• Bloomberg, Wednesday, November 7, 2007 11:45 AM

Time Warner reported disappointing third-quarter earnings on Tuesday, citing a 38 percent drop in revenue from its Internet unit, AOL. The company lost 851,000 dial-up subscribers as part of its ongoing transition into a free, ad-supported online services company. However, not all is going according to plan, as ad revenue grew just 13 percent in the quarter. Overall, Time Warner's net income sunk more than 57 cents a share to $1.09 billion, from $2.32 billion a year earlier--although that met most analysts' expectations.

There is cause for optimism, however: big changes are afoot at Time Warner, starting with Jeff Bewkes, who will take over as company CEO from Jan. 1. Bewkes is expected to sell off some of Time Warner's assets, including Time Warner Cable, Time, Inc. and possibly AOL, to boost the company's share price. Bewkes, by the way, is partly responsible for AOL dropping its ISP business in favor of ad-supported content and services.

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