Time Warner's net income fell 18 percent in the first quarter, but that was still good enough to beat Wall Street expectations. Earnings were buoyed by robust cable revenue and strong advertising sales in the AOL division.

The world's largest media company said earnings fell to $1.2 billion, or 31 cents per share, from $1.5 billion, or 32 cents per share, a year earlier.

Excluding discontinued operations and special items, Time Warner said it would have earned 22 cents a share, up from 20 cents a share. According to Thompson Financial, analysts were expecting earnings of 20 cents a share on revenue of $11.2 billion.

Revenue at Time Warner Cable, which has been publicly traded since January, rose 61 percent to $3.9 billion, boosted by new services and the addition of Adelphia subscribers.

AOL's revenue fell 25 percent to $1.5 billion, but operating profit for the internet service provider rose 27 percent. While ad sales increased 40 percent, the AOL was hurt by a 43 percent decline in subscriber revenue as it shifts from a subscription model to one supported by advertising. Investors will be watching AOL closely as it pushes to turnaround its disappointing profit history.

Time Warner's revenues from the film, network television, and publishing divisions were close to flat.

The company raised its full-year forecast for earnings before discontinued operations and accounting changes to about $1.05 per share from about $1.00. Analysts were expecting 99 cents.

Shares of Time Warner rose 50 cents to $21.09 in morning trading on Wednesday. Time Warner Cable climbed $1.23 to $37.45 in the same period.

The Wall Street Journal says that investors have been focusing on Time Warner's plans for its cable-TV business, its main source of both growth and profits, as well as the progress of a revamp at AOL.

The business, which is the No. 2 cable operator in the nation and accounts for about 40 percent of Time Warner's operating profit, has been growing at a rapid clip. That's a result of the popularity of its bundled television, Internet and telephone-service offering. Management sees strong growth in cable for years to come, the Journal said.