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Time Warner Inc. Reports Fourth-Quarter And Full-Year 2012 Results

Stock Repurchase Program Update

From January 1, 2012 through February 1, 2013, the Company repurchased approximately 84 million shares of common stock for approximately $3.5 billion. These amounts reflect the purchase of approximately 24 million shares of common stock for approximately $1.1 billion since the amounts reported in the Company’s third quarter earnings release issued on November 7, 2012.

In January 2013, the Company’s Board of Directors authorized a total of $4 billion in share repurchases beginning January 1, 2013, which replaces the amount remaining under the prior authorization.

Regular Quarterly Dividend

On February 5, 2013, the Company’s Board of Directors increased the Company’s regular quarterly dividend by 11% to $0.2875 per share.

Segment Performance

Presentation of Financial Information

The schedule below reflects Time Warner’s financial performance for the three months and year ended December 31 by line of business (millions).

           

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2012

     

2011

2012

     

2011

Revenues:

Networks

$

3,665

$

3,499

$

14,204

$

13,654

Film and TV Entertainment (a) 3,723 3,890 12,018 12,638
Publishing 967 1,044 3,436 3,677
Intersegment eliminations   (191 )   (240 )   (929 )   (995 )

Total Revenues

$

8,164

 

$

8,193

 

$

28,729

 

$

28,974

 
 

Adjusted Operating Income (Loss) (b) :

Networks

$

1,336

$

1,144

$

4,881

$

4,431

Film and TV Entertainment (a) 555 433 1,237 1,279
Publishing 201 224 463 580
Corporate (95 ) (83 ) (358 ) (336 )
Intersegment eliminations   (17 )   (13 )   (97 )   (90 )

Total Adjusted Operating Income

$

1,980

 

$

1,705

 

$

6,126

 

$

5,864

 
 

Operating Income (Loss) (b) :

Networks (c)

$

1,378

$

1,138

$

4,719

$

4,416

Film and TV Entertainment (a) 552 427 1,228 1,263
Publishing 200 207 420 563
Corporate (86 ) (86 ) (352 ) (347 )
Intersegment eliminations   (17 )   (13 )   (97 )   (90 )

Total Operating Income

$

2,027

 

$

1,673

 

$

5,918

 

$

5,805

 
 

Depreciation and Amortization:

Networks

$

90

$

92

$

355

$

367

Film and TV Entertainment (a) 106 99 382 384
Publishing 31 34 127 142
Corporate   7     8     28     29  

Total Depreciation and Amortization

$

234

 

$

233

 

$

892

 

$

922

 

 

(a)   Effective for the first quarter of 2012, Time Warner changed the name of its Filmed Entertainment reportable segment to Film and TV Entertainment. This change did not affect the composition of the segment; accordingly, all prior period financial information related to this reportable segment was unaffected.
(b) Adjusted Operating Income (Loss) and Operating Income (Loss) for the three months and year ended December 31, 2012 and 2011 included restructuring and severance costs of (millions):
                       

Three Months Ended Dec. 31,

Year Ended Dec. 31,

 

2012

   

2011

   

2012

   

2011

 
Networks

$

(27

)

$

(18

)

$

(67

)

$

(52

)

Film and TV Entertainment (4 ) (8 ) (23 ) (41 )
Publishing (3 ) (3 ) (27 ) (18 )
Corporate   (1 )   -     (2 )   (2 )

Total Restructuring and Severance Costs

$

(35

)

$

(29

)

$

(119

)

$

(113

)

 
(c)   Operating Income for the year ended December 31, 2012 included $192 million in charges related to the shutdown of Turner’s general entertainment network, Imagine, in India and TNT television operations in Turkey.
 

Presented below is a discussion of the performance of Time Warner’s segments for the 2012 fourth quarter and full year. Unless otherwise noted, the dollar amounts in parentheses represent year-over-year changes.

NETWORKS (Turner Broadcasting and HBO)

Full-Year Results

Revenues rose 4% ($550 million) to $14.2 billion, benefiting from growth of 6% ($504 million) in Subscription revenues and 3% ($119 million) in Advertising revenues, which was partially offset by a 9% ($101 million) decline in Content revenues. The increase in Subscription revenues resulted mainly from higher domestic rates and, to a lesser extent, international growth and an increase in domestic subscribers at HBO, partially offset by the negative effect of foreign currency exchange rates. Advertising revenues benefited primarily from growth at Turner’s domestic networks, due principally to higher pricing and an increase in the number of NBA games. Growth at Turner’s domestic networks was partially offset by decreases at its international networks, which were due primarily to the shutdown of Turner’s general entertainment network, Imagine, in India and TNT television operations in Turkey in the first half of 2012 and the negative effect of foreign currency exchange rates. Content revenues declined due to lower licensing revenues compared to the prior year, which included a domestic cable sale of Sex and the City and a full year of licensing revenues from the TNT television operations in Turkey.

Adjusted Operating Income increased 10% ($450 million) to $4.9 billion, reflecting higher revenues, partly offset by increased expenses, including higher programming costs. Programming costs grew 2%, primarily reflecting higher costs for sports programming, due mostly to an increase in the number of NBA games, and original series, partially offset by the shutdown of Imagine and the TNT television operations in Turkey. Operating Income increased 7% ($303 million) to $4.7 billion. 2012 included $192 million in charges related to the shutdown of the Turner operations in India and Turkey.

TNT finished 2012 with five of the top ten original series on ad-supported cable for the year, more than any other network. TBS ranked as ad-supported cable’s #1 primetime network among adults 18-34 and #3 among adults 18-49 in 2012. Ratings for TBS among adults 18-49 were up nearly 20% in primetime for the year. Adult Swim closed out the year as the #1 ad-supported cable network in total day delivery for adults 18-34. CNN continued to reach more viewers than any other cable news network in 2012 and was the #1 cable news network on election night among adults 25-54.

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