Warner Music Group posted better than expected results on Thursday, despite falling CD sales and slower growth in digital revenue.

Net profit for the fiscal first quarter came in at $23 million, or 15 cents a share, compared with loss of $16 million, or 11 cents, a year earlier.

Warner benefited from a gain of 24 cents a share on the sale of its stake in Front Line Management to Ticketmaster Entertainment.

Without the gain Warner would have posted a loss of 9 cents a share, compared with analysts' average forecast of loss of 14 cents a share, according to Reuters Estimates.

Revenue dropped 11 percent to $878 million even though digital sales on services such as Apple Inc's iTunes Store and mobile phones rose 20% to $171 million. Digital sales, while still growing, have slowed from recent quarters and now accounts for 31% of total sales.

Warner said domestic revenue declined 18.8%.

Major music labels, already struggling with the shift of younger music fans away from physical sales to digital, have had their challenges exacerbated last quarter by the bankruptcy of large music retailers including Circuit City in the United States and Woolworths in Britain.

Top sellers for Warner during the crucial holiday season quarter included Nickelback, Enya and T.I. in the United States. In Europe, Seal's "Soul" album was a strong seller.