Time Magazine 2010 Annual Report Download - page 50

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Licensed programming costs for the year ended December 31, 2009 included a fourth quarter $104 million write-
down to the net realizable value relating to a program licensed by Turner from Warner Bros. that the Company re-
licensed to a third party. The write-down of this licensed program was partially offset by $27 million of
intercompany profits that have been eliminated in consolidation, resulting in a net charge to Time Warner of
$77 million. Costs of revenues as a percentage of revenues were 48% in both 2009 and 2008.
The decrease in selling, general and administrative expenses for the year ended December 31, 2009 reflected a
$281 million charge in 2008 as a result of a trial court judgment against Turner related to the sale of the Winter
Sports Teams. Excluding the impact of this charge, selling, general and administrative expenses decreased primarily
due to lower marketing expenses.
As previously noted under “Significant Transactions and Other Items Affecting Comparability,” the 2009
results included a $52 million noncash impairment of intangible assets related to Turner’s interest in a general
entertainment network in India. The 2008 results included an $18 million noncash impairment related to GameTap,
an online video game business, and a $3 million loss on the sale of GameTap. In addition, the 2009 results included
restructuring costs of $8 million at Home Box Office primarily related to severance, and the 2008 results included a
$3 million reversal of 2007 restructuring charges related to senior management changes at Home Box Office due to
changes in estimates.
Operating Income increased primarily due to an increase in revenues.
Filmed Entertainment. Revenues and Operating Income of the Filmed Entertainment segment for the years
ended December 31, 2009 and 2008 are as follows (millions):
2009 2008 % Change
Years Ended December 31,
Revenues:
Subscription ...................................... $ 44 $ 39 13%
Advertising ....................................... 79 88 (10%)
Content ......................................... 10,766 11,030 (2%)
Other ........................................... 177 241 (27%)
Total revenues ...................................... 11,066 11,398 (3%)
Costs of revenues
(a)
.................................. (7,805) (8,161) (4%)
Selling, general and administrative
(a)
...................... (1,676) (1,867) (10%)
Loss on operating assets ............................... (33) — NM
Restructuring costs ................................... (105) (142) (26%)
Depreciation ........................................ (164) (167) (2%)
Amortization ....................................... (199) (238) (16%)
Operating Income .................................... $ 1,084 $ 823 32%
(a)
Costs of revenues and selling, general and administrative expenses exclude depreciation.
38
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)