Time Magazine 2012 Annual Report Download - page 23

150 countries. In addition, Home Box Office content is distributed by means of EST in the U.S. and various
international regions by Apple, Amazon, Microsoft, Sony, Walmart’s Vudu subsidiary, Best Buy and Barnes &
Noble through their digital platforms.
The CW. The CW broadcast network (“The CW”) is a 50-50 joint venture between Warner Bros. and CBS
Corporation. The CW’s 2012-2013 schedule includes, among other things, a 5-night and 10-hour primetime
lineup of original programming with advertising-supported programming such as 90210,America’s Next Top
Model,Arrow,Beauty and the Beast,The Carrie Diaries,Cult,Gossip Girl,Hart of Dixie,Nikita,Supernatural
and The Vampire Diaries, as well as a five-hour block of advertising-supported, animated children’s
programming on Saturday mornings. The CW is also expanding its digital distribution capabilities in an effort to
grow its audience. For example, CWtv.com promotes The CW’s programming and provides video clips, episode
guides, photos, music, social networking features and station lists, as well as full episodes with advertising. The
CW also has an app for iOS, tablet and Android mobile devices that allows users to view recently aired, in-
season episodes of The CW shows on demand in a branded environment.
In 2011, Warner Bros. and CBS Corporation entered into an agreement with Netflix, Inc. that allows U.S.
members of Netflix to stream previous seasons of the scripted series that aired on The CW beginning in fall
2011, as well as previous seasons of new scripted series produced by Warner Bros. or CBS Corporation that
premiere on The CW through the 2014-2015 season. These rights extend for a period of four years after the end
of each series’ broadcast run on The CW. Also in 2011, The CW entered into a five-year agreement with Hulu
granting Hulu the right to stream in-season episodes of The CW’s programming on the Hulu Plus subscription
service beginning the day after a program’s initial broadcast air date and the free, advertising-supported Hulu
website beginning 8 days after a program’s initial broadcast air date.
CME. As of December 31, 2012, the Company held an approximate 49.9% economic interest in Central
Media Enterprises Ltd., a publicly-traded broadcasting company that operates leading networks in six Central
and Eastern European countries.
Film and TV Entertainment
The Company’s Film and TV Entertainment businesses produce and distribute feature films, television,
videogames and other programming; distribute home video product; and license rights to the Company’s feature
films, television programming and characters. All of these businesses are principally conducted by various
subsidiaries and affiliates of Warner Bros.
The Film and TV Entertainment segment’s theatrical product revenues are generated principally from the
theatrical exhibition of feature films. In addition to the traditional 2D format, some of Warner Bros.’ theatrical
releases are available in 3D and/or formatted for viewing on IMAX screens or high frame rate (“HFR”), tickets
for which are generally sold at premium prices. The segment also generates theatrical product revenues from
licensing fees received from the distribution of feature films on television networks and pay television
programming services. The theatrical success of a feature film is a significant factor in determining the revenues
it is likely to generate from the subsequent licensing of such film to television networks and programming
services. The segment’s television product revenues are generated principally from the licensing of programs to
domestic and international television networks, television station groups and pay television programming
services.
The segment also generates revenues for both its theatrical and television product through home video
distribution on DVD, Blu-ray Discs and various digital formats (e.g., EST and VOD). In recent years, home
video revenues have declined as a result of several factors, including consumers shifting to subscription rental
services and discount rental kiosks; the general economic downturn in the U.S. and in many regions around the
world; increasing competition for consumer discretionary time and spending; piracy; and the maturation of the
standard definition DVD format. In response to these declines, Warner Bros. is working to make digital
ownership more compelling for consumers through support of initiatives such as UltraViolet, the home
entertainment industry standard that allows consumers who have purchased film and television content to create
a permanent record of their purchases, stored in the cloud. Consumers can then download or stream that content
to devices supported by participating UltraViolet retailers. The segment also generates revenues for both its
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