US media and entertainment giant Time Warner posted a 38 percent decline in quarterly net profit on Wednesday, dragged down by weak results in its publishing division and at Internet unit AOL.

Time Warner said net profit fell to 661 million dollars, or 55 cents per share, in the third quarter from 1.1 billion dollars, or 89 cents per share, in the same quarter a year ago.

Revenue declined six percent to 7.1 billion dollars.

Time Warner nevertheless raised its outlook for full-year earnings saying it expected earnings per share of at least 2.05 dollars, up from the 1.98 dollars forecast previously.

The improved full-year outlook came despite what Time Warner said will be 100 million dollars in restructuring charges in the fourth quarter in the struggling publishing division.

According to the New York Post, Time Inc., publisher of Time, Fortune, Sports Illustrated, People and other magazines, plans to lay off some 540 employees, or six percent of its workforce.

Time Warner did not provide any details about the restructuring in its third-quarter earnings report.

Time Warner chairman and chief executive Jeff Bewkes said the company "is firmly on track to post solid results this year in spite of the tough economic environment.

"Driven by the better-than-expected performance at our Content Group this quarter, we're raising our 2009 business outlook," he said in a statement.

"We still expect to spin off AOL by the end of the year, and we're making great progress on our other longer-term strategic priorities," Bewkes said.

"I'm confident that the new content-focused Time Warner will be well positioned to deliver steady and attractive stockholder returns in 2010 and beyond," he said.

Revenue at Time Warner's networks division, which includes television channels CNN, Turner Broadcasting and HBO, rose five percent to 2.9 billion dollars.

Revenue fell four percent to 2.8 billion dollars at the film division as third-quarter releases such as "Harry Potter and the Half-Blood Prince" failed to enjoy the same success as last year's hit Batman film "The Dark Knight."

In the publishing division, revenue fell 18 percent to 914 million dollars. Advertising revenue dropped 22 percent and subscription revenue declined by 13 percent.

Revenue was down 23 percent at AOL to 777 million dollars. Subscription revenue fell 29 percent and advertising revenue declined by 18 percent.

Like other US magazine publishers, Time Inc. has been facing a steep drop in print advertising revenue, steadily declining circulation and the migration of readers to free news online.

Time Inc. cut around 600 jobs last year and has shuttered several magazines recently including Southern Accents and Life. It also cut the frequency of Fortune magazine to 18 issues a year from 25.

Time Warner shares were up 2.39 percent at 30.88 dollars in early trading in New York.