10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	for the quarterly period ended March 31, 2017 or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	for the transition period from                                      to

Commission file number 001-15062

TIME WARNER INC.

(Exact name of Registrant as specified in its charter)

Delaware	13-4099534
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Time Warner Center

New York, NY 10019-8016

(Address of Principal Executive Offices) (Zip Code)

(212) 484-8000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Description of Class	Shares Outstanding           as of April 28, 2017
Common Stock – $.01 par value	775,537,504

TIME WARNER INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND OTHER FINANCIAL INFORMATION

	Page
PART I. FINANCIAL INFORMATION
Management’s Discussion and Analysis of Results of Operations and Financial Condition		1
Item 4. Controls and Procedures		19
Consolidated Balance Sheet at March 31, 2017 and December  31, 2016		20
Consolidated Statement of Operations for the Three Months Ended March  31, 2017 and 2016		21
Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2017 and 2016		22
Consolidated Statement of Cash Flows for the Three Months Ended March  31, 2017 and 2016		23
Consolidated Statement of Equity for the Three Months Ended March  31, 2017 and 2016		24
Notes to Consolidated Financial Statements		25
Supplementary Information		42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		49
Item 1A. Risk Factors		49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		49
Item 6. Exhibits		49

TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

INTRODUCTION

Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on Time Warner Inc.’s (“Time Warner” or the “Company”) businesses, current developments, financial condition, cash flows and results of operations. MD&A is organized as follows:

• Overview.  This section provides a general description of Time Warner’s business segments, as well as recent developments the Company believes are important in understanding the results of operations and financial condition or in understanding anticipated future trends.

• Results of operations.  This section provides an analysis of the Company’s results of operations for the three months ended March 31, 2017. This analysis is presented on both a consolidated and a business segment basis. In addition, a brief description of transactions and other items that affect the comparability of the results being analyzed is included.

• Financial condition and liquidity.  This section provides an analysis of the Company’s financial condition as of March 31, 2017 and cash flows for the three months ended March 31, 2017.

• Caution concerning forward-looking statements.  This section provides a description of the use of forward-looking information appearing in this report, including in MD&A and the consolidated financial statements.

OVERVIEW

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 TNT, TBS, Adult Swim, Cartoon Network, CNN, HBO, Cinemax, Warner Bros. and New Line Cinema. During the three months ended March 31, 2017, the Company generated Revenues of $7.735 billion (up 6% from $7.308 billion in 2016), Operating Income of $2.076 billion (up 4% from $1.996 billion in 2016), Income from continuing operations of $1.423 billion (up 21% from $1.174 billion in 2016), Net Income attributable to Time Warner shareholders of $1.424 billion (up 17% from $1.214 billion in 2016) and Cash provided by operations of $1.461 billion (up 94% from $753 million in 2016).

Time Warner Businesses

Time Warner classifies its operations into three reportable segments: Turner, Home Box Office and Warner Bros. For additional information regarding Time Warner’s segments, refer to Note 13, “Segment Information,” to the accompanying consolidated financial statements.

As used in MD&A, the term “affiliates” refers to distributors that deliver packages of networks to their subscribers, including cable system operators, satellite service distributors and telephone companies (“traditional affiliates”) and virtual multichannel video programming distributors (“virtual MVPDs”); and the term “OTT services” refers to services that deliver video content to consumers over the internet and includes subscription video-on-demand (“SVOD”) services and advertising-supported VOD (“AVOD”) services such as social media platforms and user-generated content digital platforms, but does not include virtual MVPDs.

Turner.  The Turner segment consists of businesses managed by Turner Broadcasting System, Inc. (“Turner”). During the three months ended March 31, 2017, the Turner segment recorded Revenues of $3.088 billion (40% of the Company’s total Revenues) and Operating Income of $1.170 billion.

Turner creates and programs branded news, entertainment, sports and kids multi-platform content for consumers around the world. The Turner networks and related businesses and brands include TNT, TBS, Adult Swim, truTV, Turner Classic Movies, Turner Sports, Bleacher Report, Cartoon Network, Boomerang, CNN, HLN and iStreamPlanet. The Turner networks generate revenues principally from licensing programming to affiliates that have contracted to receive and distribute this programming to subscribers, from the sale of advertising and from licensing its original programming and its brands and characters for consumer products and other business ventures. Turner also generates revenues from the sale of advertising and sponsorships through its digital properties. Turner’s programming is available to subscribers of affiliates for viewing live and on demand on television and various

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

internet-connected devices on services provided by affiliates and on Turner’s digital properties. Turner is also pursuing direct-to-consumer distribution options for its programming and networks. For example, in November 2016, Turner launched its first domestic SVOD service, FilmStruck, aimed at arthouse film enthusiasts. In addition, in April 2017, Turner and Warner Bros. launched a new domestic SVOD service under the Boomerang brand that offers new original animated series and kids programming from Warner Bros.’ and Turner’s animation libraries.

Home Box Office.  The Home Box Office segment consists of businesses managed by Home Box Office, Inc. (“Home Box Office”). During the three months ended March 31, 2017, the Home Box Office segment recorded Revenues of $1.568 billion (20% of the Company’s total Revenues) and Operating Income of $583 million.

Home Box Office operates the HBO and Cinemax multichannel premium pay television services, with the HBO service ranking as the most widely distributed multichannel premium pay television service. HBO and Cinemax programming is available in the U.S. to subscribers of affiliates for viewing live and on demand on television and on various internet-connected devices on services provided through affiliates and on Home Box Office’s digital properties. In addition, Home Box Office offers HBO NOW, a domestic stand-alone OTT service available through digital distributors and some affiliates on a variety of internet-connected devices. Home Box Office also has entered into arrangements with a number of digital distributors to provide their subscribers access to HBO and Cinemax services and programming on a variety of digital platforms and devices. HBO- and Cinemax-branded premium pay, basic tier television and OTT services are distributed in over 60 countries in Latin America, Asia and Europe.

In the U.S., Home Box Office generates revenues principally from licensing programming to affiliates and digital distributors that have contracted to receive and distribute such programming to their customers who subscribe to the HBO or Cinemax services. Home Box Office’s agreements with its domestic affiliates are typically long-term arrangements that provide for annual service fee increases and marketing support. The relationship between subscriber totals and the amount of revenues earned under Home Box Office affiliate agreements depends on the specific terms of the applicable agreement, which may include basic and/or pay television subscriber thresholds, volume discounts and other performance-based discounts. Marketing and promotional activities intended to retain existing subscribers and acquire new subscribers may also impact revenue earned. Internationally, Home Box Office generates subscription revenues by licensing programming to international affiliates that have contracted to receive and distribute such programming to their customers. In some countries, Home Box Office also generates subscription revenues from OTT services that are distributed to consumers either directly or through third parties. Additional sources of revenues for Home Box Office are the home entertainment sales of its original programming, including Game of Thrones, Ballers and Girls, via physical and digital formats and the licensing of its original programming.

Warner Bros.  The Warner Bros. segment consists of businesses managed by Warner Bros. Entertainment Inc. (“Warner Bros.”) that principally produce and distribute television shows, feature films and videogames. Warner Bros.’ television, film and videogame businesses benefit from a shared infrastructure, including shared production, distribution, marketing and administrative functions and resources. During the three months ended March 31, 2017, the Warner Bros. segment recorded Revenues of $3.365 billion (40% of the Company’s total Revenues) and Operating Income of $488 million.

Warner Bros. is a leader in television production and distribution. Warner Bros. generates television product revenues principally from the licensing of programs to broadcast and cable television networks and premium pay television and OTT services. For the 2016/2017 season, Warner Bros. is producing 75 original series in the U.S., including (i) at least four series for each of the five broadcast networks (including 2 Broke Girls, Arrow, The Bachelor, The Big Bang Theory, Blindspot, DC’s Legends of Tomorrow, The Flash, Gotham, iZombie, Lethal Weapon, Little Big Shots, Lucifer, The Middle, Mom, Riverdale, Supergirl, Supernatural and The Voice), (ii) series for basic cable networks (including Animal Kingdom, People of Earth, Pretty Little Liars and Queen Sugar), (iii) series for premium pay television services (including The Leftovers, Shameless and Westworld), (iv) series for SVOD services (including Disjointed, Fuller House, Gilmore Girls: A Year in the Life and Longmire), (v) series for first-run syndication (including The Ellen DeGeneres Show, Extra, The Real and TMZ) and (vi) animated series for Cartoon Network, Boomerang, Adult Swim and third party networks (including Be Cool, Scooby Doo!, Mike Tyson Mysteries, New Looney Tunes and Teen Titans Go! ). Warner Bros. also licenses the rights to many of its U.S. original television series in international territories. Outside the U.S., Warner Bros. has a global network of production companies in many countries (located across Europe and South America and in Australia and New Zealand), which allows Warner Bros. to develop programming specifically tailored for the audiences in these territories. These local production companies also focus on developing non-scripted programs and formats that can be adapted and sold internationally and in the U.S.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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Warner Bros. is a leader in the feature film industry and produces feature films under its Warner Bros. and New Line Cinema banners. Warner Bros. generates theatrical product revenues principally through rental fees from theatrical exhibition of feature films, including the following recently released films: Fantastic Beasts and Where to Find Them, Kong: Skull Island and The LEGO Batman Movie, and subsequently through licensing fees received from the distribution of films on premium pay television services, broadcast and cable television networks and OTT services.

Warner Bros. is a leader in the home entertainment and videogame industries. The segment generates television and theatrical product revenues from the distribution of television and theatrical product in various physical and digital formats (e.g., electronic sell-through (“EST”) and video-on-demand (“VOD”)). In addition, the segment generates revenues through the development and distribution of videogames.

The distribution and sale of home entertainment product in physical formats is a large contributor to the segment’s revenues and profits. For the past several years, sales of home entertainment product in physical formats have declined as the home entertainment industry has been undergoing significant changes as home entertainment consumption patterns have shifted. Several factors have contributed to this decline, including consumers shifting to digital purchases and transactional VOD rentals of content; changing retailer initiatives and strategies (e.g., reduction of floor space devoted to home entertainment product in physical formats); retail store closures; increasing competition for consumer discretionary time and spending; and piracy. Consumers have also been increasingly shifting to OTT services that are based on a subscription model rather than a transactional model. During the first quarter of 2017, across the home entertainment industry, consumer spending on home entertainment product in physical formats continued to decline and consumer spending on electronic delivery continued to increase. The electronic delivery of film and television content is growing and becoming more important to the Warner Bros. segment, which has helped to offset some of the decline in sales of home entertainment product in physical formats.

Television Industry

The television industry continues to evolve, with changes in technology, rapid growth in new video services, and a corresponding increase in overall video content consumption and shift in consumer viewing patterns. Consumers are watching an increasing amount of programming on demand and across a wide variety of services and internet-connected devices. Over the past few years, the number of subscribers to multichannel video services provided by traditional affiliates in the U.S. has declined slightly, and the Company expects further modest declines to continue in the future. To counteract this trend, some traditional affiliates are placing greater emphasis on selling smaller bundles of linear networks, resulting in higher subscriber declines for most individual networks than for traditional affiliates in total. In addition, some traditional affiliates as well as media and technology companies have launched, or have announced that they will launch, virtual MVPD services, many of which offer fewer networks at a lower cost than most of the bundles of linear networks offered by traditional affiliates.

At the same time, the penetration of internet-connected devices has grown, which has led to a growing number and variety of internet-delivered video services that do not require a traditional affiliate subscription or set-top box hardware. These include SVOD services that feature general entertainment programming with broad appeal, such as Amazon Prime Video, Hulu and Netflix, as well as niche SVOD services that offer differentiated programming. Several of these SVOD services have continued to increase their number of subscribers and have been, and are expected to continue, making significant investments in acquired and original programming. Some television networks and premium pay television services, such as HBO, have also launched OTT services. AVOD services, such as YouTube and Facebook, also have continued to gain in popularity.

As a result of these changes, consumers have more options for obtaining video content, including lower-cost alternatives. The combination of new competitors, changes in viewing habits and declines in subscribers to traditional affiliates’ multichannel video services has negatively affected overall television ratings and, as a result, television advertising revenues for the industry and certain of the Company’s networks. There also has been a corresponding shift of advertising dollars to non-traditional video outlets.

To address these changes, the Company’s strategy over the past few years has focused on strengthening its position within the traditional TV ecosystem, enhancing the value of traditional multichannel video service subscriptions for consumers and affiliates and the value of television advertising for advertisers, and pursuing new opportunities outside the traditional TV ecosystem. As part of this strategy, the Company plans to continue increasing its investment in high-quality distinctive programming to enhance the value of its networks, as well as continue expanding the amount of its content that is available on demand to capitalize on the shift in consumption habits. In addition, Turner has introduced new advertising products that provide greater data analytic tools and targeting capabilities to advertisers in order to compete more effectively with non-traditional outlets. The Company is also pursuing

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

a number of initiatives to capitalize on the new opportunities presented by these changes, including launching OTT services and investing in and obtaining distribution of its content through other companies’ OTT services, as well as investing in short-form content production and digital-first news and entertainment networks. In addition, the Company is focused on increasing the digital sales and rentals of its television and film content and is a leader in various initiatives designed to make digital ownership of content more compelling for consumers.

AT&T and Time Warner Merger Agreement

On October 22, 2016, Time Warner entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AT&T Inc. (“AT&T”), West Merger Sub, Inc. and West Merger Sub II, LLC, pursuant to which Time Warner will combine with AT&T in a stock-and-cash transaction. The Merger Agreement was approved unanimously by the boards of directors of both companies. Time Warner shareholders adopted the Merger Agreement at a special meeting of shareholders held on February 15, 2017. Subject to the satisfaction of the remaining conditions in the Merger Agreement, upon consummation of the merger, Time Warner’s shareholders will receive per share consideration consisting of $53.75 in cash and a specified number of shares of AT&T stock, as set forth in the Merger Agreement and determined by reference to the average of the volume weighted averages of the trading price of AT&T common stock on the New York Stock Exchange (“NYSE”) on each of the 15 consecutive NYSE trading days ending on and including the trading day that is three trading days prior to the closing of the merger (the “Average Stock Price”). The stock portion of the per share consideration will be subject to a collar such that if the Average Stock Price is between $37.411 and $41.349, Time Warner shareholders will receive shares of AT&T stock equal to $53.75 in value for each share of Time Warner common stock. If the Average Stock Price is below $37.411, Time Warner’s shareholders will receive 1.437 AT&T shares for each share of Time Warner common stock. If the Average Stock Price is above $41.349, Time Warner shareholders will receive 1.300 AT&T shares for each share of Time Warner common stock. The merger is conditioned on the receipt of certain antitrust and other required regulatory consents. The merger is expected to close before year-end 2017. Should Time Warner terminate the Merger Agreement in specified circumstances, Time Warner may be required to pay AT&T a termination fee equal to $1.725 billion if Time Warner enters into or consummates an alternative transaction with a third party following such termination of the Merger Agreement.

The merger with AT&T is consistent with the Company’s strategy of ensuring that its content is available to consumers on a wide range of distribution platforms. The Company expects the merger will accelerate the Company’s efforts to spur innovation in the media industry and improve the consumer experience with pay television bundles by creating compelling consumer offerings and developing more targeted advertising offerings, and it will accelerate and reduce the risk in Time Warner’s strategy to distribute content through other online and mobile services, including those offered directly to consumers.

RESULTS OF OPERATIONS

Recent Accounting Guidance

See Note 1, “Description of Business and Basis of Presentation,” to the accompanying consolidated financial statements for a discussion of recent accounting guidance.

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OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Transactions and Other Items Affecting Comparability

As more fully described herein and in the related notes to the accompanying consolidated financial statements, the comparability of Time Warner’s results from continuing operations has been affected by transactions and certain other items in each period as follows (millions):

	Three Months Ended March 31,
	2017			2016
Asset impairments	$	(1	)	$	(3	)
Gain on operating assets, net		7			—
Costs related to the AT&T merger		(82	)		—
Other		(1	)		(13	)
Impact on Operating Income		(77	)		(16	)
Investment gains (losses), net		159			(11	)
Amounts related to the separation or disposition of former Time Warner segments		(4	)		(4	)
Items affecting comparability relating to equity method investments		(1	)		9
Pretax impact		77			(22	)
Income tax impact of above items		39			4
Impact of items affecting comparability on income from continuing operations	$	116		$	(18	)

In addition to the items affecting comparability described above, the Company incurred Restructuring and severance costs of $12 million and $5 million for the three months ended March 31, 2017 and 2016, respectively. For further discussion of Restructuring and severance costs, see “Consolidated Results” and “Business Segment Results.”

Asset Impairments

During the three months ended March 31, 2017, the Company recognized miscellaneous asset impairments of $1 million at the Warner Bros. segment. During the three months ended March 31, 2016, the Company recognized miscellaneous asset impairments of $3 million, consisting of $2 million at Corporate and $1 million at the Warner Bros. segment.

Gain on Operating Assets, Net

During the three months ended March 31, 2017, the Company recognized miscellaneous gains on operating assets of $7 million, consisting of $6 million at the Turner segment and $1 million at the Warner Bros. segment.

Costs related to the AT&T merger

For the three months ended March 31, 2017, the Company recognized $82 million of costs related to the AT&T merger, consisting of $26 million at Corporate, $22 million at the Turner segment, $22 million at the Warner Bros. segment and $12 million at the Home Box Office segment. These costs reflected $18 million of external transaction costs and $64 million of costs from employee retention programs (as discussed below). Approximately $80 million of these costs are included in Selling, general and administrative expenses in the accompanying Consolidated Statement of Operations and the remainder in Costs of revenues in the accompanying Consolidated Statement of Operations.

In connection with entering into the Merger Agreement, as of March 31, 2017, the Company has granted 5.7 million special retention restricted stock units (“Special Retention RSUs”) to certain employees of Time Warner and its divisions, including all executive officers of Time Warner. Half of the Special Retention RSUs will vest 25% per year on each of the first four anniversaries of February 15, 2017, and the remaining half will vest 25% per year on each of the first four anniversaries of February 15, 2018. Pursuant to the Special Retention RSU agreements, vesting as a result of retirement is not permitted unless the employee retires after the merger has closed. In addition, the awards do not accelerate automatically following the closing of the merger. Instead, the employee must remain employed following the closing, and the awards will vest only upon the scheduled vesting date or upon termination of employment under certain circumstances, such as termination without cause, for good reason or due to retirement.

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OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

In addition, certain employees of Time Warner and its divisions, including executive officers other than the Chairman and CEO, have received or will receive a cash retention award. Half of the award will become payable upon the closing of the merger, and the remaining half will become payable six months thereafter, in both cases, subject to continued employment on the relevant payment date. Payment will also be made upon termination without cause or for good reason.

Other

For the three months ended March 31, 2017, Other includes external costs related to mergers, acquisitions or dispositions of $1 million at the Turner segment. For the three months ended March 31, 2016, Other includes external costs related to mergers, acquisitions or dispositions of $4 million, consisting of $3 million at Corporate and $1 million at the Warner Bros. segment. For the three months ended March 31, 2016, Other also includes $9 million of expenses at the Home Box Office segment related to Home Box Office’s withdrawal from a multiemployer benefit plan. External costs related to mergers, acquisitions or dispositions and the accrued benefit plan withdrawal expenses are included in Selling, general and administrative expenses in the accompanying Consolidated Statement of Operations.

Investment Gains (Losses), Net

Investment gains (losses), net are included in Other income (loss), net in the accompanying Consolidated Statement of Operations. The detail of Investment gains (losses), net is shown in the table below (millions):

	Three Months Ended March 31,
	2017		2016
Sale of interest in Omni Atlanta hotel joint venture	$	99	$	—
Fair value adjustments (a)		54		(19	)
Gains on other investments		6		8
Investment gains (losses), net	$	159	$	(11	)

(a) Related to warrants to purchase common stock of Central European Media Enterprises Ltd. (“CME”) held by the Company.

Amounts Related to the Separation or Disposition of Former Time Warner Segments

For both the three months ended March 31, 2017 and 2016, the Company recognized $4 million of losses related to the disposition of former Time Warner segments, primarily reflecting pension and other retirement benefits related to employees and former employees of Time Inc. These amounts have been reflected in Other income (loss), net in the accompanying Consolidated Statement of Operations.

Items Affecting Comparability Relating to Equity Method Investments

For the three months ended March 31, 2017, the Company recognized $1 million of losses related to its share of investment losses recorded by equity method investees. For the three months ended March 31, 2016, the Company recognized $9 million of income primarily related to its share of investment gains recorded by equity method investees. These amounts have been reflected in Other income (loss), net in the accompanying Consolidated Statement of Operations.

Income Tax Impact

The income tax impact reflects the estimated tax provision or tax benefit associated with each item affecting comparability using the effective tax rate for the item. The estimated tax provision or tax benefit can vary based on certain factors, including the taxability or deductibility of the item and the applicable tax jurisdiction for the item. For the three months ended March 31, 2017, the income tax impact includes a $69 million benefit primarily reflecting the reversal of a valuation allowance related to the use of capital loss carryforwards to offset the gain on the sale by the Turner segment of its interest in the joint venture that owns the Omni Atlanta hotel and the expected use of capital loss carryforwards in connection with the Turner segment’s entry into an agreement to sell its Atlanta broadcast television station, which closed in the second quarter of 2017.

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Consolidated Results

The following discussion provides an analysis of the Company’s results of operations and should be read in conjunction with the accompanying Consolidated Statement of Operations.

Revenues.  The components of Revenues are as follows (millions):

	Three Months Ended March 31,
	2017			2016			% Change
Turner	$	3,088		$	2,906		6%
Home Box Office		1,568			1,506		4%
Warner Bros.		3,365			3,109		8%
Intersegment eliminations		(286	)		(213	)	34%
Total revenues	$	7,735		$	7,308		6%

For the three months ended March 31, 2017, Revenues at the Turner and Home Box Office segments increased primarily driven by higher Subscription revenues, and Revenues at the Warner Bros. segment increased driven by higher Television and Theatrical product revenues, partially offset by lower Videogames and other revenues. Each of the revenue categories is discussed in greater detail by segment in “Business Segment Results.”

Costs of Revenues.  For the three months ended March 31, 2017 and 2016, Costs of revenues were $4.333 billion and $4.005 billion, respectively. The increase in Costs of revenues for the three months ended March 31, 2017 primarily reflected higher programming expenses at the Turner segment and higher film and television production costs at the Warner Bros. segment, partially offset by lower programming and distribution expenses at the Home Box Office segment. The segment variations are discussed in “Business Segment Results.”

Selling, General and Administrative Expenses.  For the three months ended March 31, 2017, Selling, general and administrative expenses increased 2% to $1.275 billion from $1.251 billion for the three months ended March 31, 2016, primarily reflecting increases at the Turner and Warner Bros. segments, partially offset by decreases at Corporate and the Home Box Office segment. For the three months ended March 31, 2017, Selling, general and administrative expenses included approximately $80 million of costs related to the AT&T merger. The segment variations are discussed in “Business Segment Results.”

Included in Costs of revenues and Selling, general and administrative expenses is depreciation expense of $120 million and $119 million for the three months ended March 31, 2017 and 2016, respectively.

Amortization Expense.  Amortization expense was $45 million and $48 million for the three months ended March 31, 2017 and 2016, respectively.

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Restructuring and Severance Costs.  For the three months ended March 31, 2017 and 2016, the Company incurred Restructuring and severance costs primarily related to employee terminations and other exit activities. Restructuring and severance costs are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Turner	$	2		$	1
Home Box Office		2			4
Warner Bros.		9			1
Corporate		(1	)		(1	)
Total restructuring and severance costs	$	12		$	5

Operating Income.  Operating Income increased to $2.076 billion for the three months ended March 31, 2017 from $1.996 billion for the three months ended March 31, 2016. Excluding the items noted under “Transactions and Other Items Affecting Comparability” totaling $77 million and $16 million of expense for the three months ended March 31, 2017 and 2016, respectively, Operating Income increased $141 million, primarily reflecting increases at the Home Box Office and Warner Bros. segments.

Interest Expense, Net.  Interest expense, net detail is shown in the table below (millions):

	Three Months Ended March 31,
	2017			2016
Interest expense	$	(308	)	$	(347	)
Interest income		49			63
Interest expense, net	$	(259	)	$	(284	)

The decrease in interest expense for the three months ended March 31, 2017 was primarily due to lower average interest rates and lower average debt balances. The decrease in interest income for the three months ended March 31, 2017 was primarily driven by the financing transactions with CME that were completed in the second quarter of 2016.

Other Income (Loss), Net.  Other income (loss), net detail is shown in the table below (millions):

	Three Months Ended March 31,
	2017			2016
Investment gains (losses), net	$	159		$	(11	)
Amounts related to the separation or disposition of former Time Warner segments		(4	)		(4	)
Loss from equity method investees		(76	)		(34	)
Other		(3	)		9
Other income (loss), net	$	76		$	(40	)

Investment gains (losses), net and amounts related to the separation or disposition of former Time Warner segments are discussed under “Transactions and Other Items Affecting Comparability.”

Income Tax Provision.  Income tax provision decreased to $470 million for the three months ended March 31, 2017 from $498 million for the three months ended March 31, 2016. The Company’s effective tax rate was 25% and 30% for the three months ended March 31, 2017 and 2016, respectively. The decrease in the effective tax rate for the three months ended March 31, 2017 was primarily due to the impact of the Company’s adoption of the new share-based compensation accounting guidance relating to excess tax benefits recognized with respect to share-based awards and the expected utilization of certain tax attribute carryovers.

Income from Continuing Operations.  Income from continuing operations was $1.423 billion and $1.174 billion for the three months ended March 31, 2017 and 2016, respectively. Excluding the items noted under “Transactions and Other Items Affecting

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Comparability” totaling $116 million of income and $18 million of expense for the three months ended March 31, 2017 and 2016, respectively, Income from continuing operations increased $115 million, primarily due to higher Operating Income and the change in Other income (loss), net. Basic and Diluted income from continuing operations per common share were $1.84 and $1.80, respectively, for the three months ended March 31, 2017 and were $1.48 and $1.46, respectively, for the three months ended March 31, 2016.

Discontinued Operations, Net of Tax.  For the three months ended March 31, 2016, Discontinued operations, net of tax was income of $40 million, related to the recognition of additional tax benefits associated with certain foreign tax attributes of Warner Music Group (“WMG”), which the company disposed of in 2004. Both Basic and Diluted income from discontinued operations per common share were $0.05 for the three months ended March 31, 2016.

Net Income attributable to Time Warner shareholders.  Net income attributable to Time Warner shareholders was $1.424 billion and $1.214 billion for the three months ended March 31, 2017 and 2016, respectively. Basic and Diluted net income per common share were $1.84 and $1.80, respectively, for the three months ended March 31, 2017 and were $1.53 and $1.51, respectively, for the three months ended March 31, 2016.

Business Segment Results

Turner.  Revenues and Operating Income of the Turner segment for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016			% Change
Revenues:
Subscription	$	1,665		$	1,490			12%
Advertising		1,213			1,235			(2)%
Content and other		210			181			16%
Total revenues		3,088			2,906			6%
Costs of revenues (a)		(1,413	)		(1,214	)		16%
Selling, general and administrative (a)		(455	)		(401	)		13%
Gain on operating assets		6			—			NM
Restructuring and severance costs		(2	)		(1	)		100%
Depreciation		(50	)		(47	)		6%
Amortization		(4	)		(4	)		—%
Operating Income	$	1,170		$	1,239			(6)%

(a) Costs of revenues and Selling, general and administrative expenses exclude depreciation.

For the three months ended March 31, 2017, Subscription revenues increased primarily due to higher domestic subscription revenues of $165 million reflecting higher contractual rates, partially offset by a decrease in subscribers.

For the three months ended March 31, 2017, the decrease in Advertising revenues reflected lower domestic revenues of $27 million primarily driven by lower audience delivery at Turner’s entertainment networks.

The increase in Content and other revenue for the three months ended March 31, 2017 was primarily due to higher television licensing revenues.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

The components of Costs of revenues for the Turner segment are as follows (millions):

	Three Months Ended March 31,
	2017		2016		% Change
Programming costs:
Originals and sports	$	982	$	817		20%
Acquired films and syndicated series		210		201		4%
Total programming costs		1,192		1,018		17%
Other direct operating costs		221		196		13%
Costs of revenues (a)	$	1,413	$	1,214		16%

(a) Costs of revenues exclude depreciation.

