Entertainment and spirits company

Seagram

(VO) - Get Report

, powered by record revenue in its music division, posted a narrower-than-expected loss in its third fiscal quarter.

Seagram shares slipped in morning trading Thursday, falling 1/8 to 52 3/16. (Seagram finished Thursday regular trading up 1 1/8, or 2%, at 53 7/16.)

The company, which owns

Universal Studios

, did see its losses widen. Seagram reported a net loss of $265 million, or 61 cents per share, vs. $199 million, or 51 cents a share, a year ago. Analysts surveyed by

First Call/Thompson Financial

had projected a loss of 66 cents.

Seagram has been plagued by rumors that it is intent on selling its entertainment divisions, rumors the company has publicly denied.

"We remain focused on building on the momentum in all of our businesses to produce strong quarterly results, and I am confident that we will meet our growth targets for this fiscal year,'' said Chief Executive Edgar Bronfman Jr. in a statement.

The company posted an operating loss of $1 million compared with an operating loss of $163 million a year ago.

Strong sales of music in Europe and North America contributed to record revenues at its

Universal Music Group

, which is the world's largest recorded music company, and cost savings achieved from the integration of

PolyGram

strengthened the group's earnings results.

Its filmed entertainment business, whose performance has lagged in recent years, narrowed its losses in the quarter, mostly as a result of the strong performances of

The Green Mile

and

Erin Brockovich

in theaters. Filmed entertainment posted a loss of $8 million, vs. $97 million a year ago.

Universal Studios is set to release the first potential big blockbuster of the summer movie season, traditionally Hollywood's largest source of box office receipts: the historical action drama

Gladiator

, a co-production with privately held

Dreamworks SKG

that reportedly cost more than $100 million to produce. That film opens Friday. Universal's other main summer entry is the comedy

The Nutty Professor II

, a sequel to the company's 1996 Oscar-winning hit

The Nutty Professor

.

Seagram's beverages unit, one of its most reliable sources of growth, saw earnings before interest, taxes, depreciation and amortization, or EBITDA, increase 8% to $108 million.