Time Magazine 2009 Annual Report Download - page 31

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RISKS RELATING TO TIME WARNER’S PUBLISHING BUSINESS
The Publishing segment could face increased costs and business disruption resulting from instability in the
wholesaler distribution channel. The Publishing segment operates a national distribution business that relies on
wholesalers to distribute its magazines to newsstands and other retail outlets. A small number of wholesalers are
responsible for a substantial percentage of the wholesale magazine distribution business in the U.S. In 2008 and
2009, there was significantly increased instability in the wholesaler channel that led to one major wholesaler leaving
the business and to certain disruptions to magazine distribution. There is the possibility of further consolidation
among these major wholesalers and insolvency of or non-payment by one or more of these wholesalers, especially
in light of the economic climate and its impact on retailers. Distribution channel disruptions can temporarily impede
the Publishing segment’s ability to distribute magazines to the retail marketplace, which could, among other things,
negatively affect the ability of certain magazines to meet the rate base established with advertisers. Continued
disruption in the wholesaler channel, an increase in wholesaler costs or the failure of wholesalers to pay amounts
due could adversely affect the Publishing segment’s operating income or cash flow.
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