Bewkes confirms AOL split

Time Warner CEO says the company is weathering the "challenging economic environment," and that it's ready to split the management of the unit's ISP and media businesses.

Caroline McCarthy Former Staff writer, CNET News
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Caroline McCarthy
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Time Warner will indeed split its AOL access and media units starting next year, CEO Jeff Bewkes confirmed in a release announcing the company's second-quarter earnings.

It's the first time the executive has confirmed that the split will take place soon, though it's been widely talked about for months since the chief mentioned it speculatively earlier this year. What he hasn't said yet--and what some are expecting may come soon--is that Time Warner will get rid of AOL altogether, perhaps selling it to a bigger player in the online-advertising market.

It was another tepid quarter for the online-service-turned-media-company, which saw revenues drop 16 percent, to $1.1 billion. Its ad revenues are up 2 percent ($8 million)--though display ad revenues on AOL-owned sites are down--but that business still isn't big enough to offset the losses from AOL's sputtering Internet access service.

Once a national mainstay, the provider lost 604,000 subscribers in the second quarter alone and is down 2.8 million from the previous year, leaving it at 8.1 million subscribers. That's a $200 million loss (29 percent drop) for the company, which had raised fees on the dial-up service in late June.

Operating income at AOL dropped 36 percent, to $230 million.

Reports have suggested that Internet provider EarthLink may be interested in acquiring the access business from AOL.

Meanwhile, at Time Warner Cable, which Time Warner spun off in May, revenues are up 7 percent, seeing a decline only in television pay-per-view revenue. An additional 214,000 people have subscribed to its "triple play" offering of cable TV, broadband Internet, and telephone service, CEO Glenn Britt said in a release.

This post was last updated at 11:36 a.m. PT.