Time Magazine 2015 Annual Report Download - page 51

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued)
$99 million due to the unfavorable impact of foreign exchange rates of approximately $185 million, partially offset by
growth mainly in Latin America.
The increase in Advertising revenues for the year ended December 31, 2015 reflected domestic growth of $116 million,
mainly driven by Turner’s domestic news business and the 2015 National Collegiate Athletic Association Division I Men’s
Basketball Championship tournament (the “NCAA Tournament”), partially offset by lower audience delivery at certain of its
entertainment networks and the absence of Advertising revenues in 2015 associated with NASCAR television programming.
International advertising revenues decreased $47 million as growth was more than offset by the unfavorable impact of
foreign exchange rates of approximately $125 million.
The increase in Content and other revenues for the year ended December 31, 2015 was primarily due to higher license
fees from SVOD services.
For the year ended December 31, 2015, Costs of revenues decreased primarily due to lower programming impairment
charges. Programming impairment charges related to Turner’s decision to no longer air certain programming were
$131 million and $526 million for the years ended December 31, 2015 and 2014, respectively. Excluding the programming
impairment charges, programming costs declined primarily due to lower acquired films and syndicated series costs as a result
of the abandonment of certain programming in 2014 and the absence of costs in 2015 associated with NASCAR, partially
offset by higher costs associated with airing the Major League Baseball playoffs.
For the year ended December 31, 2015, Selling, general and administrative expenses decreased primarily due to
operational efficiency initiatives, including the 2014 restructuring activities described below and lower marketing expenses
of $50 million, partially offset by the absence in the current period of the reversal in 2014 of a $20 million accrued
contingency.
Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Asset impairments, Gain on
operating assets, Venezuelan foreign currency loss and external costs related to mergers, acquisitions and dispositions for the
year ended December 31, 2015 and 2014, which affected the comparability of the Turner segment’s results.
The results for the years ended December 31, 2015 and 2014 included Restructuring and severance costs of $58 million
and $249 million, respectively, primarily related to headcount reductions in connection with restructuring activities designed
to position the Company for the current operating environment and reallocate resources to the Company’s growth initiatives.
The increase in Operating Income for the year ended December 31, 2015 was primarily due to lower Costs of revenues,
higher Revenues, lower Restructuring and severance costs, a decrease in Venezuela foreign currency losses and lower
Selling, general and administrative expenses.
2014 vs. 2013
The increase in Subscription revenues for the year ended December 31, 2014 reflected higher domestic revenues of
$298 million primarily due to higher rates, partially offset by lower subscribers and higher international revenues of
$69 million mainly driven by growth in Latin America and the unfavorable impact of foreign exchange rates of
approximately $50 million.
The increase in Advertising revenues for the year ended December 31, 2014 reflected domestic growth of $34 million,
mainly driven by Turner’s domestic news business, partially offset by lower audience delivery and demand at its domestic
entertainment networks. International advertising revenues were flat as growth was offset by the unfavorable impact of
foreign exchange rates of approximately $25 million.
For the year ended December 31, 2014, Costs of revenues increased primarily due to programming charges of
$526 million related to Turner’s decision following its strategic evaluation of its programming to no longer air certain
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