Time Magazine 2012 Annual Report Download - page 89

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company’s intangible assets subject to amortization and related accumulated amortization consisted of
the following (millions):
December 31, 2012 December 31, 2011
Gross
Accumulated
Amortization(a) Net Gross
Accumulated
Amortization(a) Net
Intangible assets subject to amortization:
Film library ............................. $ 3,452 $(2,345) $ 1,107 $ 3,514 $(2,194) $ 1,320
Brands, tradenames and other
intangible assets(b) ...................... 2,145 (1,144) 1,001 2,015 (1,103) 912
Total .................................. $ 5,597 $(3,489) $ 2,108 $ 5,529 $(3,297) $ 2,232
(a) The film library is amortized using a film forecast methodology. Amortization of brands, tradenames and other intangible assets subject
to amortization is provided generally on a straight-line basis over their respective useful lives.
(b) Effective December 31, 2012, certain tradenames of the Publishing segment totaling approximately $164 million that were previously
assigned indefinite lives have been assigned finite lives of 18 years and will begin to be amortized starting in January 2013.
The Company recorded amortization expense of $248 million in 2012 compared to $269 million in 2011 and
$264 million in 2010. The Company estimates amortization expense for future years based on the amount of
intangible assets subject to amortization at December 31, 2012. These amounts may vary as acquisitions and
dispositions occur in the future and as purchase price allocations are finalized. The Company’s estimated
amortization expense for the succeeding five years ended December 31 is as follows (millions):
2013 2014 2015 2016 2017
Estimated amortization expense ............. $ 242 $ 230 $ 217 $ 212 $204
3. BUSINESS ACQUISITIONS AND DISPOSITIONS
Acquisitions
Bleacher Report
In 2012, Turner Broadcasting System, Inc. (“Turner”) acquired Bleacher Report, a leading online and mobile
sports property, for $170 million, net of cash acquired. The operating results of Bleacher Report did not
significantly impact the Company’s consolidated financial results for the year ended December 31, 2012.
CME
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 the first quarter of 2011, the Company completed an additional
equity investment in CME for $61 million. 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. Upon the expiration of the voting agreement with Ronald S. Lauder in May 2013, the
Company expects to begin accounting for its investment in CME under the equity method of accounting. In the
fourth quarter of 2011, the Company recorded a $163 million noncash impairment related to its investment in
CME.
On April 30, 2012, the Company and CME entered into an arrangement in which the Company agreed to
purchase shares of CME’s Class A common stock and to loan CME up to $300 million for the sole purpose of
CME retiring certain of its outstanding public indebtedness that was scheduled to mature over the next few years
through concurrent tender offers (the “CME Credit Facility”). The arrangement also gave CME the option to sell
the Company additional shares of CME’s Class A common stock or securities convertible into Class A common
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