annual report | 2010 Our results are a testament to the strength of our valuable brands and, ultimately, the extraordinary work of our employees and creative partners. Business model innovation is a hallmark of our company, and our scale advantage positions us to lead the digital evolution of our industries. Photo by Andrew Carpenean - US PRESSWIRE Jeff Bewkes Chairman and CEO A Message from the Chairman and CEO For Time Warner, 2010 was a watershed year that showcased our ability to deliver strong financial performance while entertaining and informing the world through our television networks, filmed entertainment and journalism. A few years ago, we embarked on a multi-year plan They also reflect our continued progress on four key to become the premier global content company and strategic objectives: first, to build on our competitive improve our returns. As part of that plan, last year we advantages in making, acquiring and distributing great extended the industry leadership of all of our content content; second, to develop new models that harness businesses, and we made substantial investments technology to improve the consumer experience and to bolster their long-term competitive position and our economics; third, to expand the presence of our growth profile. At the same time, we posted our high- brands and content internationally in key territories; est revenue growth in years, achieved 17% adjusted and fourth, to achieve all of this while improving both operating income growth, and increased adjusted our operating and capital efficiency. earnings per share by over 30%. And through a com- bination of share repurchases and higher dividends, Today, Time Warner is principally a television company, we returned $3 billion to our shareholders, representing with networks representing more than two-thirds of our more than 100% of our free cash flow. These results profits. If we take into account the contribution from are a testament to the strength of our valuable brands our TV production business, an even larger proportion at Turner Broadcasting, HBO, Warner Bros. and of profits is derived from television. This is a great Time Inc. and, ultimately, the extraordinary work of position to be in. In all respects – creatively, financially, our employees and creative partners. and in terms of viewership trends – television is truly in a new Golden Age. To capitalize on these strengths digital tablet versions of Time Inc.’s major magazine and opportunities, last year we debuted breakout titles, and we’ll offer consumers a range of options, shows like Boardwalk Empire on HBO, Conan on TBS, including digital-only subscriptions and dual print and Rizzoli & Isles on TNT, and the Warner Bros.-produced digital subscriptions, as the tablet market takes off. hit comedy Mike & Molly. Turner reached a 14-year arrangement with CBS and the NCAA to broadcast the Warner Bros. is making great progress on similar Division I Men’s Basketball Championship Tournament, initiatives designed to accelerate the digital transition among the most-watched sporting events in the United in home video – an area of our business that’s going States, through 2024. through great change right now. For example, in March 2011 Warner Bros. was the first studio to offer down- In film, Warner Bros. led all studios in both domestic loaded movies for rent via Facebook, and the studio and international box office share for 2010 with such is actively working on more ways to allow people to hits as Harry Potter and the Deathly Hallows: Part 1 watch our films in their homes and on the go more and Christopher Nolan’s Inception, recipient of four conveniently and sooner than ever before. As another Academy Awards. Warner Home Video held the #1 example of our Content Everywhere approach, this position in domestic sales in its physical and digital year we’ll start shipping DVDs that are compliant with businesses, and Warner Bros. Television was the larg- the UltraViolet industry standard – which will enable est provider of network TV programming for the 19th consumers to buy movies once and then access time in 24 years. them anywhere, across a wide range of devices, at no extra charge. Time Inc.’s exceptional journalism brought the world to millions of readers in magazine and digital form, At the same time, we’re increasing the international while leading the industry in domestic advertising reach of our TV networks and businesses. In the past share in 2010. CNN’s global leadership has been two years, most of our acquisitions have been in demonstrated during major news events like the international television networks, with an emphasis Deepwater Horizon oil rig disaster, the unrest in the on territories that have attractive growth profiles and Middle East and, more recently, the earthquake, tsu- in which we can achieve scale. Between HBO and nami and their aftermath in Japan; and CNN remained Turner, we expect our combined international network the #1 destination for online