Time Warner Inc. Reports Results for 2008 Full Year and Fourth Quarter

Chairman and Chief Executive Officer Jeff Bewkes said: "We're making progress at Time Warner toward our goals of becoming a more content-focused company and delivering increasing returns to our stockholders. Last year, our priorities were to rationalize our structure and improve our operating performance. Despite the challenging economic environment, we achieved most of what we set out to do. Moving into 2009, we intend to build on these accomplishments."

Mr. Bewkes continued: "Operationally, we'll continue to improve the efficiency of our businesses while creating even more of the compelling content that's becoming increasingly valuable. Structurally, we'll complete the Time Warner Cable separation soon. At the same time, we'll strengthen our balance sheet, improve our strategic flexibility and return capital to our stockholders on a consistent basis. Through these steps, we expect to emerge from this downturn in an even stronger competitive position."

Full-Year Results

Revenues grew 1% over 2008 to $47.0 billion, reflecting increases at the Company's Cable and Networks segments.

Adjusted Operating Income before Depreciation and Amortization rose 1% to $13.0 billion. The growth at the Cable, Networks and Filmed Entertainment segments more than offset declines at the Publishing and AOL segments. The Company's Operating Loss of $16.0 billion reflected a decline of $24.9 billion compared to 2007's Operating Income of $8.9 billion, due mainly to a $24.2 billion noncash impairment to reduce the carrying value of goodwill and intangible assets.

Cash Provided by Operations totaled $10.3 billion and Free Cash Flow amounted to $6.0 billion (reflecting a 46% conversion rate of Adjusted Operating Income before Depreciation and Amortization). As of December 31, 2008, Net Debt was $33.0 billion, down $2.6 billion from $35.6 billion at the end of 2007, due primarily to the generation of Free Cash Flow, offset in part by acquisitions.

Diluted Loss per Common Share from Continuing Operations was $3.74 for the year ended December 31, 2008, compared to Diluted Income per Common Share from Continuing Operations of $1.08 in 2007. The current and prior year amounts included certain items affecting comparability that are described in Note 3 to the accompanying consolidated financial statements. The net impact of such items was to decrease the current year results by $4.73 per diluted common share and to increase the prior year results by $0.12 per diluted common share.

Fourth-Quarter Results

Fourth-quarter revenues declined 3% over the same period in 2007 to $12.3 billion, driven mainly by decreases at the Filmed Entertainment, AOL and Publishing segments, offset partially by increases at the Cable and Networks segments.

Adjusted Operating Income before Depreciation and Amortization decreased 8% to $3.2 billion. Increases at the Cable, AOL and Filmed Entertainment segments were more than offset by declines at the Publishing and Networks segments, which were adversely affected by significant charges related to restructurings and a trial court judgment, respectively, as described in the Performance of Segments section below. The Company's Operating Loss of $22.2 billion represented a decline of $24.5 billion compared to the year-ago quarter's Operating Income of $2.3 billion, due largely to a $24.2 billion noncash impairment to reduce the carrying value of goodwill and intangible assets.

Diluted Loss per Common Share from Continuing Operations was $4.47 for the three months ended December 31, 2008, compared to Diluted Income per Common Share from Continuing Operations of $0.28 in last year's fourth quarter. The current and prior year quarters' amounts included certain items affecting comparability that are described in Note 3 to the accompanying consolidated financial statements. The net impact of such items was to decrease the current and prior year quarters' results by $4.70 and $0.01 per diluted common share, respectively.

Performance of Segments

Presentation of Financial Information

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

In the presentation of financial information in this release, Adjusted Operating Income (Loss) before Depreciation and Amortization excludes the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales and amounts related to securities litigation and government investigations. Operating Income includes these amounts in their respective periods. Refer to the reconciliations of Adjusted Operating Income (Loss) before Depreciation and Amortization to Operating Income (Loss) before Depreciation and Amortization and the reconciliations of Operating Income (Loss) before Depreciation and Amortization to Operating Income (Loss) in this release for details.

