AOL lost subscribers at a faster pace in the second quarter ended June 30, as the number of users in the United States fell 668,000 to 23.4 million and the number of subscribers in Europe fell 88,000, to 6.3 million users. Since the decline in the AOL subscriber base began in late 2002, it has lost about 3.3 million U.S. users. In the first quarter of this year, AOL lost about 237,000 U.S. subscribers.
While AOL lost 1.3 million dial-up subscribers to faster and cheaper competitors, it added about 630,000 new high-speed users in the United States, bringing that total to more than 4 million. For the quarter ended June 30, AOL reported a revenue increase of 2.1 percent, primarily due to the increase in ad sales.
The decline of 668,000 AOL users in the United States included a drop of 753,000 members in free trial and retention programs, which was partially offset by an increase of 85,000 paying customers.
In the same quarter last year, AOL lost 845,000 subscribers, as it cleaned up its books to remove non-paying customers.
Don Logan, vice chairman of Time Warner, said the company will seek early next year to increase America Online's revenue by attempting to attract non-AOL subscribers to an enhanced AOL.com Web site that will include considerable content from the Time Inc. stable of magazines.
"We plan on monetizing that with advertising and search revenue," he said.
In the second quarter ended June 30, Time Warner reported that profits fell to $777 million compared to $1.06 billion in the same period last year. The prior year period included $600 million in net income from the one-time sale of various properties and a $760 million settlement of a legal dispute with Microsoft Corp.
Time Warner's revenue jumped a solid 9.7 percent to $10.9 billion from $9.9 billion in the second quarter. Time Warner's motion picture, television network and cable divisions all produced double-digit percentage growth in the quarter.
"Time Warner once again delivered a very strong quarter, with a robust 10 percent revenue increase," Chief Executive Officer Dick Parsons said in a statement. "All of our business segments contributed to the Company's growth for the second consecutive quarter."
Time Warner also updated its financial guidance for 2004, saying it expects operating income for the far-flung media giant and its AOL division to grow at a slightly faster rate.