Logan said it makes sense for AOL, which last year bought a Baltimore-based firm that specializes in maximizing sales of online advertising, to sell all of the Internet advertising for itself and Time Warner Cable.
The partnership will begin operating this week in Raleigh, N.C., and will be rolled out in other cities this year, with various price plans being tested along the way. Time Warner declined to disclose how the divisions would divide up revenue and costs from the partnership.
"This arrangement is different in character, scale and scope than anything we have done before," said AOL chief executive Jonathan F. Miller. "We are going to actively market to our dial-up base and get them on Time Warner Cable. Our subscribers will remain with AOL in the process. This answers the question of what happens to AOL in a broadband world."
Time Warner Cable chief executive Glenn A. Britt said his company is eager to get the partnership with AOL in high gear. "This is a real win for both AOL and Time Warner Cable, and also for consumers," Britt said. "For Time Warner, we should get many more broadband customers than we have been getting, and we should get more advertising revenue than we have been getting."
Time Warner Cable, which along with Comcast Corp. is bidding on the cable assets of Adelphia Communications Corp., could expand service with an acquisition, giving AOL a chance to sell advertising across a bigger cable operation. Miller said he also can envision similar deals between AOL and other cable television firms.
The deal signifies the growing role of AOL within the Time Warner orbit of companies, and it symbolizes the corporation's commitment to the America Online division. Time Warner chief executive Richard D. Parsons has said AOL ad revenue is growing rapidly and is on track to reach $1 billion this year. Time Warner plans to disclose its earnings on Friday.
Time Warner stock closed up 7 cents, or 0.4 percent, at $18 yesterday on the New York Stock Exchange.
Card, the Jupiter analyst, said AOL and Time Warner Cable may finally have been able to forge an agreement because the two could share a growing pot of revenue from Internet advertising. "There is more money to go around," he said.