By The Associated Press

NEW YORK - Media conglomerate Time Warner Inc. reported a 38 per cent drop in third-quarter profit, hurt by declines at its AOL and publishing segments.

But the results beat expectations and the company is boosting its full-year earnings forecast. The media company, based in New York, said it is still on track to spin off its struggling AOL unit.

Time Warner, which also owns the Warner Bros. movie studio and the HBO and Turner cable networks, said Wednesday its profit fell to US$661 million, or 55 cents per share, in the July-September quarter, down from $1.1 billion, or 89 cents per share, a year ago.

Excluding unusual items, earnings came to 61 cents a share. That tops the analysts' average forecast of 53 cents, according to a survey by Thomson Reuters.

Last year's earnings included results from Time Warner's spun-off cable unit, Time Warner Cable Inc. Earnings from continuing operations fell a more modest 14 per cent.

Revenue fell six per cent to $7.1 billion, in line with analysts' estimates, from $7.6 billion a year ago.

The company expects adjusted earnings of at least $2.05 per share for the year, up from its earlier forecast of $1.98. Analysts expect earnings of $2.02 a share.

The AOL unit which saw a 23 per cent drop in revenues in the latest quarter. AOL ended the quarter with 5.4 million dial-up subscribers, down 438,000 from the quarter before.

Revenue at Time Warner's publishing operations, which include Time Inc. magazines such as Sports Illustrated and Fortune, dropped 18 per cent as advertising sales continued to suffer.

Time Warner's movie studio and cable channels, which rely less on ad dollars, faired better.

Network segment revenue climbed five per cent. Filmed entertainment revenue slipped four per cent, but the unit's operating profit was up six per cent.