Time Warner is to split AOL's dial-up internet and advertising businesses into separate divisions by early 2009. The news came as it reported a slightly higher than expected quarterly profit, helped by strong cable advertising sales and films like Sex and the City.
By selling off its cable division by the end of the year and splitting the AOL business, Time Warner plans to focus on creating content rather than boosting its distribution business.
The anticipated split of AOL into two divisions is seen facilitating a sale or merger of either business.
The owner of CNN, Time Inc and Warner Bros film studios said its second-quarter net profit fell 26% from a year earlier to $792m. Revenue rose 5% to $11.56 billion, also ahead of Wall Street forecasts.
AOL revenue fell 16%, reflecting a 29% fall in subscription revenue in a quarter when it lost 604,000 subscribers. It ended the second quarter with 8.1 million U.S. subscribers. Online advertising revenue rose 2%. AOL's operating profit fell 36%.
Revenue from Time Warner Cable, Time Warner's cable division, rose 7% to $4.3 billion and operating profit rose 4% from gains in new broadband, digital phone and video customers.
Film division revenue rose 14% and operating profits rose 16% from the hit movie 'Sex And The City' and higher contributions from some high-profile home videos.
Cable networks revenue rose 9% from a 10% rise in subscription revenue and 11% gain ad revenue.
