Time Warner on Wednesday reported an 8 percent decline in third-quarter profit as the creation of a $500 million legal reserve offset double-digit growth at the company’s cable and network businesses.

The media giant said its third-quarter profit fell to $499 million, or 11 cents a share, from a year-earlier figure of $541 million, or 12 cents a share. Revenue rose 5 percent to $10 billion.

Time Warner’s quarterly profit reflected the creation of a $500 million legal fund that will be used to resolve investigations by the Securities and Exchange Commission and the Department of Justice into accounting practices at the American Online unit. At issue is how AOL accounted for certain advertising revenue, how the online service counted subscribers and how the company accounted for its stake in AOL Europe.

Although Time Warner Chairman and CEO Richard Parsons said it was unclear when the investigations might end, he said the company is gaining “visibility,” or a greater sense of what shape the probe might take. That’s why the company is setting aside the legal fund now, he said.

In addition, as part of those investigations, the company said it will restate financial results from 2000 and 2001, though those adjustments didn’t impact the 2004 third-quarter results.

Time Warner’s cable division posted a 10 percent rise in revenue to $2.1 billion, fueled by a 10 percent increase in subscription revenue and an 11 percent jump in advertising revenue. The subscription revenue increase was driven by a surge in high-speed data revenue, higher revenue growth on digital cable and higher basic-cable rates. Operating income climbed 11 percent to $438 million.

Though the cable unit reported a decline in basic cable subscribers of 11,000, digital cable subs rose 72,000 to 4.7 million and high-speed data subscribers rose 168,000 to 3.7 million.

Meanwhile, the networks division, which includes cable company Turner Entertainment Group and HBO as well as broadcaster The WB Network, saw revenue rise 8 percent to $2.2 billion, thanks to an 8 percent gain in subscriptions and a 20 percent surge in content sales. Advertising sales rose 8 percent, thanks to a 12 percent bump up at Turner, which offset a 3 percent drop at The WB Network. Operating income at the networks division increased 13 percent to $574 million.