Three Months Ended December 31, Year Ended December 31, 2008 2007 2008 2007 Revenues: AOL $ 968 $ 1,251 $ 4,165 $ 5,181 Cable 4,402 4,089 17,200 15,955 Filmed Entertainment 3,113 3,508 11,398 11,682 Networks 2,938 2,704 11,154 10,270 Publishing 1,269 1,455 4,608 4,955 Intersegment eliminations (384 ) (365 ) (1,541 ) (1,561 ) Total Revenues $ 12,306 $ 12,642 $ 46,984 $ 46,482 Adjusted Operating Income (Loss) before Depreciation and Amortization(a): AOL $ 405 $ 381 $ 1,558 $ 1,836 Cable 1,660 1,563 6,186 5,742 Filmed Entertainment 371 350 1,228 1,215 Networks(b) 682 857 3,508 3,370 Publishing 124 414 779 1,098 Corporate (71 ) (98 ) (315 ) (379 ) Intersegment eliminations 17 - 35 (3 ) Total Adjusted Operating Income (Loss) before Depreciation and Amortization $ 3,188 $ 3,467 $ 12,979 $ 12,879 Operating Income (Loss)(a): AOL(c) $ (1,929 ) $ 274 $ (1,147 ) $ 2,013 Cable(c) (13,944 ) 795 (11,782 ) 2,766 Filmed Entertainment 271 253 823 845 Networks(b) 586 770 3,118 3,015 Publishing(c) (7,097 ) 362 (6,624 ) 907 Corporate (82 ) (109 ) (359 ) (423 ) Securities litigation expenses, net (8 ) (2 ) (21 ) (171 ) Intersegment eliminations 17 - 35 (3 ) Total Operating Income (Loss) $ (22,186 ) $ 2,343 $ (15,957 ) $ 8,949 (a) Adjusted Operating Income (Loss) before Depreciation and Amortization and Operating Income (Loss) for the three months and full year ended December 31, 2008 and 2007, respectively, included merger-related and restructuring charges of (millions): AOL $ (2 ) $ (98 ) $ (17 ) $ (125 ) Cable (1 ) (3 ) (15 ) (23 ) Filmed Entertainment (12 ) - (142 ) - Networks 3 (17 ) 3 (37 ) Publishing (160 ) (21 ) (176 ) (67 ) Corporate (5 ) (10 ) (12 ) (10 ) Total Merger-related and Restructuring charges $ (177 ) $ (149 ) $ (359 ) $ (262 ) (b) Adjusted Operating Income (Loss) before Depreciation and Amortization and Operating Income (Loss) for the three months and full year ended December 31, 2008, included charges of approximately $270 million and $280 million, respectively, taken in connection with a trial court judgment against Turner related to the 2004 sale of its winter sports teams. (c) Operating Income (Loss) for the three months and full year ended December 31, 2008, included noncash impairments to reduce the carrying value of goodwill and intangible assets of $2.2 billion at the AOL segment, $14.8 billion at the Cable segment and $7.1 billion at the Publishing segment.

Presented below is a discussion of Time Warner's segments for the 2008 full year and fourth quarter. Unless otherwise noted, the dollar amounts in parentheses represent year-over-year changes.

AOL

Full-Year Results

Revenues declined 20% ($1.0 billion) to $4.2 billion, due mainly to decreases of 31% ($859 million) in Subscription revenues and 6% ($135 million) in Advertising revenues. The decline in Subscription revenues resulted from a decrease in subscribers, which reflects primarily AOL's strategy to offer its e-mail and certain other products free of charge to Internet consumers. Reducing Advertising revenues were declines in display advertising on AOL Network sites and sales of advertising on third-party Internet sites, offset partially by an increase in paid-search advertising.

Adjusted Operating Income before Depreciation and Amortization decreased 15% ($278 million) to $1.6 billion, reflecting primarily lower revenues and higher traffic acquisition costs ($83 million), offset partly by lower personnel and overhead costs, as well as reduced marketing, network and other expenses. The current and prior year results also included net restructuring charges of $17 million and $125 million, respectively.

Operating Loss of $1.1 billion reflected a decline of $3.1 billion compared to the prior year Operating Income of $2.0 billion, due mainly to a $2.2 billion noncash impairment to reduce the carrying value of goodwill, a $22 million noncash impairment related to asset writedowns in connection with facility consolidations and the absence of the net pretax gain of $668 million on the prior year sale of AOL's German access business. Also contributing to the decline were lower Adjusted Operating Income before Depreciation and Amortization and higher amortization expense ($70 million), offset in part by lower depreciation expense ($98 million).

Fourth-Quarter Results

Revenues decreased 23% ($283 million) to $968 million, including declines of 27% ($160 million) in Subscription revenues and 18% ($113 million) in Advertising revenues. Adjusted Operating Income before Depreciation and Amortization increased 6% ($24 million) to $405 million. The current and prior year quarters reflected restructuring charges of $2 million and $98 million, respectively. Operating Loss of $1.9 billion represented a decline of $2.2 billion compared to the year-ago quarter's Operating Income of $274 million, resulting from a $2.2 billion noncash impairment to reduce the carrying value of goodwill and a $13 million noncash impairment related to asset writedowns in connection with facility consolidations.

Key Operating Metrics

During the quarter, AOL had 109 million average monthly domestic unique visitors and 54 billion domestic page views, according to comScore Media Metrix, which translates into 165 average monthly domestic page views per unique visitor.

As of December 31, 2008, the AOL service had 6.9 million U.S. access subscribers, a decline of 573,000 from the prior quarter and 2.4 million from the year-ago quarter, reflecting subscriber losses due partially to AOL's strategy to prioritize its advertising business.

CABLE (Time Warner Cable)

Full-Year Results

Revenues increased 8% ($1.2 billion) to $17.2 billion. Subscription revenues rose 8% ($1.2 billion) to $16.3 billion. Video revenues grew 4% ($359 million) to $10.5 billion, benefiting from the continued growth in digital video subscriptions and video price increases. High-speed data revenues climbed 12% ($429 million) to $4.2 billion, driven by continued high-speed data subscriber growth. Voice revenues increased 36% ($426 million) to $1.6 billion. Advertising revenues grew 4% ($31 million) to $898 million, due mainly to an increase in political advertising revenues, offset partially by declines in other categories.

