Time Magazine 2011 Annual Report Download - page 90

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
3. BUSINESS ACQUISITIONS AND DISPOSITIONS
Shed Media
On October 13, 2010, Warner Bros. acquired an approximate 55% interest in Shed Media plc (“Shed
Media”), a leading television producer in the U.K., for $100 million in cash, net of cash acquired. Warner Bros.
has a call right that enables it to purchase a portion of the interests held by the other owners of Shed Media in
2014 and the remaining interests held by the other owners in 2018. The other owners have a reciprocal put right
that enables them to require Warner Bros. to purchase a portion of their interests in Shed Media in 2014 and the
remaining interests held by them in 2018.
Chilevisión
On October 6, 2010, Turner acquired Chilevisión, a television broadcaster in Chile, for $134 million in cash,
net of cash acquired.
HBO LAG
On March 9, 2010, Home Box Office purchased additional interests in HBO LAG for $217 million in cash,
which resulted in Home Box Office owning 80% of the equity interests of HBO LAG. On November 18, 2010,
one of the remaining partners in HBO LAG exercised its put option to sell its remaining 8% equity interest in
HBO LAG to Home Box Office for approximately $65 million in cash. The transaction closed in the first quarter
of 2011 and resulted in Home Box Office owning 88% of the equity interests of HBO LAG. Refer to Note 1 for
more information.
HBO Central Europe Acquisition
On January 27, 2010, Home Box Office purchased the remainder of its partners’ interests in HBO Central
Europe (“HBO CE”) for $136 million in cash, net of cash acquired. HBO CE operates the HBO and Cinemax
multi-channel premium pay television services serving various territories in Central Europe. The Company has
consolidated the results of operations and financial condition of HBO CE beginning January 27, 2010. Prior to
this transaction, Home Box Office held a 33% interest in HBO CE, which was accounted for under the equity
method of accounting. 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. The fair value of Home Box Office’s original investment in HBO CE of $78 million was determined
using the consideration paid in the January 27, 2010 purchase, which was primarily derived using a combination
of market and income valuation techniques.
CME Investment
Central European Media Enterprises Ltd. (“CME”) is a publicly-traded broadcasting company operating
leading networks in six Central and Eastern European countries. On May 18, 2009, the Company completed an
equity investment in CME for $246 million in cash. In the first quarter of 2011, the Company completed an
additional equity investment in CME for $61 million in cash. As of December 31, 2011, the Company holds an
approximate 34% economic interest in CME. In connection with its investment, Time Warner agreed to allow
CME founder and Non-Executive Chairman Ronald S. Lauder to vote Time Warner’s shares of CME until at
least May 2013, subject to certain exceptions. The Company’s investment in CME is being accounted for under
the cost method of accounting. In the fourth quarter of 2011, the Company recorded a $163 million noncash
impairment related to its investment in CME.
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