Time Magazine 2015 Annual Report Download - page 84

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
physical format are recognized at the later of the delivery date or the date that the DVDs or Blu-ray Discs are made widely
available for sale or rental by retailers based on gross sales less a provision for estimated returns. Revenues from the
licensing of feature films for electronic sell-through or video-on-demand are recognized when the product has been
purchased by and made available to the consumer to either download or stream. Revenues from the distribution of theatrical
product through subscription video-on-demand services, premium cable, basic cable and broadcast networks are recognized
when the films are available to the licensee.
Television programs and series are initially produced for broadcast networks, cable networks, first-run television
syndication or subscription video-on-demand services and may be subsequently licensed for international or domestic cable,
syndicated television and subscription video-on-demand services, as well as sold on home video and via electronic delivery.
Revenues from the distribution of television programming through broadcast networks, cable networks, first-run syndication
and subscription video-on-demand services are recognized when the programs or series are available to the licensee, except
for advertising barter agreements, where the revenue is valued and recognized when the related advertisements are exhibited.
In certain circumstances, pursuant to the terms of the applicable contractual arrangements, the availability dates granted to
customers may precede the date the Company may bill the customers for these sales. Unbilled accounts receivable, which
primarily relate to the distribution of television product at Warner Bros., totaled $4.057 billion and $3.780 billion at
December 31, 2015 and December 31, 2014, respectively. Included in the unbilled accounts receivable at December 31, 2015
was $2.259 billion that is to be billed in the next twelve months. Similar to theatrical home video sales, revenues from sales
of television programming in physical format are recognized at the later of the delivery date or the date that the DVDs or
Blu-ray Discs are made widely available for sale or rental by retailers based on gross sales less a provision for estimated
returns. Revenues from the licensing of television programs and series for electronic sell-through or video-on-demand are
recognized when the product has been purchased by and made available to the consumer to either download or stream.
Revenues from the distribution of television programming through subscription video-on-demand services are recognized
when the television programs or series are available to the licensee.
Upfront or guaranteed payments for the licensing of intellectual property are recognized as revenue when (i) an
arrangement has been signed with a customer, (ii) the customer’s right to use or otherwise exploit the intellectual property
has commenced and there is no requirement for significant continued performance by the Company, (iii) licensing fees are
either fixed or determinable and (iv) collectability of the fees is reasonably assured. In the event any significant continued
performance is required in these arrangements, revenue is allocated to each applicable element and recognized when the
related services are performed.
Revenues from the sales of console videogames are recognized at the later of the delivery date or the date that the
product is made widely available for sale or rental by retailers based on gross sales less a provision for estimated returns.
Subscription Revenue
Subscription revenues from the Company’s cable networks and premium pay and basic tier television services are recognized
as programming services are provided to affiliates based on negotiated contractual programming rates. When a distribution
contract with an affiliate has expired and a new distribution contract has not been executed, revenues are based on estimated
rates, giving consideration to factors including the previous contractual rates, inflation, current payments by the affiliate and the
status of the negotiations on a new contract. When the new distribution contract terms are finalized, an adjustment to
Subscription revenues is recorded, if necessary, to reflect the new terms. Such adjustments historically have not been significant.
Subscription revenues from streaming services (e.g., HBO NOW) are recognized as programming services are
provided to customers.
Advertising Revenue
Advertising revenues are recognized, net of agency commissions, in the period that the advertisements are aired. If
there is a targeted audience guarantee, revenues are recognized for the actual audience delivery and revenues are deferred for
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