Adjusted Operating Income before Depreciation and Amortization rose 8% ($444 million) to $6.2 billion, benefiting from revenue growth, offset partly by higher employee, video programming and voice costs related primarily to increases in digital video, high-speed data and Digital Phone subscribers, as well as higher marketing costs resulting from intensified marketing efforts. Additionally, the current year results included restructuring expenses of $15 million, compared to merger-related and restructuring expenses of $23 million in the prior year.

Operating Loss of $11.8 billion reflected a decline of $14.6 billion compared to the prior year's Operating Income of $2.8 billion, due to a $14.8 billion noncash impairment of cable franchise rights, a $45 million noncash impairment of certain non-core cable systems and a $13 million loss on the sale of these non-core cable systems. Also contributing to the decline was an increase in depreciation expense ($122 million), offset in part by higher Adjusted Operating Income before Depreciation and Amortization.

Fourth-Quarter Results

Revenues rose 8% ($313 million) to $4.4 billion. Adjusted Operating Income before Depreciation and Amortization grew 6% ($97 million) to $1.7 billion. Operating Loss of $13.9 billion represented a decline of $14.7 billion compared to the year-ago quarter's Operating Income of $795 million, resulting from a $14.8 billion noncash impairment of cable franchise rights and a $13 million loss on the sale of certain non-core cable systems, offset in part by higher Adjusted Operating Income before Depreciation and Amortization.

Key Operating Metrics

Revenue generating units ("RGUs") totaled 34.2 million as of December 31, 2008 - reflecting net additions of 175,000 during the fourth quarter. Customer relationships were 14.6 million, and Triple play subscribers reached 3.1 million (or 21% of total customer relationships), benefiting from 110,000 net additions during the fourth quarter.

Selected Subscriber Data Net Additions Acquisitions 9/30/08 (Declines)(a) (Dispositions)(a) 12/31/08 (in thousands) Subscriber Data: Revenue generating units(b) 34,151 175 (126 ) 34,200 Customer relationships(c) 14,750 (84 ) (84 ) 14,582 Double play subscribers(d) 4,811 (5 ) (12 ) 4,794 Triple play subscribers(e) 2,992 110 (3 ) 3,099 Bundled subscribers(f) 7,803 105 (15 ) 7,893 Homes passed(g) 26,830 207 (271 ) 26,766 Basic video subscribers(h) 13,266 (119 ) (78 ) 13,069 Digital video subscribers(i) 8,607 44 (24 ) 8,627 Residential high-speed data subscribers(j)(k) 8,339 124 (j) (19 ) 8,444 Commercial high-speed data subscribers(j)(k) 295 (11 )(j) (1 ) 283 Residential Digital Phone subscribers(k)(l) 3,621 130 (4 ) 3,747 Commercial Digital Phone subscribers(k)(l) 23 7 -- 30

(a) Net additions (declines) reflect subscriber activity for each period other than subscriber changes resulting from acquisitions, dispositions or exchanges during any given quarter of cable systems that, in the aggregate, served more than 5,000 basic video subscribers. The subscriber changes resulting from such transactions are reflected in the "Acquisitions (Dispositions)" column and include the subscriber changes resulting from the disposition of certain non-core cable systems in the fourth quarter of 2008. (b) Revenue generating units represent the total of all basic video, digital video, high-speed data and voice subscribers. (c) Customer relationships represent the number of subscribers who receive at least one level of service, encompassing video, high-speed data and voice services, without regard to the number of services purchased. For example, a subscriber who purchases only high-speed data service and no video service will count as one customer relationship, and a subscriber who purchases both video and high-speed data services will also count as only one customer relationship. (d) Double play subscriber numbers reflect customers who subscribe to two of Time Warner Cable's primary services (video, high-speed data and voice). (e) Triple play subscriber numbers reflect customers who subscribe to all three of Time Warner Cable's primary services. (f) Bundled subscriber numbers reflect customers who subscribe to two or more of Time Warner Cable's primary services. (g) Homes passed represent the estimated number of service-ready single residence homes, apartment and condominium units and commercial establishments passed by Time Warner Cable's cable systems without further extending the transmission lines. (h) Basic video subscriber numbers reflect billable subscribers who receive at least basic video service. (i) Digital video subscriber numbers reflect billable subscribers who receive any level of video service via digital transmissions. (j) High-speed data subscriber numbers reflect billable subscribers who receive Road Runner high-speed data service or any of the other high-speed data services offered by Time Warner Cable. Net additions (declines) for the fourth quarter and full year of 2008 reflect a reclassification of approximately 15,000 subscribers from commercial high-speed data to residential high-speed data. (k) The determination of whether a high-speed data or Digital Phone subscriber is categorized as commercial or residential is generally based upon the type of service provided to that subscriber. For example, if Time Warner Cable provides a commercial service, the subscriber is classified as commercial. (l) Digital Phone subscriber numbers reflect billable subscribers who receive an IP-based telephony service.