For the three months ended March 31, 2017, programming costs increased mainly due to higher costs for National Basketball Association programming and, to a lesser extent, original programming. The Company expects that the rate of growth for programming costs will be higher for the first half of 2017 compared to the same period in 2016, principally due to certain sports programming. The increase in other direct operating costs for the three months ended March 31, 2017 primarily related to costs associated with Turner’s and Warner Bros.’ strategic partnership to grow their global kids businesses, including the Boomerang-branded SVOD service, as well as other digital initiatives.

For the three months ended March 31, 2017, Selling, general and administrative expenses increased primarily due to $22 million of costs related to the AT&T merger and higher marketing expense of $13 million.

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Gain on operating assets, costs related to the AT&T merger and external costs related to mergers, acquisitions and dispositions for the three months ended March 31, 2017 and 2016, which affected the comparability of the Turner segment’s results.

Operating Income for the three months ended March 31, 2017 decreased due to higher Costs of revenues and Selling, general and administrative expenses, partially offset by higher Revenues.

Home Box Office.  Revenues and Operating Income of the Home Box Office segment for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016			% Change
Revenues:
Subscription	$	1,302		$	1,236			5%
Content and other		266			270			(1)%
Total revenues		1,568			1,506			4%
Costs of revenues (a)		(759	)		(783	)		(3)%
Selling, general and administrative (a)		(201	)		(220	)		(9)%
Restructuring and severance costs		(2	)		(4	)		(50)%
Depreciation		(19	)		(18	)		6%
Amortization		(4	)		(4	)		—%
Operating Income	$	583		$	477			22%

(a) Costs of revenues and Selling, general and administrative expenses exclude depreciation.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

For the three months ended March 31, 2017, Subscription revenues increased due to higher domestic subscription revenues of $49 million, reflecting higher contractual rates and increased subscribers, as well as higher international subscription revenues of $17 million, primarily reflecting growth in Europe.

For the three months ended March 31, 2017, Content and other revenues were essentially flat as lower home entertainment revenues of $55 million were offset by higher licensing revenues.

The components of Costs of revenues for the Home Box Office segment are as follows (millions):

	Three Months Ended March 31,
	2017		2016		% Change
Programming costs:
Originals and sports	$	263	$	306		(14)%
Acquired films and syndicated series		289		259		12%
Total programming costs		552		565		(2)%
Other direct operating costs		207		218		(5)%
Costs of revenues (a)	$	759	$	783		(3)%

(a) Costs of revenues exclude depreciation.

The decrease in originals and sports programming costs for the three months ended March 31, 2017 was primarily due to the impact of the change in the estimate of the utilization period of Home Box Office’s original programming described below. The increase in acquired films and syndicated series programming costs for the three months ended March 31, 2017 primarily related to acquired programming for HBO’s domestic and international businesses.

During the second quarter of 2016, the Home Box Office segment revised its estimate of the period over which its original programming is utilized by its subscribers. The updated estimate gives consideration to Home Box Office’s original programming history and was driven by consumer viewing patterns, which are influenced by the increased availability of and on-demand access to Home Box Office’s content across a wide variety of devices and services, including HBO’s OTT service, which launched in April 2015. As a result, in determining amortization under the film forecast computation method, the weighted average subscriber utilization period for the majority of Home Box Office’s original programming was increased by approximately five months. The impact of this change was a reduction in amortization expense of approximately $95 million recognized in the three months ended June 30, 2016, of which approximately $50 million represented the impact to the three months ended March 31, 2016.

For the three months ended March 31, 2017, Selling, general and administrative expenses decreased primarily due to lower employee-related costs, partially offset by $12 million of costs related to the AT&T merger. In addition, the prior year quarter included $9 million of expenses related to Home Box Office’s withdrawal from a multiemployer benefit plan.

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of costs related to the AT&T merger for the three months ended March 31, 2017, which affected the comparability of the Home Box Office segment’s results.

The increase in Operating Income for the three months ended March 31, 2017 was primarily due to higher Revenues, lower Costs of revenues and lower Selling, general and administrative expenses.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Warner Bros.  Revenues and Operating Income of the Warner Bros. segment for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016			% Change
Revenues:
Theatrical product	$	1,377		$	1,234			12%
Television product		1,675			1,425			18%
Videogames and other		313			450			(30)%
Total revenues		3,365			3,109			8%
Costs of revenues (a)		(2,331	)		(2,156	)		8%
Selling, general and administrative (a)		(456	)		(439	)		4%
Gain on operating assets		1			—			NM
Asset impairments		(1	)		(1	)		—%
Restructuring and severance costs		(9	)		(1	)		NM
Depreciation		(44	)		(48	)		(8)%
Amortization		(37	)		(40	)		(8)%
Operating Income	$	488		$	424			15%

(a) Costs of revenues and Selling, general and administrative expenses exclude depreciation.

Revenues primarily relate to theatrical product (which is content made available for initial exhibition in theaters) and television product (which is content made available for initial airing on television or OTT services). The components of Revenues for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017		2016		% Change
Theatrical product:
Film rentals	$	443	$	367		21%
Home video and electronic delivery		368		321		15%
Television licensing		485		475		2%
Consumer products and other		81		71		14%
Total theatrical product	$	1,377	$	1,234		12%
Television product:
Television licensing		1,490		1,238		20%
Home video and electronic delivery		87		94		(7)%
Consumer products and other		98		93		5%
Total television product	$	1,675	$	1,425		18%

Theatrical product revenue from film rentals increased for the three months ended March 31, 2017, primarily reflecting higher revenues from theatrical films released during the first quarter of 2017 compared to the first quarter of 2016. The Company released four and three theatrical films in the first quarters of 2017 and 2016, respectively.

For the three months ended March 31, 2017, theatrical product revenues from home video and electronic delivery increased due to higher revenues of $25 million from prior period releases, including catalog titles, during the first quarter of 2017 compared to the first quarter of 2016 and higher revenues of $22 million from releases during the first quarter of 2017 compared to the first quarter of 2016. There were four and seven home video and electronic delivery releases in the first quarters of 2017 and 2016, respectively.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

The increase in television product revenues from television licensing for the three months ended March 31, 2017 was primarily due to higher domestic licensing revenues related to certain library series.

Videogames and other revenues decreased for the three months ended March 31, 2017 primarily due to lower revenues of $69 million from releases during the first quarter of 2017 compared to the first quarter of 2016 and lower carryover revenues of $60 million from prior period releases. The Company released one and two videogames in the first quarters of 2017 and 2016, respectively.

The components of Costs of revenues for the Warner Bros. segment are as follows (millions):

	Three Months Ended March 31,
	2017		2016		% Change
Film and television production costs	$	1,667	$	1,527	9%
Print and advertising costs		492		394	25%
Other costs, including merchandise and related costs		172		235	(27)%
Costs of revenues (a)	$	2,331	$	2,156	8%

(a) Costs of revenues excludes depreciation.

Included in film and television production costs are production costs related to videogames, as well as theatrical film and videogame valuation adjustments resulting primarily from revisions to estimates of ultimate revenue and/or costs for certain theatrical films and videogames. Theatrical film valuation adjustments were $10 million and $1 million for the three months ended March 31, 2017 and 2016, respectively. Videogame valuation adjustments were $5 million and $4 million for the three months ended March 31, 2017 and 2016, respectively. The increase in film and television production costs for the three months ended March 31, 2017 was primarily a result of higher revenues for television product. The increase in print and advertising costs for the three months ended March 31, 2017 was primarily due to the type and number of theatrical releases. Other costs, including merchandise and related costs decreased for the three months ended March 31, 2017 primarily due to lower distribution-related costs of sales primarily as a result of lower revenues for videogames.

Selling, general and administrative expenses increased for the three months ended March 31, 2017 primarily due to costs related to the AT&T merger, higher costs related to digital initiatives and higher third party distribution fees, partially offset by lower equity-based compensation, none of which were individually significant.

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Gain on operating assets, Asset impairments, costs related to the AT&T merger and external costs related to mergers, acquisitions and dispositions for the three months ended March 31, 2017 and 2016, which affected the comparability of the Warner Bros. segment’s results.

The increase in Operating Income for the three months ended March 31, 2017 was primarily due to higher Revenues, partially offset by higher Costs of revenues and Selling, general and administrative expenses.

Corporate.  Corporate’s Operating Loss for the three months ended March 31, 2017 and 2016 was as follows (millions):

	Three Months Ended March 31,
	2017			2016			% Change
Selling, general and administrative (a)	$	(108	)	$	(133	)	(19)%
Asset impairments		—			(2	)	NM
Restructuring and severance costs		1			1		—%
Depreciation		(7	)		(6	)	17%
Operating Loss	$	(114	)	$	(140	)	(19)%

(a) Selling, general and administrative expenses exclude depreciation.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Asset impairments, costs related to the AT&T merger and external costs related to mergers, acquisitions and dispositions for the three months ended March 31, 2017 and 2016, which affected the comparability of Corporate’s results.

For the three months ended March 31, 2017, Operating loss decreased primarily due to lower equity-based compensation expense, which mainly reflected lower expenses for performance stock units, partially offset by $26 million of costs related to the AT&T merger.

FINANCIAL CONDITION AND LIQUIDITY

Management believes that cash generated by or available to the Company should be sufficient to fund its capital and liquidity needs for the foreseeable future, including scheduled debt repayments and quarterly dividend payments. Time Warner’s sources of cash include Cash provided by operations, Cash and equivalents on hand, available borrowing capacity under its committed credit facilities and commercial paper program and access to capital markets. Time Warner’s unused committed capacity at March 31, 2017 was $6.217 billion, which included $1.450 billion of Cash and equivalents.

Current Financial Condition

At March 31, 2017, Time Warner had $23.210 billion of debt and $1.450 billion of Cash and equivalents, resulting in net debt of $21.760 billion, compared to $24.339 billion of debt and $1.539 billion of Cash and equivalents, or net debt of $22.800 billion, at December 31, 2016. At March 31, 2017, Total equity was $25.427 billion compared to $24.337 billion at December 31, 2016.

The following table shows the significant items contributing to the decrease in net debt from December 31, 2016 to March 31, 2017 (millions):

Balance at December 31, 2016	$	22,800
Cash provided by operations		(1,461	)
Capital expenditures		98
Dividends paid to common stockholders		316
Investments and acquisitions, net of cash acquired, including available-for-sale securities		168
Proceeds from the exercise of stock options		(56	)
Other investment proceeds, including available-for-sale securities		(240	)
All other, net		135
Balance at March 31, 2017	$	21,760

Cash Flows

For the three months ended March 31, 2017 and 2016, Cash and equivalents decreased by $89 million and $615 million, respectively. Components of these changes are discussed below in more detail.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Operating Activities

Details of Cash provided by operations are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Operating Income	$	2,076		$	1,996
Depreciation and amortization		165			167
Net interest payments (a)		(303	)		(278	)
Net income taxes paid (b)		(118	)		(130	)
All other, net, including working capital changes		(359	)		(1,002	)
Cash provided by operations	$	1,461		$	753

(a) Includes cash interest received of $10 million and $13 million for the three months ended March 31, 2017 and 2016, respectively.

(b) Includes income tax refunds received of $4 million for both the three months ended March 31, 2017 and 2016.

Cash provided by operations for the three months ended March 31, 2017 increased primarily due to a decrease in cash used by working capital, which was mainly due to changes in accounts receivable reflecting higher cash collections.

Investing Activities

Details of Cash used by investing activities are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Investments in available-for-sale securities	$	—		$	(5	)
Investments and acquisitions, net of cash acquired		(168	)		(93	)
Capital expenditures		(98	)		(75	)
Other investment proceeds, including available-for-sale securities		240			18
Cash used by investing activities	$	(26	)	$	(155	)

The decrease in Cash used by investing activities for the three months ended March 31, 2017 was primarily due to proceeds received from the sale of the Turner segment’s interest in the joint venture that owns the Omni Atlanta hotel. Included in Investments and acquisitions, net of cash acquired for the three months ended March 31, 2017 and 2016 are payments of $85 million and $34 million, respectively, related to the construction and development of office and studio space in the Hudson Yards development on the west side of Manhattan for the Company’s new headquarters and consolidated location for employees based in New York City.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Financing Activities

Details of Cash used by financing activities are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Borrowings	$	—		$	2
Debt repayments		(1,144	)		(152	)
Proceeds from the exercise of stock options		56			56
Excess tax benefit from equity instruments		—			27
Principal payments on capital leases		(3	)		(3	)
Repurchases of common stock		—			(711	)
Dividends paid		(316	)		(322	)
Other financing activities		(117	)		(110	)
Cash used by financing activities from continuing operations	$	(1,524	)	$	(1,213	)

Cash used by financing activities for the three months ended March 31, 2017 increased primarily due to an increase in Debt repayments, partially offset by the impact of the discontinuation of share repurchases under the stock repurchase program in connection with the Company’s entry into the Merger Agreement.

Outstanding Debt and Other Financing Arrangements

Outstanding Debt and Committed Financial Capacity

At March 31, 2017, Time Warner had total committed capacity, defined as maximum available borrowings under various existing debt arrangements and cash and short-term investments, of $29.454 billion. Of this committed capacity, $6.217 billion was unused and $23.210 billion was outstanding as debt. At March 31, 2017, total committed capacity, outstanding letters of credit, outstanding debt and total unused committed capacity were as follows (millions):

	Committed Capacity (a)		Letters of Credit (b)		Outstanding Debt (c)		Unused Committed Capacity
Cash and equivalents	$	1,450	$	—	$	—	$	1,450
Revolving credit facilities and commercial paper program (d)		5,000		—		251		4,749
Fixed-rate public debt		22,733		—		22,733		—
Other obligations (e)		271		27		226		18
Total	$	29,454	$	27	$	23,210	$	6,217

(a) The revolving credit facilities, commercial paper program and public debt of the Company rank pari passu with the senior debt of the respective obligors thereon. The weighted average maturity of the Company’s outstanding debt and other financing arrangements was 11.7 years as of March 31, 2017.

(b) Represents the portion of committed capacity, including from bilateral letter of credit facilities, reserved for outstanding and undrawn letters of credit.

(c) Represents principal amounts adjusted for premiums and discounts and $102 million of unamortized debt issuance costs. At March 31, 2017, the principal amounts of the Company’s publicly issued debt mature as follows: $500 million in 2017, $600 million in 2018, $650 million in 2019, $1.400 billion in 2020, $2.0 billion in 2021, $1.0 billion in 2022 and $16.774 billion thereafter. In the period after 2022, no more than $2.0 billion will mature in any given year.

(d) The revolving credit facilities consist of two $2.5 billion revolving credit facilities. The Company may issue unsecured commercial paper notes up to the amount of the unused committed capacity under the revolving credit facilities. Unsecured commercial paper notes issued by the Company typically mature in 90 days.

(e) Unused committed capacity includes committed financings of subsidiaries under local bank credit agreements. Other debt obligations totaling $57 million are due within the next twelve months.

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

Programming Licensing Backlog

Programming licensing backlog represents the amount of future revenues not yet recorded from cash contracts for the worldwide licensing of theatrical and television product for premium cable, basic cable, network and syndicated television and OTT exhibition. Backlog was $6.6 billion and $6.8 billion at March 31, 2017 and December 31, 2016, respectively. Included in the backlog amounts is licensing of theatrical and television product from the Warner Bros. segment to the Turner segment in the amount of $912 million and $942 million at March 31, 2017 and December 31, 2016, respectively. Also included in the backlog amounts is licensing of theatrical product from the Warner Bros. segment to the Home Box Office segment in the amount of $659 million and $689 million at March 31, 2017 and December 31, 2016, respectively.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. Examples of the forward-looking statements in this report include, but are not limited to, the statements regarding (i) expected further modest declines in the number of subscribers to multichannel video services provided by traditional affiliates in the U.S.; (ii) the expected timing of the completion of the AT&T merger; (iii) the Company’s expectations regarding the impact of the AT&T merger on the Company’s efforts to spur innovation in the media industry and improve the consumer experience as well as its impact on the Company’s strategy; and (iv) the expected higher growth rate for programming costs at the Turner segment during the first half of 2017 compared to the same period in 2016.

The Company’s forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. The Company’s actual results may vary materially from those expressed or implied in its forward-looking statements. Important factors that could cause the Company’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:

• the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

• the risk that the necessary regulatory approvals for the proposed merger may not be obtained or may be obtained subject to conditions that are not anticipated;

• risks that any of the closing conditions to the merger may not be satisfied in a timely manner;

• risks related to disruption of management time from ongoing business operations due to the merger;

• failure to realize the benefits expected from the merger;

• the effect of the announcement of the merger on the ability of Time Warner to retain customers and retain and hire key personnel;

• the effect of the announcement of the merger on the ability of Time Warner to maintain relationships with its suppliers;

• the effect of the announcement of the merger on Time Warner’s operating results and businesses generally;

• any litigation in connection with the merger;

• recent and future changes in technology, services and standards, including alternative methods for the delivery, storage and consumption of digital media and evolving home entertainment formats;

• changes in consumer behavior, including changes in spending behavior and viewing patterns;

• changes in the Company’s plans, initiatives and strategies, and the acceptance thereof by consumers, affiliates and other third parties with which the Company does business;

• changes in the plans, initiatives and strategies of the third parties that distribute, license and/or sell Time Warner’s content;

• the popularity of the Company’s content;

• the Company’s ability to enter into or renew affiliate agreements on favorable terms;

• competitive pressures, including as a result of audience fragmentation and changes in technology and consumer viewing patterns;

• changes in advertising market conditions or advertising expenditures due to various factors, including decreasing numbers of subscribers to multichannel video services provided by traditional affiliates, changes in consumer viewing patterns, economic conditions, pressure from public interest groups, changes in laws and regulations and other societal or political developments;

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TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

• changes in how the Company sells advertising, including offering data- and analytics-driven advertising products, and advertisers’ acceptance thereof;

• the Company’s ability to deal effectively with economic slowdowns or other economic or market difficulties, including impacts on the economies of the United Kingdom and European Economic Area resulting from the United Kingdom’s pending exit from the European Union (“Brexit”);

• changes in foreign exchange rates, including as a result of Brexit;

• increased volatility or decreased liquidity in the capital markets, including any limitation on the Company’s ability to access the capital markets for debt securities, refinance its outstanding indebtedness or obtain bank financings on acceptable terms;

• piracy and the Company’s ability to exploit and protect its intellectual property rights in and to its content and other products;

• the effects of any other significant acquisitions, dispositions and other similar transactions by the Company;

• a disruption or failure of the Company’s or its vendors’ network and information systems or other technology relied on by the Company;

• the failure to meet earnings expectations;

• lower than expected valuations associated with the cash flows and revenues at Time Warner’s reporting units, which could result in Time Warner’s inability to realize the value recorded for intangible assets and goodwill at those reporting units;

• the adequacy of the Company’s risk management framework;

• changes in U.S. GAAP or other applicable accounting standards and policies;

• changes in tax, federal communication and other laws and regulations;

• currency exchange restrictions and currency devaluation risks in some foreign countries;

• the effect of union or labor disputes or professional sports league player lockouts;

• the impact of terrorist acts, hostilities, natural disasters (including extreme weather) and pandemic viruses; and

• the other risks and uncertainties detailed in Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Any forward-looking statement made by the Company in this report speaks only as of the date on which it is made. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.

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TIME WARNER INC.

Item  4. CONTROLS AND PROCEDURES

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed by the Company is accumulated and communicated to the Company’s management to allow timely decisions regarding the required disclosure.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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TIME WARNER INC.

CONSOLIDATED BALANCE SHEET

(Unaudited; millions, except share amounts)

	March 31, 2017			December 31, 2016
ASSETS
Current assets
Cash and equivalents	$	1,450		$	1,539
Receivables, less allowances of $848 and $981		8,540			8,699
Inventories		1,983			2,062
Prepaid expenses and other current assets		935			1,185
Total current assets		12,908			13,485
Noncurrent inventories and theatrical film and television production costs		7,923			7,916
Investments, including available-for-sale securities		3,412			3,337
Property, plant and equipment, net		2,462			2,510
Intangible assets subject to amortization, net		738			783
Intangible assets not subject to amortization		7,005			7,005
Goodwill		27,738			27,752
Other assets		3,463			3,178
Total assets	$	65,649		$	65,966
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	6,766		$	7,192
Deferred revenue		588			564
Debt due within one year		808			1,947
Total current liabilities		8,162			9,703
Long-term debt		22,402			22,392
Deferred income taxes		2,620			2,678
Deferred revenue		493			486
Other noncurrent liabilities		6,515			6,341
Redeemable noncontrolling interest		30			29
Commitments and Contingencies (Note 14)
Equity
Common stock, $0.01 par value, 1.652 billion and 1.652 billion shares issued and 775 million and 772 million shares outstanding		17			17
Additional paid-in capital		146,279			146,780
Treasury stock, at cost (877 million and 880 million shares)		(47,313	)		(47,497	)
Accumulated other comprehensive loss, net		(1,527	)		(1,510	)
Accumulated deficit		(72,031	)		(73,455	)
Total Time Warner Inc. shareholders’ equity		25,425			24,335
Noncontrolling interest		2			2
Total equity		25,427			24,337
Total liabilities and equity	$	65,649		$	65,966

See accompanying notes.

20

TIME WARNER INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended March 31,

(Unaudited; millions, except per share amounts)

	2017			2016
Revenues	$	7,735		$	7,308
Costs of revenues		(4,333	)		(4,005	)
Selling, general and administrative		(1,275	)		(1,251	)
Amortization of intangible assets		(45	)		(48	)
Restructuring and severance costs		(12	)		(5	)
Asset impairments		(1	)		(3	)
Gain on operating assets, net		7			—
Operating income		2,076			1,996
Interest expense, net		(259	)		(284	)
Other income (loss), net		76			(40	)
Income from continuing operations before income taxes		1,893			1,672
Income tax provision		(470	)		(498	)
Income from continuing operations		1,423			1,174
Discontinued operations, net of tax		—			40
Net income		1,423			1,214
Less Net loss attributable to noncontrolling interests		1			—
Net income attributable to Time Warner Inc. shareholders	$	1,424		$	1,214
Amounts attributable to Time Warner Inc. shareholders:
Income from continuing operations	$	1,424		$	1,174
Discontinued operations, net of tax		—			40
Net income	$	1,424		$	1,214
Per share information attributable to Time Warner Inc. common shareholders:
Basic income per common share from continuing operations	$	1.84		$	1.48
Discontinued operations		—			0.05
Basic net income per common share	$	1.84		$	1.53
Average basic common shares outstanding		773.6			790.7
Diluted income per common share from continuing operations	$	1.80		$	1.46
Discontinued operations		—			0.05
Diluted net income per common share	$	1.80		$	1.51
Average diluted common shares outstanding		789.3			802.3
Cash dividends declared per share of common stock	$	0.4025		$	0.4025

See accompanying notes.

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TIME WARNER INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended March 31,

(Unaudited; millions)

	2017			2016
Net income	$	1,423		$	1,214
Other comprehensive loss, net of tax:
Foreign currency translation:
Unrealized losses occurring during the period		(11	)		(39	)
Securities:
Unrealized gains occurring during the period		—			1
Benefit obligations:
Unrealized gains occurring during the period		2			5
Reclassification adjustment for losses realized in net income		5			6
Change in benefit obligations		7			11
Derivative financial instruments:
Unrealized losses occurring during the period		(15	)		—
Reclassification adjustment for (gains) losses realized in net income		2			(17	)
Change in derivative financial instruments		(13	)		(17	)
Other comprehensive loss		(17	)		(44	)
Comprehensive income		1,406			1,170
Less Comprehensive loss attributable to noncontrolling interests		1			—
Comprehensive income attributable to Time Warner Inc. shareholders	$	1,407		$	1,170

See accompanying notes.

22

TIME WARNER INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended March 31,

(Unaudited; millions)

	2017			2016
OPERATIONS
Net income	$	1,423		$	1,214
Less Discontinued operations, net of tax		—			(40	)
Net income from continuing operations		1,423			1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization		165			167
Amortization of film and television costs		2,203			2,112
Asset impairments		1			3
(Gain) loss on investments and other assets, net		(166	)		11
Equity in losses of investee companies, net of cash distributions		93			50
Equity-based compensation		57			108
Deferred income taxes		(44	)		113
Changes in operating assets and liabilities, net of acquisitions		(2,266	)		(2,981	)
Cash provided by operations from continuing operations		1,466			757
Cash used by operations from discontinued operations		(5	)		(4	)
Cash provided by operations		1,461			753
INVESTING ACTIVITIES
Investments in available-for-sale securities		—			(5	)
Investments and acquisitions, net of cash acquired		(168	)		(93	)
Capital expenditures		(98	)		(75	)
Other investment proceeds		240			18
Cash used by investing activities		(26	)		(155	)
FINANCING ACTIVITIES
Borrowings		—			2
Debt repayments		(1,144	)		(152	)
Proceeds from exercise of stock options		56			56
Excess tax benefit from equity instruments		—			27
Principal payments on capital leases		(3	)		(3	)
Repurchases of common stock		—			(711	)
Dividends paid		(316	)		(322	)
Other financing activities		(117	)		(110	)
Cash used by financing activities		(1,524	)		(1,213	)
DECREASE IN CASH AND EQUIVALENTS		(89	)		(615	)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		1,539			2,155
CASH AND EQUIVALENTS AT END OF PERIOD	$	1,450		$	1,540

See accompanying notes.

23

TIME WARNER INC.

CONSOLIDATED STATEMENT OF EQUITY

Three Months Ended March 31,

(Unaudited; millions)

	2017								2016
	Time Warner Shareholders			Noncontrolling Interests		Total Equity			Time Warner Shareholders			Noncontrolling Interests		Total Equity
BALANCE AT BEGINNING OF PERIOD	$	24,335		$	2	$	24,337		$	23,619		$	—	$	23,619
Net income (a)		1,424			—		1,424			1,214			1		1,215
Other comprehensive loss		(17	)		—		(17	)		(44	)		—		(44	)
Cash dividends		(316	)		—		(316	)		(322	)		—		(322	)
Common stock repurchases		—			—		—			(713	)		—		(713	)
Other, primarily related to stock options and restricted stock units		(1	)		—		(1	)		89			—		89
BALANCE AT END OF PERIOD	$	25,425		$	2	$	25,427		$	23,843		$	1	$	23,844

(a) Net income excludes losses of $1 million for both of the three months ended March 31, 2017 and March 31, 2016, relating to redeemable noncontrolling interests.

See accompanying notes.

24

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Time Warner Inc. (“Time Warner” or the “Company”) is a leading media and entertainment company, whose businesses include television networks, and film and TV entertainment. Time Warner classifies its operations into three reportable segments: Turner: consisting principally of cable networks and digital media properties; Home Box Office: consisting principally of premium pay television services and a service that delivers video content to consumers over the internet (“OTT service”) domestically and premium pay, basic tier television and OTT services internationally; and Warner Bros.: consisting principally of television, feature film, home video and videogame production and distribution.

Basis of Presentation

Interim Financial Statements

The consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (“GAAP”) applicable to interim periods. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Time Warner included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Basis of Consolidation

The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of entities in which Time Warner has a controlling interest (“subsidiaries”). Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.

Significant estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, multiple-element transactions, allowances for doubtful accounts, depreciation and amortization, the determination of ultimate revenues as it relates to amortization or impairment of capitalized film and programming costs and participations and residuals, home video and videogame product returns, business combinations, pension and other postretirement benefits, equity-based compensation, income taxes, contingencies, litigation matters, reporting revenue for certain transactions on a gross versus net basis, and the determination of whether the Company should consolidate certain entities.

