Time Warner yesterday outlined a radical plan to revive AOL by making more money with far fewer subscribers. AOL will stop marketing its highly profitable Internet access service and offer most of its main features free. As a result, it expects to lose more than half of its 17.7 million subscribers over the next three years. Still, Time Warner promised investors that AOL’s operating profit would actually increase every year. It said it would be able to cut $1 billion a year from AOL’s expenses - largely by cutting thousands of marketing and customer-service jobs - and increase its advertising sales on an expanded line of free Web-based services. Indeed, the company said yesterday that AOL’s ad sales increased faster than expected in the second quarter, one of several factors that helped Time Warner earn $1 billion in the period, ahead of expectations. It was also helped by strong results in its cable and movie divisions and by a price increase for some AOL customers, though magazine operations faltered. While initial reaction to Time Warner’s announcement was favorable - its shares rose 42 cents, or 2.58 percent, to $16.67 - some analysts said they were skeptical […]

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