Time Magazine 2013 Annual Report Download - page 66

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
The following table summarizes the Company’s aggregate contractual obligations at December 31, 2013, and
the estimated timing and effect that such obligations are expected to have on the Company’s liquidity and cash
flows in future periods (millions):
Contractual Obligations(a)(b)(c) Total 2014 2015-2016 2017-2018 Thereafter
Purchase obligations:
Network programming
obligations(d) ................... $ 15,806 $ 2,850 $ 3,911 $ 2,818 $ 6,227
Creative talent and employment
agreements(e) .................. 1,837 1,151 602 73 11
Other purchase obligations(f) ........ 1,550 690 469 169 222
Total purchase obligations ............ 19,193 4,691 4,982 3,060 6,460
Outstanding debt obligations (Note 8) . . . 20,225 56 2,250 1,100 16,819
Interest (Note 8) .................... 18,821 1,202 2,375 2,177 13,067
Capital lease obligations (Note 8) ...... 81 15 24 22 20
Operating lease obligations (Note 16) . . . 1,910 410 721 502 277
Total contractual obligations .......... $ 60,230 $ 6,374 $ 10,352 $ 6,861 $ 36,643
(a) The table does not include the effects of certain put/call or other buy-out arrangements that are contingent in nature involving certain of
the Company’s investees (Note 16).
(b) The table does not include the Company’s reserve for uncertain tax positions and related accrued interest and penalties, which at
December 31, 2013 totaled $2.607 billion, as the specific timing of any cash payments relating to this obligation cannot be projected with
reasonable certainty.
(c) The references to Note 8 and Note 16 refer to the notes to the accompanying consolidated financial statements.
(d) The Turner segment enters into contracts to license sports programming to carry on its television networks. The amounts in the table
include minimum payment obligations to sports leagues and organizations (e.g., NCAA, NBA, MLB) to air the programming over the
contract period. Included in the table is $8.6 billion payable to the NCAA over the 11 years remaining on the agreement, which does not
include amounts recoupable from CBS, and $2.6 billion payable to MLB under the agreement Turner and MLB entered into in 2012,
which is effective 2014 through 2021. The Turner and Home Box Office segments also enter into licensing agreements with certain
production studios to acquire the rights to air motion pictures and television series. The pricing structures in these contracts differ in that
some agreements require a fixed amount per film or television series and others are based on a percentage of the film’s box office receipts
(with license fees generally capped at specified amounts), or a combination of both. The amounts included in the table represent
obligations for television series and films that had been released theatrically as of December 31, 2013 and are calculated using the actual
or estimated box office performance or fixed amounts, based on the applicable agreement.
(e) The Company’s commitments under creative talent and employment agreements include obligations to executives, actors, producers,
authors, and other talent under contractual arrangements, including union contracts and contracts with other organizations that represent
such creative talent.
(f) Other purchase obligations principally include: (1) advertising, marketing, distribution and sponsorship obligations, including minimum
guaranteed royalty and marketing payments to vendors and content providers, primarily at the Turner, Home Box Office and Warner
Bros. segments; (2) obligations related to the Company’s postretirement and unfunded defined benefit pension plans; (3) obligations to
purchase information technology licenses and services; (4) obligations related to payments to the NCAA for Basketball Fan Festival
rights at the Turner segment; and (5) obligations to purchase general and administrative items and services.
The Company’s material contractual obligations at December 31, 2013 include:
• Purchase obligations — represents an agreement to purchase goods or services that is enforceable and
legally binding on the Company and that specifies all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of
the transaction. The purchase obligation amounts do not represent all anticipated purchases, but
represent only those purchases the Company is contractually obligated to make. The Company also
purchases products and services as needed, with no firm commitment. For this reason, the amounts
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