Time Magazine 2014 Annual Report Download - page 27

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In response to these dynamics, Warner Bros. has been focusing on increasing digital sales and rentals of its film and
television content through more profitable channels such as EST and transactional VOD, and is a leader in a variety of digital
initiatives designed to make digital ownership more compelling for consumers. Warner Bros. licenses its newly released
feature films as well as films from its library and its television content for viewing digitally online and on mobile platforms
in the U.S. and internationally to EST and transactional VOD services. In the U.S. and most major international markets,
Warner Bros.’ recent theatrical releases are generally released for sale in EST at least two weeks before their release on
DVD, Blu-ray Disc and VOD. In addition, Warner Bros. participates in a variety of digital initiatives, including UltraViolet,
the home entertainment industry standard that allows consumers who have purchased film and television content to access
their content at any time by downloading or streaming it from the cloud to various devices supported by participating
UltraViolet retailers.
Although consumer spending on physical discs has declined in recent years, the distribution of DVDs and Blu-ray Discs
still generates significant revenues for Warner Bros. The DVDs and Blu-ray Discs it distributes contain its own feature films
and television content, including library content, as well as content acquired from others. In the U.S. and other major
territories, physical disc sales of new feature film releases include an Ultraviolet digital copy. Warner Bros. generally
releases newly produced films on DVD and Blu-ray Disc to by-mail and kiosk rental services 28 days following their release
to online and brick and mortar retailers. Warner Bros. also distributes content on DVDs and Blu-ray Discs for others, such as
HBO, Turner, BBC, Paramount and Sesame Street in the U.S. and content producers outside the U.S.
Videogames
Warner Bros. develops, publishes and distributes videogames, including mobile and console games. Its videogames are
based on intellectual property owned by Warner Bros. (including DC Entertainment) as well as other companies. In 2014,
Warner Bros. released 8 videogames, including LEGO Batman 3: Beyond Gotham,The LEGO Movie Videogame and Middle
Earth: Shadow of Mordor, and it plans to release 11 videogames in 2015. In recent years, Warner Bros.’ videogame releases
have included multiple games based on DC Entertainment characters, Harry Potter,The Hobbit and The Lord of the Rings
trilogies, LEGO and Mortal Kombat, and Warner Bros. is focused on increasing its monetization of its franchises in its
videogames business in the future. Warner Bros. also licenses Warner Bros. and DC Entertainment properties for videogames
to other companies. Warner Bros.’ videogames revenues consist of revenues from the development and distribution of the
videogames of Warner Bros. and other companies.
Other Television Network Assets
The Company also holds interests in companies that operate broadcast networks.
Central European Media Enterprises Ltd.
As of December 31, 2014, Time Warner held an approximate 49% voting interest and an approximate 75% economic
interest in Central European Media Enterprises Ltd. (“CME”), a publicly-traded broadcasting company that operates leading
television networks in Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia. Time Warner’s
investment consists of (i) common stock, (ii) convertible preferred stock that has voting rights, (iii) convertible redeemable
preferred shares that do not have voting rights and (iv) warrants to purchase common stock of CME. Time Warner also
guarantees or holds a significant portion of CME’s outstanding indebtedness and provides financing to CME under a
revolving credit facility and term loan. See “Management’s Discussion and Analysis of Results of Operations and Financial
Condition—Recent Developments” for additional information regarding Time Warner’s guarantees, the debt held by Time
Warner and the credit facility and term loan provided by Time Warner.
The CW
The CW is a 50-50 joint venture between Warner Bros. and CBS Corporation. The CW’s 2014-2015 schedule includes a
5-night, 10-hour primetime lineup of advertising-supported original programming such as America’s Next Top Model,Arrow,
The Flash,iZombie,Jane the Virgin,The Originals,Reign,Supernatural and The Vampire Diaries, as well as a five-hour
block of advertising-supported programming on Saturday mornings. In 2015, The CW’s Jane the Virgin won one Golden
Globe Award. Advertising-supported full episodes of The CW’s original series are also available on cwtv.com. The CW
programming is also available for streaming through Netflix and Hulu.
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