Accounting Guidance Adopted in 2017

Share-Based Payments

On January 1, 2017, the Company adopted, on a prospective basis, new accounting guidance that changes the reporting for certain aspects of share-based payments. One aspect of the guidance requires that the income tax effects of share-based awards be recognized in the Income tax provision in the Consolidated Statement of Operations when the awards vest or are settled. Under the previous guidance, excess tax benefits and deficiencies were recognized in Additional paid-in capital in the Consolidated Balance Sheet. For the three months ended March 31, 2017 and 2016, the amount of excess tax benefits, net of deficiencies, recognized in Income tax provision and Additional paid-in capital, respectively, was $63 million and $22 million, respectively. In addition, because excess tax benefits are no longer recognized in Additional paid-in capital under the new guidance, such amounts are no longer included in the determination of assumed proceeds in applying the treasury stock method when computing earnings per share. Another aspect of the new guidance requires that excess tax benefits be classified as a cash flow from operating activities, rather

25

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

than a cash flow from financing activities, in the Consolidated Statement of Cash Flows. For the three months ended March 31, 2017 and 2016, the amount of excess tax benefits presented as a cash flow from operating activities and financing activities, respectively, was $63 million and $27 million, respectively. The other aspects of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

Net Periodic Benefit Costs

In March 2017, guidance was issued that requires that an employer disaggregate the service cost component from the other components of net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans. While the service cost component of net periodic benefit costs will continue to be presented as an operating expense, the other components are now required to be recorded outside of operating income in the Consolidated Statement of Operations. For the year ended December 31, 2016, net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans were $46 million, $4 million of which related to the service cost component. The guidance will become effective on a retrospective basis for the Company on January 1, 2018.

Simplifying the Accounting for Goodwill Impairment

In January 2017, guidance was issued to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires that a hypothetical purchase price allocation be performed to determine the amount of impairment, if any. Under this new guidance, a goodwill impairment charge will be based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance will become effective on a prospective basis for the Company on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements.

Definition of a Business

In January 2017, guidance was issued that changes the definition of a business for accounting purposes. Under the new guidance, an entity first determines whether substantially all of the fair value of a set of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of assets is not deemed to be a business. If the threshold is not met, the entity then evaluates whether the set of assets meets the requirement to be deemed a business, which at a minimum, requires there to be an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance will become effective on a prospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Restricted Cash

In November 2016, guidance was issued that requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, guidance was issued that requires entities to recognize the income tax consequences of an intercompany transfer of an asset other than inventory when the transfer occurs, rather than deferring the income tax consequences of the intercompany transfer of assets until the asset has been sold to a third party. The guidance will become effective on a modified retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

26

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Classification of Certain Cash Receipts and Cash Payments

In August 2016, guidance was issued that clarifies the presentation of certain cash receipts and payments in a company’s statement of cash flows. The guidance primarily relates to the classification of cash flows associated with certain (i) debt transactions, (ii) contingent consideration arrangements related to business combinations, (iii) insurance claims and policies, (iv) distributions received from equity method investees and (v) securitization transactions. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Accounting for Leases

In February 2016, guidance was issued regarding accounting for leases. The main difference between the current guidance and the new guidance is the recognition by the lessee of lease assets and liabilities for those leases it classified as operating leases under the current guidance. Under the new guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease as well as the lessor accounting model have not significantly changed from current guidance. This guidance also requires qualitative and quantitative disclosures of key information about leasing arrangements. The new guidance will become effective on a modified retrospective basis for the Company on January 1, 2019. The Company is still evaluating the impact of the new guidance on its consolidated financial statements. Because the Company is a party to more than 2,000 operating leases with future minimum rental commitments at December 31, 2016 of $1.154 billion, it expects that the impact of recognizing lease assets and liabilities for these operating leases will be significant to the Company’s Consolidated Balance Sheet.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, guidance was issued that makes limited changes to the accounting for financial instruments. The changes primarily relate to (i) the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value, with changes in the fair value recognized in earnings, (ii) an alternative approach for the measurement of equity investments that do not have a readily determinable fair value, (iii) the elimination of the other-than-temporary impairment model and its replacement with a requirement to perform a qualitative assessment to identify the impairment of equity investments, and a requirement to recognize impairment losses in earnings based on the difference between the fair value and the carrying value of the equity investment, (iv) the elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost, (v) the addition of a requirement to use the exit price concept when measuring the fair value of financial instruments for disclosure purposes and (vi) the addition of a requirement to present financial assets and financial liabilities separately in the notes to the financial statements, grouped by measurement category (e.g., fair value, amortized cost, lower of cost or market) and by form of financial asset (e.g., loans, securities). This guidance will become effective for the Company on January 1, 2018. The Company does not expect the new guidance to have a material impact on its consolidated financial statements.

Revenue Recognition

In May 2014, guidance was issued that establishes a new revenue recognition framework in GAAP for all companies and industries. The core principle of the new guidance is that an entity should recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive for those goods or services. The guidance includes a five-step framework to determine the timing and amount of revenue to recognize related to contracts with customers. In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework. Based on the current guidance, the new framework will become effective on either a full or modified retrospective basis for the Company on January 1, 2018.

Subsequent to the issuance of the May 2014 guidance, several clarifications and updates have been issued by the FASB on this topic, the most recent of which was issued in December 2016. Many of these clarifications and updates to the guidance, as well as a number of interpretive issues, apply to companies in the media and entertainment industry.

The Company has made significant progress toward completing its assessment of the impact of adopting this new guidance, and the Company is finalizing its implementation plan. The Company currently does not believe that the adoption of the new guidance will have a material impact on the Company’s financial statements, principally because the Company does not expect significant changes in the way it will record subscription revenue, advertising revenue, and a significant portion of its content revenue. However, it is possible that the Company’s evaluation of the expected impact of the new guidance on certain transactions

27

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

could change if there are additional interpretations of the new revenue guidance that are different from the Company’s preliminary conclusions. Although the Company currently does not expect the impact of adopting the new guidance to be material, there are several areas where the Company’s revenue recognition is expected to change as compared with historical GAAP. The more significant of these areas are as follows:

i. Renewals of Licenses of Intellectual Property - Under guidance currently in effect, when the term of an existing license agreement is extended, without any other changes to the provisions of the license, revenue for the renewal period is recognized on the date the renewal is agreed to contractually. Under the new guidance, revenue for the renewed license term will not be recognized until the date the renewal term begins. This change will result in delayed revenue recognition as compared with current revenue recognition guidance. The Company expects that this change will primarily impact the Warner Bros. segment, but it will also, to a lesser degree, impact the Home Box Office and Turner segments.

ii. License of Content Library - Under guidance currently in effect, when a company licenses a completed library of content and agrees to refresh the library with new content as it becomes available, and the licensee is not entitled to a refund if no further library titles are delivered, revenue is recognized once access to the library is granted to the licensee. Under the new guidance, because there is an implicit obligation for the company to refresh the library with additional content in the future, the company will need to estimate the additional content it will deliver in the future and allocate a portion of the transaction price to that content. As compared with current guidance, this results in a deferral of a portion of the transaction price until delivery of future library content. The Company expects this change will primarily impact the Home Box Office segment.

iii. Licenses of Symbolic Intellectual Property - Certain intellectual property, such as brands, tradenames and logos, is categorized in the new guidance as symbolic. An assumption inherent in the new guidance is that a licensee’s ability to derive benefit from a license of symbolic intellectual property depends on the licensor continuing to support or maintain the intellectual property throughout the license term. Accordingly, under the new guidance, revenue from licenses of symbolic intellectual property is recognized over the corresponding license term. In certain arrangements where the Company has no remaining performance obligations, under the guidance currently in effect, revenue from licenses of symbolic intellectual property is recognized at the inception of the license term. Therefore, the new guidance will result in a deferral of revenue recognition as compared to current guidance. This change will primarily impact the Warner Bros. segment.

The evaluation of the impact of the new guidance on certain other transactions is still in process; however, the Company does not expect the completion of that evaluation to impact the Company’s conclusion that the adoption will not have a material impact on the Company’s financial statements.

The Company currently expects to adopt the standard in 2018 using the modified retrospective method of adoption. However, the transition method ultimately selected could be affected by the Company’s pending merger with AT&T Inc. (“AT&T”) if the merger closes prior to the adoption of the new guidance. For more information regarding the AT&T merger, see Note 2.

2. MERGER AGREEMENT WITH AT&T

On October 22, 2016, Time Warner entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AT&T. The Merger Agreement provides for the merger of a newly formed wholly owned subsidiary of AT&T with and into Time Warner, with Time Warner continuing as the surviving company in the merger. Immediately thereafter, Time Warner will merge with and into a limited liability company formed by AT&T, which will continue as the surviving entity and a wholly owned subsidiary of AT&T. The Merger Agreement was unanimously approved by all members of Time Warner’s and AT&T’s boards of directors. Time Warner shareholders adopted the Merger Agreement at a special meeting of shareholders on February 15, 2017. Subject to the satisfaction of the remaining conditions set forth in the Merger Agreement, upon consummation of the merger, each share of the Company’s common stock will be converted into the right to receive $53.75 in cash and a specified number of shares of AT&T stock, as set forth in the Merger Agreement and determined by reference to the average of the volume weighted averages of the trading price of AT&T common stock on the New York Stock Exchange (“NYSE”) on each of the 15 consecutive NYSE trading days ending on and including the trading day that is three trading days prior to the closing of the merger (the “Average Stock Price”). The stock portion of the per share consideration will be subject to a collar such that if the Average Stock Price is between $37.411 and $41.349, Time Warner shareholders will receive shares of AT&T stock equal to $53.75 in value for each share of Time Warner common stock. If the Average Stock Price is below $37.411, Time Warner shareholders will receive 1.437 AT&T shares for each share of Time Warner

28

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

common stock. If the Average Stock Price is an amount greater than $41.349, Time Warner shareholders will receive 1.300 AT&T shares for each share of Time Warner common stock. The merger is conditioned on the receipt of certain antitrust and other required regulatory consents. The merger is expected to close before year-end 2017. Should Time Warner terminate the Merger Agreement in specified circumstances, Time Warner may be required to pay AT&T a termination fee equal to $1.725 billion if Time Warner enters into or consummates an alternative transaction with a third party following such termination of the Merger Agreement.

3. BUSINESS DISPOSITIONS AND ACQUISITIONS

For the three months ended March 31, 2016, Discontinued operations, net of tax was income of $40 million ($0.05 of diluted income from discontinued operations per common share), related to the recognition of certain tax benefits associated with foreign tax attributes of the Warner Music Group (“WMG”), which the Company disposed of in 2004.

4. INVESTMENTS

Central European Media Enterprises Ltd.

As of March 31, 2017, the Company had an approximate 47% voting interest in Central European Media Enterprises Ltd.’s (“CME”) common stock and an approximate 76% economic interest in CME on a diluted basis.

As of March 31, 2017, the Company owned 61.4 million shares of CME’s Class A common stock and 1 share of Series A convertible preferred stock, which is convertible into 11.2 million shares of CME’s Class A common stock and votes with the Class A common stock on an as-converted basis. The Company accounts for its investment in CME’s Class A common stock and Series A convertible preferred stock under the equity method of accounting. Although the book value of the Company’s equity method investment in CME has been reduced to zero through the recognition of equity method losses, the Company has continued to record equity method losses because it has guaranteed an aggregate amount of €955 million of CME’s obligations. The amount of such equity method losses at March 31, 2017 was $143 million and is presented in Other noncurrent liabilities on the Consolidated Balance Sheet. In addition, in connection with these guarantees, the Company recognized a liability at the inception of each respective arrangement based on the estimated fair value of the applicable guarantee. At March 31, 2017, the carrying value of liabilities associated with such guarantees was $183 million, which is also included in Other noncurrent liabilities on the Consolidated Balance Sheet. Pursuant to the terms of all of CME’s outstanding senior debt, a change of control of Time Warner provides the administrative agent and/or lenders of this debt the right to declare the debt immediately due and payable. If that were to occur, Time Warner would be obligated under the terms of its guarantees to pay the full amount of the debt, subject to reimbursement from CME on the scheduled maturity dates for the debt in 2018, 2019 and 2021.

As of March 31, 2017, the Company owned all of the outstanding shares of CME’s Series B convertible redeemable preferred shares, which are non-voting and may be converted into 106.2 million shares of CME’s Class A common stock at the Company’s option. The Series B convertible redeemable preferred shares accrete in value until June 24, 2018 at an annual rate of 3.75% compounded quarterly. The Company accounts for its investment in CME’s Series B convertible redeemable preferred shares under the cost method of accounting.

As of March 31, 2017, the Company held 101 million warrants each to purchase one share of CME Class A common stock. The warrants, which became exercisable in May 2016, have a four-year term that expires in May 2018 and an exercise price of $1.00 per share and do not contain any voting rights. The warrants are carried at fair value in the Consolidated Balance Sheet, which at March 31, 2017, was $213 million.

As of March 31, 2017, there were no amounts outstanding under the CME Revolving Credit Facility.

On March 2, 2017, Time Warner, CME and CME Media Enterprises B.V. (“CME BV”), a wholly owned subsidiary of CME, entered into an amendment (the “2017 Amendment”) to the Amended and Restated Reimbursement Agreement, dated as of November 14, 2014, and as amended and restated as of February 19, 2016. Effective March 1, 2017, the 2017 Amendment reduced the guarantee fees payable by CME and CME BV to Time Warner for Time Warner’s guarantees of CME’s obligations under its €251 million senior unsecured term loan that matures on November 1, 2018 and its €235 million senior unsecured term loan that matures on November 1, 2019 as well as CME BV’s obligation under its €469 million senior unsecured term loan that matures on February 19, 2021. The reduced fee to be paid to Time Warner for each of these guarantees is equal to a rate (the “all-in” rate) ranging between 5% and 8.5%, measured quarterly based on CME’s consolidated net leverage ratio, less the interest rate on the term loans. A portion of the fee equal to 5.0% less the interest rate on the term loans is payable in cash by CME and CME BV and the

29

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

remainder may be payable in cash or in kind, at CME’s option. The 2017 Amendment also provides that if CME’s consolidated debt level is less than €815 million by September 30, 2018, the all-in rate will be decreased further by 50 basis points. In addition, if there is a change in control of CME, the all-in rate will increase to the lower of (i) the then applicable guarantee fee payable to Time Warner plus 3.5% and (ii) 10.0% on the date that is 180 days following such change of control. The 2017 Amendment did not affect the terms of the guarantees the Company provided to CME’s and CME BV’s lenders under the term loans.

5. FAIR VALUE MEASUREMENT

A fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3). The following table presents information about assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2017 and December 31, 2016, respectively (millions):

	March 31, 2017											December 31, 2016
	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3		Total
Assets:
Trading securities:
Diversified equity securities (a)	$	170	$	—		$	—		$	170		$	163	$	—		$	—	$	163
Available-for-sale securities:
Equity securities		16		—			—			16			17		—			—		17
Debt securities		—		36			—			36			—		37			—		37
Derivatives:
Foreign exchange contracts		—		136			—			136			—		153			—		153
Other		—		—			214			214			—		—			161		161
Liabilities:
Derivatives:
Foreign exchange contracts		—		(13	)		—			(13	)		—		(9	)		—		(9	)
Other		—		—			(1	)		(1	)		—		—			—		—
Total	$	186	$	159		$	213		$	558		$	180	$	181		$	161	$	522

(a) Consists of investments related to deferred compensation.

The Company primarily applies the market approach for valuing recurring fair value measurements. As of March 31, 2017 and December 31, 2016, assets valued using significant unobservable inputs (Level 3) primarily related to warrants to purchase shares of Class A common stock of CME valued at $213 million and $159 million, respectively. The Company estimates the fair value of these warrants using a Monte Carlo Simulation model. Significant unobservable inputs used in the fair value measurement at March 31, 2017 are an expected term of 0.69 years and an expected volatility of approximately 46%. As of March 31, 2017 and December 31, 2016, the other Level 3 assets consisted of equity instruments held by employees of a former subsidiary of the Company. As of March 31, 2017, Level 3 liabilities consisted of a liability related to contingent consideration.

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table reconciles the beginning and ending balances of net derivative assets and liabilities classified as Level 3 and identifies the total gains (losses) the Company recognized during the three months ended March 31, 2017 and 2016 on such assets and liabilities that were included in the Consolidated Balance Sheet as of March 31, 2017 and 2016 (millions):

	March 31, 2017			March 31, 2016
Balance as of the beginning of the period	$	161		$	173
Total gains (losses), net:
Included in operating income		—			—
Included in other income (loss), net		54			(19	)
Included in other comprehensive loss		—			—
Purchases		—			—
Settlements		(1	)		5
Issuances		(1	)		—
Balance as of the end of the period	$	213		$	159
Net gain (loss) for the period included in net income related to assets and liabilities still held as of the end of the period	$	54		$	(19	)

Other Financial Instruments

The Company’s other financial instruments, including debt, are not required to be carried at fair value. Based on the interest rates prevailing at March 31, 2017, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.072 billion and, based on interest rates prevailing at December 31, 2016, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.238 billion. The fair value of Time Warner’s public debt is considered a Level 2 measurement as it is based on observable market inputs such as current interest rates and, where available, actual sales transactions. Unrealized gains or losses on debt do not result in the realization or expenditure of cash and generally are not recognized in the consolidated financial statements unless the debt is retired prior to its maturity.

Information as of March 31, 2017 about the Company’s investments in CME that are not required to be carried at fair value on a recurring basis is as follows (millions):

	Carrying Value		Fair Value		Fair Value Hierarchy
Class A common stock (a)	$	—	$	225	Level 1
Series B convertible redeemable preferred shares	$	—	$	329	Level 2

(a) Includes 1 share of Series A convertible preferred stock.

The fair values of the Company’s investments in CME’s Class A common stock (including Series A convertible preferred stock) and Series B convertible redeemable preferred shares are primarily determined by reference to the March 31, 2017 closing price of CME’s common stock.

The carrying value for the majority of the Company’s other financial instruments approximates fair value due to the short-term nature of the financial instruments or because the financial instruments are of a longer-term nature and are recorded on a discounted basis.

Non-Financial Instruments

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value.

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the three months ended March 31, 2017 and March 31, 2016, the Company also performed fair value measurements related to certain theatrical films and television programs. In determining the fair value of its theatrical films, the Company employs a DCF methodology that includes cash flow estimates of a film’s ultimate revenue and costs as well as a discount rate. The discount rate utilized in the DCF analysis is based on the weighted average cost of capital of the respective business (e.g., Warner Bros.) plus a risk premium representing the risk associated with producing a particular theatrical film. The fair value of any theatrical films and television programs that management plans to abandon is zero. Because the primary determination of fair value is made using a DCF model, the resulting fair value is considered a Level 3 measurement. The following table presents certain theatrical film and television production costs, which were recorded as inventory in the Consolidated Balance Sheet, that were written down to fair value (millions):

	Carrying value before write down		Carrying value after write down
Fair value measurements made during the three months ended March 31,:
2017	$	51	$	30
2016	$	28	$	2

6. INVENTORIES AND THEATRICAL FILM AND TELEVISION PRODUCTION COSTS

Inventories and theatrical film and television production costs consist of (millions):

	March 31,      2017			December 31,      2016
Inventories:
Programming costs, less amortization (a)	$	3,520		$	3,625
Other inventory, primarily DVDs and Blu-ray Discs		182			184
Total inventories		3,702			3,809
Less: current portion of inventory		(1,983	)		(2,062	)
Total noncurrent inventories		1,719			1,747
Theatrical film production costs: (b)
Released, less amortization		724			818
Completed and not released		635			460
In production		1,086			1,286
Development and pre-production		126			133
Television production costs: (b)
Released, less amortization		1,976			1,618
Completed and not released		645			841
In production		999			995
Development and pre-production		13			18
Total theatrical film and television production costs		6,204			6,169
Total noncurrent inventories and theatrical film and television production costs	$	7,923		$	7,916

(a) Includes the costs of certain programming rights, primarily sports, for which payments have been made prior to the related rights being received.

(b) Does not include $485 million and $518 million of acquired film library intangible assets as of March 31, 2017 and December 31, 2016, respectively, which are included in Intangible assets subject to amortization, net in the Consolidated Balance Sheet.

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Time Warner uses derivative instruments, primarily forward contracts, to manage the risk associated with the volatility of future cash flows denominated in foreign currencies and changes in fair value resulting from changes in foreign currency exchange rates. The principal currencies being hedged include the British Pound, Euro, Australian Dollar and Canadian Dollar. Time Warner uses foreign exchange contracts that generally have maturities of three to 18 months to hedge various foreign exchange exposures, including the following: (i) variability in foreign-currency-denominated cash flows, such as the hedges of unremitted or forecasted royalty and license fees owed to Time Warner’s domestic companies for the sale or anticipated sale of U.S. copyrighted products abroad or cash flows for certain film production costs denominated in a foreign currency (i.e., cash flow hedges), and (ii) currency risk associated with foreign-currency-denominated operating assets and liabilities (i.e., fair value hedges).

The Company also enters into derivative contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. These economic hedges are used primarily to offset the change in certain foreign-currency-denominated intercompany debt due to changes in the underlying foreign exchange rates.

The translation of revenues and expenses denominated in the functional currency of a foreign subsidiary may result in fluctuations in the U.S. Dollar-equivalent value of such revenues and expenses as compared to prior periods. Such transactions are not eligible for qualifying hedge accounting treatment, and the Company does not economically hedge this exposure.

Net gains and losses from hedging activities recognized in the Consolidated Statement of Operations were as follows (millions):

	Three Months Ended March 31,
	2017			2016
Gains (losses) recognized in:
Cost of revenues	$	(1	)	$	9
Selling, general and administrative		(3	)		3
Other income (loss), net		1			22

Amounts included in Other income (loss), net include the impact of forward points and option premiums, which are excluded from the assessment of hedge effectiveness. Other amounts included in Other income (loss), net relate to hedge of foreign-currency-denominated debt and hedge ineffectiveness, which are not material.

The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions and has entered into collateral agreements with these counterparties to further protect the Company in the event of deterioration of the credit quality of such counterparties on outstanding transactions. Additionally, netting provisions are included in agreements in situations where the Company executes multiple contracts with the same counterparty. For such foreign exchange contracts, the Company offsets the fair values of the amounts owed to or due from the same counterparty and classifies the net amount as a net asset or net liability within Prepaid expenses and other current assets or Accounts payable and accrued liabilities, respectively, in the Consolidated Balance Sheet. The following is a summary of amounts recorded in the Consolidated Balance Sheet pertaining to Time Warner’s use of foreign currency derivatives at March 31, 2017 and December 31, 2016 (millions):

	March 31, 2017 (a)			December 31, 2016 (b)
Prepaid expenses and other current assets	$	136		$	153
Accounts payable and accrued liabilities		(13	)		(9	)

(a) Includes $294 million ($270 million of qualifying hedges and $24 million of economic hedges) and $171 million ($164 million of qualifying hedges and $7 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

(b) Includes $297 million ($272 million of qualifying hedges and $25 million of economic hedges) and $153 million ($141 million of qualifying hedges and $12 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At March 31, 2017 and December 31, 2016, $26 million and $46 million of gains, respectively, related to cash flow hedges are recorded in Accumulated other comprehensive loss, net and are expected to be recognized in earnings at the same time the hedged items affect earnings. Included in Accumulated other comprehensive loss, net at March 31, 2017 and December 31, 2016 are net losses of $1 million and $3 million, respectively, related to hedges of cash flows associated with films that are not expected to be released within the next twelve months.

At March 31, 2017, the carrying amount of the Company’s €700 million aggregate principal amount of debt due 2023 is designated as a hedge of the variability in the Company’s Euro-denominated net investments. The gain or loss on the debt that is designated as, and is effective as, an economic hedge of the net investment in a foreign operation is recorded as a currency translation adjustment within Accumulated other comprehensive loss, net in the Consolidated Balance Sheet. For the three months ended March 31, 2017 and 2016, such amounts totaled $13 million and $7 million of losses, respectively.

8. SHAREHOLDERS’ EQUITY

Comprehensive Income (Loss)

Comprehensive income (loss) is reported in the Consolidated Statement of Comprehensive Income and consists of Net income and other gains and losses affecting shareholders’ equity that, under GAAP, are excluded from Net income. For Time Warner, such items consist primarily of foreign currency translation gains (losses), unrealized gains and losses on certain derivative financial instruments and equity securities, and changes in benefit plan obligations.

The following summary sets forth the activity within Other comprehensive loss (millions):

	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Pretax			Tax (provision) benefit			Net of tax			Pretax			Tax (provision) benefit			Net of tax
Unrealized losses on foreign currency translation	$	(10	)	$	(1	)	$	(11	)	$	(50	)	$	11		$	(39	)
Unrealized gains on securities		—			—			—			2			(1	)		1
Unrealized gains on benefit obligations		3			(1	)		2			7			(2	)		5
Reclassification adjustment for losses on benefit obligations realized in net income (a)		8			(3	)		5			9			(3	)		6
Unrealized gains (losses) on derivative financial instruments		(23	)		8			(15	)		1			(1	)		—
Reclassification adjustment for (gains) losses on derivative financial instruments realized in net income (b)		3			(1	)		2			(27	)		10			(17	)
Other comprehensive loss	$	(19	)	$	2		$	(17	)	$	(58	)	$	14		$	(44	)

(a) Pretax (gains) losses are included in Selling, general and administrative expenses.

(b) Pretax (gains) losses are included in Selling, general and administrative expenses, Costs of revenues and Other income (loss), net are as follows (millions):

	Three Months Ended March 31,
	2017		2016
Selling, general and administrative expenses	$	3	$	(3	)
Costs of revenues		—		(9	)
Other income (loss), net		—		(15	)

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. INCOME PER COMMON SHARE

Set forth below is a reconciliation of Basic and Diluted income per common share from continuing operations attributable to Time Warner Inc. common shareholders (millions, except per share amounts):

	Three Months Ended March 31,
	2017			2016
Income from continuing operations attributable to Time Warner Inc. shareholders	$	1,424		$	1,174
Income allocated to participating securities		(4	)		(3	)
Income from continuing operations attributable to Time Warner Inc. common shareholders— basic	$	1,420		$	1,171
Average basic common shares outstanding		773.6			790.7
Dilutive effect of equity awards		15.7			11.6
Average diluted common shares outstanding		789.3			802.3
Antidilutive common share equivalents excluded from computation		—			7
Income per common share from continuing operations attributable to Time Warner Inc. common shareholders:
Basic	$	1.84		$	1.48
Diluted	$	1.80		$	1.46

10. EQUITY-BASED COMPENSATION

The following table sets forth the number of stock options, RSUs and PSUs granted (millions):

	Three Months Ended March 31,
	2017		2016
Stock options		—		2.2
RSUs		0.4		2.7
PSUs		—		0.2

The following table sets forth the weighted-average grant date fair value of restricted stock units (“RSUs”) granted during the three months ended March 31, 2017 and 2016 and PSUs granted during the three months ended March 31, 2016. For PSUs, the service inception date precedes the grant date and requires the Company to apply mark-to-market accounting that is reflected in the grant date fair values presented:

	Three Months Ended March 31,
	2017		2016
RSUs	$	96.28	$	62.38
PSUs		—		112.56

In connection with entering into the Merger Agreement, the Company granted special retention restricted stock units (“Special Retention RSUs”) to certain employees of Time Warner and its divisions, including all executive officers of Time Warner. Half of the Special Retention RSUs will vest 25% per year on each of the first four anniversaries of February 15, 2017, and the remaining half will vest 25% per year on each of the first four anniversaries of February 15, 2018. Pursuant to the Special Retention RSU agreements, vesting as a result of retirement is not permitted unless the employee retires after the merger has closed. In addition, the awards do not accelerate automatically following the closing of the merger. Instead, the employee must remain employed following the closing, and the awards will vest only upon the scheduled vesting date or upon termination of employment under certain circumstances, such as termination without cause, for good reason or due to retirement.

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The impact of equity-based compensation awards on Operating income is as follows (millions):

	Three Months Ended March 31,
	2017		2016
Stock options	$	7	$	21
RSUs and PSUs		50		87
Total impact on operating income	$	57	$	108
Tax benefit recognized	$	19	$	38

Total unrecognized compensation cost related to unvested Time Warner stock option awards as of March 31, 2017, without taking into account expected forfeitures, is $46 million and is expected to be recognized over a weighted-average period of approximately 1 year. Total unrecognized compensation cost related to unvested RSUs and PSUs as of March 31, 2017, without taking into account expected forfeitures, is $619 million and is expected to be recognized over a weighted-average period between 1 and 2 years.

