New York - Time Warner, the world's largest media company, said Wednesday that it planned to divest its lucrative cable TV unit as first quarter profits slid 36 per cent to 771 million dollars.

"Our results this quarter, particularly the underlying operating strength at our cable, networks and filmed-entertainment businesses, gave us the confidence to reaffirm our full-year business outlook," chief executive officer Jeff Bewkes said in a statement. "We've decided that a complete structural separation of Time Warner Cable, under the right circumstances, is in the best interests of both companies' shareholders. We're working hard on an agreement with Time Warner Cable, which we expect to finalize soon."

Time Warner owns 84 per cent of Time Warner cable but has come under pressure to sell its stake in order to focus on its entertainment businesses and a turnaround at the AOL internet unit. Analysts said that proceeds from the sale could allow the company to repurchase some 4 billion dollars in stock and significantly boost its share price.

The announcement came as Time Warner reported that first-quarter net income fell 36 per cent to 771 million, or 21 cents a share, from 1.2 billion dollars, or 31 cents, a year earlier. Sales rose 2.1 per cent to 11.4 billion, the New York-based company said in a statement. Revenue rose 2 per cent to 11.42 billion dollars from 11.18 billion dollars on improved results at Time Warner Cable and its filmed entertainment business.

Sales at Time Warner Cable rose 8 per cent to 4.16 billion dollars but the unit's net income declined 12 per cent to 242 million after marketing costs rose and the company recorded a gain from an asset sale a year earlier.

However AOL continued to disappoint as lackluster ad sales failed to compensate for the continued decline in internet access subscribers. AOL lost 647,000 Internet-access subscribers during the quarter, bringing the user base at the end of March to 8.7 million. The business has lost more than half of its customers in the past two years.

AOL's advertising grew just 1 per cent and overall revenue at the unit declined 23 percent to 1.1 billion dollars.

Profits at the company's film unit fell 25 per cent to 183 million dollars on costs related to merging the New Line Cinema film studio with Warner Bros. But sales increased 3.5 per cent to 2.84 billion dollars. Profit at the cable-TV networks group, which includes TBS and HBO, rose 1.6 per cent to 874 million dollars on a 10 per cent rise in sales to
2.66 billion dollars.

Earnings at the publishing unit that includes Time Magazine and People more than doubled to 93 million dollars as revenue grew 73 per cent to 145 million dollars. (dpa)