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Last Updated: Wednesday, 22 October, 2003, 19:29 GMT 20:29 UK
AOL lets down Time Warner
Time Warner logos
AOL is loosing revenue fast
US media giant Time Warner has reported a 3.7% overall rise in profits, although its AOL internet unit has seen revenues drop.

Time Warner - which abandoned the AOL prefix to its name earlier this month - said its net profit rose in the third quarter to $541m, or 12 cents a share, from $57m, or 1 cent a share, a year earlier.

However, its AOL division saw revenue decrease by 4.5% during the same period to $2.1bn. Meanwhile the internet's operating income dropped to $150m from $161m in the same period last year.

Subscribers to the internet service were down 688,000, bringing its total subscriber base to 24.7 million, 2 million lower than at the same time a year ago.

Advertising down

The fall is mainly attributed to the high speed internet connections increasingly offered by competitors which have increasingly lured AOL customers away, the company says.

However, subscription revenues grew 4% overall due principally to strong gains in Europe, which benefited from favourable foreign currency exchange rates, it adds.

AOL has also seen a 33% drop in online advertising revenue.

But despite the weaker results at AOL, other parts of the Time Warner media family did well.

The company's cable business grew by 10% while its networks unit saw a 22% boom in revenue.

'SEC investigation'

In another development, the New York Times reports that top executives from the company, including chief executive Richard Parsons and former chairman Steve Case, have been subpoenaed by the Securities and Exchange Commission.

The are being required to co-operate with an investigation into the company's accounting for an advertising deal with the German media company Bertelsmann, the newspaper said.

The SEC has been looking into the company's accounting practices for more than a year.

In March, the company indicated that it might have to restate its financial results by as much as $400 million because of the SEC's questioning of its deal with Bertelsmann, although it says it believes its accounting is correct.

Time Warner has refused to comment on the New York Times report.

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