Time Warner will split the advertising and dial-up subscription businesses of its AOL unit in early 2009, the media company disclosed Wednesday as it released its second quarter earnings.

Revenue at AOL fell 16 percent in the second quarter as its dial-up subscription business fell 29 percent. That tempered growth at corporate parent Time Warner, where net income slid to $792 million versus $1.1 billion in the prior year’s period on revenue of $11.6 billion. Diluted net income per share was $.22 versus $.28 in the 2007 quarter.

In a conference call, Chief Executive Jeffrey Bewkes said New York-based Time Warner had made the structural moves to divide AOL’s dial-up business from its online advertising segment beginning in 2009.

Time Warner’s quarterly results got a charge from hit movies, including the theatrical release of “Sex in the City” and the home video release of  “I Am Legend.” The smash summer Batman film “Dark Knight” will add to third-quarter financials.

Time Warner’s “LEGO Indiana Jones” was the No. 1 video game in June and Mr. Bewkes said video games would play an increasingly important role in its media mix.

Overall, AOL’s revenue fell $196 million, or 16 percent year over year, to $1.1 billion. The decline in dial-up revenue was offset in part by a 2 percent, or $8 million increase in advertising revenue.

In recent years, AOL made a wrenching strategy shift as its once-dominant dial-up saw subscribers exit as they moved to broadband.

As of June 30, AOL had 8.1 U.S. dial-up subscribers, a decline of 604,000 from the previous quarter and 2.8 million from the 2007 period.

In response, AOL built its “Platform A” to take advantage of the growth of online advertising by making a string of acquisitions, including the purchases of Advertising.com in 2004 for $435 million and two behavioral-targeting companies in 2007, Tacoda for an estimated $275 million and Quigo for about $350 million.

There has been wide speculation that Time Warner would sell AOL’s dial-up business to Earthlink or another rival provider.

In the conference call, Mr. Bewkes said the company will “assess all options,” including the possibility of retaining the unit if its  “cash flow from operations is superior to any deal we can get…from the usual suspects.”

For the company overall, Time Warner said it continues to forecast full year 2008 earnings per diluted share from continuing operations of $1.07 to $1.11.