Time Warner Inc. (TWX), the world's largest media company, on Wednesday posted a 25 percent jump in quarterly profit excluding one-time gains, boosted by advanced cable service subscribers and stronger advertising sales at America Online and cable network TNT.

Total profit rose to $864 million, or 18 cents a share, in the first quarter from $690 million, or 15 cents a share, before one-time items and assuming the same portfolio of assets in both years.

Time Warner (search) has bet on the cable industry as its main growth engine in the coming years, a wager that paid off in the first quarter. Shares rose 3 percent in mid-day trading.

The New York-based owner of AOL, the Warner Brothers movie studio and the HBO pay cable channel said net profit edged up to $963 million, or 20 cents a share, from $961 million, or 20 cents a share.

Revenue increased 3 percent to $10.48 billion, just above the average Wall Street estimate.

"I thought it was a pretty good quarter," said Jeffrey Logsdon, an analyst at Harris Nesbitt, who pointed out that the company's 2005 forecasts, which remained unchanged, was conservative.

Revenue in the TV networks division jumped 4 percent, aided by a 12 percent gain in ad sales at Turner Networks, including top-rated TNT.

Time Warner, which sealed a complicated joint bid with Comcast Corp. (CMCSA) to buy the assets of bankrupt cable operator Adelphia Communications Corp. (search), is leaning on its cable unit to be a main source of growth in the years to come.

The cable division's revenue and earnings before interest, taxes, depreciation and amortization both increased by 10 percent, helped by new digital services. The unit added 26,000 net additional basic video subscribers and 209,000 high-speed Internet subscribers in the quarter.

Time Warner Cable (search), which fully deployed digital phone service at the end of last year, added 152,000 net phone customers.

America Online revenue fell 3 percent as U.S. subscribers declined by 549,000, but it logged a 45 percent increase in advertising revenue.

"The numbers were better than expected, and AOL continues to show the benefits of shifting the business from subscription to advertising as well as significant cost-cutting opportunities available," said Richard Greenfield, an analyst at Fulcrum Global Partners.

The films division eked out a 1 percent rise in revenue, despite a tough comparison with the year-ago quarter, when results were boosted by the third "Lord of the Rings" movie and TV syndication fees.

"One of the more surprising aspects of the quarter was the performance of the film unit, which faced tough comparisons, but still managed to grow revenue a bit," said Christopher Marangi, an analyst at Gabelli Asset Management, which owns 290 million shares of Time Warner.

Strong film results in 2004 and an anticipated advertising sales shortfall at some of its magazines are expected to lead to a weaker second quarter 2005, Time Warner said, calling it the "weakest" of the year. The magazine unit includes Time, Sports Illustrated, People and Fortune among others.

"Beyond the second quarter, we expect improving results for the rest of the year," said Chief Financial Officer Wayne Pace on a conference call.

It sold its Warner Music Group unit in the first quarter of 2004 and recorded a profit from discontinued operations of $215 million. It also recorded a separate one-time gain of $22 million.

Excluding 2 cents a share in one-time gains that included a rise in the fair value of an option related to the sale of Warner Music Group, the results beat the Wall Street consensus estimate by a penny, as compiled by Reuters Estimates.

Time Warner on Wednesday also said it planned to record a $925 million gain in the second quarter on the sale of its remaining Google Inc. (GOOG) stake.

Shares of Time Warner rose 60 cents to end at $17.28 on the New York Stock Exchange.