The media conglomerate has taken a beating for years, with players and pundits dismissing it as synergistically useless. But that hasn't stopped Time Warner Inc. from demonstrating that, as an operating structure, the media conglomerate is holding up better than media stocks.

Indeed, during last week's teleconference about third-quarter results, Time Warner president and CEO Jeff ­Bewkes tried clarifying one analyst's question with one of his own: "I think I understood your question to be, Are we doing so well in either the third quarter now or the fourth quarter of this year that we're going to have high comps to deal with next year?"

Not that Time Warner's revenue went through the roof. At $11.71 billion for the quarter, it was flat compared with $11.68 billion for the year-earlier period. And the $34.68 billion for the first three quarters represented a sales gain of only 2.5%.

Adjusted Oibda (operating income before depreciation and amortization) was another matter, however. It rose 9.1% during the quarter and 4% in the year to date.

The year so far also had Time Warner's five divisions posting a 24.7% boost in free cash flow. This not only brought the running total of FCF to $5 billion but emboldened management to raise full-year guidance to $5.5 billion, from $4.5 billion anticipated last April.

Bewkes acknowledged that Time Warner's "diversified revenue streams" contributed much to the surprisingly successful performance in an otherwise turbulent environment. But what he didn't address was management's ability to dial the performance of certain divisions up and down in ways other media conglomerates can only envy.

Only two divisions, for instance, had revenue gains during the quarter. But increases of 8.5% for cable (Time Warner Cable Inc.) and 6.9% for networks (Turner Broadcasting System Inc. and Home Box Office Inc.) balanced sales declines of 6.8% for publishing (Time Inc.), 9.3% for filmed entertainment (Warner Bros. Entertainment Inc.) and 17% for AOL LLC. There was disparity in divisional contributions to the quarter's impressive Oibda gain, too. Increases of 8.8%, 6.1% and 21.4% for cable, filmed entertainment and networks, respectively, more than offset declines of 19.1% for publishing and 7% for AOL.

Filmed entertainment was especially noteworthy in light of Warner Bros.' decision to put off the release of "Harry Potter and the Half-Blood Prince"--originally destined for big screens this month--until July 2009. On announcing the movie's delay in August, the studio heralded summertime as the "ideal window for a family tent pole release."

But the truth is that, with Warner Bros.' "Dark Knight" Batman sequel generating nearly $1 billion in worldwide box office since July, Time Warner doesn't need Harry at Hogwarts this year. Its studio is already No. 1 in year-to-date box office, DVD sell-through and video on demand.

So why not use the sixth installment of the wildly popular series to ensure next summer's comps aren't overwhelmed by this summer's "Dark Knight"? Why not secure future income statement contributions from that part of the conglomerate where, otherwise, growth may be difficult to post?

The teleconference also revealed that Time Warner is managing its balance sheet as well as its income statement. Of its $18 billion in unused financial capacity--an amount that, for the purpose of perspective, is nearly 50% greater than Viacom Inc.'s entire market capitalization--$12.6 billion is allocated to Time Warner's TWC division and $5.4 billion to the remaining four.

But when TWC separates from its parent company early next year, it will leave Time Warner with a $9.25 billion dividend. This portends a war chest of nearly $15 billion for a cable-free Time Warner, prompting Bewkes to remark, "We have resources, as some others don't, to pursue whatever opportunities come up."

The CEO assured call participants that, given all the media-industry "value destroyed through poor acquisitions and poor capital allocations," Time Warner would be careful, limiting itself to three areas: cable networks, film and television production, and game publishing. But the thought of Time Warner's return to M&A still spooks investors. The stock closed with a 6.3% decline the very trading session that opened with Bewkes' justifiable assertion that Time Warner's "solid earnings and superior free cash flow show the resilience of our businesses."

Richard Morgan covers media for The Deal.