Time Magazine 2012 Annual Report Download - page 90

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
stock. The purchase price for the shares was fixed at $7.51 per share based on the trailing 20 day volume-
weighted average closing price of CME Class A common stock prior to April 30, 2012 and was to be paid
through a reduction in the amount owed by CME under the CME Credit Facility.
CME borrowed $180 million under the CME Credit Facility, of which $15 million was repaid during the
second quarter of 2012. The remaining $165 million outstanding under the CME Credit Facility was used to
purchase approximately 10.8 million shares of Class A common stock and one share of CME’s Class A
convertible preferred stock, which increased the Company’s economic interest in CME to 49.9%, and the CME
Credit Facility was terminated. In the fourth quarter of 2012, the Company recorded a $43 million noncash
impairment related to its investment in CME.
Shed Media
In 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, 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
In 2010, Turner acquired Chilevisión, a television broadcaster in Chile, for $134 million, net of cash
acquired.
HBO LAG
In the first quarter of 2010, Home Box Office purchased additional interests in HBO LAG for $217 million,
which resulted in Home Box Office owning 80% of the equity interests of HBO LAG. In the fourth quarter of
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. The transaction closed in the first quarter of
2011 and resulted in Home Box Office owning 88% of the equity interests of HBO LAG. The Company’s
investment in HBO LAG is being accounted for using the equity method of accounting. See Note 4 for more
information.
HBO Europe Acquisition
In 2010, Home Box Office purchased the remainder of its partners’ interests in HBO Europe (formerly
HBO Central Europe) for $136 million, net of cash acquired. HBO Europe operates the HBO and Cinemax multi-
channel premium pay television services serving various territories in Europe. The Company has consolidated
the results of operations and financial condition of HBO Europe since January 27, 2010. Prior to this transaction,
Home Box Office held a 33% interest in HBO Europe, which was accounted for under the equity method of
accounting. Upon the acquisition of the controlling interest in HBO Europe, 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 Europe. The fair value of Home Box Office’s original investment in HBO Europe of $78 million was
determined using the consideration paid in the 2010 purchase, which was primarily derived using a combination
of market and income valuation techniques.
Dispositions
Imagine
In 2012, Turner shut down its general entertainment network, Imagine, in India and recognized $123 million
of charges related to the shutdown. These charges consisted of $117 million, primarily related to certain
receivables, including value added tax receivables, inventories and long-lived assets, including Goodwill, and
$6 million related to exit and other transaction costs.
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