AOL Continues Shift from Subscriptions to Ads

America Online’s advertising revenues for the first quarter rose to $312 million, topping last year’s first quarter ad revenues by 45 percent.

Paid search revenues grew by $27 million, while Advertising.com, acquired last August, added $60 million in revenues. Advertising revenues for all of Time Warner grew slightly to $1.65 billion, up from $1.45 billion a year ago.

“We’re very pleased with where we’re at with advertising on AOL,” said Dick Parsons, Time Warner chairman and CEO. “Our strategy is to continue to find ways to build our audience.”

Two elements of that growth strategy include the pending launch of AOL.com, expected this summer, and the addition of inventory from a Time Warner Cable deal launched in January that combines cable broadband access with content and ads from AOL.

AOL’s ad growth was not enough to offset a $145 million decrease in subscription revenues resulting from a declining membership in the AOL service, bringing total revenues down 3 percent to $2.1 billion. The AOL service had 2.17 million members in the U.S. at the end of March, down by 549,000 from last quarter, and by 2.3 million from last year’s first quarter. In Europe, AOL had 6.3 million members at the end of the quarter, a decline of 69,000 from a year ago.

Profits at Time Warner came in flat at $963 million, or $0.21 per share, compared with $961 million a year ago. Overall revenues at the parent company rose slightly to $10.5 billion, from $10.2 billion a year ago. Leading this growth were cable, up 10 percent; publishing, up 8 percent; and TV networks, up 4 percent.

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