11. BENEFIT PLANS

Components of Net Periodic Benefit Costs

A summary of the components of the net periodic benefit costs from continuing operations recognized for substantially all of Time Warner’s defined benefit pension plans for the three months ended March 31, 2017 and 2016 is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Service cost	$	1		$	1
Interest cost		16			22
Expected return on plan assets		(15	)		(21	)
Amortization of net loss		3			4
Net periodic benefit costs (a)	$	5		$	6
Contributions	$	10		$	9

(a) Excludes net periodic benefit costs related to discontinued operations of $3 million and $4 million for the three months ended March 31, 2017 and March 31, 2016, respectively, primarily related to employees and former employees of Time Inc. These amounts have been reflected in Other income (loss), net in the Consolidated Statement of Operations.

12. RESTRUCTURING AND SEVERANCE COSTS

The Company’s Restructuring and severance costs primarily related to employee termination costs, ranging from senior executives to line personnel, and other exit costs, including lease terminations and real estate consolidations. Restructuring and severance costs expensed as incurred for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Turner	$	2		$	1
Home Box Office		2			4
Warner Bros.		9			1
Corporate		(1	)		(1	)
Total restructuring and severance costs	$	12		$	5

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Three Months Ended March 31,
	2017			2016
2017 initiatives	$	16		$	—
2016 and prior initiatives		(4	)		5
Total restructuring and severance costs	$	12		$	5

Selected information relating to accrued restructuring and severance costs is as follows (millions):

	Employee Terminations			Other Exit Costs			Total
Remaining liability as of December 31, 2016	$	162		$	9		$	171
Net accruals		12			—			12
Noncash reductions (a)		(2	)		—			(2	)
Cash paid		(34	)		(1	)		(35	)
Remaining liability as of March 31, 2017	$	138		$	8		$	146

(a) Noncash reductions relate to the settlement of certain liabilities relating to employee compensation with equity instruments.

As of March 31, 2017, of the remaining $146 million liability, $95 million was classified as a current liability in the Consolidated Balance Sheet, with the remaining $51 million classified as a long-term liability. Amounts classified as long-term are expected to be paid through 2020.

13. SEGMENT INFORMATION

Time Warner classifies its operations into three reportable segments: Turner: consisting principally of cable networks and digital media properties; Home Box Office: consisting principally of premium pay television and OTT services domestically and premium pay, basic tier television and OTT services internationally; and Warner Bros.: consisting principally of television, feature film, home video and videogame production and distribution. Time Warner’s reportable segments have been determined in accordance with its internal management structure and the financial information that is evaluated regularly by the Company’s chief operating decision maker.

In the ordinary course of business, Time Warner’s reportable segments enter into transactions with one another. The most common types of intersegment transactions include the Warner Bros. segment generating revenues by licensing television and theatrical programming to the Turner and Home Box Office segments. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses or assets recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Information as to the Revenues, intersegment revenues, Operating Income (Loss) and Assets of Time Warner’s reportable segments is set forth below (millions):

	Three Months Ended March 31,
	2017			2016
Revenues
Turner	$	3,088		$	2,906
Home Box Office		1,568			1,506
Warner Bros.		3,365			3,109
Intersegment eliminations		(286	)		(213	)
Total revenues	$	7,735		$	7,308

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TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Three Months Ended March 31,
	2017			2016
Intersegment Revenues
Turner	$	21		$	20
Home Box Office		2			3
Warner Bros.		263			190
Total intersegment revenues	$	286		$	213
	Three Months Ended March 31,
	2017			2016
Operating Income (Loss)
Turner	$	1,170		$	1,239
Home Box Office		583			477
Warner Bros.		488			424
Corporate		(114	)		(140	)
Intersegment eliminations		(51	)		(4	)
Total operating income	$	2,076		$	1,996
	March 31, 2017			December 31,     2016
Assets
Turner	$	26,703		$	26,317
Home Box Office		14,692			14,636
Warner Bros.		20,968			21,550
Corporate		3,286			3,463
Total assets	$	65,649		$	65,966

14. COMMITMENTS AND CONTINGENCIES

Commitments

Six Flags

In connection with the Company’s former investment in the Six Flags theme parks located in Georgia and Texas (collectively, the “Parks”), in 1997, certain subsidiaries of the Company (including Historic TW and, in connection with the separation of Time Warner Cable Inc. in 2009, Warner Bros. Entertainment Inc.) agreed to guarantee (the “Six Flags Guarantee”) certain obligations of the partnerships that hold the Parks (the “Partnerships”) for the benefit of the limited partners in such Partnerships, including: annual payments made at the Parks or to the limited partners and additional obligations at the end of the respective terms for the Partnerships in 2027 and 2028 (the “Guaranteed Obligations”). The aggregate undiscounted estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term (through 2028) are $928 million (for a net present value of $456 million). To date, no payments have been made by the Company pursuant to the Six Flags Guarantee.

Six Flags Entertainment Corporation (formerly known as Six Flags, Inc. and Premier Parks Inc.) (“Six Flags”), which has the controlling interest in the Parks, has agreed, pursuant to a subordinated indemnity agreement (the “Subordinated Indemnity Agreement”), to guarantee the performance of the Guaranteed Obligations when due and to indemnify Historic TW, among others, if the Six Flags Guarantee is called upon. If Six Flags defaults in its indemnification obligations, Historic TW has the right to acquire control of the managing partner of the Parks. Six Flags’ obligations to Historic TW are further secured by its interest in all limited partnership units held by Six Flags.

38

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Because the Six Flags Guarantee existed prior to December 31, 2002 and no modifications to the arrangements have been made since the date the guarantee came into existence, the Company is required to continue to account for the Guaranteed Obligations as a contingent liability. Based on its evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the Subordinated Indemnity Agreement, the Company is unable to predict the loss, if any, that may be incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized at March 31, 2017. Because of the specific circumstances surrounding the arrangements and the fact that no active or observable market exists for this type of financial guarantee, the Company is unable to determine a current fair value for the Guaranteed Obligations and related Subordinated Indemnity Agreement.

Contingencies

In the ordinary course of business, the Company and its subsidiaries are defendants in or parties to various legal claims, actions and proceedings. These claims, actions and proceedings are at varying stages of investigation, arbitration or adjudication, and involve a variety of areas of law.

On April 4, 2007, the National Labor Relations Board (“NLRB”) issued a complaint against CNN America Inc. (“CNN America”) and Team Video Services, LLC (“Team Video”) related to CNN America’s December 2003 and January 2004 terminations of its contractual relationships with Team Video, under which Team Video had provided electronic news gathering services in Washington, D.C. and New York, NY. The National Association of Broadcast Employees and Technicians, under which Team Video’s employees were unionized, initially filed charges of unfair labor practices with the NLRB in February 2004, alleging that CNN America and Team Video were joint employers, that CNN America was a successor employer to Team Video, and/or that CNN America discriminated in its hiring practices to avoid becoming a successor employer or due to specific individuals’ union affiliation or activities. In the complaint, the NLRB sought, among other things, the reinstatement of certain union members and monetary damages. On November 19, 2008, the presiding NLRB Administrative Law Judge (“ALJ”) issued a non-binding recommended decision and order finding CNN America liable. On September 15, 2014, a three-member panel of the NLRB affirmed the ALJ’s decision and adopted the ALJ’s order with certain modifications. On November 12, 2014, both CNN America and the NLRB General Counsel filed motions with the NLRB for reconsideration of the panel’s decision. On March 20, 2015, the NLRB granted the NLRB General Counsel’s motion for reconsideration to correct certain inadvertent errors in the panel’s decision, and it denied CNN America’s motion for reconsideration. On July 9, 2015, CNN America filed a notice of appeal with the U.S. Court of Appeals for the D.C. Circuit regarding the panel’s decision and the denial of CNN America’s motion for reconsideration; on February 23, 2017, the U.S. Court of Appeals for the D.C. Circuit heard oral argument from the parties on CNN America’s appeal.

The Company establishes an accrued liability for legal claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

The Company has estimated a range of possible loss for legal claims for which the Company has determined a loss is probable or reasonably possible, including the matter disclosed above. The Company believes the estimate of the aggregate range of possible loss for such matters in excess of accrued liabilities is between $0 and $100 million at March 31, 2017. The estimated aggregate range of possible loss is subject to significant judgment and a variety of assumptions. The matters represented in the estimated aggregate range of possible loss will change from time to time and actual results may vary significantly from the current estimate.

In view of the inherent difficulty of predicting the outcome of litigation and claims, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. An adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

Income Tax Uncertainties

During the three months ended March 31, 2017, the Company recorded net increases to income tax reserves of approximately $16 million, of which approximately $7 million impacted the Company’s effective tax rate. During the three months ended March 31, 2017, the Company recorded net increases to interest reserves related to the income tax reserves of approximately $10 million.

39

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In the Company’s judgment, uncertainties related to certain tax matters are reasonably possible of being resolved during the next twelve months. The effect of such resolution, which could vary based on the final terms and timing of actual settlements with taxing authorities, is estimated to be a reduction of recorded unrecognized tax benefits ranging from $0 to $270 million, which would decrease the Company’s effective tax rate.

15. RELATED PARTY TRANSACTIONS

The Company has entered into certain transactions in the ordinary course of business with unconsolidated investees accounted for under the equity method of accounting. The transactions that generate revenue and expenses primarily relate to the licensing by the Warner Bros. segment of content to The CW broadcast network, Hulu and certain international networks, including networks owned by CME. Transactions that generate interest income and other income primarily relate to financing transactions with CME. Receivables due from related parties were $344 million and $265 million at March 31, 2017 and December 31, 2016, respectively. Payables due to related parties were immaterial at March 31, 2017 and December 31, 2016, respectively. Amounts included in the Consolidated Statement of Operations resulting from transactions with related parties consist of (millions):

	Three Months Ended March 31,
	2017			2016
Revenues	$	234		$	123
Expenses		(1	)		—
Interest income		23			41
Other income		2			5

16. ADDITIONAL FINANCIAL INFORMATION

Additional financial information with respect to cash payments and receipts, Interest expense, net, Other income (loss), net, Accounts payable and accrued liabilities and Other noncurrent liabilities is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Cash Flows
Cash payments made for interest	$	(313	)	$	(291	)
Interest income received		10			13
Cash interest payments, net	$	(303	)	$	(278	)
Cash payments made for income taxes	$	(122	)	$	(134	)
Income tax refunds received		4			4
Cash tax payments, net	$	(118	)	$	(130	)
	Three Months Ended March 31,
	2017			2016
Interest Expense, Net
Interest income	$	49		$	63
Interest expense		(308	)		(347	)
Total interest expense, net	$	(259	)	$	(284	)

40

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Three Months Ended March 31,
	2017			2016
Other Income (Loss), Net
Investment gains (losses), net	$	159		$	(11	)
Loss on equity method investees		(76	)		(34	)
Other		(7	)		5
Total other income (loss), net	$	76		$	(40	)
	March 31, 2017			December 31, 2016
Accounts Payable and Accrued Liabilities
Accounts payable	$	521		$	527
Other accrued expenses		1,605			1,878
Participations payable		2,583			2,525
Programming costs payable		850			776
Accrued compensation		651			1,004
Accrued interest		295			320
Accrued income taxes		261			162
Total accounts payable and accrued liabilities	$	6,766		$	7,192
	March 31, 2017			December 31, 2016
Other Noncurrent Liabilities
Noncurrent tax and interest reserves	$	1,628		$	1,567
Participations payable		1,939			1,780
Programming costs payable		786			827
Noncurrent pension and post-retirement liabilities		940			954
Deferred compensation		509			491
Other noncurrent liabilities		713			722
Total other noncurrent liabilities	$	6,515		$	6,341

Accounting for Collaborative Arrangements

The Company’s collaborative arrangements primarily relate to arrangements entered into with third parties to jointly finance and distribute theatrical productions and an arrangement entered into with CBS Broadcasting, Inc. (“CBS”) and The National Collegiate Athletic Association (the “NCAA”).

For the Company’s collaborative arrangements entered into with third parties to jointly finance and distribute theatrical productions, net participation costs of $93 million and $73 million were recorded in Costs of revenues for the three months ended March 31, 2017 and 2016, respectively.

The arrangement among Turner, CBS and the NCAA provides Turner and CBS with rights to the NCAA Division I Men’s Basketball Championship Tournament (the “NCAA Tournament”) in the United States and its territories and possessions through 2032. The aggregate rights fee, production costs, advertising revenues and sponsorship revenues related to the NCAA Tournament and related programming are shared by Turner and CBS. However, if the amount paid for the rights fee and production costs, in any given year, exceeds advertising and sponsorship revenues for that year, CBS’ share of such shortfall is limited to specified annual amounts, ranging from approximately $30 million to $45 million.

41

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Overview

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations and cash flows of (i) Time Warner Inc. (the “Parent Company”), (ii) Historic TW Inc. (in its own capacity and as successor by merger to Time Warner Companies, Inc.), Home Box Office, Inc., and Turner Broadcasting System, Inc., each a wholly owned subsidiary of the Parent Company (collectively, the “Guarantor Subsidiaries”), on a combined basis, (iii) the direct and indirect non-guarantor subsidiaries of the Parent Company (the “Non-Guarantor Subsidiaries”), on a combined basis, and (iv) the eliminations necessary to arrive at the information for Time Warner Inc. on a consolidated basis. The Guarantor Subsidiaries fully and unconditionally, jointly and severally guarantee securities issued under certain of the Company’s indentures on an unsecured basis.

There are no legal or regulatory restrictions on the Parent Company’s ability to obtain funds from any of its wholly owned subsidiaries through dividends, loans or advances.

Basis of Presentation

In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent Company’s interests in the Guarantor Subsidiaries and (ii) the Guarantor Subsidiaries’ interests in the Non-Guarantor Subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown in the column “Eliminations.”

The Parent Company’s accounting bases in all subsidiaries, including goodwill and identified intangible assets, have been “pushed down” to the applicable subsidiaries. Corporate overhead expenses have been reflected as expenses of the Parent Company and have not been allocated to the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries. Interest income (expense) is determined based on outstanding debt and the relevant intercompany amounts at the respective subsidiary.

All direct and indirect domestic subsidiaries are included in Time Warner Inc.’s consolidated U.S. tax return. In the condensed consolidating financial statements, tax provision has been allocated based on each such subsidiary’s relative pretax income to the consolidated pretax income. With respect to the use of certain consolidated tax attributes (principally operating and capital loss carryforwards), such benefits have been allocated to the respective subsidiary that generated the taxable income permitting such use (i.e., pro-rata based on where the income was generated). For example, to the extent a Non-Guarantor Subsidiary generated a gain on the sale of a business for which the Parent Company utilized tax attributes to offset such gain, the tax attribute benefit would be allocated to that Non-Guarantor Subsidiary. Deferred taxes of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been determined based on the temporary differences between the book and tax basis of the respective assets and liabilities of the applicable entities.

Certain transfers of cash between subsidiaries and their parent companies and intercompany dividends are reflected as cash flows from investing and financing activities in the accompanying Condensed Consolidating Statements of Cash Flows. All other intercompany activity is reflected in cash flows from operations.

Management believes that the allocations and adjustments noted above are reasonable. However, such allocations and adjustments may not be indicative of the actual amounts that would have been incurred had the Parent Company, Guarantor Subsidiaries and Non-Guarantor Subsidiaries operated independently.

42

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Balance Sheet

March 31, 2017

(Unaudited; millions)

	Parent     Company		Guarantor   Subsidiaries			Non- Guarantor   Subsidiaries			Eliminations			Time Warner   Consolidated
ASSETS
Current assets
Cash and equivalents	$	300	$	98		$	1,052		$	—		$	1,450
Receivables, net		116		1,237			7,223			(36	)		8,540
Inventories		—		574			1,441			(32	)		1,983
Prepaid expenses and other current assets		409		107			419			—			935
Total current assets		825		2,016			10,135			(68	)		12,908
Noncurrent inventories and theatrical film and television production costs		—		1,891			6,063			(31	)		7,923
Investments in amounts due to and from consolidated subsidiaries		48,770		10,915			13,092			(72,777	)		—
Investments, including available-for-sale securities		297		449			2,671			(5	)		3,412
Property, plant and equipment, net		52		415			1,995			—			2,462
Intangible assets subject to amortization, net		—		—			738			—			738
Intangible assets not subject to amortization		—		2,007			4,998			—			7,005
Goodwill		—		9,880			17,858			—			27,738
Other assets		533		506			2,653			(229	)		3,463
Total assets	$	50,477	$	28,079		$	60,203		$	(73,110	)	$	65,649
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	754	$	814		$	5,290		$	(92	)	$	6,766
Deferred revenue		—		75			520			(7	)		588
Debt due within one year		295		511			2			—			808
Total current liabilities		1,049		1,400			5,812			(99	)		8,162
Long-term debt		19,331		3,062			9			—			22,402
Deferred income taxes		2,620		2,872			2,023			(4,895	)		2,620
Deferred revenue		—		26			467			—			493
Other noncurrent liabilities		2,052		1,885			3,938			(1,360	)		6,515
Redeemable noncontrolling interest		—		—			30			—			30
Equity
Due to (from) Time Warner Inc. and subsidiaries		—		(54,590	)		(1,287	)		55,877			—
Other shareholders’ equity		25,425		73,424			49,209			(122,633	)		25,425
Total Time Warner Inc. shareholders’ equity		25,425		18,834			47,922			(66,756	)		25,425
Noncontrolling interest		—		—			2			—			2
Total equity		25,425		18,834			47,924			(66,756	)		25,427
Total liabilities and equity	$	50,477	$	28,079		$	60,203		$	(73,110	)	$	65,649

43

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Balance Sheet

December 31, 2016

(Unaudited; millions)

	Parent     Company		Guarantor   Subsidiaries			Non- Guarantor   Subsidiaries			Eliminations			Time Warner   Consolidated
ASSETS
Current assets
Cash and equivalents	$	617	$	91		$	831		$	—		$	1,539
Receivables, net		118		1,294			7,329			(42	)		8,699
Inventories		—		528			1,564			(30	)		2,062
Prepaid expenses and other current assets		639		91			455			—			1,185
Total current assets		1,374		2,004			10,179			(72	)		13,485
Noncurrent inventories and theatrical film and television production costs		—		1,929			6,028			(41	)		7,916
Investments in amounts due to and from consolidated subsidiaries		48,212		11,319			13,155			(72,686	)		—
Investments, including available-for-sale securities		274		441			2,628			(6	)		3,337
Property, plant and equipment, net		48		423			2,039			—			2,510
Intangible assets subject to amortization, net		—		—			783			—			783
Intangible assets not subject to amortization		—		2,007			4,998			—			7,005
Goodwill		—		9,880			17,872			—			27,752
Other assets		520		385			2,522			(249	)		3,178
Total assets	$	50,428	$	28,388		$	60,204		$	(73,054	)	$	65,966
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	687	$	854		$	5,760		$	(109	)	$	7,192
Deferred revenue		—		67			511			(14	)		564
Debt due within one year		1,434		511			2			—			1,947
Total current liabilities		2,121		1,432			6,273			(123	)		9,703
Long-term debt		19,318		3,065			9			—			22,392
Deferred income taxes		2,678		3,011			2,133			(5,144	)		2,678
Deferred revenue		—		26			460			—			486
Other noncurrent liabilities		1,976		1,886			3,815			(1,336	)		6,341
Redeemable noncontrolling interest		—		—			29			—			29
Equity
Due to (from) Time Warner Inc. and subsidiaries		—		(52,869	)		(366	)		53,235			—
Other shareholders’ equity		24,335		71,837			47,849			(119,686	)		24,335
Total Time Warner Inc. shareholders’ equity		24,335		18,968			47,483			(66,451	)		24,335
Noncontrolling interest		—		—			2			—			2
Total equity		24,335		18,968			47,485			(66,451	)		24,337
Total liabilities and equity	$	50,428	$	28,388		$	60,204		$	(73,054	)	$	65,966

44

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Operations

For The Three Months Ended March 31, 2017

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
Revenues	$	—		$	2,020		$	5,936		$	(221	)	$	7,735
Costs of revenues		—			(923	)		(3,601	)		191			(4,333	)
Selling, general and administrative		(105	)		(311	)		(886	)		27			(1,275	)
Amortization of intangible assets		—			—			(45	)		—			(45	)
Restructuring and severance costs		—			(2	)		(10	)		—			(12	)
Asset impairments		—			—			(1	)		—			(1	)
Gain on operating assets, net		—			—			7			—			7
Operating income		(105	)		784			1,400			(3	)		2,076
Equity in pretax income (loss) of consolidated subsidiaries		2,203			1,453			557			(4,213	)		—
Interest expense, net		(208	)		(68	)		16			1			(259	)
Other income (loss), net		3			—			72			1			76
Income from continuing operations before income taxes		1,893			2,169			2,045			(4,214	)		1,893
Income tax provision		(470	)		(613	)		(588	)		1,201			(470	)
Net income		1,423			1,556			1,457			(3,013	)		1,423
Less Net loss attributable to noncontrolling interests		1			1			1			(2	)		1
Net income attributable to Time Warner Inc. shareholders	$	1,424		$	1,557		$	1,458		$	(3,015	)	$	1,424
Comprehensive income	$	1,406		$	1,562		$	1,446		$	(3,008	)	$	1,406
Less Comprehensive loss attributable to noncontrolling interests		1			1			1			(2	)		1
Comprehensive income attributable to Time Warner Inc. shareholders	$	1,407		$	1,563		$	1,447		$	(3,010	)	$	1,407

45

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Operations

For The Three Months Ended March 31, 2016

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
Revenues	$	—		$	1,983		$	5,562		$	(237	)	$	7,308
Costs of revenues		—			(953	)		(3,239	)		187			(4,005	)
Selling, general and administrative		(120	)		(312	)		(866	)		47			(1,251	)
Amortization of intangible assets		—			—			(48	)		—			(48	)
Restructuring and severance costs		—			(4	)		(1	)		—			(5	)
Asset impairments		(2	)		—			(1	)		—			(3	)
Operating income		(122	)		714			1,407			(3	)		1,996
Equity in pretax income (loss) of consolidated subsidiaries		2,028			1,426			471			(3,925	)		—
Interest expense, net		(247	)		(76	)		37			2			(284	)
Other income (loss), net		13			(3	)		(49	)		(1	)		(40	)
Income from continuing operations before income taxes		1,672			2,061			1,866			(3,927	)		1,672
Income tax provision		(498	)		(618	)		(572	)		1,190			(498	)
Income from continuing operations		1,174			1,443			1,294			(2,737	)		1,174
Discontinued operations, net of tax		40			40			40			(80	)		40
Net income attributable to Time Warner Inc. shareholders	$	1,214		$	1,483		$	1,334		$	(2,817	)	$	1,214
Comprehensive income attributable to Time Warner Inc. shareholders	$	1,170		$	1,453		$	1,287		$	(2,740	)	$	1,170

46

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Cash Flows

For The Three Months Ended March 31, 2017

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
OPERATIONS
Net income	$	1,423		$	1,556		$	1,457		$	(3,013	)	$	1,423
Less Discontinued operations, net of tax		—			—			—			—			—
Net income from continuing operations		1,423			1,556			1,457			(3,013	)		1,423
Adjustments for noncash and nonoperating items:
Depreciation and amortization		3			27			135			—			165
Amortization of film and television costs		—			735			1,480			(12	)		2,203
Asset impairments		—			—			1			—			1
(Gain) loss on investments and other assets, net		(22	)		5			(149	)		—			(166	)
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions		(2,203	)		(1,453	)		(557	)		4,213			—
Equity in losses of investee companies, net of cash distributions		6			—			87			—			93
Equity-based compensation		11			23			23			—			57
Deferred income taxes		(44	)		(127	)		(95	)		222			(44	)
Changes in operating assets and liabilities, net of acquisitions		342			(12	)		(1,181	)		(1,415	)		(2,266	)
Intercompany		—			605			(605	)		—			—
Cash provided by operations from continuing operations		(484	)		1,359			596			(5	)		1,466
Cash used by operations from discontinued operations		—			—			(5	)		—			(5	)
Cash provided by operations		(484	)		1,359			591			(5	)		1,461
INVESTING ACTIVITIES
Investments and acquisitions, net of cash acquired		(21	)		(9	)		(138	)		—			(168	)
Capital expenditures		—			(32	)		(66	)		—			(98	)
Advances to (from) parent and consolidated subsidiaries		1,543			429			1			(1,973	)		—
Other investment proceeds		20			—			220			—			240
Cash used by investing activities		1,542			388			17			(1,973	)		(26	)
FINANCING ACTIVITIES
Debt repayments		(1,144	)		—			—			—			(1,144	)
Proceeds from exercise of stock options		56			—			—			—			56
Principal payments on capital leases		—			(3	)		—			—			(3	)
Dividends paid		(316	)		—			—			—			(316	)
Other financing activities		29			(16	)		(131	)		1			(117	)
Change in due to/from parent and investment in segment		—			(1,721	)		(256	)		1,977			—
Cash used by financing activities		(1,375	)		(1,740	)		(387	)		1,978			(1,524	)
DECREASE IN CASH AND EQUIVALENTS		(317	)		7			221			—			(89	)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		617			91			831			—			1,539
CASH AND EQUIVALENTS AT END OF PERIOD	$	300		$	98		$	1,052		$	—		$	1,450

47

TIME WARNER INC.

SUPPLEMENTARY INFORMATION

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Cash Flows

For The Three Months Ended March 31, 2016

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
OPERATIONS
Net income	$	1,214		$	1,483		$	1,334		$	(2,817	)	$	1,214
Less Discontinued operations, net of tax		(40	)		(40	)		(40	)		80			(40	)
Net income from continuing operations		1,174			1,443			1,294			(2,737	)		1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization		2			27			138			—			167
Amortization of film and television costs		—			768			1,351			(7	)		2,112
Asset impairments		2			—			1			—			3
(Gain) loss on investments and other assets, net		(3	)		—			14			—			11
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions		(2,028	)		(1,426	)		(471	)		3,925			—
Equity in losses of investee companies, net of cash distributions		(8	)		—			59			(1	)		50
Equity-based compensation		42			30			36			—			108
Deferred income taxes		113			37			13			(50	)		113
Changes in operating assets and liabilities, net of acquisitions		123			(330	)		(1,641	)		(1,133	)		(2,981	)
Intercompany		—			616			(616	)		—			—
Cash provided by operations from continuing operations		(583	)		1,165			178			(3	)		757
Cash used by operations from discontinued operations		—			—			(4	)		—			(4	)
Cash provided by operations		(583	)		1,165			174			(3	)		753
INVESTING ACTIVITIES
Investments in available-for-sale securities		—			—			(5	)		—			(5	)
Investments and acquisitions, net of cash acquired		(9	)		(14	)		(70	)		—			(93	)
Capital expenditures		(7	)		(13	)		(55	)		—			(75	)
Advances to (from) parent and consolidated subsidiaries		1,471			108			—			(1,579	)		—
Other investment proceeds		15			—			3			—			18
Cash used by investing activities		1,470			81			(127	)		(1,579	)		(155	)
FINANCING ACTIVITIES
Borrowings		—			—			2			—			2
Debt repayments		—			(150	)		(2	)		—			(152	)
Proceeds from exercise of stock options		56			—			—			—			56
Excess tax benefit from equity instruments		27			—			—			—			27
Principal payments on capital leases		—			(3	)		—			—			(3	)
Repurchases of common stock		(711	)		—			—			—			(711	)
Dividends paid		(322	)		—			—			—			(322	)
Other financing activities		58			(25	)		(145	)		2			(110	)
Change in due to/from parent and investment in segment		—			(1,277	)		(303	)		1,580			—
Cash used by financing activities		(892	)		(1,455	)		(448	)		1,582			(1,213	)
DECREASE IN CASH AND EQUIVALENTS		(5	)		(209	)		(401	)		—			(615	)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		976			288			891			—			2,155
CASH AND EQUIVALENTS AT END OF PERIOD	$	971		$	79		$	490		$	—		$	1,540

48

Part II. Other Information

Item 1. Legal Proceedings.

The following information supplements and amends the disclosure set forth in Part I, Item 3. Legal Proceedings, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Reference is made to the complaint issued by the National Labor Relations Board (“NLRB”) against CNN America Inc. (“CNN America”) and Team Video Services, LLC described on page 31 of the 2016 Form 10-K. On February 23, 2017, the U.S. Court of Appeals for the D.C. Circuit heard oral argument from the parties on CNN America’s appeal regarding the decision of the three-member panel of the NLRB and the denial of CNN America’s motion for reconsideration.

