Time Warner (NYSE:TWX) made it official earlier this week that it plans to spin off its AOL subsidiary to its shareholders. This morning, we learned why.

The once-thriving online arm of the media giant continues to feel more numb with every passing quarter. AOL revenue and operating profits fell 24% and 28%, respectively. That's a steeper drop than even dot-com laggards Yahoo! (NASDAQ:YHOO) and Microsoft (NASDAQ:MSFT) have been reporting.

Remember when Time Warner and AOL hooked up, in a defining moment of new media conquering old media? Well, that was so Y2K. AOL now makes up just 12% of Time Warner's revenue, and it's sandbagging the combined company's performance.

Back out the Time Warner Cable (NYSE:TWC) spinoff, and revenue fell 9% to $6.8 billion. A modest 5% top-line gain in the company's resilient networks division was snuffed out by weakness in publishing, film, and … yes, AOL.

The strength is the company's flagship network subsidiary, and that's no surprise. Until couch potatoes start canceling their cable and satellite television accounts -- and they haven't yet -- Time Warner will reap the steady subscription revenue of its Turner and HBO divisions.

Time Warner's publishing division is a mess, but it's hard to escape the one-two punch of weakness in advertising and the widespread shunning of print subscriptions. The studio stumbled, but things should pick up there once Harry Potter And The Half-Blood Prince revenue begins trickling in.

In the end, adjusted earnings clocked in at $0.45 a share, just shy of the $0.47 it earned a year ago but well ahead of the $0.37 that analysts were expecting. Despite the bottom-line win, Time Warner is sticking to its original guidance of generating an adjusted profit of $1.98 a share.

As for AOL, Time Warner shareholders can expect to receive their slice of the fading online subsidiary around the end of the year. But there won't be any windfall of the size that Time Warner Cable provided. That spinoff was enough to allow Time Warner to nearly chop its long-term debt in half.

With just 5.8 million access customers -- a sliver of the 26.7 million access subscribers it watched over when it peaked seven years ago -- AOL becomes a less savory temptation to rival service providers Earthlink (NASDAQ:ELNK) and United Online (NASDAQ:UNTD). AOL is a giant is serving up ad-supported sites, but this morning's Microhoo partnership will probably keep things quiet on that front.

If you saw the company's sleeper comedy hit The Hangover, you probably know just how the company feels. It chipped a tooth. It trashed its suite. It realizes that it was wasted when it got married. In short, it doesn't remember much about the whole AOL incident.

Maybe it's better that way.

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