Time Magazine 2010 Annual Report Download - page 43

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As previously noted under “Significant Transactions and Other Items Affecting Comparability,” the 2010
results included a $59 million gain that was recognized upon the acquisition of the controlling interest in HBO CE,
reflecting the excess of the fair value over the Company’s carrying costs of its original investment in HBO CE. The
2009 results included a $52 million noncash impairment of intangible assets related to Turner’s interest in a general
entertainment network in India. In addition, the 2010 and 2009 results included $6 million and $8 million,
respectively, of restructuring costs, primarily related to headcount reductions.
Operating Income increased primarily due to the increase in revenues, the $59 million gain relating to HBO CE,
the $58 million reserve reversal in connection with the resolution of litigation related to the sale of the Winter Sports
Teams and the absence in 2010 of the $52 million noncash impairment of intangible assets, partially offset by higher
costs of revenues and higher selling, general and administrative expenses.
The Company anticipates that Operating Income growth at the Networks segment for the first quarter of 2011
will be negatively affected by increased programming costs associated with Turner’s investment in the NCAA
Tournament Games programming.
Filmed Entertainment. Revenues and Operating Income of the Filmed Entertainment segment for the years
ended December 31, 2010 and 2009 are as follows (millions):
2010 2009 % Change
Years Ended December 31,
Revenues:
Subscription ...................................... $ 66 $ 44 50%
Advertising ....................................... 75 79 (5%)
Content ......................................... 11,359 10,766 6%
Other ........................................... 122 177 (31%)
Total revenues ...................................... 11,622 11,066 5%
Costs of revenues
(a)
.................................. (8,429) (7,805) 8%
Selling, general and administrative
(a)
...................... (1,684) (1,676) —
Gain (loss) on operating assets .......................... 11 (33) (133%)
Asset impairments ................................... (9) — NM
Restructuring costs ................................... (30) (105) (71%)
Depreciation ........................................ (186) (164) 13%
Amortization ....................................... (188) (199) (6%)
Operating Income .................................... $ 1,107 $ 1,084 2%
(a)
Costs of revenues and selling, general and administrative expenses exclude depreciation.
31
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)