Item 1A. Risk Factors.

There have been no material changes in the Company’s risk factors as previously disclosed in Part I, Item 1A. Risk Factors, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Company Purchases of Equity Securities

The Company did not purchase any equity securities registered by the Company pursuant to Section 12 of the Exchange Act, as amended, during the quarter ended March 31, 2017.

Issuer Purchases of Equity Securities

Period	Total Number of     Shares Purchased		Average Price     Paid Per Share		Total Number of   Shares Purchased as   Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the   Plans or Programs(1)(2)
January 1, 2017 - January 31, 2017		0	$	—		0	$	2,693,315,245
February 1, 2017 - February 28, 2017		0	$	—		0	$	2,693,315,245
March 1, 2017 - March 31, 2017		0	$	—		0	$	2,693,315,245
Total		0	$	—		0	$	2,693,315,245

(1) These amounts do not give effect to any fees, commissions or other costs associated with share repurchases in prior periods.

(2) On February 10, 2016, the Company announced that its Board of Directors had authorized a total of $5.0 billion in share repurchases beginning January 1, 2016, including the approximately $902 million remaining at December 31, 2015 from the prior $5.0 billion authorization. Purchases under the stock repurchase program may be made, from time to time, on the open market or in privately negotiated transactions, with the size and timing of these purchases based on a number of factors, including price and business and market conditions. The Company has repurchased shares of its common stock pursuant to trading plans under Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended. In connection with entering into the Merger Agreement, the Company discontinued share repurchases under the stock repurchase program in October 2016.

Item 6. Exhibits.

The exhibits listed on the accompanying Exhibit Index are submitted with or incorporated by reference as a part of this report, and such Exhibit Index is incorporated herein by reference.

49

TIME WARNER INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TIME WARNER INC. (Registrant)
	/s/ Howard M. Averill
Date: May 3, 2017	Name:   Howard M. Averill
	Title:     Executive Vice President
	and Chief Financial Officer

50

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

Exhibit No.	Description of Exhibit
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. †
101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheet at March 31, 2017 and December 31, 2016, (ii) Consolidated Statement of Operations for the three months ended March 31, 2017 and 2016, (iii) Consolidated Statement of Comprehensive Income for the three months ended March 31, 2017 and 2016, (iv) Consolidated Statement of Cash Flows for the three months ended March 31, 2017 and 2016, (v) Consolidated Statement of Equity for the three months ended March 31, 2017 and 2016, (vi) Notes to Consolidated Financial Statements and (vii) Supplementary Information-Condensed Consolidating Financial Statements.

† This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

51

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey L. Bewkes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Time Warner Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2017	By:	/s/ Jeffrey L. Bewkes
		Name:	Jeffrey L. Bewkes
		Title:	Chief Executive Officer
			Time Warner Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Howard M. Averill, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Time Warner Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2017	By:	/s/ Howard M. Averill
		Name:	Howard M. Averill
		Title:	Chief Financial Officer
			Time Warner Inc.

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Time Warner Inc., a Delaware corporation (the “Company”), for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his respective knowledge:

1.      the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 3, 2017	/s/ Jeffrey L. Bewkes
	Jeffrey L. Bewkes
	Chief Executive Officer
	Time Warner Inc.
Date: May 3, 2017	/s/ Howard M. Averill
	Howard M. Averill
	Chief Financial Officer
	Time Warner Inc.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	TWX
Entity Registrant Name	TIME WARNER INC.
Entity Central Index Key	0001105705
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		775,537,504

XML

Consolidated Balance Sheet - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Current assets
Cash and equivalents	$ 1,450	$ 1,539
Receivables, less allowances of $848 and $981	8,540	8,699
Inventories	1,983	2,062
Prepaid expenses and other current assets	935	1,185
Total current assets	12,908	13,485
Noncurrent inventories and theatrical film and television production costs	7,923	7,916
Investments, including available-for-sale securities	3,412	3,337
Property, plant and equipment, net	2,462	2,510
Intangible assets subject to amortization, net	738	783
Intangible assets not subject to amortization	7,005	7,005
Goodwill	27,738	27,752
Other assets	3,463	3,178
Total assets	65,649	65,966
Current liabilities
Accounts payable and accrued liabilities	6,766	7,192
Deferred revenue	588	564
Debt due within one year	808	1,947
Total current liabilities	8,162	9,703
Long-term debt	22,402	22,392
Deferred income taxes	2,620	2,678
Deferred revenue	493	486
Other noncurrent liabilities	6,515	6,341
Redeemable noncontrolling interest	30	29
Commitments and Contingencies (Note 14)
Equity
Common stock, $0.01 par value, 1.652 billion and 1.652 billion shares issued and 775 million and 772 million shares outstanding	17	17
Additional paid-in capital	146,279	146,780
Treasury stock, at cost (877 million and 880 million shares)	(47,313)	(47,497)
Accumulated other comprehensive loss, net	(1,527)	(1,510)
Accumulated deficit	(72,031)	(73,455)
Total Time Warner Inc. shareholders’ equity	25,425	24,335
Noncontrolling interest	2	2
Total equity	25,427	24,337
Total liabilities and equity	$ 65,649	$ 65,966

XML

Consolidated Balance Sheet (Parenthetical) - USD ($) shares in Millions, $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Current assets
Allowances	$ 848	$ 981
Equity
Time Warner common stock, par value	$ 0.01	$ 0.01
Time Warner common stock, shares issued	1,652	1,652
Time Warner common stock, shares outstanding	775	772
Treasury stock, shares	877	880

XML

Consolidated Statement Of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues	$ 7,735	$ 7,308
Costs of revenues	(4,333)	(4,005)
Selling, general and administrative	(1,275)	(1,251)
Amortization of intangible assets	(45)	(48)
Restructuring and severance costs	(12)	(5)
Asset impairments	(1)	(3)
Gain on operating assets, net	7	0
Operating income	2,076	1,996
Interest expense, net	(259)	(284)
Other income (loss), net	76	(40)
Income from continuing operations before income taxes	1,893	1,672
Income tax provision	(470)	(498)
Income from continuing operations	1,423	1,174
Discontinued operations, net of tax	0	40
Net income	1,423	1,214
Less Net loss attributable to noncontrolling interests	1	0
Net income attributable to Time Warner Inc. shareholders	1,424	1,214
Amounts attributable to Time Warner Inc. shareholders:
Income from continuing operations	1,424	1,174
Discontinued operations, net of tax	0	40
Net income attributable to Time Warner Inc. shareholders	$ 1,424	$ 1,214
Per share information attributable to Time Warner Inc. common shareholders:
Basic income per common share from continuing operations (in dollars per share)	$ 1.84	$ 1.48
Discontinued operations (in dollars per share)	0.00	0.05
Basic net income per common share (in dollars per share)	$ 1.84	$ 1.53
Average basic common shares outstanding (in shares)	773.6	790.7
Diluted income per common share from continuing operations (in dollars per share)	$ 1.80	$ 1.46
Discontinued operations (in dollars per share)	0.00	0.05
Diluted net income per common share (in dollars per share)	$ 1.80	$ 1.51
Average diluted common shares outstanding (in shares)	789.3	802.3
Cash dividends declared per share of common stock (in dollars per share)	$ 0.4025	$ 0.4025

XML

Consolidated Statement Of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 1,423	$ 1,214
Foreign currency translation:
Unrealized losses occurring during the period	(11)	(39)
Securities:
Unrealized gains occurring during the period	0	1
Benefit obligations:
Unrealized gains occurring during the period	2	5
Reclassification adjustment for losses realized in net income	5	6
Change in benefit obligations	7	11
Derivative financial instruments:
Unrealized losses occurring during the period	(15)	0
Reclassification adjustment for (gains) losses realized in net income	2	(17)
Change in derivative financial instruments	(13)	(17)
Other comprehensive loss	(17)	(44)
Comprehensive income	1,406	1,170
Less Comprehensive loss attributable to noncontrolling interests	1	0
Comprehensive income attributable to Time Warner Inc. shareholders	$ 1,407	$ 1,170

XML

Consolidated Statement Of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATIONS
Net income	$ 1,423	$ 1,214
Less Discontinued operations, net of tax	0	(40)
Net income from continuing operations	1,423	1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization	165	167
Amortization of film and television costs	2,203	2,112
Asset impairments	1	3
(Gain) loss on investments and other assets, net	(166)	11
Equity in losses of investee companies, net of cash distributions	93	50
Equity-based compensation	57	108
Deferred income taxes	(44)	113
Changes in operating assets and liabilities, net of acquisitions	(2,266)	(2,981)
Cash provided by operations from continuing operations	1,466	757
Cash used by operations from discontinued operations	(5)	(4)
Cash provided by operations	1,461	753
INVESTING ACTIVITIES
Investments in available-for-sale securities	0	(5)
Investments and acquisitions, net of cash acquired	(168)	(93)
Capital expenditures	(98)	(75)
Other investment proceeds	240	18
Cash used by investing activities	(26)	(155)
FINANCING ACTIVITIES
Borrowings	0	2
Debt repayments	(1,144)	(152)
Proceeds from exercise of stock options	56	56
Excess tax benefit from equity instruments	0	27
Principal payments on capital leases	(3)	(3)
Repurchases of common stock	0	(711)
Dividends paid	(316)	(322)
Other financing activities	(117)	(110)
Cash used by financing activities	(1,524)	(1,213)
DECREASE IN CASH AND EQUIVALENTS	(89)	(615)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	1,539	2,155
CASH AND EQUIVALENTS AT END OF PERIOD	$ 1,450	$ 1,540

XML

Consolidated Statement Of Equity - USD ($) $ in Millions	Total	Time Warner Shareholders	Noncontrolling Interests
BALANCE AT BEGINNING OF PERIOD at Dec. 31, 2015	$ 23,619	$ 23,619	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,215	1,214	1	[1]
Other comprehensive loss	(44)	(44)	0
Cash dividends	(322)	(322)	0
Common stock repurchases	(713)	(713)	0
Other, primarily related to stock options and restricted stock units	89	89	0
BALANCE AT END OF PERIOD at Mar. 31, 2016	23,844	23,843	1
BALANCE AT BEGINNING OF PERIOD at Dec. 31, 2016	24,337	24,335	2
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,424	1,424	0	[1]
Other comprehensive loss	(17)	(17)	0
Cash dividends	(316)	(316)	0
Common stock repurchases	0	0	0
Other, primarily related to stock options and restricted stock units	(1)	(1)	0
BALANCE AT END OF PERIOD at Mar. 31, 2017	$ 25,427	$ 25,425	$ 2

[1] Net income excludes losses of $1 million for both of the three months ended March 31, 2017 and March 31, 2016, relating to redeemable noncontrolling interests.

XML

Consolidated Statement Of Equity Consolidated Statement of Equity (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Stockholders' Equity [Abstract]
Net income (loss) attributable to redeemable noncontrolling interest	$ (1)	$ (1)

XML

Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Time Warner Inc. (“Time Warner” or the “Company”) is a leading media and entertainment company, whose businesses include television networks, and film and TV entertainment. Time Warner classifies its operations into three reportable segments: Turner: consisting principally of cable networks and digital media properties; Home Box Office: consisting principally of premium pay television services and a service that delivers video content to consumers over the internet (“OTT service”) domestically and premium pay, basic tier television and OTT services internationally; and Warner Bros.: consisting principally of television, feature film, home video and videogame production and distribution.

Basis of Presentation

Interim Financial Statements

The consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (“GAAP”) applicable to interim periods. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Time Warner included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Basis of Consolidation

The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of entities in which Time Warner has a controlling interest (“subsidiaries”). Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.

Significant estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, multiple-element transactions, allowances for doubtful accounts, depreciation and amortization, the determination of ultimate revenues as it relates to amortization or impairment of capitalized film and programming costs and participations and residuals, home video and videogame product returns, business combinations, pension and other postretirement benefits, equity-based compensation, income taxes, contingencies, litigation matters, reporting revenue for certain transactions on a gross versus net basis, and the determination of whether the Company should consolidate certain entities.

Accounting Guidance Adopted in 2017

Share-Based Payments

On January 1, 2017, the Company adopted, on a prospective basis, new accounting guidance that changes the reporting for certain aspects of share-based payments. One aspect of the guidance requires that the income tax effects of share-based awards be recognized in the Income tax provision in the Consolidated Statement of Operations when the awards vest or are settled. Under the previous guidance, excess tax benefits and deficiencies were recognized in Additional paid-in capital in the Consolidated Balance Sheet. For the three months ended March 31,2017 and 2016, the amount of excess tax benefits, net of deficiencies, recognized in Income tax provision and Additional paid-in capital, respectively, was $63 million and $22 million, respectively. In addition, because excess tax benefits are no longer recognized in Additional paid-in capital under the new guidance, such amounts are no longer included in the determination of assumed proceeds in applying the treasury stock method when computing earnings per share. Another aspect of the new guidance requires that excess tax benefits be classified as a cash flow from operating activities, rather than a cash flow from financing activities, in the Consolidated Statement of Cash Flows. For the three months ended March 31,2017 and 2016, the amount of excess tax benefits presented as a cash flow from operating activities and financing activities, respectively, was $63 million and $27 million, respectively. The other aspects of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

Net Periodic Benefit Costs

In March 2017, guidance was issued that requires that an employer disaggregate the service cost component from the other components of net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans.  While the service cost component of net periodic benefit costs will continue to be presented as an operating expense, the other components are now required to be recorded outside of operating income in the Consolidated Statement of Operations.  For the year ended December 31, 2016, net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans were $46 million, $4 million of which related to the service cost component.  The guidance will become effective on a retrospective basis for the Company on January 1, 2018.

Simplifying the Accounting for Goodwill Impairment

In January 2017, guidance was issued to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires that a hypothetical purchase price allocation be performed to determine the amount of impairment, if any. Under this new guidance, a goodwill impairment charge will be based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance will become effective on a prospective basis for the Company on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements.

Definition of a Business

In January 2017, guidance was issued that changes the definition of a business for accounting purposes. Under the new guidance, an entity first determines whether substantially all of the fair value of a set of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of assets is not deemed to be a business. If the threshold is not met, the entity then evaluates whether the set of assets meets the requirement to be deemed a business, which at a minimum, requires there to be an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance will become effective on a prospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Restricted Cash

In November 2016, guidance was issued that requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, guidance was issued that requires entities to recognize the income tax consequences of an intercompany transfer of an asset other than inventory when the transfer occurs, rather than deferring the income tax consequences of the intercompany transfer of assets until the asset has been sold to a third party. The guidance will become effective on a modified retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Classification of Certain Cash Receipts and Cash Payments

In August 2016, guidance was issued that clarifies the presentation of certain cash receipts and payments in a company’s statement of cash flows. The guidance primarily relates to the classification of cash flows associated with certain (i) debt transactions, (ii) contingent consideration arrangements related to business combinations, (iii) insurance claims and policies, (iv) distributions received from equity method investees and (v) securitization transactions. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Accounting for Leases

In February 2016, guidance was issued regarding accounting for leases. The main difference between the current guidance and the new guidance is the recognition by the lessee of lease assets and liabilities for those leases it classified as operating leases under the current guidance. Under the new guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease as well as the lessor accounting model have not significantly changed from current guidance. This guidance also requires qualitative and quantitative disclosures of key information about leasing arrangements. The new guidance will become effective on a modified retrospective basis for the Company on January 1, 2019. The Company is still evaluating the impact of the new guidance on its consolidated financial statements. Because the Company is a party to more than 2,000 operating leases with future minimum rental commitments at December 31, 2016 of $1.154 billion, it expects that the impact of recognizing lease assets and liabilities for these operating leases will be significant to the Company’s Consolidated Balance Sheet.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, guidance was issued that makes limited changes to the accounting for financial instruments. The changes primarily relate to (i) the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value, with changes in the fair value recognized in earnings, (ii) an alternative approach for the measurement of equity investments that do not have a readily determinable fair value, (iii) the elimination of the other-than-temporary impairment model and its replacement with a requirement to perform a qualitative assessment to identify the impairment of equity investments, and a requirement to recognize impairment losses in earnings based on the difference between the fair value and the carrying value of the equity investment, (iv) the elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost, (v) the addition of a requirement to use the exit price concept when measuring the fair value of financial instruments for disclosure purposes and (vi) the addition of a requirement to present financial assets and financial liabilities separately in the notes to the financial statements, grouped by measurement category (e.g., fair value, amortized cost, lower of cost or market) and by form of financial asset (e.g., loans, securities). This guidance will become effective for the Company on January 1, 2018. The Company does not expect the new guidance to have a material impact on its consolidated financial statements.

Revenue Recognition

In May 2014, guidance was issued that establishes a new revenue recognition framework in GAAP for all companies and industries. The core principle of the new guidance is that an entity should recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive for those goods or services.  The guidance includes a five-step framework to determine the timing and amount of revenue to recognize related to contracts with customers.  In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework.  Based on the current guidance, the new framework will become effective on either a full or modified retrospective basis for the Company on January 1, 2018. 

Subsequent to the issuance of the May 2014 guidance, several clarifications and updates have been issued by the FASB on this topic, the most recent of which was issued in December 2016.  Many of these clarifications and updates to the guidance, as well as a number of interpretive issues, apply to companies in the media and entertainment industry.

The Company has made significant progress toward completing its assessment of the impact of adopting this new guidance, and the Company is finalizing its implementation plan. The Company currently does not believe that the adoption of the new guidance will have a material impact on the Company’s financial statements, principally because the Company does not expect significant changes in the way it will record subscription revenue, advertising revenue, and a significant portion of its content revenue. However, it is possible that the Company’s evaluation of the expected impact of the new guidance on certain transactions could change if there are additional interpretations of the new revenue guidance that are different from the Company’s preliminary conclusions. Although the Company currently does not expect the impact of adopting the new guidance to be material, there are several areas where the Company’s revenue recognition is expected to change as compared with historical GAAP. The more significant of these areas are as follows:

i. Renewals of Licenses of Intellectual Property - Under guidance currently in effect, when the term of an existing license agreement is extended, without any other changes to the provisions of the license, revenue for the renewal period is recognized on the date the renewal is agreed to contractually. Under the new guidance, revenue for the renewed license term will not be recognized until the date the renewal term begins. This change will result in delayed revenue recognition as compared with current revenue recognition guidance. The Company expects that this change will primarily impact the Warner Bros. segment, but it will also, to a lesser degree, impact the Home Box Office and Turner segments.

ii. License of Content Library - Under guidance currently in effect, when a company licenses a completed library of content and agrees to refresh the library with new content as it becomes available, and the licensee is not entitled to a refund if no further library titles are delivered, revenue is recognized once access to the library is granted to the licensee. Under the new guidance, because there is an implicit obligation for the company to refresh the library with additional content in the future, the company will need to estimate the additional content it will deliver in the future and allocate a portion of the transaction price to that content. As compared with current guidance, this results in a deferral of a portion of the transaction price until delivery of future library content. The Company expects this change will primarily impact the Home Box Office segment.

iii. Licenses of Symbolic Intellectual Property - Certain intellectual property, such as brands, tradenames and logos, is categorized in the new guidance as symbolic. An assumption inherent in the new guidance is that a licensee’s ability to derive benefit from a license of symbolic intellectual property depends on the licensor continuing to support or maintain the intellectual property throughout the license term. Accordingly, under the new guidance, revenue from licenses of symbolic intellectual property is recognized over the corresponding license term. In certain arrangements where the Company has no remaining performance obligations, under the guidance currently in effect, revenue from licenses of symbolic intellectual property is recognized at the inception of the license term. Therefore, the new guidance will result in a deferral of revenue recognition as compared to current guidance. This change will primarily impact the Warner Bros. segment.

The evaluation of the impact of the new guidance on certain other transactions is still in process; however, the Company does not expect the completion of that evaluation to impact the Company’s conclusion that the adoption will not have a material impact on the Company’s financial statements.

The Company currently expects to adopt the standard in 2018 using the modified retrospective method of adoption. However, the transition method ultimately selected could be affected by the Company’s pending merger with AT&T Inc. (“AT&T”) if the merger closes prior to the adoption of the new guidance. For more information regarding the AT&T merger, see Note 2.

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Merger Agreement with AT&T

3 Months Ended

Mar. 31, 2017

Merger [Abstract]

MERGER AGREEMENT WITH AT&T

MERGER AGREEMENT WITH AT&T

On October 22, 2016, Time Warner entered into an Agreement and Plan of Merger (the “Merger Agreement”) with AT&T. The Merger Agreement provides for the merger of a newly formed wholly owned subsidiary of AT&T with and into Time Warner, with Time Warner continuing as the surviving company in the merger. Immediately thereafter, Time Warner will merge with and into a limited liability company formed by AT&T, which will continue as the surviving entity and a wholly owned subsidiary of AT&T. The Merger Agreement was unanimously approved by all members of Time Warner’s and AT&T’s boards of directors. Time Warner shareholders adopted the Merger Agreement at a special meeting of shareholders on February 15, 2017. Subject to the satisfaction of the remaining conditions set forth in the Merger Agreement, upon consummation of the merger, each share of the Company’s common stock will be converted into the right to receive $53.75 in cash and a specified number of shares of AT&T stock, as set forth in the Merger Agreement and determined by reference to the average of the volume weighted averages of the trading price of AT&T common stock on the New York Stock Exchange (“NYSE”) on each of the 15 consecutive NYSE trading days ending on and including the trading day that is three trading days prior to the closing of the merger (the “Average Stock Price”). The stock portion of the per share consideration will be subject to a collar such that if the Average Stock Price is between $37.411 and $41.349, Time Warner shareholders will receive shares of AT&T stock equal to $53.75 in value for each share of Time Warner common stock. If the Average Stock Price is below $37.411, Time Warner shareholders will receive 1.437 AT&T shares for each share of Time Warner common stock. If the Average Stock Price is an amount greater than $41.349, Time Warner shareholders will receive 1.300 AT&T shares for each share of Time Warner common stock. The merger is conditioned on the receipt of certain antitrust and other required regulatory consents. The merger is expected to close before year-end 2017. Should Time Warner terminate the Merger Agreement in specified circumstances, Time Warner may be required to pay AT&T a termination fee equal to $1.725 billion if Time Warner enters into or consummates an alternative transaction with a third party following such termination of the Merger Agreement.

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Business Dispositions and Acquisitions

3 Months Ended

Mar. 31, 2017

Acquisitions and Dispositions [Abstract]

BUSINESS DISPOSITIONS AND ACQUISITIONS

BUSINESS DISPOSITIONS AND ACQUISITIONS

For the three months ended March 31, 2016, Discontinued operations, net of tax was income of $40 million ($0.05 of diluted income from discontinued operations per common share), related to the recognition of certain tax benefits associated with foreign tax attributes of the Warner Music Group (“WMG”), which the Company disposed of in 2004.

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Investments

3 Months Ended

Mar. 31, 2017

Investments [Abstract]

INVESTMENTS

INVESTMENTS

Central European Media Enterprises Ltd.

As of March 31, 2017, the Company had an approximate 47% voting interest in Central European Media Enterprises Ltd.’s (“CME”) common stock and an approximate 76% economic interest in CME on a diluted basis.

As of March 31, 2017, the Company owned 61.4 million shares of CME’s Class A common stock and 1 share of Series A convertible preferred stock, which is convertible into 11.2 million shares of CME’s Class A common stock and votes with the Class A common stock on an as-converted basis. The Company accounts for its investment in CME’s Class A common stock and Series A convertible preferred stock under the equity method of accounting. Although the book value of the Company’s equity method investment in CME has been reduced to zero through the recognition of equity method losses, the Company has continued to record equity method losses because it has guaranteed an aggregate amount of €955 million of CME’s obligations. The amount of such equity method losses at March 31, 2017 was $143 million and is presented in Other noncurrent liabilities on the Consolidated Balance Sheet. In addition, in connection with these guarantees, the Company recognized a liability at the inception of each respective arrangement based on the estimated fair value of the applicable guarantee. At March 31, 2017, the carrying value of liabilities associated with such guarantees was $183 million, which is also included in Other noncurrent liabilities on the Consolidated Balance Sheet. Pursuant to the terms of all of CME’s outstanding senior debt, a change of control of Time Warner provides the administrative agent and/or lenders of this debt the right to declare the debt immediately due and payable. If that were to occur, Time Warner would be obligated under the terms of its guarantees to pay the full amount of the debt, subject to reimbursement from CME on the scheduled maturity dates for the debt in 2018, 2019 and 2021.

As of March 31, 2017, the Company owned all of the outstanding shares of CME’s Series B convertible redeemable preferred shares, which are non-voting and may be converted into 106.2 million shares of CME’s Class A common stock at the Company’s option. The Series B convertible redeemable preferred shares accrete in value until June 24, 2018 at an annual rate of 3.75% compounded quarterly. The Company accounts for its investment in CME’s Series B convertible redeemable preferred shares under the cost method of accounting.

As of March 31, 2017, the Company held 101 million warrants each to purchase one share of CME Class A common stock. The warrants, which became exercisable in May 2016, have a four-year term that expires in May 2018 and an exercise price of $1.00 per share and do not contain any voting rights. The warrants are carried at fair value in the Consolidated Balance Sheet, which at March 31, 2017, was $213 million.

As of March 31, 2017, there were no amounts outstanding under the CME Revolving Credit Facility.

On March 2, 2017, Time Warner, CME and CME Media Enterprises B.V. (“CME BV”), a wholly owned subsidiary of CME, entered into an amendment (the “2017 Amendment”) to the Amended and Restated Reimbursement Agreement, dated as of November 14, 2014, and as amended and restated as of February 19, 2016. Effective March 1, 2017, the 2017 Amendment reduced the guarantee fees payable by CME and CME BV to Time Warner for Time Warner’s guarantees of CME’s obligations under its €251 million senior unsecured term loan that matures on November 1, 2018 and its €235 million senior unsecured term loan that matures on November 1, 2019 as well as CME BV’s obligation under its €469 million senior unsecured term loan that matures on February 19, 2021.  The reduced fee to be paid to Time Warner for each of these guarantees is equal to a rate (the “all-in” rate) ranging between 5% and 8.5%, measured quarterly based on CME’s consolidated net leverage ratio, less the interest rate on the term loans. A portion of the fee equal to 5.0% less the interest rate on the term loans is payable in cash by CME and CME BV and the remainder may be payable in cash or in kind, at CME’s option. The 2017 Amendment also provides that if CME’s consolidated debt level is less than €815 million by September 30, 2018, the all-in rate will be decreased further by 50 basis points. In addition, if there is a change in control of CME, the all-in rate will increase to the lower of (i) the then applicable guarantee fee payable to Time Warner plus 3.5% and (ii) 10.0% on the date that is 180 days following such change of control. The 2017 Amendment did not affect the terms of the guarantees the Company provided to CME’s and CME BV’s lenders under the term loans.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

A fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3). The following table presents information about assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2017 and December 31, 2016, respectively (millions):

	March 31, 2017											December 31, 2016
	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3		Total
Assets:
Trading securities:
Diversified equity securities (a)	$	170	$	—		$	—		$	170		$	163	$	—		$	—	$	163
Available-for-sale securities:
Equity securities	16		—			—			16			17		—			—		17
Debt securities	—		36			—			36			—		37			—		37
Derivatives:
Foreign exchange contracts	—		136			—			136			—		153			—		153
Other	—		—			214			214			—		—			161		161
Liabilities:
Derivatives:
Foreign exchange contracts	—		(13		)	—			(13		)	—		(9		)	—		(9		)
Other	—		—			(1		)	(1		)	—		—			—		—
Total	$	186	$	159		$	213		$	558		$	180	$	181		$	161	$	522

_________________________ 

(a) Consists of investments related to deferred compensation.

The Company primarily applies the market approach for valuing recurring fair value measurements. As of March 31, 2017 and December 31, 2016, assets valued using significant unobservable inputs (Level 3) primarily related to warrants to purchase shares of Class A common stock of CME valued at $213 million and $159 million, respectively. The Company estimates the fair value of these warrants using a Monte Carlo Simulation model. Significant unobservable inputs used in the fair value measurement at March 31, 2017 are an expected term of 0.69 years and an expected volatility of approximately 46%. As of March 31, 2017 and December 31, 2016, the other Level 3 assets consisted of equity instruments held by employees of a former subsidiary of the Company. As of March 31, 2017, Level 3 liabilities consisted of a liability related to contingent consideration.

