• by Wendy Davis  @wendyndavis, November 3, 2005

Ad revenues at America Online increased to about $324 million in the third quarter, marking a 28 percent leap from this time last year. But that increase wasn't enough to compensate for a 10 percent year drop in subscriber base, which declined in the United States to 20.1 million users as of the end of the quarter. Overall, AOL's third-quarter revenue sank to $2.04 billion, from $2.14 last year at this time.

Paid search revenues increased by $31 million--a jump of about 38 percent from last year. Revenue from Advertising.com, acquired in August of 2004, accounted for $31 million of AOL's ad revenue.

Dick Parsons, chairman and chief executive of AOL parent company Time Warner, confirmed that the company was in talks about possible deals for AOL. In the last six weeks, rumors have swirled that Microsoft, Google, and Yahoo! each are interested in acquiring part of AOL.

Time Warner's overall profits rose to $897 million, or 19 cents per share--beating analysts' estimates by 2 cents a share and marking an 80 percent increase from $499 million, or 11 cents per share, in last year's third quarter.