Time Magazine 2009 Annual Report Download - page 34

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OVERVIEW
Time Warner is a leading media and entertainment company, whose major businesses encompass an array of the
most respected and successful media brands. Among the Company’s brands are HBO, TNT, CNN, People,Sports
Illustrated and Time. The Company produces and distributes films through Warner Bros. and New Line Cinema,
including Harry Potter and the Half-Blood Prince,The Hangover,The Blind Side and Sherlock Holmes, as well as
television series, including Two and a Half Men,The Mentalist,The Big Bang Theory,Gossip Girl and The Closer.
During 2009, the Company generated revenues of $25.785 billion (down 3% from $26.516 billion in 2008),
Operating Income of $4.545 billion (compared to Operating Loss of $3.028 billion in 2008), Net Income
attributable to Time Warner shareholders of $2.468 billion (compared to Net Loss attributable to Time Warner
shareholders of $13.402 billion in 2008) and Cash Provided by Operations from Continuing Operations of
$3.385 billion (down 17% from $4.064 billion in 2008). As discussed more fully in “Business Segment Results,” the
year ended December 31, 2008 included asset impairments of $7.213 billion, primarily related to reductions in the
carrying values of goodwill and identifiable intangible assets at the Company’s Publishing segment.
On March 12, 2009, the Company completed the legal and structural separation of Time Warner Cable Inc.
(“TWC”) from the Company. In addition, on December 9, 2009, the Company completed the legal and structural
separation of AOL Inc. (“AOL”) from the Company. With the completion of these separations, the Company
disposed of its Cable and AOL segments in their entirety and ceased to consolidate their financial condition and
results of operations in its consolidated financial statements. Accordingly, the Company has presented the financial
condition and results of operations of its former Cable and AOL segments as discontinued operations in the
accompanying consolidated financial statements for all periods presented.
Time Warner Businesses
Time Warner classifies its operations into three reportable segments: Networks, Filmed Entertainment and
Publishing.
Time Warner evaluates the performance and operational strength of its business segments based on several
factors, of which the primary financial measure is operating income before depreciation of tangible assets and
amortization of intangible assets (“Operating Income before Depreciation and Amortization”). Operating Income
before Depreciation and Amortization eliminates the uneven effects across all business segments of noncash
depreciation of tangible assets and amortization of certain intangible assets, primarily intangible assets recognized
in business combinations. Operating Income before Depreciation and Amortization should be considered in
addition to Operating Income, as well as other measures of financial performance. Accordingly, the discussion of
the results of operations for each of Time Warner’s business segments includes both Operating Income before
Depreciation and Amortization and Operating Income. For additional information regarding Time Warner’s
business segments, refer to Note 14, “Segment Information” to the accompanying consolidated financial
statements.
Networks. Time Warner’s Networks segment is comprised of Turner Broadcasting System, Inc. (“Turner”)
and Home Box Office, Inc. (“HBO”). In 2009, the Networks segment generated revenues of $11.703 billion (45% of
the Company’s overall revenues), $3.967 billion in Operating Income before Depreciation and Amortization and
$3.545 billion in Operating Income.
The Turner networks — including such recognized brands as TNT, TBS, CNN, Cartoon Network, truTV and
HLN — are among the leaders in advertising-supported cable television networks. For eight consecutive years,
more primetime households have watched advertising-supported cable television networks than the national
broadcast networks. The Turner networks generate revenues principally from providing programming to cable
system operators, satellite distribution services, telephone companies and other distributors (known as affiliates)
that have contracted to receive and distribute this programming and from the sale of advertising. Key contributors to
Turner’s success are its continued investments in high-quality, popular programming focused on sports, original and
22
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)