The following table reconciles the beginning and ending balances of net derivative assets and liabilities classified as Level 3 and identifies the total gains (losses) the Company recognized during the three months ended March 31, 2017 and 2016 on such assets and liabilities that were included in the Consolidated Balance Sheet as of March 31, 2017 and 2016 (millions):

	March 31, 2017			March 31, 2016
Balance as of the beginning of the period	$	161		$	173
Total gains (losses), net:
Included in operating income	—			—
Included in other income (loss), net	54			(19		)
Included in other comprehensive loss	—			—
Purchases	—			—
Settlements	(1		)	5
Issuances	(1		)	—
Balance as of the end of the period	$	213		$	159
Net gain (loss) for the period included in net income related to assets and liabilities still held as of the end of the period	$	54		$	(19	)

Other Financial Instruments

The Company’s other financial instruments, including debt, are not required to be carried at fair value. Based on the interest rates prevailing at March 31, 2017, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.072 billion and, based on interest rates prevailing at December 31, 2016, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.238 billion. The fair value of Time Warner’s public debt is considered a Level 2 measurement as it is based on observable market inputs such as current interest rates and, where available, actual sales transactions. Unrealized gains or losses on debt do not result in the realization or expenditure of cash and generally are not recognized in the consolidated financial statements unless the debt is retired prior to its maturity.

Information as of March 31, 2017 about the Company’s investments in CME that are not required to be carried at fair value on a recurring basis is as follows (millions):

	Carrying Value		Fair Value		Fair Value Hierarchy
Class A common stock (a)	$	—	$	225	Level 1
Series B convertible redeemable preferred shares	$	—	$	329	Level 2

_________________________ 

(a) Includes 1 share of Series A convertible preferred stock.

The fair values of the Company’s investments in CME’s Class A common stock (including Series A convertible preferred stock) and Series B convertible redeemable preferred shares are primarily determined by reference to the March 31, 2017 closing price of CME’s common stock.

The carrying value for the majority of the Company’s other financial instruments approximates fair value due to the short-term nature of the financial instruments or because the financial instruments are of a longer-term nature and are recorded on a discounted basis.

Non-Financial Instruments

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value.

During the three months ended March 31, 2017 and March 31, 2016, the Company also performed fair value measurements related to certain theatrical films and television programs. In determining the fair value of its theatrical films, the Company employs a DCF methodology that includes cash flow estimates of a film’s ultimate revenue and costs as well as a discount rate. The discount rate utilized in the DCF analysis is based on the weighted average cost of capital of the respective business (e.g., Warner Bros.) plus a risk premium representing the risk associated with producing a particular theatrical film. The fair value of any theatrical films and television programs that management plans to abandon is zero. Because the primary determination of fair value is made using a DCF model, the resulting fair value is considered a Level 3 measurement. The following table presents certain theatrical film and television production costs, which were recorded as inventory in the Consolidated Balance Sheet, that were written down to fair value (millions):

	Carrying value before  write down		Carrying value after write down
Fair value measurements made during the three months ended March 31,:
2017	$	51	$	30
2016	$	28	$	2

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Inventories and Theatrical Film and Television Production Costs

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

INVENTORIES AND THEATRICAL FILM AND TELEVISION PRODUCTION COSTS

INVENTORIES AND THEATRICAL FILM AND TELEVISION PRODUCTION COSTS

Inventories and theatrical film and television production costs consist of (millions):

	March 31, 2017			December 31, 2016
Inventories:
Programming costs, less amortization (a)	$	3,520		$	3,625
Other inventory, primarily DVDs and Blu-ray Discs	182			184
Total inventories	3,702			3,809
Less: current portion of inventory	(1,983		)	(2,062		)
Total noncurrent inventories	1,719			1,747
Theatrical film production costs: (b)
Released, less amortization	724			818
Completed and not released	635			460
In production	1,086			1,286
Development and pre-production	126			133
Television production costs: (b)
Released, less amortization	1,976			1,618
Completed and not released	645			841
In production	999			995
Development and pre-production	13			18
Total theatrical film and television production costs	6,204			6,169
Total noncurrent inventories and theatrical film and television production costs	$	7,923		$	7,916

_________________________ 

(a) Includes the costs of certain programming rights, primarily sports, for which payments have been made prior to the related rights being received.

(b) Does not include $485 million and $518 million of acquired film library intangible assets as of March 31, 2017 and December 31, 2016, respectively, which are included in Intangible assets subject to amortization, net in the Consolidated Balance Sheet.

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Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Time Warner uses derivative instruments, primarily forward contracts, to manage the risk associated with the volatility of future cash flows denominated in foreign currencies and changes in fair value resulting from changes in foreign currency exchange rates. The principal currencies being hedged include the British Pound, Euro, Australian Dollar and Canadian Dollar. Time Warner uses foreign exchange contracts that generally have maturities of three to 18 months to hedge various foreign exchange exposures, including the following: (i) variability in foreign-currency-denominated cash flows, such as the hedges of unremitted or forecasted royalty and license fees owed to Time Warner’s domestic companies for the sale or anticipated sale of U.S. copyrighted products abroad or cash flows for certain film production costs denominated in a foreign currency (i.e., cash flow hedges), and (ii) currency risk associated with foreign-currency-denominated operating assets and liabilities (i.e., fair value hedges).

The Company also enters into derivative contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. These economic hedges are used primarily to offset the change in certain foreign-currency-denominated intercompany debt due to changes in the underlying foreign exchange rates.

The translation of revenues and expenses denominated in the functional currency of a foreign subsidiary may result in fluctuations in the U.S. Dollar-equivalent value of such revenues and expenses as compared to prior periods. Such transactions are not eligible for qualifying hedge accounting treatment, and the Company does not economically hedge this exposure.

Net gains and losses from hedging activities recognized in the Consolidated Statement of Operations were as follows (millions):

	Three Months Ended March 31,
	2017			2016
Gains (losses) recognized in:
Cost of revenues	$	(1	)	$	9
Selling, general and administrative	(3		)	3
Other income (loss), net	1			22

Amounts included in Other income (loss), net include the impact of forward points and option premiums, which are excluded from the assessment of hedge effectiveness. Other amounts included in Other income (loss), net relate to hedge of foreign-currency-denominated debt and hedge ineffectiveness, which are not material.

The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions and has entered into collateral agreements with these counterparties to further protect the Company in the event of deterioration of the credit quality of such counterparties on outstanding transactions. Additionally, netting provisions are included in agreements in situations where the Company executes multiple contracts with the same counterparty. For such foreign exchange contracts, the Company offsets the fair values of the amounts owed to or due from the same counterparty and classifies the net amount as a net asset or net liability within Prepaid expenses and other current assets or Accounts payable and accrued liabilities, respectively, in the Consolidated Balance Sheet. The following is a summary of amounts recorded in the Consolidated Balance Sheet pertaining to Time Warner’s use of foreign currency derivatives at March 31, 2017 and December 31, 2016 (millions):

	March 31, 2017 (a)			December 31, 2016 (b)
Prepaid expenses and other current assets	$	136		$	153
Accounts payable and accrued liabilities	(13		)	(9		)

________________________

(a) Includes $294 million ($270 million of qualifying hedges and $24 million of economic hedges) and $171 million ($164 million of qualifying hedges and $7 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

(b) Includes $297 million ($272 million of qualifying hedges and $25 million of economic hedges) and $153 million ($141 million of qualifying hedges and $12 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

At March 31, 2017 and December 31, 2016, $26 million and $46 million of gains, respectively, related to cash flow hedges are recorded in Accumulated other comprehensive loss, net and are expected to be recognized in earnings at the same time the hedged items affect earnings. Included in Accumulated other comprehensive loss, net at March 31, 2017 and December 31, 2016 are net losses of $1 million and $3 million, respectively, related to hedges of cash flows associated with films that are not expected to be released within the next twelve months.

At March 31, 2017, the carrying amount of the Company’s €700 million aggregate principal amount of debt due 2023 is designated as a hedge of the variability in the Company’s Euro-denominated net investments. The gain or loss on the debt that is designated as, and is effective as, an economic hedge of the net investment in a foreign operation is recorded as a currency translation adjustment within Accumulated other comprehensive loss, net in the Consolidated Balance Sheet. For the three months ended March 31, 2017 and 2016, such amounts totaled $13 million and $7 million of losses, respectively.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY

Comprehensive Income (Loss)

Comprehensive income (loss) is reported in the Consolidated Statement of Comprehensive Income and consists of Net income and other gains and losses affecting shareholders’ equity that, under GAAP, are excluded from Net income. For Time Warner, such items consist primarily of foreign currency translation gains (losses), unrealized gains and losses on certain derivative financial instruments and equity securities, and changes in benefit plan obligations.

The following summary sets forth the activity within Other comprehensive loss (millions):

	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Pretax			Tax (provision) benefit			Net of tax			Pretax			Tax (provision) benefit			Net of tax
Unrealized losses on foreign currency translation	$	(10	)	$	(1	)	$	(11	)	$	(50	)	$	11		$	(39	)
Unrealized gains on securities	—			—			—			2			(1		)	1
Unrealized gains on benefit obligations	3			(1		)	2			7			(2		)	5
Reclassification adjustment for losses on benefit obligations realized in net income (a)	8			(3		)	5			9			(3		)	6
Unrealized gains (losses) on derivative financial instruments	(23		)	8			(15		)	1			(1		)	—
Reclassification adjustment for (gains) losses on derivative financial instruments realized in net income (b)	3			(1		)	2			(27		)	10			(17		)
Other comprehensive loss	$	(19	)	$	2		$	(17	)	$	(58	)	$	14		$	(44	)

_________________________

(a) Pretax (gains) losses are included in Selling, general and administrative expenses.

(b) Pretax (gains) losses are included in Selling, general and administrative expenses, Costs of revenues and Other income (loss), net are as follows (millions):

	Three Months Ended March 31,
	2017		2016
Selling, general and administrative expenses	$	3	$	(3	)
Costs of revenues	—		(9		)
Other income (loss), net	—		(15		)

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Income Per Common Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

INCOME PER COMMON SHARE

INCOME PER COMMON SHARE

Set forth below is a reconciliation of Basic and Diluted income per common share from continuing operations attributable to Time Warner Inc. common shareholders (millions, except per share amounts):

	Three Months Ended March 31,
	2017			2016
Income from continuing operations attributable to Time Warner Inc. shareholders	$	1,424		$	1,174
Income allocated to participating securities	(4		)	(3		)
Income from continuing operations attributable to Time Warner Inc. common shareholders— basic	$	1,420		$	1,171
Average basic common shares outstanding	773.6			790.7
Dilutive effect of equity awards	15.7			11.6
Average diluted common shares outstanding	789.3			802.3
Antidilutive common share equivalents excluded from computation	—			7
Income per common share from continuing operations attributable to Time Warner Inc. common shareholders:
Basic	$	1.84		$	1.48
Diluted	$	1.80		$	1.46

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Equity-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY-BASED COMPENSATION

EQUITY-BASED COMPENSATION

The following table sets forth the number of stock options, RSUs and PSUs granted (millions):

	Three Months Ended March 31,
	2017	2016
Stock options	—	2.2
RSUs	0.4	2.7
PSUs	—	0.2

The following table sets forth the weighted-average grant date fair value of restricted stock units (“RSUs”) granted during the three months ended March 31, 2017 and 2016 and PSUs granted during the three months ended March 31,2016. For PSUs, the service inception date precedes the grant date and requires the Company to apply mark-to-market accounting that is reflected in the grant date fair values presented:

	Three Months Ended March 31,
	2017		2016
RSUs	$	96.28	$	62.38
PSUs	—		112.56

In connection with entering into the Merger Agreement, the Company granted special retention restricted stock units (“Special Retention RSUs”) to certain employees of Time Warner and its divisions, including all executive officers of Time Warner.  Half of the Special Retention RSUs will vest 25% per year on each of the first four anniversaries of February 15, 2017, and the remaining half will vest 25% per year on each of the first four anniversaries of February 15, 2018. Pursuant to the Special Retention RSU agreements, vesting as a result of retirement is not permitted unless the employee retires after the merger has closed.  In addition, the awards do not accelerate automatically following the closing of the merger.  Instead, the employee must remain employed following the closing, and the awards will vest only upon the scheduled vesting date or upon termination of employment under certain circumstances, such as termination without cause, for good reason or due to retirement.

The impact of equity-based compensation awards on Operating income is as follows (millions):

	Three Months Ended March 31,
	2017		2016
Stock options	$	7	$	21
RSUs and PSUs	50		87
Total impact on operating income	$	57	$	108
Tax benefit recognized	$	19	$	38

Total unrecognized compensation cost related to unvested Time Warner stock option awards as of March 31, 2017, without taking into account expected forfeitures, is $46 million and is expected to be recognized over a weighted-average period of approximately 1 year. Total unrecognized compensation cost related to unvested RSUs and PSUs as of March 31, 2017, without taking into account expected forfeitures, is $619 million and is expected to be recognized over a weighted-average period between 1 and 2 years.

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Benefit Plans

3 Months Ended

Mar. 31, 2017

Compensation and Retirement Disclosure [Abstract]

BENEFIT PLANS

BENEFIT PLANS

Components of Net Periodic Benefit Costs

A summary of the components of the net periodic benefit costs from continuing operations recognized for substantially all of Time Warner’s defined benefit pension plans for the three months ended March 31, 2017 and 2016 is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Service cost	$	1		$	1
Interest cost	16			22
Expected return on plan assets	(15		)	(21		)
Amortization of net loss	3			4
Net periodic benefit costs (a)	$	5		$	6
Contributions	$	10		$	9

_________________________

(a) Excludes net periodic benefit costs related to discontinued operations of $3 million and $4 million for the three months ended March 31, 2017 and March 31, 2016, respectively, primarily related to employees and former employees of Time Inc. These amounts have been reflected in Other income (loss), net in the Consolidated Statement of Operations.

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Restructuring and Severance Costs

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND SEVERANCE COSTS

RESTRUCTURING AND SEVERANCE COSTS

The Company’s Restructuring and severance costs primarily related to employee termination costs, ranging from senior executives to line personnel, and other exit costs, including lease terminations and real estate consolidations. Restructuring and severance costs expensed as incurred for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Turner	$	2		$	1
Home Box Office	2			4
Warner Bros.	9			1
Corporate	(1		)	(1		)
Total restructuring and severance costs	$	12		$	5

	Three Months Ended March 31,
	2017			2016
2017 initiatives	$	16		$	—
2016 and prior initiatives	(4		)	5
Total restructuring and severance costs	$	12		$	5

Selected information relating to accrued restructuring and severance costs is as follows (millions):

	Employee Terminations			Other Exit Costs			Total
Remaining liability as of December 31, 2016	$	162		$	9		$	171
Net accruals	12			—			12
Noncash reductions (a)	(2		)	—			(2		)
Cash paid	(34		)	(1		)	(35		)
Remaining liability as of March 31, 2017	$	138		$	8		$	146

_________________________

(a) Noncash reductions relate to the settlement of certain liabilities relating to employee compensation with equity instruments.

As of March 31, 2017, of the remaining $146 million liability, $95 million was classified as a current liability in the Consolidated Balance Sheet, with the remaining $51 million classified as a long-term liability. Amounts classified as long-term are expected to be paid through 2020.

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Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Time Warner classifies its operations into three reportable segments: Turner: consisting principally of cable networks and digital media properties; Home Box Office: consisting principally of premium pay television and OTT services domestically and premium pay, basic tier television and OTT services internationally; and Warner Bros.: consisting principally of television, feature film, home video and videogame production and distribution. Time Warner’s reportable segments have been determined in accordance with its internal management structure and the financial information that is evaluated regularly by the Company’s chief operating decision maker.

In the ordinary course of business, Time Warner’s reportable segments enter into transactions with one another. The most common types of intersegment transactions include the Warner Bros. segment generating revenues by licensing television and theatrical programming to the Turner and Home Box Office segments. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses or assets recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.

Information as to the Revenues, intersegment revenues, Operating Income (Loss) and Assets of Time Warner’s reportable segments is set forth below (millions):

	Three Months Ended March 31,
	2017			2016
Revenues
Turner	$	3,088		$	2,906
Home Box Office	1,568			1,506
Warner Bros.	3,365			3,109
Intersegment eliminations	(286		)	(213		)
Total revenues	$	7,735		$	7,308

	Three Months Ended March 31,
	2017		2016
Intersegment Revenues
Turner	$	21	$	20
Home Box Office	2		3
Warner Bros.	263		190
Total intersegment revenues	$	286	$	213

	Three Months Ended March 31,
	2017			2016
Operating Income (Loss)
Turner	$	1,170		$	1,239
Home Box Office	583			477
Warner Bros.	488			424
Corporate	(114		)	(140		)
Intersegment eliminations	(51		)	(4		)
Total operating income	$	2,076		$	1,996

	March 31, 2017		December 31, 2016
Assets
Turner	$	26,703	$	26,317
Home Box Office	14,692		14,636
Warner Bros.	20,968		21,550
Corporate	3,286		3,463
Total assets	$	65,649	$	65,966

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Commitments

Six Flags

In connection with the Company’s former investment in the Six Flags theme parks located in Georgia and Texas (collectively, the “Parks”), in 1997, certain subsidiaries of the Company (including Historic TW and, in connection with the separation of Time Warner Cable Inc. in 2009, Warner Bros. Entertainment Inc.) agreed to guarantee (the “Six Flags Guarantee”) certain obligations of the partnerships that hold the Parks (the “Partnerships”) for the benefit of the limited partners in such Partnerships, including: annual payments made at the Parks or to the limited partners and additional obligations at the end of the respective terms for the Partnerships in 2027 and 2028 (the “Guaranteed Obligations”). The aggregate undiscounted estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term (through 2028) are $928 million (for a net present value of $456 million). To date, no payments have been made by the Company pursuant to the Six Flags Guarantee.

Six Flags Entertainment Corporation (formerly known as Six Flags, Inc. and Premier Parks Inc.) (“Six Flags”), which has the controlling interest in the Parks, has agreed, pursuant to a subordinated indemnity agreement (the “Subordinated Indemnity Agreement”), to guarantee the performance of the Guaranteed Obligations when due and to indemnify Historic TW, among others, if the Six Flags Guarantee is called upon. If Six Flags defaults in its indemnification obligations, Historic TW has the right to acquire control of the managing partner of the Parks. Six Flags’ obligations to Historic TW are further secured by its interest in all limited partnership units held by Six Flags.

Because the Six Flags Guarantee existed prior to December 31, 2002 and no modifications to the arrangements have been made since the date the guarantee came into existence, the Company is required to continue to account for the Guaranteed Obligations as a contingent liability. Based on its evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the Subordinated Indemnity Agreement, the Company is unable to predict the loss, if any, that may be incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized at March 31, 2017. Because of the specific circumstances surrounding the arrangements and the fact that no active or observable market exists for this type of financial guarantee, the Company is unable to determine a current fair value for the Guaranteed Obligations and related Subordinated Indemnity Agreement.

Contingencies

In the ordinary course of business, the Company and its subsidiaries are defendants in or parties to various legal claims, actions and proceedings. These claims, actions and proceedings are at varying stages of investigation, arbitration or adjudication, and involve a variety of areas of law.

On April 4, 2007, the National Labor Relations Board (“NLRB”) issued a complaint against CNN America Inc. (“CNN America”) and Team Video Services, LLC (“Team Video”) related to CNN America’s December 2003 and January 2004 terminations of its contractual relationships with Team Video, under which Team Video had provided electronic news gathering services in Washington, D.C. and New York, NY. The National Association of Broadcast Employees and Technicians, under which Team Video’s employees were unionized, initially filed charges of unfair labor practices with the NLRB in February 2004, alleging that CNN America and Team Video were joint employers, that CNN America was a successor employer to Team Video, and/or that CNN America discriminated in its hiring practices to avoid becoming a successor employer or due to specific individuals’ union affiliation or activities. In the complaint, the NLRB sought, among other things, the reinstatement of certain union members and monetary damages. On November 19, 2008, the presiding NLRB Administrative Law Judge (“ALJ”) issued a non-binding recommended decision and order finding CNN America liable. On September 15, 2014, a three-member panel of the NLRB affirmed the ALJ’s decision and adopted the ALJ’s order with certain modifications. On November 12, 2014, both CNN America and the NLRB General Counsel filed motions with the NLRB for reconsideration of the panel’s decision. On March 20, 2015, the NLRB granted the NLRB General Counsel’s motion for reconsideration to correct certain inadvertent errors in the panel’s decision, and it denied CNN America’s motion for reconsideration. On July 9, 2015, CNN America filed a notice of appeal with the U.S. Court of Appeals for the D.C. Circuit regarding the panel’s decision and the denial of CNN America’s motion for reconsideration; on February 23, 2017, the U.S. Court of Appeals for the D.C. Circuit heard oral argument from the parties on CNN America’s appeal.

The Company establishes an accrued liability for legal claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

The Company has estimated a range of possible loss for legal claims for which the Company has determined a loss is probable or reasonably possible, including the matter disclosed above. The Company believes the estimate of the aggregate range of possible loss for such matters in excess of accrued liabilities is between $0 and $100 million at March 31, 2017. The estimated aggregate range of possible loss is subject to significant judgment and a variety of assumptions. The matters represented in the estimated aggregate range of possible loss will change from time to time and actual results may vary significantly from the current estimate.

In view of the inherent difficulty of predicting the outcome of litigation and claims, the Company often cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. An adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.

Income Tax Uncertainties

During the three months ended March 31,2017, the Company recorded net increases to income tax reserves of approximately $16 million, of which approximately $7 million impacted the Company’s effective tax rate. During the three months ended March 31,2017, the Company recorded net increases to interest reserves related to the income tax reserves of approximately $10 million.

In the Company’s judgment, uncertainties related to certain tax matters are reasonably possible of being resolved during the next twelve months. The effect of such resolution, which could vary based on the final terms and timing of actual settlements with taxing authorities, is estimated to be a reduction of recorded unrecognized tax benefits ranging from $0 to $270 million, which would decrease the Company’s effective tax rate.

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Related Party Transactions

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

The Company has entered into certain transactions in the ordinary course of business with unconsolidated investees accounted for under the equity method of accounting. The transactions that generate revenue and expenses primarily relate to the licensing by the Warner Bros. segment of content to The CW broadcast network, Hulu and certain international networks, including networks owned by CME. Transactions that generate interest income and other income primarily relate to financing transactions with CME. Receivables due from related parties were $344 million and $265 million at March 31, 2017 and December 31, 2016, respectively. Payables due to related parties were immaterial at March 31, 2017 and December 31, 2016, respectively. Amounts included in the Consolidated Statement of Operations resulting from transactions with related parties consist of (millions):

	Three Months Ended March 31,
	2017			2016
Revenues	$	234		$	123
Expenses	(1		)	—
Interest income	23			41
Other income	2			5

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Additional Financial Information

3 Months Ended

Mar. 31, 2017

Additional Financial Information [Abstract]

ADDITIONAL FINANCIAL INFORMATION

ADDITIONAL FINANCIAL INFORMATION

Additional financial information with respect to cash payments and receipts, Interest expense, net, Other income (loss), net, Accounts payable and accrued liabilities and Other noncurrent liabilities is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Cash Flows
Cash payments made for interest	$	(313	)	$	(291	)
Interest income received	10			13
Cash interest payments, net	$	(303	)	$	(278	)
Cash payments made for income taxes	$	(122	)	$	(134	)
Income tax refunds received	4			4
Cash tax payments, net	$	(118	)	$	(130	)

	Three Months Ended March 31,
	2017			2016
Interest Expense, Net
Interest income	$	49		$	63
Interest expense	(308		)	(347		)
Total interest expense, net	$	(259	)	$	(284	)

	Three Months Ended March 31,
	2017			2016
Other Income (Loss), Net
Investment gains (losses), net	$	159		$	(11	)
Loss on equity method investees	(76		)	(34		)
Other	(7		)	5
Total other income (loss), net	$	76		$	(40	)

	March 31, 2017		December 31, 2016
Accounts Payable and Accrued Liabilities
Accounts payable	$	521	$	527
Other accrued expenses	1,605		1,878
Participations payable	2,583		2,525
Programming costs payable	850		776
Accrued compensation	651		1,004
Accrued interest	295		320
Accrued income taxes	261		162
Total accounts payable and accrued liabilities	$	6,766	$	7,192

	March 31, 2017		December 31, 2016
Other Noncurrent Liabilities
Noncurrent tax and interest reserves	$	1,628	$	1,567
Participations payable	1,939		1,780
Programming costs payable	786		827
Noncurrent pension and post-retirement liabilities	940		954
Deferred compensation	509		491
Other noncurrent liabilities	713		722
Total other noncurrent liabilities	$	6,515	$	6,341

Accounting for Collaborative Arrangements

The Company’s collaborative arrangements primarily relate to arrangements entered into with third parties to jointly finance and distribute theatrical productions and an arrangement entered into with CBS Broadcasting, Inc. (“CBS”) and The National Collegiate Athletic Association (the “NCAA”).

For the Company’s collaborative arrangements entered into with third parties to jointly finance and distribute theatrical productions, net participation costs of $93 million and $73 million were recorded in Costs of revenues for the three months ended March 31, 2017 and 2016, respectively.

The arrangement among Turner, CBS and the NCAA provides Turner and CBS with rights to the NCAA Division I Men’s Basketball Championship Tournament (the “NCAA Tournament”) in the United States and its territories and possessions through 2032. The aggregate rights fee, production costs, advertising revenues and sponsorship revenues related to the NCAA Tournament and related programming are shared by Turner and CBS. However, if the amount paid for the rights fee and production costs, in any given year, exceeds advertising and sponsorship revenues for that year, CBS’ share of such shortfall is limited to specified annual amounts, ranging from approximately $30 million to $45 million.

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Supplementary Information - Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SUPPLEMENTARY INFORMATION - CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Overview

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations and cash flows of (i) Time Warner Inc. (the “Parent Company”), (ii) Historic TW Inc. (in its own capacity and as successor by merger to Time Warner Companies, Inc.), Home Box Office, Inc., and Turner Broadcasting System, Inc., each a wholly owned subsidiary of the Parent Company (collectively, the “Guarantor Subsidiaries”), on a combined basis, (iii) the direct and indirect non-guarantor subsidiaries of the Parent Company (the “Non-Guarantor Subsidiaries”), on a combined basis, and (iv) the eliminations necessary to arrive at the information for Time Warner Inc. on a consolidated basis. The Guarantor Subsidiaries fully and unconditionally, jointly and severally guarantee securities issued under certain of the Company’s indentures on an unsecured basis.

There are no legal or regulatory restrictions on the Parent Company’s ability to obtain funds from any of its wholly owned subsidiaries through dividends, loans or advances.

Basis of Presentation

In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent Company’s interests in the Guarantor Subsidiaries and (ii) the Guarantor Subsidiaries’ interests in the Non-Guarantor Subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown in the column “Eliminations.”

The Parent Company’s accounting bases in all subsidiaries, including goodwill and identified intangible assets, have been “pushed down” to the applicable subsidiaries. Corporate overhead expenses have been reflected as expenses of the Parent Company and have not been allocated to the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries. Interest income (expense) is determined based on outstanding debt and the relevant intercompany amounts at the respective subsidiary.

All direct and indirect domestic subsidiaries are included in Time Warner Inc.’s consolidated U.S. tax return. In the condensed consolidating financial statements, tax provision has been allocated based on each such subsidiary’s relative pretax income to the consolidated pretax income. With respect to the use of certain consolidated tax attributes (principally operating and capital loss carryforwards), such benefits have been allocated to the respective subsidiary that generated the taxable income permitting such use (i.e., pro-rata based on where the income was generated). For example, to the extent a Non-Guarantor Subsidiary generated a gain on the sale of a business for which the Parent Company utilized tax attributes to offset such gain, the tax attribute benefit would be allocated to that Non-Guarantor Subsidiary. Deferred taxes of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been determined based on the temporary differences between the book and tax basis of the respective assets and liabilities of the applicable entities.

