Dulles, Va. - Another sharp drop in subscription revenue took its toll on AOL's bottom line during the first quarter, parent Time Warner (NYSE: TWX) said on Wednesday. The company, which has been trying to establish itself as an online advertising power, lost 647,000 subscribers during the three-month period, and was down to 8.7 million subscribers as of March 31.

The company at one time had nearly 30 million. More disturbing to the company, however, was a decline in display ad sales, which it attributed partly to difficulty integrating its new Platform-A ad unit.

As a result, AOL's revenue dropped 23% during the quarter to $1.1 billion, only slightly offset by a 1% increase in ad revenue, and its operating income fell 74% to $284 million.

The numbers also were skewed by the sale of AOL's German Internet access business.

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