Profile: Time Warner Inc. (TWX)

Time Warner Inc. (Time Warner) is a media and entertainment company. The Company's business segments include Cable, consisting principally of cable systems that provide video, high-speed data and voice services; Filmed Entertainment, consisting principally of feature film, television and home video production and distribution; Networks, consisting principally of cable television networks that provide programming, and Publishing, consisting principally of magazine publishing. In May 2008, AOL completed the acquisition of Bebo, a global social media network that will form the centerpiece of AOL's newly created People Networks business unit. In December 2009, the Company announced that it completed the spin-off of AOL Inc.

Cable

The Company’s cable business, Time Warner Cable Inc. (TWC), is a cable operator in the United States, with systems located in five geographic areas: New York state (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. As of December 31, 2008, TWC served approximately 14.6 million customers who subscribed to one or more of its video, high-speed data and voice services. In addition to its video, high-speed data and voice services, TWC sells advertising to a variety of national, regional and local customers. As of December 31, 2008, Time Warner owns approximately 84% of TWC. TWC offers video, high-speed data and voice services over its broadband cable systems. TWC markets its services separately and as bundled packages of multiple services and features. TWC offers three levels or tiers of video programming: basic service tier (BST), expanded basic service tier (CPST) and digital basic service tier (DBT).

TWC’s video subscribers may receive service through analog transmissions, a combination of digital and analog transmissions or, in systems where TWC has fully deployed digital technology, digital transmissions only. On-Demand services are available to digital video subscribers using a TWC-provided set-top box or, when available, a tru2way-enabled television. Available On-Demand services include a selection of featured movies and special events, for which separate per-use fees are generally charged, and free access to selected movies, programs and program excerpts from broadcast and cable networks, music videos, local programming and other content. In addition, premium service subscribers receiving services via a digital set-top box provided by TWC generally have access to the premium service’s On-Demand content without additional fees.

Set-top boxes equipped with digital video recorders (DVRs), among other things, enable customers to pause and/or rewind live television programs and record programs on a hard drive built into the set-top box. TWC offers between 30 and 40 channels of high-definition (HD) television (HDTV). As of December 31, 2008, 47%, or approximately 4.0 million, of TWC’s digital video subscribers also subscribed to its DVR service. As of December 31, 2008, TWC offered residential high-speed data services to nearly all of its homes passed and approximately 8.4 million customers, or 32% of estimated high-speed data service-ready homes passed, subscribed to a residential high-speed data service.

TWC offered its residential digital phone service. Most Digital Phone customers receive unlimited local, in-state and United States, Canada and Puerto Rico calling and a number of calling features for a fixed monthly fee. TWC also offers additional calling plans with a variety of calling options that are designed to meet customers’ particular needs, including a local-only calling plan, an unlimited in-state calling plan and an international calling plan. As of December 31, 2008, approximately 3.7 million customers, or 14% of estimated voice service-ready homes passed, subscribed to residential Digital Phone.

TWC offers business customers a range of video programming tiers marketed under the Time Warner Cable Business Class brand. TWC offers business customers a variety of high-speed data services, including Internet access, Website hosting and managed security. In addition to TWC’s existing commercial video and high-speed data businesses, TWC introduced Business Class Phone, a business-grade phone service geared to small and medium-sized businesses. As of December 31, 2008, TWC had 30,000 Business Class Phone subscribers. TWC provides transmission capacity on its network to customers that desire high-bandwidth connections between locations. TWC also offers point-to-point circuits to wireless telephone providers and other carriers and wholesale customers. TWC also generates revenues by selling advertising time to a variety of national, regional and local businesses.

The Company competes with DISH Network Corporation, DirecTV Group Inc., AT&T Inc. and Verizon Communications Inc.

Filmed Entertainment

Time Warner’s Filmed Entertainment businesses produce and distribute theatrical motion pictures, television shows, animation and other programming, distribute home video product, and license rights to the Company’s feature films, television programming and characters. All of the foregoing businesses are principally conducted by various subsidiaries and affiliates of Warner Bros. Entertainment Inc., known collectively as the Warner Bros. Entertainment Group (Warner Bros.) and New Line Cinema Corporation (New Line). Warner Bros. produces feature films both wholly on its own and under co-financing arrangements with others, and also distributes its films and completed films produced by others. Theatrical films are also produced and distributed by New Line, an independent producer and distributor of theatrical motion pictures. New Line also produces and releases feature films both wholly on its own and under co-financing arrangements with others. Included in its nine films released during the year ended December 31, 2008 was Sex and the City: The Movie, Journey to the Center of the Earth and Four Christmases.

Warner Home Video (WHV), a division of Warner Bros. Home Entertainment Inc. (WBHE), distributes for home video use digital versatile discs (DVDs) containing filmed entertainment product produced or otherwise acquired by the Company’s various content-producing subsidiaries and divisions, including Warner Bros. Pictures, Warner Bros. Television, New Line, Home Box Office and Turner Broadcasting System. Warner Bros. WHV produces and distributes DVDs from new content generated by the Company, as well as from the Company’s extensive filmed entertainment library of thousands of feature films, television titles and animated titles. WHV also distributes other companies’ product, including DVDs for British Broadcasting Corporation (BBC), National Geographic and national sports leagues in the United States, and has similar distribution relationships with producers outside the United States.

