Chief Executive Richard Parsons also confirmed the media conglomerate is in discussions with several undisclosed companies about AOL. Several sources have said Time Warner is courting Microsoft Corp, Google Inc and Comcast Corp to sell off a minority stake in the online unit.
The increase in the share repurchase program, to $12.5 billion from $5 billion over 21 months, comes after billionaire activist Carl Icahn voiced concern about Time Warner's laggard stock price.
Icahn and a coalition of hedge funds collectively own a 2.8 percent stake in Time Warner. The corporate raider has demanded the company completely spin off its cable company and raise its stock buyback to $20 billion.
During the third quarter, Time Warner said its high-speed Internet and digital phone services drew more subscribers and online advertising sales increased.
Earnings rose to $897 million, or 19 cents per share, from $499 million, or 11 cents per share, a year earlier.
The New York-based owner of HBO, the Warner Brothers movies studio and Time magazine beat analysts' expectations by 2 cents per share, according to Reuters Estimates.
Revenue was up 6 percent to $10.5 billion. Advertising revenue at AOL, which Time Warner now views as an important component of the future of media, rose 28 percent, factoring in last year's purchase of Advertising.com. Overall revenue fell 5 percent, however, as the unit lost 678,000 subscribers, ending the quarter with 20.1 million.
Parsons said AOL is in discussions with several unidentified parties to accelerate its transition from a subscription business to an advertising-led entity, but also said it was not clear if any deal would occur at all.
For the full year, the company affirmed its expectations that adjusted operating income before depreciation and amortisation would increase at a high-single digit percentage rate.