the video at the top and bottom. This would result in a 1920x800p video, and would fit better in Window mode in VLC
![Image](http://i.imgur.com/q9HQcER.jpg)