and mobile news. businesses (including majority-owned unconsolidated joint ventures) to double operating profits over the next Business model innovation is a hallmark of our com- few years. On the production side, last year Warner pany, and our scale advantage positions us to lead Bros. acquired a majority interest in Shed Media, a the digital evolution of our industries. In June 2009, leading independent production company in the UK, we unveiled the TV Everywhere (TVE) initiative as a and we’re looking for more ways to expand our global way for consumers to best take advantage of new production capabilities. forms of distribution and mobile devices. The simple premise of TVE is that if you already subscribe to a We are optimistic about the businesses we are in television network, you should be able to access that and the consumer trends underlying them, and we network’s shows on any broadband device, any- have great confidence in the financial strength and where and anytime, at no additional cost. TVE enjoys exceptional talent that resides within our company. In broad industry support, including from every major the digital world, as platforms and devices proliferate distributor, and by the middle of 2011 we expect it and commoditize, we believe that our brands and our to be available in some form in close to 70 million compelling content will only become more valuable. homes. One of the best examples of TVE is HBO Time Warner also benefits from its distinct culture: GO, which we plan to roll out to almost our entire one that stays true to the traditions and qualities that subscriber base this year. And we’ve extended our have made us a market leader while at the same time Content Everywhere concept to our film and publish- delivering value to shareholders today and innovating ing businesses. For instance, last year we launched to ensure our continued success into the future. Reflecting our confidence and our commitment to policies that promote freedom of expression, access continue to improve shareholder returns, in early to information and respect for intellectual property 2011 we raised our dividend by 11% and increased rights, are important to the long-term sustainability of our stock buyback authorization to $5 billion. For the company and the global community we serve. The 2011, we also plan to invest even more in our busi- company’s efforts have earned many accolades, and nesses, which we’ll fund in part by continuing to we were particularly proud to be named a 2011 recipi- manage aggressively our overhead costs. ent of the prestigious Catalyst Award for our diversity initiatives and investment in our women leaders. As we pursue our business objectives, we also remain committed to our corporate social responsibility My colleagues and I greatly appreciate the trust you efforts, which have included such initiatives as Turner’s have put in Time Warner and will continue to work Cartoon Network’s anti-bullying campaign, Time Inc.’s hard on your behalf. efforts to reduce paper waste, Warner Bros.’ leader- ship in reducing depictions of tobacco use in films, and our company-wide Ethical Sourcing Guidelines. These efforts, coupled with our support of public Jeff Bewkes Chairman and CEO April 5, 2011 Board of Directors & Management Time Warner Board of Directors Time Warner Senior Corporate Executives Jeffrey L. Bewkes Jeffrey L. Bewkes Chairman of the Board and CEO, Chairman of the Board and CEO Time Warner Inc. John K. Martin, Jr. James L. Barksdale Executive Vice President, Chairman and President, Chief Financial and Administrative Officer Barksdale Management Corporation Paul T. Cappuccio William P. Barr Executive Vice President Former Attorney General of the and General Counsel United States Gary L. Ginsberg Stephen F. Bollenbach Executive Vice President, Former Co-Chairman and CEO, Corporate Marketing and Communications Hilton Hotels Corporation Carol A. Melton Frank J. Caufield Executive Vice President, Co-Founder, Global Public Policy Kleiner Perkins Caufield & Byers Olaf J. Olafsson Robert C. Clark Executive Vice President Distinguished Service Professor, Harvard University Time Warner Senior Operating Executives Mathias Döpfner Turner Broadcasting System, Inc. Chairman and CEO, Philip I. Kent Axel Springer AG Chairman and CEO Jessica P. Einhorn Dean, Paul H. Nitze School of Warner Bros. Entertainment Inc. Advanced International Studies (SAIS), Barry M. Meyer Chairman and CEO The Johns Hopkins University Fred Hassan Home Box Office, Inc. Partner, Bill Nelson Warburg Pincus Chairman and CEO Michael A. Miles Time Inc. Special Limited Partner, Interim Management Committee Forstmann Little & Company Howard M. Averill Kenneth J. Novack Executive Vice President Senior Counsel, Maurice F. Edelson Mintz, Levin, Cohn, Ferris, Glovsky Executive Vice President and Popeo, PC John Huey Paul D. Wachter Editor-in-Chief Founder and CEO, Main Street Advisors Deborah C. Wright Chairman, President and CEO, Carver Bancorp, Inc.