Certain transfers of cash between subsidiaries and their parent companies and intercompany dividends are reflected as cash flows from investing and financing activities in the accompanying Condensed Consolidating Statements of Cash Flows. All other intercompany activity is reflected in cash flows from operations.

Management believes that the allocations and adjustments noted above are reasonable. However, such allocations and adjustments may not be indicative of the actual amounts that would have been incurred had the Parent Company, Guarantor Subsidiaries and Non-Guarantor Subsidiaries operated independently.

Consolidating Balance Sheet

March 31, 2017

(Unaudited; millions)

	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
ASSETS
Current assets
Cash and equivalents	$	300	$	98		$	1,052		$	—		$	1,450
Receivables, net	116		1,237			7,223			(36		)	8,540
Inventories	—		574			1,441			(32		)	1,983
Prepaid expenses and other current assets	409		107			419			—			935
Total current assets	825		2,016			10,135			(68		)	12,908
Noncurrent inventories and theatrical film and television production costs	—		1,891			6,063			(31		)	7,923
Investments in amounts due to and from consolidated subsidiaries	48,770		10,915			13,092			(72,777		)	—
Investments, including available-for-sale securities	297		449			2,671			(5		)	3,412
Property, plant and equipment, net	52		415			1,995			—			2,462
Intangible assets subject to amortization, net	—		—			738			—			738
Intangible assets not subject to amortization	—		2,007			4,998			—			7,005
Goodwill	—		9,880			17,858			—			27,738
Other assets	533		506			2,653			(229		)	3,463
Total assets	$	50,477	$	28,079		$	60,203		$	(73,110	)	$	65,649
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	754	$	814		$	5,290		$	(92	)	$	6,766
Deferred revenue	—		75			520			(7		)	588
Debt due within one year	295		511			2			—			808
Total current liabilities	1,049		1,400			5,812			(99		)	8,162
Long-term debt	19,331		3,062			9			—			22,402
Deferred income taxes	2,620		2,872			2,023			(4,895		)	2,620
Deferred revenue	—		26			467			—			493
Other noncurrent liabilities	2,052		1,885			3,938			(1,360		)	6,515
Redeemable noncontrolling interest	—		—			30			—			30
Equity
Due to (from) Time Warner Inc. and subsidiaries	—		(54,590		)	(1,287		)	55,877			—
Other shareholders’ equity	25,425		73,424			49,209			(122,633		)	25,425
Total Time Warner Inc. shareholders’ equity	25,425		18,834			47,922			(66,756		)	25,425
Noncontrolling interest	—		—			2			—			2
Total equity	25,425		18,834			47,924			(66,756		)	25,427
Total liabilities and equity	$	50,477	$	28,079		$	60,203		$	(73,110	)	$	65,649

Consolidating Balance Sheet

December 31, 2016

(Unaudited; millions)

	Parent Company		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
ASSETS
Current assets
Cash and equivalents	$	617	$	91		$	831		$	—		$	1,539
Receivables, net	118		1,294			7,329			(42		)	8,699
Inventories	—		528			1,564			(30		)	2,062
Prepaid expenses and other current assets	639		91			455			—			1,185
Total current assets	1,374		2,004			10,179			(72		)	13,485
Noncurrent inventories and theatrical film and television production costs	—		1,929			6,028			(41		)	7,916
Investments in amounts due to and from consolidated subsidiaries	48,212		11,319			13,155			(72,686		)	—
Investments, including available-for-sale securities	274		441			2,628			(6		)	3,337
Property, plant and equipment, net	48		423			2,039			—			2,510
Intangible assets subject to amortization, net	—		—			783			—			783
Intangible assets not subject to amortization	—		2,007			4,998			—			7,005
Goodwill	—		9,880			17,872			—			27,752
Other assets	520		385			2,522			(249		)	3,178
Total assets	$	50,428	$	28,388		$	60,204		$	(73,054	)	$	65,966
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	687	$	854		$	5,760		$	(109	)	$	7,192
Deferred revenue	—		67			511			(14		)	564
Debt due within one year	1,434		511			2			—			1,947
Total current liabilities	2,121		1,432			6,273			(123		)	9,703
Long-term debt	19,318		3,065			9			—			22,392
Deferred income taxes	2,678		3,011			2,133			(5,144		)	2,678
Deferred revenue	—		26			460			—			486
Other noncurrent liabilities	1,976		1,886			3,815			(1,336		)	6,341
Redeemable noncontrolling interest	—		—			29			—			29
Equity
Due to (from) Time Warner Inc. and subsidiaries	—		(52,869		)	(366		)	53,235			—
Other shareholders’ equity	24,335		71,837			47,849			(119,686		)	24,335
Total Time Warner Inc. shareholders’ equity	24,335		18,968			47,483			(66,451		)	24,335
Noncontrolling interest	—		—			2			—			2
Total equity	24,335		18,968			47,485			(66,451		)	24,337
Total liabilities and equity	$	50,428	$	28,388		$	60,204		$	(73,054	)	$	65,966

Consolidating Statement of Operations

For The Three Months Ended March 31, 2017

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
Revenues	$	—		$	2,020		$	5,936		$	(221	)	$	7,735
Costs of revenues	—			(923		)	(3,601		)	191			(4,333		)
Selling, general and administrative	(105		)	(311		)	(886		)	27			(1,275		)
Amortization of intangible assets	—			—			(45		)	—			(45		)
Restructuring and severance costs	—			(2		)	(10		)	—			(12		)
Asset impairments	—			—			(1		)	—			(1		)
Gain on operating assets, net	—			—			7			—			7
Operating income	(105		)	784			1,400			(3		)	2,076
Equity in pretax income (loss) of consolidated subsidiaries	2,203			1,453			557			(4,213		)	—
Interest expense, net	(208		)	(68		)	16			1			(259		)
Other income (loss), net	3			—			72			1			76
Income from continuing operations before income taxes	1,893			2,169			2,045			(4,214		)	1,893
Income tax provision	(470		)	(613		)	(588		)	1,201			(470		)
Net income	1,423			1,556			1,457			(3,013		)	1,423
Less Net loss attributable to noncontrolling interests	1			1			1			(2		)	1
Net income attributable to Time Warner Inc. shareholders	$	1,424		$	1,557		$	1,458		$	(3,015	)	$	1,424
Comprehensive income	$	1,406		$	1,562		$	1,446		$	(3,008	)	$	1,406
Less Comprehensive loss attributable to noncontrolling interests	1			1			1			(2		)	1
Comprehensive income attributable to Time Warner Inc. shareholders	$	1,407		$	1,563		$	1,447		$	(3,010	)	$	1,407

Consolidating Statement of Operations

For The Three Months Ended March 31, 2016

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
Revenues	$	—		$	1,983		$	5,562		$	(237	)	$	7,308
Costs of revenues	—			(953		)	(3,239		)	187			(4,005		)
Selling, general and administrative	(120		)	(312		)	(866		)	47			(1,251		)
Amortization of intangible assets	—			—			(48		)	—			(48		)
Restructuring and severance costs	—			(4		)	(1		)	—			(5		)
Asset impairments	(2		)	—			(1		)	—			(3		)
Operating income	(122		)	714			1,407			(3		)	1,996
Equity in pretax income (loss) of consolidated subsidiaries	2,028			1,426			471			(3,925		)	—
Interest expense, net	(247		)	(76		)	37			2			(284		)
Other income (loss), net	13			(3		)	(49		)	(1		)	(40		)
Income from continuing operations before income taxes	1,672			2,061			1,866			(3,927		)	1,672
Income tax provision	(498		)	(618		)	(572		)	1,190			(498		)
Income from continuing operations	1,174			1,443			1,294			(2,737		)	1,174
Discontinued operations, net of tax	40			40			40			(80		)	40
Net income attributable to Time Warner Inc. shareholders	$	1,214		$	1,483		$	1,334		$	(2,817	)	$	1,214
Comprehensive income attributable to Time Warner Inc. shareholders	$	1,170		$	1,453		$	1,287		$	(2,740	)	$	1,170

Consolidating Statement of Cash Flows

For The Three Months Ended March 31, 2017

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
OPERATIONS
Net income	$	1,423		$	1,556		$	1,457		$	(3,013	)	$	1,423
Less Discontinued operations, net of tax	—			—			—			—			—
Net income from continuing operations	1,423			1,556			1,457			(3,013		)	1,423
Adjustments for noncash and nonoperating items:
Depreciation and amortization	3			27			135			—			165
Amortization of film and television costs	—			735			1,480			(12		)	2,203
Asset impairments	—			—			1			—			1
(Gain) loss on investments and other assets, net	(22		)	5			(149		)	—			(166		)
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	(2,203		)	(1,453		)	(557		)	4,213			—
Equity in losses of investee companies, net of cash distributions	6			—			87			—			93
Equity-based compensation	11			23			23			—			57
Deferred income taxes	(44		)	(127		)	(95		)	222			(44		)
Changes in operating assets and liabilities, net of acquisitions	342			(12		)	(1,181		)	(1,415		)	(2,266		)
Intercompany	—			605			(605		)	—			—
Cash provided by operations from continuing operations	(484		)	1,359			596			(5		)	1,466
Cash used by operations from discontinued operations	—			—			(5		)	—			(5		)
Cash provided by operations	(484		)	1,359			591			(5		)	1,461
INVESTING ACTIVITIES
Investments and acquisitions, net of cash acquired	(21		)	(9		)	(138		)	—			(168		)
Capital expenditures	—			(32		)	(66		)	—			(98		)
Advances to (from) parent and consolidated subsidiaries	1,543			429			1			(1,973		)	—
Other investment proceeds	20			—			220			—			240
Cash used by investing activities	1,542			388			17			(1,973		)	(26		)
FINANCING ACTIVITIES
Debt repayments	(1,144		)	—			—			—			(1,144		)
Proceeds from exercise of stock options	56			—			—			—			56
Principal payments on capital leases	—			(3		)	—			—			(3		)
Dividends paid	(316		)	—			—			—			(316		)
Other financing activities	29			(16		)	(131		)	1			(117		)
Change in due to/from parent and investment in segment	—			(1,721		)	(256		)	1,977			—
Cash used by financing activities	(1,375		)	(1,740		)	(387		)	1,978			(1,524		)
DECREASE IN CASH AND EQUIVALENTS	(317		)	7			221			—			(89		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	617			91			831			—			1,539
CASH AND EQUIVALENTS AT END OF PERIOD	$	300		$	98		$	1,052		$	—		$	1,450

Consolidating Statement of Cash Flows

For The Three Months Ended March 31, 2016

(Unaudited; millions)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Time Warner Consolidated
OPERATIONS
Net income	$	1,214		$	1,483		$	1,334		$	(2,817	)	$	1,214
Less Discontinued operations, net of tax	(40		)	(40		)	(40		)	80			(40		)
Net income from continuing operations	1,174			1,443			1,294			(2,737		)	1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization	2			27			138			—			167
Amortization of film and television costs	—			768			1,351			(7		)	2,112
Asset impairments	2			—			1			—			3
(Gain) loss on investments and other assets, net	(3		)	—			14			—			11
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	(2,028		)	(1,426		)	(471		)	3,925			—
Equity in losses of investee companies, net of cash distributions	(8		)	—			59			(1		)	50
Equity-based compensation	42			30			36			—			108
Deferred income taxes	113			37			13			(50		)	113
Changes in operating assets and liabilities, net of acquisitions	123			(330		)	(1,641		)	(1,133		)	(2,981		)
Intercompany	—			616			(616		)	—			—
Cash provided by operations from continuing operations	(583		)	1,165			178			(3		)	757
Cash used by operations from discontinued operations	—			—			(4		)	—			(4		)
Cash provided by operations	(583		)	1,165			174			(3		)	753
INVESTING ACTIVITIES
Investments in available-for-sale securities	—			—			(5		)	—			(5		)
Investments and acquisitions, net of cash acquired	(9		)	(14		)	(70		)	—			(93		)
Capital expenditures	(7		)	(13		)	(55		)	—			(75		)
Advances to (from) parent and consolidated subsidiaries	1,471			108			—			(1,579		)	—
Other investment proceeds	15			—			3			—			18
Cash used by investing activities	1,470			81			(127		)	(1,579		)	(155		)
FINANCING ACTIVITIES
Borrowings	—			—			2			—			2
Debt repayments	—			(150		)	(2		)	—			(152		)
Proceeds from exercise of stock options	56			—			—			—			56
Excess tax benefit from equity instruments	27			—			—			—			27
Principal payments on capital leases	—			(3		)	—			—			(3		)
Repurchases of common stock	(711		)	—			—			—			(711		)
Dividends paid	(322		)	—			—			—			(322		)
Other financing activities	58			(25		)	(145		)	2			(110		)
Change in due to/from parent and investment in segment	—			(1,277		)	(303		)	1,580			—
Cash used by financing activities	(892		)	(1,455		)	(448		)	1,582			(1,213		)
DECREASE IN CASH AND EQUIVALENTS	(5		)	(209		)	(401		)	—			(615		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	976			288			891			—			2,155
CASH AND EQUIVALENTS AT END OF PERIOD	$	971		$	79		$	490		$	—		$	1,540

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Description of Business and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of entities in which Time Warner has a controlling interest (“subsidiaries”). Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.

Significant estimates and judgments inherent in the preparation of the consolidated financial statements include accounting for asset impairments, multiple-element transactions, allowances for doubtful accounts, depreciation and amortization, the determination of ultimate revenues as it relates to amortization or impairment of capitalized film and programming costs and participations and residuals, home video and videogame product returns, business combinations, pension and other postretirement benefits, equity-based compensation, income taxes, contingencies, litigation matters, reporting revenue for certain transactions on a gross versus net basis, and the determination of whether the Company should consolidate certain entities.

New Accounting Guidance

Accounting Guidance Adopted in 2017

Share-Based Payments

On January 1, 2017, the Company adopted, on a prospective basis, new accounting guidance that changes the reporting for certain aspects of share-based payments. One aspect of the guidance requires that the income tax effects of share-based awards be recognized in the Income tax provision in the Consolidated Statement of Operations when the awards vest or are settled. Under the previous guidance, excess tax benefits and deficiencies were recognized in Additional paid-in capital in the Consolidated Balance Sheet. For the three months ended March 31,2017 and 2016, the amount of excess tax benefits, net of deficiencies, recognized in Income tax provision and Additional paid-in capital, respectively, was $63 million and $22 million, respectively. In addition, because excess tax benefits are no longer recognized in Additional paid-in capital under the new guidance, such amounts are no longer included in the determination of assumed proceeds in applying the treasury stock method when computing earnings per share. Another aspect of the new guidance requires that excess tax benefits be classified as a cash flow from operating activities, rather than a cash flow from financing activities, in the Consolidated Statement of Cash Flows. For the three months ended March 31,2017 and 2016, the amount of excess tax benefits presented as a cash flow from operating activities and financing activities, respectively, was $63 million and $27 million, respectively. The other aspects of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Accounting Guidance Not Yet Adopted

Net Periodic Benefit Costs

In March 2017, guidance was issued that requires that an employer disaggregate the service cost component from the other components of net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans.  While the service cost component of net periodic benefit costs will continue to be presented as an operating expense, the other components are now required to be recorded outside of operating income in the Consolidated Statement of Operations.  For the year ended December 31, 2016, net periodic benefit costs relating to defined benefit pension and other postretirement benefit plans were $46 million, $4 million of which related to the service cost component.  The guidance will become effective on a retrospective basis for the Company on January 1, 2018.

Simplifying the Accounting for Goodwill Impairment

In January 2017, guidance was issued to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires that a hypothetical purchase price allocation be performed to determine the amount of impairment, if any. Under this new guidance, a goodwill impairment charge will be based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance will become effective on a prospective basis for the Company on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements.

Definition of a Business

In January 2017, guidance was issued that changes the definition of a business for accounting purposes. Under the new guidance, an entity first determines whether substantially all of the fair value of a set of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of assets is not deemed to be a business. If the threshold is not met, the entity then evaluates whether the set of assets meets the requirement to be deemed a business, which at a minimum, requires there to be an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance will become effective on a prospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Restricted Cash

In November 2016, guidance was issued that requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Intra-Entity Transfers of Assets Other than Inventory

In October 2016, guidance was issued that requires entities to recognize the income tax consequences of an intercompany transfer of an asset other than inventory when the transfer occurs, rather than deferring the income tax consequences of the intercompany transfer of assets until the asset has been sold to a third party. The guidance will become effective on a modified retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Classification of Certain Cash Receipts and Cash Payments

In August 2016, guidance was issued that clarifies the presentation of certain cash receipts and payments in a company’s statement of cash flows. The guidance primarily relates to the classification of cash flows associated with certain (i) debt transactions, (ii) contingent consideration arrangements related to business combinations, (iii) insurance claims and policies, (iv) distributions received from equity method investees and (v) securitization transactions. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements.

Accounting for Leases

In February 2016, guidance was issued regarding accounting for leases. The main difference between the current guidance and the new guidance is the recognition by the lessee of lease assets and liabilities for those leases it classified as operating leases under the current guidance. Under the new guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease as well as the lessor accounting model have not significantly changed from current guidance. This guidance also requires qualitative and quantitative disclosures of key information about leasing arrangements. The new guidance will become effective on a modified retrospective basis for the Company on January 1, 2019. The Company is still evaluating the impact of the new guidance on its consolidated financial statements. Because the Company is a party to more than 2,000 operating leases with future minimum rental commitments at December 31, 2016 of $1.154 billion, it expects that the impact of recognizing lease assets and liabilities for these operating leases will be significant to the Company’s Consolidated Balance Sheet.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, guidance was issued that makes limited changes to the accounting for financial instruments. The changes primarily relate to (i) the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value, with changes in the fair value recognized in earnings, (ii) an alternative approach for the measurement of equity investments that do not have a readily determinable fair value, (iii) the elimination of the other-than-temporary impairment model and its replacement with a requirement to perform a qualitative assessment to identify the impairment of equity investments, and a requirement to recognize impairment losses in earnings based on the difference between the fair value and the carrying value of the equity investment, (iv) the elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost, (v) the addition of a requirement to use the exit price concept when measuring the fair value of financial instruments for disclosure purposes and (vi) the addition of a requirement to present financial assets and financial liabilities separately in the notes to the financial statements, grouped by measurement category (e.g., fair value, amortized cost, lower of cost or market) and by form of financial asset (e.g., loans, securities). This guidance will become effective for the Company on January 1, 2018. The Company does not expect the new guidance to have a material impact on its consolidated financial statements.

Revenue Recognition

In May 2014, guidance was issued that establishes a new revenue recognition framework in GAAP for all companies and industries. The core principle of the new guidance is that an entity should recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive for those goods or services.  The guidance includes a five-step framework to determine the timing and amount of revenue to recognize related to contracts with customers.  In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework.  Based on the current guidance, the new framework will become effective on either a full or modified retrospective basis for the Company on January 1, 2018. 

Subsequent to the issuance of the May 2014 guidance, several clarifications and updates have been issued by the FASB on this topic, the most recent of which was issued in December 2016.  Many of these clarifications and updates to the guidance, as well as a number of interpretive issues, apply to companies in the media and entertainment industry.

The Company has made significant progress toward completing its assessment of the impact of adopting this new guidance, and the Company is finalizing its implementation plan. The Company currently does not believe that the adoption of the new guidance will have a material impact on the Company’s financial statements, principally because the Company does not expect significant changes in the way it will record subscription revenue, advertising revenue, and a significant portion of its content revenue. However, it is possible that the Company’s evaluation of the expected impact of the new guidance on certain transactions could change if there are additional interpretations of the new revenue guidance that are different from the Company’s preliminary conclusions. Although the Company currently does not expect the impact of adopting the new guidance to be material, there are several areas where the Company’s revenue recognition is expected to change as compared with historical GAAP. The more significant of these areas are as follows:

i. Renewals of Licenses of Intellectual Property - Under guidance currently in effect, when the term of an existing license agreement is extended, without any other changes to the provisions of the license, revenue for the renewal period is recognized on the date the renewal is agreed to contractually. Under the new guidance, revenue for the renewed license term will not be recognized until the date the renewal term begins. This change will result in delayed revenue recognition as compared with current revenue recognition guidance. The Company expects that this change will primarily impact the Warner Bros. segment, but it will also, to a lesser degree, impact the Home Box Office and Turner segments.

ii. License of Content Library - Under guidance currently in effect, when a company licenses a completed library of content and agrees to refresh the library with new content as it becomes available, and the licensee is not entitled to a refund if no further library titles are delivered, revenue is recognized once access to the library is granted to the licensee. Under the new guidance, because there is an implicit obligation for the company to refresh the library with additional content in the future, the company will need to estimate the additional content it will deliver in the future and allocate a portion of the transaction price to that content. As compared with current guidance, this results in a deferral of a portion of the transaction price until delivery of future library content. The Company expects this change will primarily impact the Home Box Office segment.

iii. Licenses of Symbolic Intellectual Property - Certain intellectual property, such as brands, tradenames and logos, is categorized in the new guidance as symbolic. An assumption inherent in the new guidance is that a licensee’s ability to derive benefit from a license of symbolic intellectual property depends on the licensor continuing to support or maintain the intellectual property throughout the license term. Accordingly, under the new guidance, revenue from licenses of symbolic intellectual property is recognized over the corresponding license term. In certain arrangements where the Company has no remaining performance obligations, under the guidance currently in effect, revenue from licenses of symbolic intellectual property is recognized at the inception of the license term. Therefore, the new guidance will result in a deferral of revenue recognition as compared to current guidance. This change will primarily impact the Warner Bros. segment.

The evaluation of the impact of the new guidance on certain other transactions is still in process; however, the Company does not expect the completion of that evaluation to impact the Company’s conclusion that the adoption will not have a material impact on the Company’s financial statements.

The Company currently expects to adopt the standard in 2018 using the modified retrospective method of adoption. However, the transition method ultimately selected could be affected by the Company’s pending merger with AT&T Inc. (“AT&T”) if the merger closes prior to the adoption of the new guidance. For more information regarding the AT&T merger, see Note 2.

Long-Lived Assets

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value.

Cost of Sales

In determining the fair value of its theatrical films, the Company employs a DCF methodology that includes cash flow estimates of a film’s ultimate revenue and costs as well as a discount rate. The discount rate utilized in the DCF analysis is based on the weighted average cost of capital of the respective business (e.g., Warner Bros.) plus a risk premium representing the risk associated with producing a particular theatrical film. The fair value of any theatrical films and television programs that management plans to abandon is zero. Because the primary determination of fair value is made using a DCF model, the resulting fair value is considered a Level 3 measurement.

Derivatives, Offsetting Fair Value Amounts

For such foreign exchange contracts, the Company offsets the fair values of the amounts owed to or due from the same counterparty and classifies the net amount as a net asset or net liability within Prepaid expenses and other current assets or Accounts payable and accrued liabilities, respectively, in the Consolidated Balance Sheet.

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurement Inputs

The following table presents information about assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2017 and December 31, 2016, respectively (millions):

	March 31, 2017											December 31, 2016
	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3		Total
Assets:
Trading securities:
Diversified equity securities (a)	$	170	$	—		$	—		$	170		$	163	$	—		$	—	$	163
Available-for-sale securities:
Equity securities	16		—			—			16			17		—			—		17
Debt securities	—		36			—			36			—		37			—		37
Derivatives:
Foreign exchange contracts	—		136			—			136			—		153			—		153
Other	—		—			214			214			—		—			161		161
Liabilities:
Derivatives:
Foreign exchange contracts	—		(13		)	—			(13		)	—		(9		)	—		(9		)
Other	—		—			(1		)	(1		)	—		—			—		—
Total	$	186	$	159		$	213		$	558		$	180	$	181		$	161	$	522

_________________________ 

(a) Consists of investments related to deferred compensation.

Level 3 Asset and Liability Reconciliation

The following table reconciles the beginning and ending balances of net derivative assets and liabilities classified as Level 3 and identifies the total gains (losses) the Company recognized during the three months ended March 31, 2017 and 2016 on such assets and liabilities that were included in the Consolidated Balance Sheet as of March 31, 2017 and 2016 (millions):

	March 31, 2017			March 31, 2016
Balance as of the beginning of the period	$	161		$	173
Total gains (losses), net:
Included in operating income	—			—
Included in other income (loss), net	54			(19		)
Included in other comprehensive loss	—			—
Purchases	—			—
Settlements	(1		)	5
Issuances	(1		)	—
Balance as of the end of the period	$	213		$	159
Net gain (loss) for the period included in net income related to assets and liabilities still held as of the end of the period	$	54		$	(19	)

Carrying Value Fair Value, by investment

Information as of March 31, 2017 about the Company’s investments in CME that are not required to be carried at fair value on a recurring basis is as follows (millions):

	Carrying Value		Fair Value		Fair Value Hierarchy
Class A common stock (a)	$	—	$	225	Level 1
Series B convertible redeemable preferred shares	$	—	$	329	Level 2

_________________________ 

(a) Includes 1 share of Series A convertible preferred stock.

Fair Value Measurements, Nonrecurring

The following table presents certain theatrical film and television production costs, which were recorded as inventory in the Consolidated Balance Sheet, that were written down to fair value (millions):

	Carrying value before  write down		Carrying value after write down
Fair value measurements made during the three months ended March 31,:
2017	$	51	$	30
2016	$	28	$	2

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Inventories and Theatrical Film and Television Production Costs (Tables)

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Inventories and Theatrical Film and Television Production Costs

Inventories and theatrical film and television production costs consist of (millions):

	March 31, 2017			December 31, 2016
Inventories:
Programming costs, less amortization (a)	$	3,520		$	3,625
Other inventory, primarily DVDs and Blu-ray Discs	182			184
Total inventories	3,702			3,809
Less: current portion of inventory	(1,983		)	(2,062		)
Total noncurrent inventories	1,719			1,747
Theatrical film production costs: (b)
Released, less amortization	724			818
Completed and not released	635			460
In production	1,086			1,286
Development and pre-production	126			133
Television production costs: (b)
Released, less amortization	1,976			1,618
Completed and not released	645			841
In production	999			995
Development and pre-production	13			18
Total theatrical film and television production costs	6,204			6,169
Total noncurrent inventories and theatrical film and television production costs	$	7,923		$	7,916

_________________________ 

(a) Includes the costs of certain programming rights, primarily sports, for which payments have been made prior to the related rights being received.

(b) Does not include $485 million and $518 million of acquired film library intangible assets as of March 31, 2017 and December 31, 2016, respectively, which are included in Intangible assets subject to amortization, net in the Consolidated Balance Sheet.

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Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Hedging Activities Net Gains and Losses Recognized

Net gains and losses from hedging activities recognized in the Consolidated Statement of Operations were as follows (millions):

	Three Months Ended March 31,
	2017			2016
Gains (losses) recognized in:
Cost of revenues	$	(1	)	$	9
Selling, general and administrative	(3		)	3
Other income (loss), net	1			22

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following is a summary of amounts recorded in the Consolidated Balance Sheet pertaining to Time Warner’s use of foreign currency derivatives at March 31, 2017 and December 31, 2016 (millions):

	March 31, 2017 (a)			December 31, 2016 (b)
Prepaid expenses and other current assets	$	136		$	153
Accounts payable and accrued liabilities	(13		)	(9		)

________________________

(a) Includes $294 million ($270 million of qualifying hedges and $24 million of economic hedges) and $171 million ($164 million of qualifying hedges and $7 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

(b) Includes $297 million ($272 million of qualifying hedges and $25 million of economic hedges) and $153 million ($141 million of qualifying hedges and $12 million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.

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Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Schedule of Comprehensive Income (Loss)

The following summary sets forth the activity within Other comprehensive loss (millions):

	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Pretax			Tax (provision) benefit			Net of tax			Pretax			Tax (provision) benefit			Net of tax
Unrealized losses on foreign currency translation	$	(10	)	$	(1	)	$	(11	)	$	(50	)	$	11		$	(39	)
Unrealized gains on securities	—			—			—			2			(1		)	1
Unrealized gains on benefit obligations	3			(1		)	2			7			(2		)	5
Reclassification adjustment for losses on benefit obligations realized in net income (a)	8			(3		)	5			9			(3		)	6
Unrealized gains (losses) on derivative financial instruments	(23		)	8			(15		)	1			(1		)	—
Reclassification adjustment for (gains) losses on derivative financial instruments realized in net income (b)	3			(1		)	2			(27		)	10			(17		)
Other comprehensive loss	$	(19	)	$	2		$	(17	)	$	(58	)	$	14		$	(44	)

_________________________

(a) Pretax (gains) losses are included in Selling, general and administrative expenses.