Warner Bros. Television Group (WBTVG) is a supplier of television programming, distributing programming in the United States, as well as in more than 200 international territories and in more than 45 languages. WBTVG both develops and produces new television series, made-for-television movies, reality-based entertainment shows and animation programs and also licenses programming from the Warner Bros. library for exhibition on media all over the world. WBTVG programming is primarily produced by Warner Bros. Television (WBTV), a division of WB Studio Enterprises Inc. that produces primetime dramatic and comedy programming for the major broadcast networks and for cable networks; Warner Horizon Television Inc. (Warner Horizon), which specializes in unscripted programming for broadcast networks, as well as scripted and unscripted programming for cable networks; and Telepictures Productions Inc. (Telepictures), which specializes in reality-based and talk/variety series for the syndication and daytime markets. Warner Bros. Animation Inc. (WBAI) is responsible for the creation, development and production of contemporary animated television programming and original made-for-DVD releases, including the Scooby Doo and Tom and Jerry series. WBAI also oversees the creative use of, and production of animated programming based on, classic animated characters from Warner Bros., including Looney Tunes, and from the Hanna-Barbera and DC Comics libraries.

Warner Bros. Digital Distribution (WBDD), a division of WBHE, enters into domestic and international licensing arrangements for distribution of Warner Bros.’ film and television content through both Video on demand (VOD) and/or permanent download or electronic sell-through (EST) transactions via cable, Internet protocol television (IPTV) systems, satellite and online services for delivery to households, hotels and other viewers worldwide. Warner Bros. Consumer Products Inc. licenses rights in both domestic and international markets to the names, likenesses, images, logos and other representations of characters and copyrighted material from the films and television series produced or distributed by Warner Bros., including the superhero characters of DC Comics, Hanna-Barbera characters, classic films and Looney Tunes. Warner Bros. and CBS Corporation (CBS) each have a 50% interest in The CW, a broadcast network. Warner Bros. International Cinemas Inc. holds interests, either wholly owned or through joint ventures, in 90 multi-screen cinema complexes, with over 700 screens in Japan, Italy and the United States. DC Comics, wholly owned by the Company, publishes an array of graphic novels and an average of over 90 comic book titles per month, featuring such characters as Superman, Batman, Wonder Woman and The Sandman.

Networks

The Company’s Networks business consists principally of domestic and international networks and pay television programming services. The networks owned by Turner Broadcasting System, Inc. (Turner) are collectively referred to herein as the Turner Networks. Pay television programming consists of the multi-channel Home Box Office (HBO) and Cinemax pay television programming services (collectively, the Home Box Office Services) operated by Home Box Office, Inc. (Home Box Office). The programming of the Turner Networks and the Home Box Office Services (collectively, the Networks) is distributed via cable, satellite and other distribution technologies.

Turner’s entertainment networks include two general entertainment networks: TBS, which reached approximately 98.9 million United States television households as of December 2008, and TNT, which reached approximately 98 million United States television households as of December 2008. In addition to its networks, Turner manages various Websites that generate revenues from commercial advertising and in some cases, consumer subscription fees. HBO, operated by Home Box Office, is a pay television service. Including HBO’s sister service, Cinemax, the Home Box Office Services had approximately 40.9 million subscriptions as of December 31, 2008. In addition to its networks, Turner manages various Websites that generate revenues from commercial advertising and, in some cases, consumer subscription fees. CNN has multiple Websites, including CNN.com and several localized editions that operate in Turner’s international markets. CNN also operates CNNMoney.com in collaboration with Time Inc.’s Money, Fortune and Fortune Small Business (FSB) magazines.

Publishing

Time Warner’s publishing business is conducted primarily by Time Inc., a wholly owned subsidiary of the Company, either directly or through its subsidiaries. Time Inc. is a magazine publisher in the United States. In addition to publishing magazines, Time Inc. also operates a number of Websites, as well as certain direct-marketing and direct-selling businesses. As of December 31, 2008, Time Inc. published 23 magazines in the United States, including People, Sports Illustrated, Time, InStyle, Real Simple, Southern Living and Fortune, and over 90 magazines outside the United States, primarily through IPC Media (IPC) in the United Kingdom and Grupo Editorial Expansión (GEE) in Mexico. In addition, Time Inc. operates almost 50 websites worldwide, such as CNNMoney.com, People.com and SI.com, that collectively had average monthly unique visitors of over 29 million worldwide in 2008, according to Nielsen Media Research in the United States and comScore Media Metrix in the United Kingdom. Time Inc.’s Synapse Group, Inc. (Synapse) is a seller of domestic magazine subscriptions to Time Inc. magazines and magazines of other United States publishers. Synapse sells magazine subscriptions principally through marketing relationships with credit card issuers, consumer catalog companies, commercial airlines with frequent flier programs, retailers and Internet businesses. Through subsidiaries, Time Inc. conducts direct-marketing and direct-selling businesses as well as certain niche book publishing. In addition to selling magazine subscriptions, Synapse is a direct marketer of consumer products, including jewelry and other merchandise.