NEW YORK — A financially fortified Time Warner will start paying a cash dividend again and is sweet once more on AOL, but there’s one business it’s tuning out for good — music.

TW has cashed out its option in Warner Music Group, which went public earlier this month in a lackluster initial public offering.

“We’re not going to go back into music,” Time Warner chair-CEO Richard Parsons told reporters Friday following the conglom’s annual shareholder meeting in Gotham.

While there was plenty of obligatory griping from shareholders at the lengthy gathering — held in a jazz theater at Time Warner Center — it was tame in comparison to the meetings held in the aftermath of the ill-fated AOL/Time Warner marriage, when AOL collapsed, dragging down TW with it.

Playing host to hundreds of shareholders, Parsons said the 5¢ per share quarterly cash dividend reflected the conglom’s financial recovery. Time Warner stopped paying a dividend after the merger.

Parsons also confirmed that he would consider spinning off AOL under certain circumstances but stressed there is no plan in place. He said AOL is reinventing itself into a valuable member of the Time Warner team.

“Does it make sense for (AOL) to have a currency of its own? We’ve concluded there’s no need for it now,” said Parsons, adding that if AOL were ever spun off, Time Warner would retain control.

He said AOL could be spun off if the Internet biz becomes consolidated. In that event, AOL could use access to the capital markets, allowing it to pursue acquisitions.

TW remains on track to spin off Time Warner Cable once the bid to buy up bankrupt cabler Adelphia is sealed. Spinoffs are suddenly all the rage in the media biz, as frustrated execs try to “unlock” value and rescue what they say are discounted stock prices.

While Parsons was aglow over the cable and Internet biz, he showed no angst over the decision to shed the Warner Music option.

Time Warner, which sold the music operation to Edgar Bronfman and a consortium of private investors last year, had the option of buying a 15% stake as part of Warner Music’s IPO.

Some Wall Streeters believed that Time Warner would indeed exercise that option, particularly when Parsons recently said he missed the music biz.

TW sold the option back to Warner Music for $140 million.

Parsons, who is widely respected for navigating the conglom through tortured times, was easily re-elected to another board term, as were all other board members, including Ted Turner and former AOL topper Steve Case.

Swept into office were new board members Jessica Einhorn, dean of the Paul H. Nitze School of Advanced Intl. Studies at John Hopkins U., and Deborah Wright, chair-CEO of Carver Bancorp, the country’s largest bank operated by African- and Caribbean-Americans.

Still, a deft Parsons was forced to take his share of abuse from cranky shareholders vexed by executive compensation.

Unmoved by the new dividend, they said Parsons’ total pay package last year, valued at $16 million, didn’t make sense amid a stagnant stock price.

Time Warner’s stock price has tumbled more than 70% since 2001.

“I don’t like all this money going to you and your cohorts. Don’t tell me you’re going to give me a nickel. I don’t want your nickel,” one animated shareholder told Parsons, demanding that the dividend be upped to at least $2.

Parsons assured shareholders that no one is happy with where the stock is, but that if “we stick to our guns and we stick to our knitting,” value will be restored.

New dividend could play a valuable role in boosting share price by making Time Warner stock available to funds that invest only in companies that pay dividends, Parsons said.

The dividend — approved by the board one day before the shareholder sesh — reflects Time Warner’s strong balance sheet, robust free cash flow and growth prospects, he said. The first dividend will be paid in September.

Wall Street analyst Jessica Reif Cohen of Merrill Lynch said the dividend fell short of investor expectations and that Time Warner could afford a higher dividend.

Even with the acquisition of Adelphia, Time Warner could return nearly $16 billion to shareholders by the end of 2006 and still remain within its leverage guidelines, Reif Cohen wrote in a note.

Parsons estimated that the 5¢ dividend would cost the company roughly $1 billion per year.

But Reif Cohen said Time Warner would need to be “more aggressive if it truly wants to catch investor interest and drive its stock price.” She said a “substantial share buyback program could go a long way” toward achieving this goal.

TW stock didn’t enjoy any boost after the dividend was announced early Friday. Shares fell 14¢ in trading to close at $17.61.

Back at Time Warner Center, the majority of shareholders sided with the TW board in voting down a resolution that would have required the conglom to study the salary disparity between top execs and employees.

“We try in this company to be as transparent as we can. We are not afraid of revealing information. This resolution isn’t appropriate or useful,” Parsons said. “There is more information than you can shake a stick at.”

Shareholders were treated to several movie trailers with Warner Bros. Entertainment chair-CEO Barry Meyer sitting in the aud, including one for WB’s summer tentpole “Batman Begins.”

But the folk hero of the day was the real-life Turner, who needed no introduction, according to Parsons.

“Ted Turner — that’s all I’m going to say,” Parsons said. “If you’re from this planet, you know who he is.”