Time Magazine 2010 Annual Report Download - page 36

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HBO Central Europe Acquisition
On January 27, 2010, Home Box Office purchased the remainder of its partners’ interests in HBO CE for
$136 million in cash, net of cash acquired. HBO CE operates the HBO and Cinemax premium pay television
services serving 11 territories in Central Europe. The Company has consolidated the results of operations and
financial condition of HBO CE effective January 27, 2010. Upon the acquisition of the controlling interest in HBO
CE, a gain of $59 million was recognized reflecting the excess of the fair value over the Company’s carrying cost of
its original investment in HBO CE. See Note 3 to the accompanying consolidated financial statements.
Common Stock Repurchase Program
On January 25, 2011, Time Warner’s Board of Directors authorized up to $5.0 billion of share repurchases
beginning January 1, 2011. See “Financial Condition and Liquidity” for more information.
Retirement Plan Amendments
In March 2010, the Company’s Board of Directors approved amendments to its domestic defined benefit
pension plans. Pursuant to the amendments, (i) effective June 30, 2010, benefits provided under the plans stopped
accruing for additional years of service and the plans were closed to new hires and employees with less than one
year of service and (ii) after December 31, 2013, pay increases will no longer be taken into consideration when
determining a participating employee’s benefits under the plans.
Effective July 1, 2010, the Company increased its matching contributions for eligible participants in the
Company’s domestic defined contribution plan (“Time Warner Savings Plan”). Effective January 1, 2011, the
Company has implemented a supplemental savings plan that provides for similar Company matching for eligible
participant deferrals above the Internal Revenue Service compensation limits that apply to the Time Warner Savings
Plan up to $500,000 of eligible compensation.
In December 2010, amendments to the U.K. defined benefit pension plans were approved. Pursuant to the
amendments, beginning in April 2011, benefits provided under the plans will stop accruing for additional years of
service. Pay increases will continue to be taken into consideration when determining a participating employee’s
benefits under the plans. In addition, matching contributions under a defined contribution plan will be provided to
eligible U.K. employees.
See Note 13, “Benefit Plans,” to the accompanying consolidated financial statements.
NCAA Basketball Programming Agreement
On April 22, 2010, Turner, together with CBS Broadcasting, Inc. (“CBS”), entered into a 14-year agreement
with The National Collegiate Athletic Association (the “NCAA”), which provides Turner and CBS with exclusive
television, Internet, and wireless rights to the NCAA Division I Men’s Basketball Championship events (the
“NCAA Tournament Games”) in the United States and its territories and possessions. Under the terms of the
arrangement, Turner and CBS will work together to produce and distribute the NCAA Tournament Games and
related programming commencing in 2011. The games will be televised on Turner’s TNT, TBS and truTV networks
and on the CBS network, and advertising is sold on a joint basis.
The aggregate programming rights fee of approximately $10.8 billion, which will be shared by Turner and
CBS, will be paid by Turner to the NCAA over the 14-year term of the agreement. Further, Turner and CBS have
agreed to share advertising and sponsorship revenues and production costs. In the event, however, that the
programming rights fee and production costs exceed advertising and sponsorship revenues, CBS’s share of such
shortfall is limited to specified annual amounts (the “Loss Cap Amounts”), ranging from approximately $90 million
to $30 million (totaling approximately $670 million over the term of the agreement). Beginning in 2011, consistent
with the Company’s other sports programming rights, Turner’s share of the programming rights fee will be
24
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)