Ad Revenue Up Ahead of AOL Portal Launch

Time Warner’s AOL unit lost nearly a million subscribers last quarter, around four percent of its total base. Ad revenues, however, were up 45 percent to $320 million.

The company said it set aside $3 billion to settle shareholder litigation over its disastrous merger with the online unit.

AOL brought in total revenues of $2.1 billion, down from $2.2 billion for the year ago period, as dial-up subscribers over age 15 fled in droves. The positive news on the advertising front was earnings of $30 million from paid search and $60 million from its Advertising.com unit.

Executives repeatedly referred to the beta launch of the public AOL.com portal in June, as well as its breakaway success with the Live 8 concerts.

“AOL is positioning itself to take advantage of the same broadband trends that are currently benefiting cable,” said Chairman and CEO Dick Parsons. “Live 8 demonstrates how large audiences are starting to use this medium. ”

Presumably based on its success with Live 8 last month, the company estimates the streaming event on-demand audience can be five to 10 times larger than Live 8’s. MSN execs have made similar remarks about the power of live event streaming online.

Parsons added, “Although it’s still early days, we have every reason to be optimistic that this audience-driven strategy will be very successful.”

AOL’s AIM instant messenger platform continues to grow. Execs called it an important channel for audience growth across all its properties. The company wants to improve its ad sales operation across its whole network with the goal of raising CPMs on all its sites to the higher level AOL-branded sites currently command.

Total revenues for Time Warner declined one percent to $10.7 billion, and the company reported a net loss of $321 million, or $.07 per share.