Dump AOL? Time Warner Struggles

TIME WARNER INC. REPORTS RESULTS FOR 2008 FULL YEAR AND FOURTH QUARTER

NEW YORK, February 4, 2009 – Time Warner Inc. (NYSE:TWX) today reported financial results for its full year and fourth quarter ended December 31, 2008.

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.

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