FILMED ENTERTAINMENT (Warner Bros. Entertainment)

Full-Year Results

Revenues declined 2% ($284 million) to $11.4 billion, reflecting difficult comparisons due to a reduced number of films released in 2008 compared to 2007 and softening DVD sales. The current year included revenues from The Dark Knight, Sex and the City: The Movie and 10,000 B.C., while revenues in the prior year included Harry Potter and the Order of the Phoenix, 300, Ocean's 13 and I Am Legend. Also contributing to the decline were lower television license fees, due mainly to the prior year's initial off-network availabilities of Two and a Half Men and Cold Case and the negative impact of the Writers Guild of America (East and West) strike on the current year results. These decreases were offset partially by growth in interactive video games revenues, due primarily to the releases of LEGO Indiana Jones and LEGO Batman.

Operating Income before Depreciation and Amortization rose 1% ($13 million) to $1.2 billion, as the impact of lower revenues and higher restructuring costs ($142 million), which were associated largely with the operational reorganization of the New Line Cinema business, were more than offset by lower print and advertising expenses and lower film costs, due mainly to timing, quantity and mix of titles.

Operating Income declined 3% ($22 million) to $823 million, due primarily to higher depreciation ($14 million) and amortization ($21 million) expenses, offset in part by higher Operating Income before Depreciation and Amortization.

Fourth-Quarter Results

Revenues decreased 11% ($395 million) to $3.1 billion. Operating Income before Depreciation and Amortization rose 6% ($21 million) to $371 million. The current year quarter's results also included $30 million in increased bad debt reserves for potential credit losses related to several customers that have recently filed for bankruptcy. Operating Income grew 7% ($18 million) to $271 million, due largely to higher Operating Income before Depreciation and Amortization.

NETWORKS (Turner Broadcasting & HBO)

Full-Year Results

Revenues rose 9% ($884 million) to $11.2 billion, benefiting from growth of 9% ($577 million) in Subscription revenues and 10% ($301 million) in Advertising revenues. The increase in Subscription revenues resulted mainly from higher rates at both Turner and HBO and, to a lesser extent, more subscribers for Turner's networks, as well as the impact of international expansion. Advertising revenues benefited from increases at Turner's domestic entertainment and news networks, reflecting largely higher CPMs (advertising rates per thousand viewers) and audience delivery, as well as increases at Turner's international networks, due primarily to an increase in the number of units sold.

Adjusted Operating Income before Depreciation and Amortization climbed 4% ($138 million) to $3.5 billion, reflecting revenue growth, offset primarily by higher programming and election-related newsgathering expenses. The current year results also included a charge of approximately $280 million, taken in connection with a trial court judgment against Turner related to the 2004 sale of its winter sports teams. This charge reduced growth in Adjusted Operating Income before Depreciation and Amortization by 8 percentage points. Programming expenses grew 8% to $3.9 billion, driven largely by an increase in programming costs associated with international expansion; sports programming costs at Turner, related particularly to NBA programming; and higher original and licensed programming costs. In addition, programming expenses in the current and prior year results included impairments of $38 million and $6 million, respectively, in connection with the decision not to proceed with certain original programming. The prior year results included a charge of $37 million related to restructuring charges and severance at HBO.

Operating Income grew 3% ($103 million) to $3.1 billion, due mainly to the increase in Adjusted Operating Income before Depreciation and Amortization, offset partly by increased depreciation ($23 million) and amortization ($25 million) expenses. The current year results included an $18 million noncash impairment of GameTap, an online video game business and a $3 million loss on the sale of GameTap. The prior year results included a $34 million noncash impairment of the Court TV tradename due to rebranding the network's name to truTV.

Fourth-Quarter Results

Revenues rose 9% ($234 million) to $2.9 billion, including increases of 7% ($113 million) in Subscription revenues and 7% ($65 million) in Advertising revenues. Adjusted Operating Income before Depreciation and Amortization declined 20% ($175 million) to $682 million. The current year quarter's results included a charge of approximately $270 million taken in connection with a trial court judgment against Turner related to the 2004 sale of its winter sports teams. This charge reduced growth in Adjusted Operating Income before Depreciation and Amortization by 31 percentage points. Operating Income decreased 24% ($184 million) to $586 million, reflecting primarily the decline in Adjusted Operating Income before Depreciation and Amortization.

PUBLISHING (Time Inc.)

Full-Year Results

Revenues decreased 7% ($347 million) to $4.6 billion, resulting from declines of 10% ($279 million) in Advertising revenues, 8% ($50 million) in Other revenues and 2% ($28 million) in Subscription revenues. Advertising revenues reflected decreases in print magazine revenues and lower custom publishing revenues, as well as the impact of the 2007 closures of LIFE and Business 2.0 magazines. Offsetting these decreases in part was an increase in online revenues ($57 million), led by People.com, CNNMoney.com and Time.com. The decline in Other revenues was due primarily to decreases at Synapse, Southern Living At Home and Oxmoor House, offset partly by the impact of the acquisition of QSP, Inc. and its Canadian affiliate, Quality Service Programs Inc. Subscription revenues declined, reflecting mainly the negative impact of foreign exchange rates at IPC Media and lower domestic magazine subscription sales, offset partly by higher newsstand sales for certain domestic magazines.

