Time Magazine 2013 Annual Report Download - page 41

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
two reportable segments: Turner and Home Box Office. In addition, during the fourth quarter of 2013, the
Company changed the names of its Film and TV Entertainment reportable segment to Warner Bros. and its
Publishing reportable segment to Time Inc. For additional information regarding Time Warner’s segments, refer
to Note 15, “Segment Information,” to the accompanying consolidated financial statements.
Turner. Time Warner’s Turner segment consists of businesses managed by Turner Broadcasting System,
Inc. (“Turner”). During the year ended December 31, 2013, the Turner segment recorded Revenues of $9.983
billion (33% of the Company’s total Revenues) and Operating Income of $3.486 billion.
Turner operates domestic and international television networks, including such recognized brands as TNT,
TBS, truTV, CNN and Cartoon Network, which are among the leaders in advertising-supported television
networks. The Turner networks generate revenues principally from providing programming to affiliates that have
contracted to receive and distribute this programming to subscribers and from the sale of advertising. In addition,
Turner provides online and mobile offerings for on-demand viewing of programs on its networks and live
streaming of its networks to authenticated subscribers. Turner also manages and operates various digital media
properties that primarily consist of websites, including CNN.com,BleacherReport.com,NBA.com,NCAA.com
and cartoonnetwork.com, that generate revenues principally from the sale of advertising and sponsorships.
Home Box Office. Time Warner’s Home Box Office segment consists of businesses managed by Home
Box Office, Inc. (“Home Box Office”). During the year ended December 31, 2013, the Home Box Office
segment recorded Revenues of $4.890 billion (17% of the Company’s total Revenues) and Operating Income of
$1.791 billion.
Home Box Office operates the HBO and Cinemax multi-channel premium pay television services, with the
HBO service ranking as the most widely distributed domestic multi-channel premium pay television service.
HBO- and Cinemax-branded premium pay and basic tier television services are distributed in more than 60
countries across Latin America, Asia and Europe. HBO and Cinemax domestic premium pay television
subscribers have access to the authenticated HBO GO and MAX GO streaming services, respectively, on various
mobile devices and other online platforms, and an authenticated HBO GO streaming service is available to
international premium pay television subscribers of HBO in a number of countries. Home Box Office generates
revenues principally from providing programming to domestic affiliates that have contracted to receive and
distribute such programming to their customers who subscribe to the HBO or Cinemax services. Home Box
Office also derives subscription revenues from the distribution by international affiliates of country-specific
HBO and Cinemax premium pay and basic tier television services to their local subscribers. Additional sources
of revenues for Home Box Office are the sale of its original programming, including Game of Thrones, True
Blood and Boardwalk Empire, via DVDs, Blu-ray Discs and electronic sell-through (“EST”) and the licensing of
its original programming primarily to international television networks.
Warner Bros. Time Warner’s Warner Bros. segment consists of businesses managed by Warner Bros.
Entertainment Inc. (“Warner Bros.”) that principally produce and distribute feature films, television shows and
videogames. During the year ended December 31, 2013, the Warner Bros. segment recorded Revenues of
$12.312 billion (39% of the Company’s total Revenues) and Operating Income of $1.324 billion.
The Warner Bros. segment’s theatrical product revenues are generated principally through rental fees from
theatrical exhibition of feature films, including the following films released during 2013: The Conjuring,Gravity,
The Great Gatsby,The Hangover Part III,The Hobbit: The Desolation of Smaug,Man of Steel,Pacific Rim and
We’re the Millers, and subsequently through licensing fees received from the distribution of films on television
networks and premium pay television services. Television product revenues are generated principally from the
licensing of programs to television networks and premium pay television services. The segment also generates
revenues for both its theatrical and television product through home video distribution on DVD and Blu-ray
Discs and in various digital formats (e.g., EST and video-on-demand) as well as through licensing of feature
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