WRAPUP 1-As media results improve, investors lose interest

* CBS adj Q1 EPS $0.05, in line with Wall Street

* Analysts say investors already priced in ad recovery

* News Corp shares down 5 pct on outlook

By Jennifer Saba

NEW YORK, May 5 The media stock rally could be ending.

Time Warner Inc (TWX.N) and CBS Corp (CBS.N) on Wednesday followed News Corp (NWSA.O) in reporting stronger quarterly results, but a sell-off in their shares suggested that Wall Street has already baked in the gradual recovery in advertising spending that is bolstering media profits.

"I think media stocks have peaked," said Alan Gould, an analyst with Soleil-Gould Research Corp.

"The whole media group has taken a breather," according to Gould, who said he personally holds News Corp shares.

CBS Corp, owner of the most-watched U.S. television network, reported a 12 percent increase in revenue to $3.53 billion in the first quarter -- the first time it has recorded revenue growth in five quarters. Analysts on average had expected $3.44 billion, according to Thomson Reuters I/B/E/S. [ID:nN05260222]

Profit, excluding special items, was 5 cents a share, CBS said, compared with a loss of 5 cents a share in the year-ago period and in line with analysts' expectations.

But CBS shares fell 3 percent in after-hours trading, on top of a 3.83 percent decline during the NYSE session.

"CBS has had a good run this year. They really needed to show good numbers, better than Street estimates, and good guidance to have the stock continue to rally," Gould said.

CBS shares hit a 52-week high on May 3 at $16.98 and are up 15 percent year-to-date.

Earlier on Wednesday, Time Warner reported stronger-than-expected quarterly results on a rebound in advertising sales at its cable networks and magazines, That didn't help boost its stock, though, which ended down 2.42 percent. [ID:nN04115489]

The same fate befell News Corp, whose shares fell 5.2 percent on Wednesday, a day after its results beat Wall Street estimates. News Corp it didn't raise its full-year outlook by as much as some investors had hoped. [ID:nN04111686]

Media investor Larry Haverty of Gabelli & Co was cautious about any further upside for the stock, even though he called Time Warner's results "terrific" and said he was impressed with its high conversion of revenue to cash flow.

"Six-months ago I thought the stock was undervalued but none of the media companies are paragons of enormous value right now," he said. (Reporting by Jennifer Saba, additional reporting by Yinka Adegoke; Editing by Tiffany Wu and Steve Orlofsky)