Adjusted Operating Income before Depreciation and Amortization declined 29% ($319 million) to $779 million, due primarily to decreases in Advertising revenues, higher restructuring charges ($109 million) and a $35 million increase in bad debt reserves, offset partially by lower overhead expenses. The current year restructuring charges of $176 million included $57 million related to a sub-lease with a tenant that filed for bankruptcy in September 2008.

Operating Loss of $6.6 billion reflected a decline of $7.5 billion compared to the prior year Operating Income of $907 million, due mainly to a $7.1 billion noncash impairment to reduce the carrying value of goodwill and intangible assets. Also contributing to the decline were lower Adjusted Operating Income before Depreciation and Amortization, a $30 million noncash asset impairment related to the sub-lease with a tenant that filed for bankruptcy in September 2008 and a $21 million noncash impairment related to Southern Living At Home, which is held for sale.

Fourth-Quarter Results

Revenues declined 13% ($186 million) to $1.3 billion, including decreases of 20% ($158 million) in Advertising revenues and 9% ($38 million) in Subscription revenues. The decline in Subscription revenues was due primarily to the negative impact of foreign exchange rates ($22 million). Adjusted Operating Income before Depreciation and Amortization decreased 70% ($290 million) to $124 million. The current and prior year quarters reflected restructuring charges of $160 million and $21 million, respectively. The current year quarter's restructuring charges included $57 million related to the sub-lease with a tenant that filed for bankruptcy in September 2008. The current year quarter also included a $35 million increase in bad debt reserves. Operating Loss of $7.1 billion represented a decline of $7.5 billion compared to the year-ago quarter's Operating Income of $362 million, resulting from a $7.1 billion noncash impairment to reduce the carrying value of goodwill and intangible assets, lower Adjusted Operating Income before Depreciation and Amortization and a $21 million noncash impairment related to Southern Living At Home, which is held for sale.

CONSOLIDATED REPORTED NET INCOME (LOSS) AND PER SHARE RESULTS

Full-Year Results

For the year ended December 31, 2008, the Company reported a Net Loss of $13.4 billion, or $3.74 per diluted common share. This compares to 2007 Net Income of $4.4 billion, or $1.17 per diluted common share.

For the year ended December 31, 2008, the Company reported a Loss from Continuing Operations of $13.4 billion, or $3.74 per diluted common share. This compares to Income from Continuing Operations in 2007 of $4.1 billion, or $1.08 per diluted common share.

The comparability of the Company's results from continuing operations has been affected by certain significant transactions and other items in the current and prior years. Refer to Note 3 to the accompanying consolidated financial statements at the end of this release for a discussion of these items.

In the aggregate, these items affecting comparability had the net effect of decreasing the current year Income (Loss) from Continuing Operations by $17.0 billion (net of taxes), or $4.73 per diluted common share, and increasing the prior year by $426 million (net of taxes), or $0.12 per diluted common share. Excluding such items, Income (Loss) from Continuing Operations decreased, reflecting higher amortization and depreciation expenses and the impact of an increase in the effective tax rate due to the potential nondeductibility of certain litigation accruals, offset in part by growth in Adjusted Operating Income (Loss) before Depreciation and Amortization and lower interest expense. Excluding such items, Diluted Income (Loss) per Common Share from Continuing Operations increased in 2008 compared to 2007, driven by a decrease in average diluted common shares outstanding as a result of common stock repurchases made under the stock repurchase program, offset partly by the decline in Income (Loss) from Continuing Operations.

Fourth-Quarter Results

For the three months ended December 31, 2008, the Company reported a Net Loss of $16.0 billion, or $4.47 per diluted common share. This compares to Net Income in the 2007 comparable quarter of $1.0 billion, or $0.28 per diluted common share.

For the three months ended December 31, 2008, the Company reported a Loss from Continuing Operations of $16.0 billion, or $4.47 per diluted common share. This compares to Income from Continuing Operations in 2007's fourth quarter of $1.0 billion, or $0.28 per diluted common share.

The comparability of the Company's results from continuing operations has been affected by certain significant transactions and other items in the current and prior year quarters. Refer to Note 3 to the accompanying consolidated financial statements at the end of this release for a discussion of these items.

In the aggregate, these items affecting comparability had the net effect of decreasing the current year quarter's Income (Loss) from Continuing Operations by $16.8 billion (net of taxes), or $4.70 per diluted common share, and decreasing the prior year quarter's Income (Loss) from Continuing Operations by $35 million (net of taxes), or $0.01 per diluted common share. Excluding such items, Income (Loss) from Continuing Operations decreased, reflecting lower Adjusted Operating Income before Depreciation and Amortization and the impact of an increase in the effective tax rate due to the potential nondeductibility of certain litigation accruals, offset in part by lower interest expense. Excluding such items, Diluted Income (Loss) per Common Share from Continuing Operations declined in the current year quarter compared to the prior year quarter, driven by lower Income (Loss) from Continuing Operations, offset partly by a decrease in average diluted common shares outstanding as a result of common stock repurchases made under the stock repurchase program.

