This isn’t a total shock. The previous quarter, AOL had only been able to manage two percent advertising growth, and the company had already signaled since then that both its display ad business and its ad network were struggling. But given that these results cover the three-month period that ended Sept. 30, which only included a couple weeks of flat-out economic collapse, there will be worse news in store for the last quarter of the year.

Total revenues at the unit, owned by Time Warner (TWX), dropped 17 percent, to $1 billion. The bulk of that is attributable to its declining (down 26 percent) subscription business, so that number is less relevant–except to whoever may be in the market for one or both parts of the unit, like Yahoo (YHOO). Things would have been even worse, by the way, if AOL’s paid-search business hadn’t ticked up.

Overall results at Time Warner were flat for the year, with revenues of $11.7 billion and earnings of 30 cents per share. CEO Jeff Bewkes also announced that 2008 earnings would be lower than previously forecast due to restructuring charges, but that cash flow would actually be higher than the company had predicted.

Revenues at its to-be-shrunk Time Inc. publishing unit dropped seven percent, pushed down by an eight percent drop in ad revenue. The good news is that online revenues of $13 million, driven primarily by SI.com, People.com and CNNMoney.com, helped cushion some of the blow. The bad news is that those numbers are down from $19 million in the previous quarter.

Other results:

• Cable: Revenues up eight percent; adjusted operating income up nine percent.
• Movies: Revenues nine percent (“The Dark Knight” did great, but not as well as “Harry Potter,” “Rush Hour 3″ and “Hairspray” last year).
• Cable TV networks: Revenues up seven percent. Both subscription fees and ad revenues were up.