Dulles, Va. - AOL's decision last year to eschew its subscriber model in favor of ad-supported services paid off handsomely in the first quarter, parent Time Warner said on Wednesday.

Despite a 25% decline in revenue, due mainly to the loss of subscription fees, AOL saw its operating income jump 27% to $542 million, the result of a sharp increase in ad revenue and reductions in marketing and network expenses.

"AOL continued to build momentum with its advertising-focused strategy," said Dick Parsons, the chairman and CEO of Time Warner.

As of March 31, AOL has 12.0 million U.S. subscribers, down 6.6 million from a year ago. The company's content, however, remained quite popular on the Web, drawing 111 million average unique visitors per month in the U.S.

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