Time Magazine 2013 Annual Report Download - page 97

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
4. INVESTMENTS
The Company’s investments consist of equity-method investments, fair-value and other investments,
including available-for-sale securities, and cost-method investments. Time Warner’s investments, by category,
consist of (millions):
December 31,
2013 2012
Equity-method investments ........................................... $ 947 $ 1,123
Fair-value and other investments, including available-for-sale securities:
Deferred compensation investments, recorded at fair value ................ 248 251
Deferred compensation insurance-related investments, recorded at cash
surrender value ................................................ 397 358
Available-for-sale securities ........................................ 97 117
Total fair-value and other investments .................................. 742 726
Cost-method investments ............................................ 335 117
Total ............................................................. $ 2,024 $ 1,966
Available-for-sale securities are recorded at fair value in the Consolidated Balance Sheet, and the realized
gains and losses are included as a component of Other loss, net in the Consolidated Statement of Operations. The
cost basis, unrealized gains and fair market value of available-for-sale securities are set forth below (millions):
December 31,
2013 2012
Cost basis ......................................................... $ 54 $ 96
Gross unrealized gain ............................................... 46 21
Gross unrealized loss ................................................ (3) —
Fair value ......................................................... $ 97 $ 117
Gains and losses reclassified from Accumulated other comprehensive loss, net to Other loss, net in the
Consolidated Statement of Operations are determined based on the specific identification method.
Equity-Method Investments
At December 31, 2013, investments accounted for using the equity method primarily included the
Company’s investments in the Class A common stock and Series A convertible preferred stock of CME (49.9%
economic interest), HBO LAG (88% owned) and certain other Turner, Home Box Office and Warner Bros.
ventures that are generally 20% to 50% owned. For more information regarding CME, see Note 3.
HBO LAG is a VIE and, because voting control of this entity is shared equally with the other investor, the
Company has determined that it is not the primary beneficiary of this VIE. As of both December 31, 2013 and
December 31, 2012, the Company’s aggregate investment in HBO LAG was $580 million and was recorded in
Investments, including available-for-sale securities, in the Consolidated Balance Sheet. The investment in HBO
LAG is intended to enable the Company to more broadly leverage its programming and digital strategy in the
territories served and to capitalize on growing multi-channel television opportunities in such territories. The
Company provides programming as well as certain services, including distribution, licensing and technological
and administrative support, to this entity. HBO LAG is financed through cash flows from its operations, and the
Company is not obligated to provide HBO LAG with any additional financial support. In addition, the assets of
HBO LAG are not available to settle the Company’s obligations.
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