TIME WARNER INC NEW (TWX) filed Quarterly Report for the period ended 2009-09-30.
Time Warner Inc. is the world's leading media and entertainment company whose businesses include filmed entertainment interactive services television networks cable systems publishing and music. Time Warner Inc New has a market cap of $35.76 billion; its shares were traded at around $30.16 with a P/E ratio of 12 and P/S ratio of 0.8. The dividend yield of Time Warner Inc New stocks is 2.5%.
Highlight of Business Operations:
Time Warner is a leading media and entertainment company, whose major businesses encompass an array of the most respected and successful media brands. Among the Company’s brands are HBO, TNT, CNN, AOL, People, Sports Illustrated and Time. The Company produces and distributes films through Warner Bros. and New Line Cinema, including Harry Potter and the Half-Blood Prince, The Hangover, The Dark Knight and Gran Torino, as well as television series, including Two and a Half Men, The Mentalist, The Big Bang Theory, Gossip Girl and The Closer. During the nine months ended September 30, 2009, the Company generated revenues of $20.889 billion (down 7% from $22.518 billion in 2008), Operating Income of $3.769 billion (down 7% from $4.066 billion in 2008), Net Income of $1.841 billion (down 30% from $2.630 billion in 2008) and Cash Provided by Operations from Continuing Operations of $3.482 billion (down 18% from $4.246 billion in 2008).
The significant losses in the market value of the Company’s pension plan assets in 2008 have resulted in an increase in pension expense of approximately $42 million and $113 million, respectively, for the three and nine months ended September 30, 2009 and are expected to result in an approximately $150 million increase in pension expense for the full year of 2009. Additionally, the strengthening of the U.S. dollar relative to significant foreign currencies to which the Company is exposed has negatively affected the Company’s revenues and Operating Income by approximately $130 million and $70 million, respectively, for the three months ended September 30, 2009 and approximately $570 million and $170 million, respectively, for the nine months ended September 30, 2009. If exchange rates remain at levels similar to those at September 30, 2009, the Company does not expect they will have a significant impact on revenues or Operating Income during the remainder of 2009 compared to the similar period in 2008.
Publishing. Time Warner’s Publishing segment consists principally of magazine publishing and related websites as well as a number of direct-marketing businesses. For the nine months ended September 30, 2009, the Publishing segment generated revenues of $2.635 billion (12% of the Company’s overall revenues), $295 million in Operating Income before Depreciation and Amortization and $167 million in Operating Income. In an ongoing effort to continue to streamline the Publishing segment’s operations, the Company expects to incur up to $100 million of restructuring costs primarily related to severance costs in the fourth quarter of 2009.
AOL. AOL LLC (together with its subsidiaries, “AOL”) is a leading global web services company with an extensive suite of brands and offerings and a substantial worldwide audience. Its business spans online content, products and services that it offers to consumers, publishers and advertisers. AOL is focused on attracting and engaging consumers and providing valuable online advertising services on both its owned and operated properties and third-party websites. As of September 2009, AOL has the largest advertising network in terms of online consumer reach in the U.S. For the nine months ended September 30, 2009, AOL generated revenues of $2.448 billion (12% of the Company’s overall revenues), $760 million in Operating Income before Depreciation and Amortization and $449 million in Operating Income.
During the first nine months of 2009, in an effort to better align its cost structure with its revenues, AOL undertook various restructuring activities. As a result, for the three and nine months ended September 30, 2009, AOL incurred restructuring charges of $10 million and $83 million, respectively, primarily related to involuntary employee terminations and facility closures. AOL currently expects to incur up to $20 million of additional restructuring charges through the consummation of the AOL Separation (as defined below), which is anticipated to occur in the fourth quarter of 2009. Shortly after the AOL Separation, AOL anticipates undertaking significant additional restructuring activities to more effectively align its organizational structure and costs with its strategy.
At the time of closing, Tim Armstrong, AOL’s Chairman and Chief Executive Officer, held, indirectly through Polar Capital Group, LLC (“Polar Capital”) (a private investment company which he founded), economic interests in Patch that entitled him to receive approximately 75% of the transaction consideration. Mr. Armstrong’s original investment in Patch, made in December 2007 through Polar Capital, was approximately $4.5 million. In connection with the transaction, Mr. Armstrong, through Polar Capital, waived his right to receive any transaction consideration in excess of his original $4.5 million investment, opting to accept only the return of his initial investment. In addition, Mr. Armstrong elected to return the $4.5 million (approximately $450,000 of which is being held in the indemnity escrow account for a year) that he was entitled to receive in connection with the transaction to AOL, to be held by AOL until after the AOL Separation. As soon as legally permissible, following the AOL Separation, AOL will cause to be issued to Polar Capital an amount of AOL Inc. common stock equivalent to $4.5 million (less any amounts held in the indemnity escrow account) based on an average of the high and low market prices on the relevant trading day. The issuance of shares of AOL Inc. common stock to Polar Capital will be exempt from registration under Section 4(2) of the Securities Act of 1933, as a transaction by an issuer not involving a public offering. The payment to Polar Capital of the $4.5 million of consideration is not contingent on the continued employment of Mr. Armstrong with AOL.
TWX is in the portfolios of Bill Miller of Legg Mason Value Trust, Dodge & Cox, Bill Nygren of Oak Mark Fund, Brian Rogers of T Rowe Price Equity Income Fund, Kenneth Fisher of Fisher Asset Management, LLC, Mark Hillman of Hillman Capital Management, Richard Pzena of Pzena Investment Management LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, George Soros of Soros Fund Management LLC.
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