Time Magazine 2010 Annual Report Download - page 33

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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 TNT, TBS, CNN, HBO, Cinemax,
Warner Bros., New Line Cinema, People,Sports Illustrated and Time. During the year ended December 31, 2010,
the Company generated revenues of $26.888 billion (up 6% from $25.388 billion in 2009), Operating Income of
$5.428 billion (up 21% from $4.470 billion in 2009), Net Income attributable to Time Warner shareholders of
$2.578 billion (up 4% from $2.477 billion in 2009) and Cash Provided by Operations from Continuing Operations
of $3.314 billion (down 2% from $3.386 billion in 2009).
Time Warner Businesses
Time Warner classifies its operations into three reportable segments: Networks, Filmed Entertainment and
Publishing. For additional information regarding Time Warner’s business segments, refer to “Company
Description” and Note 15, “Segment Information,” in the accompanying consolidated financial statements.
Networks. Time Warner’s Networks segment consists of Turner Broadcasting System, Inc. (“Turner”) and
Home Box Office, Inc. (“Home Box Office”). During the year ended December 31, 2010, the Networks segment
generated revenues of $12.480 billion (46% of the Company’s overall revenues) and $4.224 billion in Operating
Income.
Turner operates domestic and international networks, including such recognized brands as TNT, TBS, and
CNN, which are among the leaders in advertising-supported cable television networks. The Turner networks
generate revenues principally from providing programming to affiliates that have contracted to receive and
distribute this programming and from the sale of advertising. Turner also operates various websites, including
CNN.com,NASCAR.com and CartoonNetwork.com that generate revenues principally from the sale of advertising.
During 2010, Turner’s Advertising revenue increased reflecting the benefit of an improved advertising environment
domestically and internationally as well as yield management, partially offset by the impact of lower audience
delivery at Turner’s domestic news networks.
Home Box Office operates the HBO and Cinemax multi-channel premium pay television services, with the
HBO service ranking as the nation’s most widely distributed premium pay television service. Home Box Office
generates revenues principally from providing programming to affiliates that have contracted to receive and
distribute such programming to their customers who choose to subscribe to the HBO or Cinemax services. An
additional source of revenues for Home Box Office is the sale and licensing of its original programming, including
True Blood,Entourage and The Pacific.
The Company’s Networks segment has been pursuing international expansion in select areas. For example,
during 2010, Home Box Office purchased an additional 21% equity interest in HBO Latin America Group,
consisting of HBO Brasil, HBO Olé and HBO Latin America Production Services (collectively, “HBO LAG”), and
acquired the remainder of its partners’ interests in HBO Central Europe (“HBO CE”), and Turner acquired
Chilevisión, a television broadcaster in Chile, and a majority ownership interest in NDTV Imagine, a Hindi general
entertainment channel in India. In addition, Home Box Office is expected to acquire an additional 8% equity interest
in HBO LAG in the first quarter of 2011. The Company anticipates that international expansion will continue to be
an area of focus at the Networks segment for the foreseeable future.
Filmed Entertainment. Time Warner’s Filmed Entertainment segment consists of businesses managed by the
Warner Bros. Entertainment Group (“Warner Bros.”) that principally produce and distribute theatrical motion
pictures, including Harry Potter and the Deathly Hallows: Part 1,Inception and Clash of the Titans, as well as
television shows and videogames. During the year ended December 31, 2010, the Filmed Entertainment segment
generated revenues of $11.622 billion (40% of the Company’s overall revenues) and $1.107 billion in Operating
Income.
21
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)