STOCK REPURCHASE PROGRAM UPDATE

From the announcement of the Company's $5 billion stock repurchase program on August 1, 2007, through February 3, 2009, the Company repurchased approximately 154 million shares of common stock for approximately $2.8 billion. These amounts are unchanged from those reported in the Company's third-quarter 2008 earnings release issued on November 5, 2008.

Use of Operating Income (Loss) before Depreciation and Amortization, Adjusted Operating Income (Loss) before Depreciation and Amortization and Free Cash Flow

The Company utilizes Operating Income (Loss) before Depreciation and Amortization, among other measures, to evaluate the performance of its businesses. The Company also evaluates the performance of its businesses using Operating Income (Loss) before Depreciation and Amortization excluding the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales, and amounts related to securities litigation and government investigations (referred to herein as Adjusted Operating Income (Loss) before Depreciation and Amortization). Both Operating Income (Loss) before Depreciation and Amortization and Adjusted Operating Income (Loss) before Depreciation and Amortization are considered important indicators of the operational strength of the Company's businesses. Operating Income (Loss) before Depreciation and Amortization eliminates the uneven effect across all business segments of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were primarily recognized in business combinations. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Moreover, Adjusted Operating Income (Loss) before Depreciation and Amortization does not reflect gains and losses on asset sales or amounts related to securities litigation and government investigations or any impairment charge related to goodwill, intangible assets and fixed assets. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets, investment spending levels and return on capital.

Free Cash Flow is Cash Provided by Operations (as defined by U.S. generally accepted accounting principles) plus payments related to securities litigation and government investigations (net of any insurance recoveries) and excess tax benefits from the exercise of stock options, less cash flow attributable to discontinued operations, capital expenditures and product development costs, principal payments on capital leases and partnership distributions, if any. The Company uses Free Cash Flow to evaluate its businesses and this measure is considered an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments, pay dividends to common shareholders and repurchase stock. A limitation of this measure, however, is that it does not reflect payments made in connection with the securities litigation and government investigations, which reduce liquidity.

Operating Income (Loss) before Depreciation and Amortization, Adjusted Operating Income (Loss) before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, the Company's Operating Income, Net Income and various cash flow measures (e.g., Cash Provided by Operations), as well as other measures of financial performance and liquidity reported in accordance with U.S. generally accepted accounting principles.

About Time Warner Inc.

Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing.

Information on Time Warner's Business Outlook Release and Conference Call

Time Warner Inc. issued a separate release today providing its 2009 full-year business outlook.

The Company's conference call can be heard live at 10:30 am ET on Wednesday, February 4, 2009. To listen to the call, visit www.timewarner.com/investors or AOL Keyword: IR.

Information on Time Warner Cable's Release and Conference Call

Time Warner Cable issued a separate release today providing its 2008 full-year and fourth-quarter results.

Time Warner Cable's conference call can be heard live at 8:30 am ET on Wednesday, February 4, 2009. To listen to the call, visit www.timewarnercable.com/investors or AOL Keyword: TWC IR.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors, the planned separation of Time Warner Cable from the Company and other factors affecting the operation of the businesses of Time Warner Inc. More detailed information about these factors may be found in filings by Time Warner with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Time Warner is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

TIME WARNER INC. CONSOLIDATED BALANCE SHEET (Unaudited; millions, except per share amounts) December 31, December 31, 2008 2007 ASSETS Current assets Cash and equivalents $ 6,682 $ 1,516 Receivables, less allowances of $2,359 and $2,410 6,195 7,296 Inventories 1,989 2,105 Prepaid expenses and other current assets 976 834 Deferred income taxes 760 700 Total current assets 16,602 12,451 Noncurrent inventories and film costs 5,192 5,304 Investments, including available-for-sale securities 1,930 1,963 Property, plant and equipment, net 18,433 18,048 Intangible assets subject to amortization, net 4,057 5,167 Intangible assets not subject to amortization 31,822 47,220 Goodwill 34,530 41,749 Other assets 1,330 1,928 Total assets $ 113,896 $ 133,830 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 1,341 $ 1,470 Participations payable 2,522 2,547 Royalties and programming costs payable 1,265 1,253 Deferred revenue 1,169 1,178 Debt due within one year 2,067 126 Other current liabilities 5,610 5,611 Current liabilities of discontinued operations 2 8 Total current liabilities 13,976 12,193 Long-term debt 37,616 37,004 Mandatorily redeemable preferred membership units issued by a 300 300 subsidiary Deferred income taxes 8,756 13,951 Deferred revenue 283 522 Other liabilities 7,258 7,002 Minority interests 3,419 4,322 Shareholders' equity Time Warner common stock, $0.01 par value, 4.891 and 4.877 billion 49 49 shares issued and 3.588 and 3.593 billion shares outstanding Paid-in-capital 172,645 172,443 Treasury stock, at cost (1.303 and 1.284 billion shares) (25,836 ) (25,526 ) Accumulated other comprehensive income (loss), net (1,676 ) 149 Accumulated deficit (102,894 ) (88,579 ) Total shareholders' equity 42,288 58,536 Total liabilities and shareholders' equity $ 113,896 $ 133,830 See accompanying notes.

