Dulles, Va. - Media giant Time Warner (NYSE: TWX) said on Wednesday that its AOL unit saw a 17% drop in revenue during the third quarter.

The unit's sharp decline in subscription revenue was expected, however, less expected was a 6% ($33 million) drop in ad revenue, driven by declines in display advertising on AOL Network sites and sales of ads on third-party sites.

Operating income decreased 9% to $268 million.

AOL two years ago decided to deemphasize its dial-up Internet business to focus on online advertising.

As of Sept. 30, AOL had 7.5 million subscribers left in the U.S., down 634,000 in the quarter and 2.6 million from the year before.

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