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Time Warner's


happy results Wednesday offer fresh evidence that Chairman Dick Parsons has successfully navigated rough waters at the media behemoth.

The company earned $963 million, or 20 cents a share, in the first quarter, up from the year-ago continuing operations profit of $712 million, or 15 cents a share. Revenue for the quarter ended March 31 rose to $10.48 billion from $10.18 billion a year earlier, beating the $10.29 billion Wall Street estimate.

Time Warner also reaffirmed 2005 guidance.

Investors responded accordingly, sending the stock up 3%.

Not so long ago, the world's largest media company reeled from a potentially ruinous partnership with AOL and the poor timing of an ad downturn in the new millennium.

But a focus on cable offerings has yielded results, with cable revenue up 10% to $2.2 billion on the back of increased digital video and basic cable customers. Time Warner added 136,000 digital video recorder and 108,000 video on demand subscribers during the period. Time Warner digital cable customers now account for 45% of its total, and 20% of those are now DVR and VOD subscribers, according to the company.

Parsons said first-quarter strength underscores operational gains across the board. "Time Warner Cable's robust growth this quarter in high-speed data and digital phone subscribers, as well as its strong showing in enhanced digital video services, reinforces our confidence in the cable industry's promising future," he said.

The company added 152,000 digital phone users in the quarter, a hefty portion of which are coming from its current cable customers. Time Warner says that the market is growing at a pace of 15,000 per week and it expects that number to creep up in the next two quarters as digital telephone takes hold throughout its footprint.

Time Warner hopes to position itself as the go-to provider of high-speed cable, Internet and telephone access for customers, the bundling of which it says will prevent single-service providers from poaching customers in the future and decrease churn.

At America Online, ad revenue allowed the division to mitigate continued subscriber loss. Revenue at the division slipped 3% to $2.1 billion and it lost 549,000 subscribers in the quarter ahead of its summer launch of, which will give the company a better platform with which to grab ad dollars. Parsons said that the new nonsubscriber AOL "should grow to become a much more significant advertising platform."

Still, remains a wait-and-see prospect in the view of many analysts, who worry that the new service might lag behind competitors like







Time Warner's cable networks business has also fared well. Broadcast ratings are down this year, and cable is benefiting from that fact. Channels in its Turner Broadcasting unit, including TBS and TNT, have shown significant strength in ratings, which has driven revenue. "Turner delivered another quarter of double-digit subscriber and ad revenue growth," said Parsons.

The company also said its entertainment divisions were looking forward to upcoming blockbuster releases of

Batman Begins


Charlie and the Chocolate Factory

and the latest Harry Potter installment,

Harry Potter and the Goblet of Fire

, later this year.

Time Warner rose 48 cents Wednesday to $17.16.