NEW YORK (CNN/Money) - Underscoring the troubles it has been having at its flagship America Online Internet service, AOL Time Warner Inc. on Monday lowered its profit and revenue targets for that unit, pinning the blame on a protracted slump in online advertising sales.

But the media giant, which is the parent company of CNN/Money, reiterated its prior revenue estimate for the company as a whole, saying that strength in other areas of its business will offset the Internet unit's weakness.

Chief Financial Officer Wayne Pace said the company's diversified revenue stream, specifically its subscriber-based revenue from businesses such as its Time Warner Cable service and Time Inc. magazine publishing outfit, are providing a "natural hedge" to the company.

"I like the position we're in within the context of the overall industry," Pace said at a Morgan Stanley investor conference late Monday evening.

Before the stock market opened Monday, the company said it still sees full-year revenue growth within the previously announced 5 to 8 percent range while earnings before interest, taxes, depreciation and amortization are expected to grow at the low end of its earlier guidance of 5 to 9 percent.

AOL also said it sees third-quarter revenue growth in the mid-single digits and EBITDA to be off by a low single digit percentage, compared with the same period in 2001. The company previously said it expected third-quarter EBITDA to be flat to slightly lower in the third quarter, so the new guidance is slightly below the guidance at the end of the second quarter. The third-quarter revenue outlook is identical to its guidance at the end of the second quarter.

Part of the problem is a new outlook for Internet service provider America Online.

That unit is expected to post full-year advertising and commerce revenue of $1.7 billion, down from $2.7 billion in 2001. The company also warned it sees an additional "5 percent downside risk" on revenue. EBITDA from the unit is expected to be within a range of $1.7 billion to $1.8 billion, down from $2.9 billion in 2001.

Executives put forward the America Online unit, which is the nation's largest Internet service provider, as the driver of future growth when they pitched the merger of AOL and Time Warner to Wall Street in 2000. It has since become a drag on earnings and a source of concerns about future growth.

A sharp decline in online advertising spending, a substantial slowdown in new subscriber growth and difficulty in shifting customers to more lucrative high-speed, or broadband, connections have made the America Online unit a liability to the merged company.

The online unit also has undergone a series of management shifts in recent months. In July, Robert Pittman, the former AOL Time Warner chief operating officer who had been charged with turning the unit around, announced his resignation.

Pittman's departure came as part of a broader management shift that gave more power to executives from the Time Warner side of the company, including Don Logan, who now sits as chairman of its media and communications group which included AOL, Time magazine, Time Warner cable and other properties.

Pace said that Logan and the new America Online management team currently are in the process of developing their strategy, stressing that they are looking at it as "a business that has long-term growth prospects."

"He wants it to be profitable growth, sustainable growth and responsible growth," Pace said.

As for the advertising slump, Pace said television advertising is starting to rebound, while publishing appears to have "reached a trough." At the same time, he said the online advertising market appears to be less sensitive to the broader economy and would not be as quick to improve even in the face of more positive economic news.

Moving forward, Pace said growth in America Online's dial-up, or narrowband, service is going to slow, while broadband is likely to develop at a pace that's "evolutionary, not revolutionary."

"What's really going to turn broadband is a compelling product," he said. "Now it's up to us to build a compelling product that is must have."

Separately, the New York Times reported Monday that AOL Time Warner is looking to sell its stake in two cable networks, Comedy Central and Court TV. The paper said it is looking to sell the networks to the companies which share ownership in them already; Comedy Central is owned jointly with Viacom Inc. (VIA: Research, Estimates), while Court TV is held jointly with Liberty Media (L: Research, Estimates).

The Times quoted Kagan World Media, a media research firm, as estimating that the channels are each worth more than $1 billion, although they are worth less than they would have been a couple of years ago. Kaufman Brothers analyst Paul Kim told CNN/Money last month that AOL Time Warner's stake in the two networks would bring in between $3 billion and $4 billion.

AOL Time Warner CEO Richard Parsons said last month that the company would consider sale of noncore assets. But Parsons and other executives spoke glowingly of the two channels when the company reached a deal with telecom AT&T to increase its ownership stake in the two networks.

Before that agreement, the 50 percent stake in Court TV and Comedy Central had been held by Time Warner Entertainment, which itself was a joint venture with AT&T. AOL Time Warner will now hold all of the 50 percent stake in the two companies not held by Viacom and Liberty Media.