Updated with stock price information and information from the company's quarterly conference call.

NEW YORK (

TheStreet

) -- Shares of

Time Warner

(TWX)

were dropping more than 3% after the media company reported a drop in first-quarter net income.

For the period ended March 31, Time Warner's net income slipped 11% to $651 million, or 59 cents a share, from $725 million, or 62 cents a share, in the year-earlier quarter.

The company announced on its conference call that its Warner Bros. movie studio plans to buy Flixster, a movie-search service for smartphones. Through the deal it will also acquire the movie-review site Rotten Tomatoes, which is a subsidiary of Flixster.

First-quarter adjusted earnings beat analysts' expectations as the company saw a gain in revenue, driven by advertising from sports events. Adjusted earnings were 58 cents a share; analysts were expecting earnings of 56 cents a share.

Revenue was up 6% to $6.7 billion on stronger advertising sales at its cable TV networks.

"Our continued investment in the highest-quality content is paying off: the NCAA Men's Basketball Tournament on

TBS

,

TNT

and

truTV

performed even better than we expected and

Game of Thrones

debuted on

HBO

to critical acclaim and strong viewership," Chairman and CEO Jeff Bewkes said in the company's financial report.

Time Warner said it is focusing on expanding its "digital offerings" to allow its customers to watch its content on more platforms and devices.

"Just this past week, we expanded the availability of our HBO GO streaming service to mobile devices; reached agreement with

Apple

(AAPL) - Get Report

to enable our

Time

,

Fortune

and

Sports Illustrated

print subscribers to access the iPad editions of these magazines at no extra cost; and, through Warner Bros., launched our test of premium video on demand," Bewkes added.

The company expects to see its 2011 earnings grow in the "low teens."

Analyst Alan Gould of Evercore Partners referred to the company's overall earnings report as "good, not great," in a note to investors Wednesday morning.

"Given the strength of the ad environment and Warner's upcoming film and video slate, we were surprised that the company did not raise its business outlook of EPS up

from the low teens," Gould stated.

Time Warner shares were down 3.3% early Wednesday, trading around $36.50.

--Written by Theresa McCabe in Boston.

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