Time Magazine 2012 Annual Report Download - page 121

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
reconsideration of that dismissal. On November 8, 2010, Anderson News appealed and, on April 3, 2012, the
U.S. Court of Appeals for the Second Circuit vacated the district court’s dismissal of the complaint and
remanded the case to the district court. On January 7, 2013, the U.S. Supreme Court denied defendants’ petition
for writ of certiorari to review the judgment of the U.S. Court of Appeals for the Second Circuit vacating the
district court’s dismissal of the complaint. The case continues to proceed before the district court.
The Company intends to vigorously defend against or prosecute, as applicable, the matters described above.
On September 20, 2007, Brantley, et al. v. NBC Universal, Inc., et al. was filed in the U.S. District Court for
the Central District of California against the Company and several other programming content providers
(collectively, the “programmer defendants”) as well as cable and satellite providers (collectively, the “distributor
defendants”), alleging violations of the federal antitrust laws. Among other things, the complaint alleged
coordination between and among the programmer defendants to sell and/or license programming on a “bundled”
basis to the distributor defendants, who in turn purportedly offer that programming to subscribers in packaged
tiers, rather than on a per channel (or “à la carte”) basis. In an order dated October 15, 2009, the court dismissed
the third amended complaint with prejudice. On October 30, 2009, plaintiffs filed a notice of appeal with the U.S.
Court of Appeals for the Ninth Circuit. On March 30, 2012, the U.S. Court of Appeals for the Ninth Circuit
affirmed the district court’s dismissal of the lawsuit. On August 2, 2012, plaintiffs filed a petition for writ of
certiorari to review with the U.S. Supreme Court the judgment of the U.S. Court of Appeals for the Ninth Circuit
affirming the district court’s dismissal of the lawsuit. On November 5, 2012, the U.S. Supreme Court denied
plaintiffs’ petition for writ of certiorari. This concludes the litigation. As a result, the Company does not intend
to include disclosure regarding this litigation in future periodic reports.
The Company establishes an accrued liability for legal claims when the Company determines that a loss is
both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted
from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred
in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued
for such matters.
For matters disclosed above for which a loss is probable or reasonably possible, whether in excess of an
accrued liability or where there is no accrued liability, the Company has estimated a range of possible loss. The
Company believes the estimate of the aggregate range of possible loss in excess of accrued liabilities for such
matters is between $0 and $80 million at December 31, 2012. The estimated aggregate range of possible loss is
subject to significant judgment and a variety of assumptions. The matters represented in the estimated aggregate
range of possible loss will change from time to time and actual results may vary significantly from the current
estimate.
In view of the inherent difficulty of predicting the outcome of litigation and claims, the Company often
cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate
resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter
may be. An adverse outcome in one or more of these matters could be material to the Company’s results of
operations or cash flows for any particular reporting period.
17. RELATED PARTY TRANSACTIONS
The Company has entered into certain transactions in the ordinary course of business with unconsolidated
investees accounted for under the equity method of accounting. These transactions have been executed on terms
comparable to the terms of transactions with unrelated third parties and primarily include the licensing of
broadcast rights to The CW broadcast network for television product by the Film and TV Entertainment segment
and the licensing of rights to carry cable television programming provided by the Networks segment.
105