TIME WARNER INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited; millions, except per share amounts) Three Months Ended December 31, Year Ended December 31, 2008 2007 2008 2007 Revenues: Subscription $ 6,474 $ 6,266 $ 25,786 $ 24,904 Advertising 2,329 2,504 8,742 8,799 Content 3,155 3,545 11,432 11,708 Other 348 327 1,024 1,071 Total revenues 12,306 12,642 46,984 46,482 Costs of revenues (7,092 ) (7,552 ) (27,289 ) (27,426 ) Selling, general and administrative (2,794 ) (2,440 ) (10,163 ) (9,653 ) Amortization of intangible assets (201 ) (172 ) (784 ) (674 ) Amounts related to securities litigation and government (8 ) (2 ) (21 ) (171 ) investigations Merger-related, restructuring and shutdown costs (177 ) (149 ) (359 ) (262 ) Asset impairments (24,207 ) -- (24,309 ) (36 ) Gain (loss) on disposal of assets, net (13 ) 16 (16 ) 689 Operating income (loss) (22,186 ) 2,343 (15,957 ) 8,949 Interest expense, net (604 ) (585 ) (2,250 ) (2,299 ) Other income (loss), net (394 ) (86 ) (416 ) 145 Minority interest income (expense), net 2,240 (103 ) 1,974 (408 ) Income (loss) from continuing operations before income taxes (20,944 ) 1,569 (16,649 ) 6,387 Income tax provision 4,910 (550 ) 3,247 (2,336 ) Income (loss) from continuing operations (16,034 ) 1,019 (13,402 ) 4,051 Discontinued operations, net of tax 2 12 -- 336 Net income (loss) $ (16,032 ) $ 1,031 $ (13,402 ) $ 4,387 Basic income (loss) per common share from continuing operations $ (4.47 ) $ 0.28 $ (3.74 ) $ 1.09 Discontinued operations -- 0.01 -- 0.09 Basic net income (loss) per common share $ (4.47 ) $ 0.29 $ (3.74 ) $ 1.18 Diluted income (loss) per common share from continuing operations $ (4.47 ) $ 0.28 $ (3.74 ) $ 1.08 Discontinued operations -- -- -- 0.09 Diluted net income (loss) per common share $ (4.47 ) $ 0.28 $ (3.74 ) $ 1.17 Average basic common shares outstanding 3,587.4 3,605.8 3,582.6 3,718.9 Average diluted common shares outstanding 3,587.4 3,637.8 3,582.6 3,762.3 Cash dividends declared per share of common stock $ 0.0625 $ 0.0625 $ 0.2500 $ 0.2350 See accompanying notes.

TIME WARNER INC. CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31, (Unaudited, millions) 2008 2007 OPERATIONS Net income (loss)(a) $ (13,402 ) $ 4,387 Adjustments for noncash and nonoperating items: Depreciation and amortization 4,590 4,412 Amortization of film and television costs 5,891 6,076 Asset impairments 24,309 36 (Gain) loss on investments and other assets, net 434 (909 ) Equity in losses of investee companies, net of cash distributions 31 63 Equity-based compensation 290 286 Minority interests (1,974 ) 408 Deferred income taxes (4,116 ) 1,736 Amounts related to securities litigation and government -- (741 ) investigations Changes in operating assets and liabilities, net of acquisitions: Receivables 1,245 (1,090 ) Inventories and film costs (5,766 ) (6,045 ) Accounts payable and other liabilities (445 ) 109 Other balance sheet changes (741 ) 60 Adjustments relating to discontinued operations(a) (14 ) (313 ) Cash provided by operations(b) (c) 10,332 8,475 INVESTING ACTIVITIES Investments in available-for-sale securities (19 ) (94 ) Investments and acquisitions, net of cash acquired (2,435 ) (1,513 ) Investment in a wireless joint venture (3 ) (33 ) Investment activities of discontinued operations -- (26 ) Capital expenditures and product development costs (4,377 ) (4,430 ) Investment proceeds from available-for-sale securities 17 36 Other investment proceeds 331 2,041 Cash used by investing activities (6,486 ) (4,019 ) FINANCING ACTIVITIES Borrowings 40,366 14,690 Debt repayments (37,808 ) (12,523 ) Proceeds from exercise of stock options 134 521 Excess tax benefit on stock options 3 76 Principal payments on capital leases (43 ) (57 ) Repurchases of common stock(d) (332 ) (6,231 ) Dividends paid (901 ) (871 ) Other financing activities (99 ) (94 ) Cash provided (used) by financing activities 1,320 (4,489 ) INCREASE (DECREASE) IN CASH AND EQUIVALENTS 5,166 (33 ) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,516 1,549 CASH AND EQUIVALENTS AT END OF PERIOD $ 6,682 $ 1,516

