Oct. 31 (Bloomberg) -- Time Warner Inc., struggling to revive its film and Internet units, probably managed an increase in third-quarter profit on cable television growth fueled by the acquisition of Adelphia Communications Corp.

Earnings likely rose 13 percent to $823 million, or 20 cents a share, estimated William Drewry, an analyst at Credit Suisse in Atlanta. Sales may have gained 8.2 percent to $11.2 billion, said Drewry, the second-ranked entertainment analyst by Institutional Investor magazine. Time Warner reports tomorrow.

Time Warner Cable, the second-largest U.S. cable operator, probably will post a 33 percent rise in profit, Drewry said. Time Warner bought Adelphia with larger rival Comcast Corp. in July and the transaction helped Comcast report a fivefold jump in profit last week. Adelphia also may help Time Warner Cable as Chief Executive Officer Richard Parsons prepares to take the unit public.

``It's a cable-driven performance,'' Hal Vogel, president of Vogel Capital in New York, said of the quarter just ended. ``Comcast had good numbers and Time Warner Cable is basking in its glory.''

Shares of New York-based Time Warner gained 7 cents to $20.01 at 4 p.m. in New York Stock Exchange composite trading. They've gained 15 percent this year.

Shares Rise

Time Warner shares received their first upgrades in more than a year on Sept. 25, from Morgan Stanley and Sanford C. Bernstein & Co. The analysts cited cable TV and improvements at AOL, the Internet unit. Of 24 analysts tracked by Bloomberg, 15 rate the stock ``buy'' and nine rate it ``hold.''

Analysts estimate profit was 20 cents a share in the quarter, the average in a survey of 19 analysts by Thomson Financial. Sales rose to $11.1 billion, according to the average estimate.

Time Warner Cable was probably Time Warner's fastest- growing division for the 11th straight quarter. Profit probably rose to $1.24 billion, Drewry said. The unit also gained an estimated 275,000 digital-phone customers and 282,000 high-speed Web-access clients, according to Jessica Reif Cohen, an analyst at Merrill Lynch & Co. in New York. She rates the shares ``buy.''

Revenue at Time Warner Cable may have risen 33 percent to $3.19 billion, Reif Cohen said. Without Adelphia, sales would have risen 15 percent, she said.

Cable Packages

The Adelphia purchase made Time Warner the largest cable operator in New York and Los Angeles. The initial public offering may value Time Warner Cable at more than $40 billion.

Philadelphia-based Comcast and Time Warner Cable are selling packages of cable, Web access and phone services that compete with phone companies.

``The cable companies have been showing strong operating performance and a lot has to do with maximizing the triple-play strategy,'' said Fitch Ratings analyst Brendan Buckley in New York.

Parsons, 58, is trying to turn AOL around by offering free e-mail and software to broadband users and cutting 5,000 jobs. The offer, which started in September, is aimed at retaining users and boosting online advertising revenue. Parsons was paid a total of $16 million last year, including $1.5 million in salary, $7.5 million in bonus.

Anthony Noto, an analyst at Goldman Sachs Group Inc., who rates the shares ``neutral,'' called the AOL changes a ``net positive'' in an Oct. 23 research note. Noto, based in New York, said the new plan may help stop a loss of subscribers.

Losing Customers

AOL probably lost 2.3 million U.S. Web-access subscribers in the quarter and increased online ad sales by 29 percent, Credit Suisse's Drewry said in a report to clients on Oct. 27. Overall, sales at AOL probably fell 10 percent to $1.83 billion, while operating profit declined 8 percent to $430 million, Drewry estimates.

Revenue of Time Warner's film studios, including Warner Bros. and New Line, fell 14 percent to $2.28 billion, while profit declined 26 percent to $180 million, Reif Cohen estimated.

The film unit produced flops such as ``Lady in the Water,'' which cost $70 million to make and earned $42.3 million in domestic ticket sales, according to Box Office Mojo, a Burbank, California, Web site that tracks films. Last year Time Warner had movie hits including ``Charlie and the Chocolate Factory'' and ``Wedding Crashers,'' which each took in more than $200 million.

Publishing unit Time Inc. put 18 magazines including Parenting and Outdoor Life up for sale in September to focus on bigger titles such as Time.

Sales at the unit may have gained 1 percent to $1.26 billion, and profit gained 2 percent to $265 million, Reif Cohen estimated.

The Turner Broadcasting cable-TV networks unit was bolstered by ad revenue at Court TV after Time Warner bought the rest of the network it didn't own from Liberty Media Corp. in May.

Revenue at the unit, which includes TNT and TBS, probably gained 4 percent to $2.48 billion, Reif Cohen estimates. Profit may gain 5 percent to $770 million.

To contact the reporter on this story: Cecile Daurat in New York at cdaurat@bloomberg.net.

Last Updated: October 31, 2006 16:29 EST