With Dick Parsons on his way out at Time Warner ( TWX), AOL continues to be a drag on the media giant as questions surrounding its future swirl.

Time Warner met Wall Street's expectations with its third-quarter earnings report, but its shares edged lower amid a selloff in the broader stock market. The company's cable and film divisions carried results as its beleaguered Web business continued to lag.

After Time Warner finally made it official this week that Parsons, its CEO, will be replaced by President and Chief Operating Officer Jeff Bewkes at the end of the year, investors are sensing that strategic and structural change could be at hand at the company.

Bewkes -- billed as the media industry's next Bob Iger, who took over amid turmoil for Michael Eisner at Disney ( DIS) -- is keeping his cards close to his vest.

"We're not going to telegraph our decisions in advance," said Bewkes on the company's post-earnings conference call, as he took questions from analysts about whether Time Warner will spin off the rest of its cable business or even cut AOL loose. "We're aware that the questions are out there, but now is not an appropriate time to discuss it."

Parsons, who will remain at Time Warner as the company's chairman after he hands over the CEO reins, predicted double-digit growth in earnings per share for the media conglomerate starting in 2008.

"That forecast is for Time Warner as we know it today," said Parsons on the conference call. "It applies to the current long-term plan, including the cable business."

For the third quarter, Time Warner's net income fell to $1.09 billion, or 30 cents a share, from $2.32 billion, or 57 cents a share, a year earlier, when results included gains from asset sales and tax-related items.

Earnings from continuing operations were 24 cents a share in the latest quarter, matching Thomson Financial's average analyst estimate. The company earned 19 cents a share on a comparable basis a year ago.

Its revenue rose 9% for the quarter to $11.68 billion from last year's $10.75 billion. That beat expectations for revenue of $11.36 billion.

Shares of the media colossus were recently down 3 cents, or 0.2%, to $18.30.

Time Warner Cable ( TWC), which was partially spun off early this year in an IPO, posted a 28% jump in profits, thanks to new subscribers coming from bankrupt Adelphia Communications and growth of its triple-play offering, which includes digital cable, phone and broadband Internet access. Its revenue rose 25% to $4 billion.

Time Warner saw the biggest revenue growth at its filmed entertainment division, where the top line jumped 33% to $3.18 billion. Adjusted earnings from its film businesses, consisting of the New Line and Warner Bros. studios, jumped 71% to $359 million thanks to the latest Harry Potter flick, Ocean's 13 and Hairspray.

The publishing unit squeezed a 12% profit increase from flat revenue by cutting jobs and selling assets, and Time Warner's TV networks, HBO and Turner Broadcasting, posted a 6% increase in earnings and revenue.

Meanwhile, earnings at the embattled AOL division were down 24%, while revenue dropped 38%. The declines came from the loss of Internet-access fees that AOL dumped last year when it announced a shift in strategy towards an ad-supported business model.

Wall Street liked that idea, but its execution is lacking. Third-quarter ad revenue at AOL grew 13%, less than the 16% rate in the second quarter. That marks a dramatic slowdown from previous quarters of 40% ad-revenue growth, and the company said it expects further slowing in the fourth quarter and into next year.

Executives on the company's conference call dodged questions about what factors were driving the deteriorating outlook, but the company attributed it to price competition for display advertising and lower search advertising results in a regulatory filing. The situation has renewed calls on Wall Street for Time Warner to separate itself from the business.

AOL announced Wednesday that it will acquire Quigo, a company that matches online ads to the content, for an undisclosed amount.

"This company has to move fast -- the world is changing fast," Bewkes said on the conference call when asked to describe his management style. "We need to adapt all our products and how we offer them. All of that requires a lot of trial and error."