(a) The year ended December 31, 2007 includes net income from discontinued operations of $336 million. After considering noncash gains and expenses and working capital-related adjustments relating to discontinued operations, net operational cash flows from discontinued operations were $(14) million and $23 million for the years ended December 31, 2008 and 2007, respectively. (b) The years ended December 31, 2008 and 2007 include $21 million and $912 million, respectively, in payments, net of recoveries, related to securities litigation and government investigations. (c) The year ended December 31, 2007 includes approximately $2 million of cash related to changing the fiscal year end of certain international operations from November 30 to December 31. (d) The year ended December 31, 2007 excludes $440 million of common stock repurchased from Liberty Media Corporation, indirectly attributable to the exchange of the Atlanta Braves baseball franchise (the "Braves") and Leisure Arts, Inc. ("Leisure Arts"). Specifically, the $440 million represents the fair value at the time of the exchange of the Braves and Leisure Arts of $473 million, less a $33 million net working capital adjustment.

See accompanying notes.

TIME WARNER INC. RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION TO OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION (Unaudited, millions) Three Months Ended December 31, 2008 Adjusted Asset Amounts Gains/(Losses) Operating Operating Impairments Related To From Income/(Loss) Income/(Loss) Securities Asset Before Before Litigation Disposals Depreciation Depreciation & And And Government Amortization Amortization Investigations AOL(a) $ 405 $ (2,220 ) $ -- $ -- $ (1,815 ) Cable(b) 1,660 (14,822 ) -- (13 ) (13,175 ) Filmed Entertainment 371 -- -- -- 371 Networks 682 -- -- -- 682 Publishing(c) 124 (7,165 ) -- -- (7,041 ) Corporate(d) (71 ) -- (8 ) -- (79 ) Intersegment elimination 17 -- -- -- 17 Total $ 3,188 $ (24,207 ) $ (8 ) $ (13 ) $ (21,040 ) Three Months Ended December 31, 2007 Adjusted Asset Amounts Gains/(Losses) Operating Operating Impairments Related To From Income/(Loss) Income/(Loss) Securities Asset Before Before Litigation Disposals Depreciation Depreciation & And And Government Amortization Amortization Investigations AOL(a) $ 381 $ -- $ -- $ 16 $ 397 Cable 1,563 -- -- -- 1,563 Filmed Entertainment 350 -- -- -- 350 Networks 857 -- -- -- 857 Publishing 414 -- -- -- 414 Corporate(d) (98 ) -- (2 ) -- (100 ) Intersegment elimination -- -- -- -- -- Total $ 3,467 $ -- $ (2 ) $ 16 $ 3,481

(a) For the three months ended December 31, 2008, Operating Loss before Depreciation and Amortization includes a $2.207 billion noncash impairment to reduce the carrying value of goodwill and a $13 million noncash impairment related to asset writedowns in connection with facility consolidations. For the three months ended December 31, 2007, Operating Income before Depreciation and Amortization includes a $16 million gain related to the sale of a building. (b) For the three months ended December 31, 2008, Operating Loss before Depreciation and Amortization includes a $14.822 billion noncash impairment of cable franchise rights and a $13 million loss on the sale of certain non-core cable systems. (c) For the three months ended December 31, 2008, Operating Loss before Depreciation and Amortization includes a $7.139 billion noncash impairment to reduce the carrying value of goodwill and intangible assets, a $21 million noncash impairment of Southern Living At Home, which is held for sale, and a $5 million noncash impairment related to certain other asset write-offs. (d) For the three months ended December 31, 2008, Operating Loss before Depreciation and Amortization includes $8 million in net expenses related to securities litigation and government investigations. For the three months ended December 31, 2007, Operating Loss before Depreciation and Amortization includes $2 million in net expenses related to securities litigation and government investigations.

TIME WARNER INC. RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION TO OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION (Unaudited, millions) Year Ended December 31, 2008 Adjusted Asset Amounts Gains/(Losses) Operating Operating Impairments Related To From Income/(Loss) Income/(Loss) Securities Asset Before Before Litigation Disposals Depreciation Depreciation & And And Government Amortization Amortization Investigations AOL(a) $ 1,558 $ (2,229 ) $ -- $ -- $ (671 ) Cable(b) 6,186 (14,867 ) -- (13 ) (8,694 ) Filmed Entertainment 1,228 -- -- -- 1,228 Networks(c) 3,508 (18 ) -- (3 ) 3,487 Publishing(d) 779 (7,195 ) -- -- (6,416 ) Corporate(e) (315 ) -- (21 ) -- (336 ) Intersegment elimination 35 -- -- -- 35 Total $ 12,979 $ (24,309 ) $ (21 ) $ (16 ) $ (11,367 ) Year Ended December 31, 2007 Adjusted Asset Amounts Gains/(Losses) Operating Operating Impairments Related To From Income/(Loss) Income/(Loss) Securities Asset Before Before