TORONTO (Reuters) - Shaw Communications Inc (>> Shaw Communications Inc), a Western Canada-focused media and cable company, said on Thursday that net income fell almost 9 percent in the third quarter, as it lost more television subscribers despite a boost from business customers.

Calgary, Alberta-based Shaw is engaged in a fierce battle for customers with telecommunications operator Telus Corp (>> TELUS Corporation), but both have sought to avoid a price war.

Analysts cheered the cost-cutting of job cuts in its cable unit, which also shed viewers at a slower-than-expected pace and added net business accounts.

Shares of the family-controlled company closed up 0.2 percent at C$24.65 on the Toronto Stock Exchange.

"We were impressed by cable subscriber results and financials, but satellite, media and valuation are concerns," Dvai Ghose, an analyst at Canaccord Genuity, wrote in a note.

Shaw reported net income of C$228 million ($210 million), or 47 Canadian cents per share, for the quarter ended May 31, down from C$250 million, or 52 cents a share, a year earlier.

Operating revenue was C$1.342 billion, up slightly from a year ago. The company said it now expects free cash in excess of C$650 million for 2014.

Analysts, on average, expected Shaw to earn 49 Canadian cents a share on revenue of C$1.36 billion, according to Thomson Reuters I/B/E/S.

Shaw said some of the quarterly income decline was due to the sale of a cable business in the year-ago quarter.

The number of new Internet customers rose by 12,400 to a total of 1.9 million. Shaw lost more than 12,000 video subscribers, while it added 4,800 landline telephone accounts.

Shaw has sidestepped the wireless market, instead choosing to build a network of more than 40,000 free WiFi access points for its customers.

However, it bought spectrum licenses in a 2008 auction, airwaves CEO Brad Shaw said he fully expects to transfer to wireless leader Rogers Communications (>> Rogers Communications Inc.) soon.

The federal government has blocked some small new entrants from that auction from selling their airwaves to big players.

Rogers has already paid Shaw a C$200 million deposit, including a C$50 million option premium that would be non-refundable in the event Ottawa blocks the deal, Shaw executives said.

Shaw said it has more than 1 million devices on its Shaw Go

network. Shaw packages content for its Internet or TV customers to access either over its WiFi network in coffee shops, transportation hubs and offices in urban centers, or on the cellular network of rival Telus (>> TELUS Corporation) if WiFi coverage drops.

Shaw recently said it would realign its corporate structure around customers - business or consumer - rather than products such as cable TV. It said it will report financials on this basis starting in the next fiscal year.

In April, Shaw cut 400 jobs as part of the restructuring.

($1 = 1.0853 Canadian dollars)

(Reporting by Alastair Sharp; Editing by Jeffrey Benkoe, Bernard Orr)

By Alastair Sharp