Time Magazine 2013 Annual Report Download - page 52

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
Athletic Association Division I Men’s Basketball Championship tournament (the “NCAA Tournament”),
partially offset by a decline at Turner’s domestic news networks primarily due to an unfavorable comparison to
the 2012 U.S. presidential election.
Content revenues decreased primarily due to the absence of revenues from Turner’s TNT television
operations in Turkey, which were shut down in the second quarter of 2012, partially offset by higher revenues
from availabilities to SVOD services.
The increase in Costs of revenues for the year ended December 31, 2013 was primarily due to higher
originals and sports programming costs, mainly due to higher costs for original series, as well as higher costs for
acquired films and syndicated series. Programming costs for the year ended December 31, 2013 included $73
million of impairments related to certain programs, primarily syndicated series, that management has concluded
will no longer be exhibited.
For the year ended December 31, 2013, Selling, general and administrative expenses were essentially flat
mainly due to the absence of $18 million of exit and other costs related to the Imagine and TNT Turkey
Shutdowns, partially offset by higher marketing expenses.
As previously noted under “Transactions and Other Items Affecting Comparability,” the results for the year
ended December 31, 2013 included a $2 million gain on the sale of a building, $18 million of impairments
related to certain of Turner’s international intangible assets, an $18 million impairment related to a building and
$10 million of impairments related to programming assets resulting from Turner’s decision to shut down certain
of its entertainment networks in Spain and Belgium. The results for the year ended December 31, 2012 reflected
the charges incurred in connection with the Imagine and TNT Turkey Shutdowns, consisting of $174 million
primarily related to certain receivables, including value added tax receivables, inventories and long-lived assets,
including Goodwill, and $18 million related to exit and other transaction costs. The results for the year ended
December 31, 2012 also included a $34 million gain on the settlement of an indemnification obligation related to
the Company’s 2007 sale of the Braves. In addition, for the years ended December 31, 2013 and 2012, the Turner
segment incurred $1 million and $2 million, respectively, of other miscellaneous asset impairments.
For the year ended December 31, 2013, Restructuring and severance costs increased due largely to higher
severance costs.
The increase in Operating Income for the year ended December 31, 2013 was primarily due to higher
Revenues and lower asset impairments, partially offset by higher Costs of revenues, higher Restructuring and
severance costs and lower Gains on operating assets.
2012 vs. 2011
The increase in Subscription revenues for the year ended December 31, 2012 was primarily due to an
increase in domestic subscription revenues of $213 million driven largely by higher domestic rates and an
increase in international subscription revenues of $49 million reflecting subscriber growth and the unfavorable
impact of foreign exchange rates of approximately $60 million.
The increase in Advertising revenues for the year ended December 31, 2012 primarily reflected domestic
growth of $175 million mainly due to higher pricing and additional NBA games, partially offset by lower
international advertising revenues of $56 million primarily due to the unfavorable impact of the Imagine and
TNT Turkey Shutdowns and the negative effect of foreign exchange rates of approximately $30 million.
The decrease in Content revenues for the year ended December 31, 2012 was due primarily to the shutdown
of Turner’s TNT television operations in Turkey.
The increase in Costs of revenues for the year ended December 31, 2012 was driven by higher originals and
sports programming costs, partially offset by lower programming costs related to the Imagine and TNT Turkey
Shutdowns.
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