(b) Pretax (gains) losses are included in Selling, general and administrative expenses, Costs of revenues and Other income (loss), net are as follows (millions):

	Three Months Ended March 31,
	2017		2016
Selling, general and administrative expenses	$	3	$	(3	)
Costs of revenues	—		(9		)
Other income (loss), net	—		(15		)

Reclassification out of Accumulated Other Comprehensive Income

Pretax (gains) losses are included in Selling, general and administrative expenses, Costs of revenues and Other income (loss), net are as follows (millions):

	Three Months Ended March 31,
	2017		2016
Selling, general and administrative expenses	$	3	$	(3	)
Costs of revenues	—		(9		)
Other income (loss), net	—		(15		)

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Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Income Per Common Share

Set forth below is a reconciliation of Basic and Diluted income per common share from continuing operations attributable to Time Warner Inc. common shareholders (millions, except per share amounts):

	Three Months Ended March 31,
	2017			2016
Income from continuing operations attributable to Time Warner Inc. shareholders	$	1,424		$	1,174
Income allocated to participating securities	(4		)	(3		)
Income from continuing operations attributable to Time Warner Inc. common shareholders— basic	$	1,420		$	1,171
Average basic common shares outstanding	773.6			790.7
Dilutive effect of equity awards	15.7			11.6
Average diluted common shares outstanding	789.3			802.3
Antidilutive common share equivalents excluded from computation	—			7
Income per common share from continuing operations attributable to Time Warner Inc. common shareholders:
Basic	$	1.84		$	1.48
Diluted	$	1.80		$	1.46

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Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Number of Awards Granted

The following table sets forth the number of stock options, RSUs and PSUs granted (millions):

	Three Months Ended March 31,
	2017	2016
Stock options	—	2.2
RSUs	0.4	2.7
PSUs	—	0.2

Share-based Compensation Arrangement by Share-based Payment Award, RSUs and Target PSUs, Grants in Period, Weighted Average Grant Date Fair Value

The following table sets forth the weighted-average grant date fair value of restricted stock units (“RSUs”) granted during the three months ended March 31, 2017 and 2016 and PSUs granted during the three months ended March 31,2016. For PSUs, the service inception date precedes the grant date and requires the Company to apply mark-to-market accounting that is reflected in the grant date fair values presented:

	Three Months Ended March 31,
	2017		2016
RSUs	$	96.28	$	62.38
PSUs	—		112.56

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The impact of equity-based compensation awards on Operating income is as follows (millions):

	Three Months Ended March 31,
	2017		2016
Stock options	$	7	$	21
RSUs and PSUs	50		87
Total impact on operating income	$	57	$	108
Tax benefit recognized	$	19	$	38

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Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2017

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs

A summary of the components of the net periodic benefit costs from continuing operations recognized for substantially all of Time Warner’s defined benefit pension plans for the three months ended March 31, 2017 and 2016 is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Service cost	$	1		$	1
Interest cost	16			22
Expected return on plan assets	(15		)	(21		)
Amortization of net loss	3			4
Net periodic benefit costs (a)	$	5		$	6
Contributions	$	10		$	9

_________________________

(a) Excludes net periodic benefit costs related to discontinued operations of $3 million and $4 million for the three months ended March 31, 2017 and March 31, 2016, respectively, primarily related to employees and former employees of Time Inc. These amounts have been reflected in Other income (loss), net in the Consolidated Statement of Operations

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Restructuring and Severance Costs (Tables)

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Severance Costs

Restructuring and severance costs expensed as incurred for the three months ended March 31, 2017 and 2016 are as follows (millions):

	Three Months Ended March 31,
	2017			2016
Turner	$	2		$	1
Home Box Office	2			4
Warner Bros.	9			1
Corporate	(1		)	(1		)
Total restructuring and severance costs	$	12		$	5

	Three Months Ended March 31,
	2017			2016
2017 initiatives	$	16		$	—
2016 and prior initiatives	(4		)	5
Total restructuring and severance costs	$	12		$	5

Selected Information

Selected information relating to accrued restructuring and severance costs is as follows (millions):

	Employee Terminations			Other Exit Costs			Total
Remaining liability as of December 31, 2016	$	162		$	9		$	171
Net accruals	12			—			12
Noncash reductions (a)	(2		)	—			(2		)
Cash paid	(34		)	(1		)	(35		)
Remaining liability as of March 31, 2017	$	138		$	8		$	146

_________________________

(a) Noncash reductions relate to the settlement of certain liabilities relating to employee compensation with equity instruments.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information as to the Revenues, intersegment revenues, Operating Income (Loss) and Assets of Time Warner’s reportable segments is set forth below (millions):

	Three Months Ended March 31,
	2017			2016
Revenues
Turner	$	3,088		$	2,906
Home Box Office	1,568			1,506
Warner Bros.	3,365			3,109
Intersegment eliminations	(286		)	(213		)
Total revenues	$	7,735		$	7,308

	Three Months Ended March 31,
	2017		2016
Intersegment Revenues
Turner	$	21	$	20
Home Box Office	2		3
Warner Bros.	263		190
Total intersegment revenues	$	286	$	213

	Three Months Ended March 31,
	2017			2016
Operating Income (Loss)
Turner	$	1,170		$	1,239
Home Box Office	583			477
Warner Bros.	488			424
Corporate	(114		)	(140		)
Intersegment eliminations	(51		)	(4		)
Total operating income	$	2,076		$	1,996

	March 31, 2017		December 31, 2016
Assets
Turner	$	26,703	$	26,317
Home Box Office	14,692		14,636
Warner Bros.	20,968		21,550
Corporate	3,286		3,463
Total assets	$	65,649	$	65,966

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Amounts included in the Consolidated Statement of Operations resulting from transactions with related parties consist of (millions):

	Three Months Ended March 31,
	2017			2016
Revenues	$	234		$	123
Expenses	(1		)	—
Interest income	23			41
Other income	2			5

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Additional Financial Information (Tables)

3 Months Ended

Mar. 31, 2017

Additional Financial Information [Abstract]

Cash Flows

Additional financial information with respect to cash payments and receipts, Interest expense, net, Other income (loss), net, Accounts payable and accrued liabilities and Other noncurrent liabilities is as follows (millions):

	Three Months Ended March 31,
	2017			2016
Cash Flows
Cash payments made for interest	$	(313	)	$	(291	)
Interest income received	10			13
Cash interest payments, net	$	(303	)	$	(278	)
Cash payments made for income taxes	$	(122	)	$	(134	)
Income tax refunds received	4			4
Cash tax payments, net	$	(118	)	$	(130	)

Interest Expense, Net

	Three Months Ended March 31,
	2017			2016
Interest Expense, Net
Interest income	$	49		$	63
Interest expense	(308		)	(347		)
Total interest expense, net	$	(259	)	$	(284	)

Other Income (Loss), Net

	Three Months Ended March 31,
	2017			2016
Other Income (Loss), Net
Investment gains (losses), net	$	159		$	(11	)
Loss on equity method investees	(76		)	(34		)
Other	(7		)	5
Total other income (loss), net	$	76		$	(40	)

Accounts Payable and Accrued Liabilities

	March 31, 2017		December 31, 2016
Accounts Payable and Accrued Liabilities
Accounts payable	$	521	$	527
Other accrued expenses	1,605		1,878
Participations payable	2,583		2,525
Programming costs payable	850		776
Accrued compensation	651		1,004
Accrued interest	295		320
Accrued income taxes	261		162
Total accounts payable and accrued liabilities	$	6,766	$	7,192

Other Noncurrent Liabilities

	March 31, 2017		December 31, 2016
Other Noncurrent Liabilities
Noncurrent tax and interest reserves	$	1,628	$	1,567
Participations payable	1,939		1,780
Programming costs payable	786		827
Noncurrent pension and post-retirement liabilities	940		954
Deferred compensation	509		491
Other noncurrent liabilities	713		722
Total other noncurrent liabilities	$	6,515	$	6,341

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Description of Business and Basis of Presentation 1 (Details) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($) segment	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Number of reportable segments | segment	3
Adjustment to additional paid in capital, Income tax effect from share-based compensation, net		$ 22
Excess tax benefit from share based compensation	$ 63
Excess tax benefit from equity instruments, financing activities	$ 0	$ 27
Operating leases, future minimum payments due			$ 1,154
Defined Benefit Pension Plans and Other Postretirement Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Net periodic benefit costs			46
Service cost			$ 4

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Description of Business and Basis of Presentation 2 (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax expense (benefit)	$ 470	$ 498
Adoption of ASU 2016-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax expense (benefit)	$ (63)

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Merger Agreement with AT&T (Details) $ / shares in Units, $ in Millions	Oct. 22, 2016 USD ($) $ / shares
Merger [Abstract]
Per share amount to be received in cash from AT&T	$ 53.75
Average stock price of AT&T, lower threshold	37.411
Average stock price of AT&T, upper threshold	$ 41.349
Exchange ratio if stock price is less than $37.411	1.437
Exchange ratio if stock price is greater than $41.349	1.300
Termination Fee | $	$ 1,725

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Business Dispositions and Acquisitions - Dispositions (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Net income (loss)	$ 0	$ 40
Diluted income (loss) from discontinued operations per common share (in dollars per share)	$ 0.00	$ 0.05
Warner Music Group
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]
Net income (loss)		$ 40
Diluted income (loss) from discontinued operations per common share (in dollars per share)		$ 0.05

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Investments 1 (Details) - CME Equity Method Investment € in Millions	Mar. 02, 2017 EUR (€)	Mar. 31, 2017 USD ($) shares	Mar. 31, 2017 EUR (€) shares
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage		47.00%	47.00%
Class A common stock, number of shares (shares) | shares		61,400,000	61,400,000
Series A convertible preferred stock, number of shares (shares) | shares		1	1
Convertible preferred stock, shares issued upon conversion (shares) | shares		11,200,000	11,200,000
Equity-method investments | $		$ 0
CME senior unsecured term loan			€ 955
Equity method losses presented in other noncurrent liabilities | $		143,000,000
CME, guarantor obligations, current carrying value | $		$ 183,000,000
CME senior unsecured term loan, amended fee payable in cash	5.00%
CME senior unsecured term loan, amended debt level threshold	€ 815
CME senior unsecured term loan, debt level rate decrease	0.50%
CME senior unsecured term loan, change in control rate increase, based on fee payable	3.50%
CME senior unsecured term loan, change in control flat rate increase	10.00%
CME senior unsecured term loan, change in control rate increase, time period	180 days
Minimum
Schedule of Equity Method Investments [Line Items]
CME senior unsecured term loan, amended fee	5.00%
Maximum
Schedule of Equity Method Investments [Line Items]
CME senior unsecured term loan, amended fee	8.50%
2014 Loan
Schedule of Equity Method Investments [Line Items]
CME senior unsecured term loan	€ 251
2015 Loan
Schedule of Equity Method Investments [Line Items]
CME senior unsecured term loan	235
2016 Loan
Schedule of Equity Method Investments [Line Items]
CME senior unsecured term loan	€ 469

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Investments 2 (Details) - Series B convertible redeemable preferred shares shares in Millions	Mar. 31, 2017 shares
Schedule of Cost-method Investments [Line Items]
Series B convertible redeemable preferred shares, ownership percentage	100.00%
Series B convertible redeemable preferred shares, conversion into Class A common stock (shares)	106.2
Annual rate at which convertible redeemable preferred stock accretes in value	3.75%

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Investments 3 (Details) - CME Rights Offering $ / shares in Units, warrant in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($) warrant $ / shares shares
Class of Warrant or Right [Line Items]
Economic interest (percent)	76.00%
Class of warrant or right, number of securities called by each warrant or right (shares) | shares	1
Class of warrant or right, term (years)	4 years
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ / shares	$ 1
Warrant
Class of Warrant or Right [Line Items]
Warrants Held | warrant	101
Equity warrants | $	$ 213

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Investments 4 (Details)	Mar. 31, 2017 USD ($)
Time Warner Inc. Revolving Credit Facility with CME
Line of Credit Facility [Line Items]
Long-term line of credit	$ 0

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Fair Value Measurement (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Class A common stock
Other Financial Instruments Numeric [Abstract]
Class A common stock, carrying value	$ 0
Series A convertible preferred stock, number of shares owned	1
Series B convertible redeemable preferred shares
Other Financial Instruments Numeric [Abstract]
Series B convertible redeemable preferred shares, carrying value	$ 0
Warrant | CME Rights Offering
Derivatives:
Equity warrants	213,000,000
Fair Value, Measurements, Recurring
Trading securities:
Diversified equity securities	170,000,000		$ 163,000,000
Available-for-sale securities:
Equity securities	16,000,000		17,000,000
Debt securities	36,000,000		37,000,000
Derivatives:
Foreign exchange contracts	136,000,000		153,000,000
Other	214,000,000		161,000,000
Derivatives:
Foreign exchange contracts	(13,000,000)		(9,000,000)
Other	(1,000,000)		0
Total	558,000,000		522,000,000
Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance as of the beginning of the period	161,000,000	$ 173,000,000
Total gains (losses), net:
Included in other comprehensive loss	0	0
Purchases	0	0
Settlements	(1,000,000)	5,000,000
Issuances	(1,000,000)	0
Balance as of the end of the period	213,000,000	159,000,000
Net gain (loss) for the period included in net income related to assets and liabilities still held as of the end of the period	54,000,000	(19,000,000)
Operating Income (Loss) | Derivatives
Total gains (losses), net:
Included in earnings	0	0
Other Nonoperating Income (Expense) | Derivatives
Total gains (losses), net:
Included in earnings	54,000,000	(19,000,000)
Level 1 | Class A common stock
Other Financial Instruments Numeric [Abstract]
Class A common stock, fair value	225,000,000
Level 1 | Fair Value, Measurements, Recurring
Trading securities:
Diversified equity securities	170,000,000		163,000,000
Available-for-sale securities:
Equity securities	16,000,000		17,000,000
Debt securities	0		0
Derivatives:
Foreign exchange contracts	0		0
Other	0		0
Derivatives:
Foreign exchange contracts	0		0
Other	0		0
Total	186,000,000		180,000,000
Level 2
Other Financial Instruments Numeric [Abstract]
Difference between carrying value and fair value of debt	2,072,000,000		2,238,000,000
Level 2 | Series B convertible redeemable preferred shares
Other Financial Instruments Numeric [Abstract]
Series B convertible redeemable preferred shares, fair value	329,000,000
Level 2 | Fair Value, Measurements, Recurring
Trading securities:
Diversified equity securities	0		0
Available-for-sale securities:
Equity securities	0		0
Debt securities	36,000,000		37,000,000
Derivatives:
Foreign exchange contracts	136,000,000		153,000,000
Other	0		0
Derivatives:
Foreign exchange contracts	(13,000,000)		(9,000,000)
Other	0		0
Total	159,000,000		181,000,000
Level 3 | Fair Value, Measurements, Recurring
Trading securities:
Diversified equity securities	0		0
Available-for-sale securities:
Equity securities	0		0
Debt securities	0		0
Derivatives:
Foreign exchange contracts	0		0
Other	214,000,000		161,000,000
Derivatives:
Foreign exchange contracts	0		0
Other	(1,000,000)		0
Total	213,000,000		161,000,000
Level 3 | Fair Value, Measurements, Recurring | Warrant | CME Rights Offering
Derivatives:
Equity warrants	$ 213,000,000		$ 159,000,000
Fair value assumptions, expected term	8 months 9 days
Fair value assumptions, expected volatility rate (percent)	46.00%
Level 3 | Fair Value, Measurements, Nonrecurring
Non Financial Instruments Numeric [Abstract]
Fair value of film costs to be abandoned	$ 0
Film production costs carrying value in inventory prior to write down	51,000,000	28,000,000
Film production costs carrying value in inventory subsequent to write down	$ 30,000,000	$ 2,000,000

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Inventories and Theatrical Film and Television Production Costs (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Inventories:
Programming costs, less amortization	$ 3,520	$ 3,625
Other inventory, primarily DVDs and Blu-ray Discs	182	184
Total inventories	3,702	3,809
Less: current portion of inventory	(1,983)	(2,062)
Total noncurrent inventories	1,719	1,747
Theatrical film production costs:
Released, less amortization	724	818
Completed and not released	635	460
In production	1,086	1,286
Development and pre-production	126	133
Television production costs:
Released, less amortization	1,976	1,618
Completed and not released	645	841
In production	999	995
Development and pre-production	13	18
Total theatrical film and television production costs	6,204	6,169
Total noncurrent inventories and theatrical film and television production costs	7,923	7,916
Finite-Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, net	738	783
Film Libraries
Finite-Lived Intangible Assets [Line Items]
Intangible assets subject to amortization, net	$ 485	$ 518

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Derivative Instruments and Hedging Activities (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Mar. 31, 2017 EUR (€)	Dec. 31, 2016 USD ($)
Gains (losses) recognized in:
Gains (losses) recognized in Costs of revenues	$ (1)	$ 9
Gains (losses) recognized in Selling, general and administrative	(3)	3
Gains (losses) recognized in Other income (loss), net	1	22
General Discussion of Derivative Instruments and Hedging Activities [Abstract]
Cash flow hedge gains (losses) recorded in accumulated OCI	26			$ 46
Cash flow hedge gains (losses) recorded in accumulated OCI deferred gains (losses)	(1)			(3)
Net Investment Hedging
Derivatives, Fair Value [Line Items]
Derivatives used in net investment hedge, increase (decrease), gross of tax	(13)	$ (7)
Net Investment Hedging | Debt Designated as a Hedge of Euro-denominated Net Investments
Derivatives, Fair Value [Line Items]
Debt instrument, face amount | €			€ 700,000,000
Foreign Currency Derivatives
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross	294			297
Derivative liability, fair value, gross	$ 171			153
Foreign Currency Derivatives | Minimum
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	3 months
Foreign Currency Derivatives | Maximum
Derivatives, Fair Value [Line Items]
Derivative, remaining maturity	18 months
Foreign Currency Derivatives | Qualifying Hedges
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross	$ 270			272
Derivative liability, fair value, gross	164			141
Foreign Currency Derivatives | Economic Hedges
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross	24			25
Derivative liability, fair value, gross	7			12
Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Prepaid expenses and other current assets	136			153
Accounts payable and accrued liabilities
Derivatives, Fair Value [Line Items]
Accounts payable and accrued liabilities	$ (13)			$ (9)

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Shareholders' Equity (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Unrealized gains (losses) on foreign currency translation, Pretax	$ (10)	$ (50)
Unrealized gains (losses) on foreign currency translation, Tax (provision) benefit	(1)	11
Unrealized gains (losses) on foreign currency translation, Net of tax	(11)	(39)
Unrealized gains (losses) on securities, Pretax	0	2
Unrealized gains (losses) on securities, Tax (provision) benefit	0	(1)
Unrealized gains (losses) on securities, Net of tax	0	1
Unrealized gains (losses) on benefit obligations, Pretax	3	7
Unrealized gains (losses) on benefit obligations, Tax (provision) benefit	(1)	(2)
Unrealized gains (losses) on benefit obligations, Net of tax	2	5
Reclassification adjustment for (gains) losses on benefit obligations realized in net income, Pretax	8	9
Reclassification adjustment for (gains) losses on benefit obligations realized in net income, Tax (provision) benefit	(3)	(3)
Reclassification adjustment for (gains) losses on benefit obligations realized in net income, Net of tax	5	6
Unrealized gains (losses) on derivative financial instruments, Pretax	(23)	1
Unrealized gains (losses) on derivative financial instruments, Tax (provision) benefit	8	(1)
Unrealized gains (losses) on derivative financial instruments, Net of tax	(15)	0
Reclassification adjustment for derivative financial instruments (gains) losses realized in net income, Pretax	3	(27)
Reclassification adjustment for derivative financial instruments (gains) losses realized in net income, Tax (provision) benefit	(1)	10
Reclassification adjustment for derivative financial instruments (gains) losses realized in net income, Net of tax	2	(17)
Other comprehensive income (loss), Pretax	(19)	(58)
Other comprehensive income (loss), Tax (provision) benefit	2	14
Other comprehensive loss	(17)	(44)
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Selling, general and administrative expenses	1,275	1,251
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Costs of revenues	4,333	4,005
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Other income (loss)	(76)	40
Accumulated Defined Benefit Plans Adjustment | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Selling, general and administrative expenses	8	9
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Selling, general and administrative expenses	3	(3)
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Costs of revenues	0	(9)
Pretax (gains) losses reclassified out of Accumulated Other Comprehensive Income to Other income (loss)	$ 0	$ (15)

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Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Income from continuing operations attributable to Time Warner Inc. shareholders	$ 1,424	$ 1,174
Income allocated to participating securities	(4)	(3)
Income from continuing operations attributable to Time Warner Inc. common shareholders— basic	$ 1,420	$ 1,171
Average basic common shares outstanding (in shares)	773.6	790.7
Dilutive effect of equity awards (in shares)	15.7	11.6
Average diluted common shares outstanding (in shares)	789.3	802.3
Antidilutive common share equivalents excluded from computation (in shares)	0.0	7.0
Income per common share from continuing operations attributable to Time Warner Inc. common shareholders - basic (in dollars per share)	$ 1.84	$ 1.48
Income per common share from continuing operations attributable to Time Warner Inc. common shareholders - diluted (in dollars per share)	$ 1.80	$ 1.46

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Equity-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Total impact on operating income	$ 57	$ 108
Tax benefit recognized	$ 19	$ 38
Restricted Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award, Options, Granted [Abstract]
Number of units granted (in shares)	0.4	2.7
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average grant date fair value of units granted (in dollars per share)	$ 96.28	$ 62.38
Restricted Stock Unit | Special Retention Plan First Half | First Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan First Half | Second Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan First Half | Third Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan First Half | Fourth Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan Second Half | First Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan Second Half | Second Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan Second Half | Third Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Restricted Stock Unit | Special Retention Plan Second Half | Fourth Year Anniversary
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Share-based compensation arrangement by share-based payment award, award vesting rights (percentage)	25.00%
Performance Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award, Options, Granted [Abstract]
Number of units granted (in shares)	0.0	0.2
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average grant date fair value of units granted (in dollars per share)	$ 0.00	$ 112.56
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Granted [Abstract]
Number of stock options granted (in shares)	0.0	2.2
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Total impact on operating income	$ 7	$ 21
Unrecognized compensation cost	$ 46
Unrecognized compensation cost, weighted-average period for recognition	1 year
Restricted stock units and performance stock units
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Total impact on operating income	$ 50	$ 87
Unrecognized compensation cost	$ 619
Restricted stock units and performance stock units | Minimum
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Unrecognized compensation cost, weighted-average period for recognition	1 year
Restricted stock units and performance stock units | Maximum
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]
Unrecognized compensation cost, weighted-average period for recognition	2 years

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Benefit Plans (Details) - Defined Benefit Pension Plans - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Components of Net Periodic Benefit Costs [Abstract]
Service cost	$ 1	$ 1
Interest cost	16	22
Expected return on plan assets	(15)	(21)
Amortization of net loss	3	4
Net periodic benefit costs	5	6
Contributions	10	9
Net periodic benefit costs, related to discontinued operations included in Other income (loss), net	$ 3	$ 4

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Restructuring and Severance Costs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	$ 12	$ 5
2017 initiatives
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	16	0
2016 and prior initiatives
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	(4)	5
Corporate
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	(1)	(1)
Turner | Operating Segments
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	2	1
Home Box Office | Operating Segments
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	2	4
Warner Bros. | Operating Segments
Restructuring Cost and Reserve [Line Items]
Total restructuring and severance costs	$ 9	$ 1

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Restructuring and Severance Costs (Accrued Restructuring and Severance Costs) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Reserve [Roll Forward]
Remaining liability, beginning balance	$ 171
Net accruals	12	$ 5
Noncash reductions	(2)
Cash paid	(35)
Remaining liability, ending balance	146
Restructuring Reserve [Abstract]
Restructuring reserve, current	95
Restructuring reserve, long-term	51
Employee Terminations
Restructuring Reserve [Roll Forward]
Remaining liability, beginning balance	162
Net accruals	12
Noncash reductions	(2)
Cash paid	(34)
Remaining liability, ending balance	138
Other Exit Costs
Restructuring Reserve [Roll Forward]
Remaining liability, beginning balance	9
Net accruals	0
Noncash reductions	0
Cash paid	(1)
Remaining liability, ending balance	$ 8

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Segment Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($) segment	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment	3
Total revenues	$ 7,735	$ 7,308
Total operating income (loss)	2,076	1,996
Total assets	65,649		$ 65,966
Corporate
Segment Reporting Information [Line Items]
Total operating income (loss)	(114)	(140)
Total assets	3,286		3,463
Intersegment eliminations
Segment Reporting Information [Line Items]
Total revenues	(286)	(213)
Total operating income (loss)	(51)	(4)
Turner | Operating Segments
Segment Reporting Information [Line Items]
Total revenues	3,088	2,906
Total operating income (loss)	1,170	1,239
Total assets	26,703		26,317
Turner | Intersegment eliminations
Segment Reporting Information [Line Items]
Total revenues	(21)	(20)
Home Box Office | Operating Segments
Segment Reporting Information [Line Items]
Total revenues	1,568	1,506
Total operating income (loss)	583	477
Total assets	14,692		14,636
Home Box Office | Intersegment eliminations
Segment Reporting Information [Line Items]
Total revenues	(2)	(3)
Warner Bros. | Operating Segments
Segment Reporting Information [Line Items]
Total revenues	3,365	3,109
Total operating income (loss)	488	424
Total assets	20,968		$ 21,550
Warner Bros. | Intersegment eliminations
Segment Reporting Information [Line Items]
Total revenues	$ (263)	$ (190)

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Commitments and Contingencies - Six Flags (Details) - Six Flags	3 Months Ended
	Mar. 31, 2017 USD ($)
Other Commitments [Line Items]
Six Flags, net present value	$ 456,000,000
Six Flags, guarantee payments made	0
Six Flags, guarantor obligations, current carrying value	0
Financial Guarantee
Other Commitments [Line Items]
Aggregate undiscounted contingent commitment	$ 928,000,000

XML

Commitments and Contingencies - Contingencies (Details)	Mar. 31, 2017 USD ($)
Minimum
Loss Contingencies [Line Items]
Loss contingency, range of possible loss, not accrued	$ 0
Maximum
Loss Contingencies [Line Items]
Loss contingency, range of possible loss, not accrued	$ 100,000,000

XML

Commitments and Contingencies - Tax Uncertainties (Details)	3 Months Ended
	Mar. 31, 2017 USD ($)
Income Tax Uncertainties [Abstract]
Unrecognized tax benefits, period increase (decrease)	$ 16,000,000
Unrecognized tax benefits, increases resulting from current period tax positions that increase the ETR	7,000,000
Unrecognized tax benefits, interest on income taxes expense	10,000,000
Minimum
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Decrease in unrecognized tax benefits is reasonably possible	0
Maximum
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Decrease in unrecognized tax benefits is reasonably possible	$ 270,000,000

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Related Party Transactions (Details) - Equity Method Investee - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Related Party Transaction [Line Items]
Receivables due from related parties	$ 344		$ 265
Revenues	234	$ 123
Expenses	(1)	0
Interest income	23	41
Other income	$ 2	$ 5

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Additional Financial Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Cash Flows [Abstract]
Cash payments made for interest	$ (313,000,000)	$ (291,000,000)
Interest income received	10,000,000	13,000,000
Cash interest payments, net	(303,000,000)	(278,000,000)
Cash payments made for income taxes	(122,000,000)	(134,000,000)
Income tax refunds received	4,000,000	4,000,000
Cash tax payments, net	(118,000,000)	(130,000,000)
Interest Expense, Net [Abstract]
Interest income	49,000,000	63,000,000
Interest expense	(308,000,000)	(347,000,000)
Total interest expense, net	(259,000,000)	(284,000,000)
Other Income (Loss), Net [Abstract]
Investment gains (losses), net	159,000,000	(11,000,000)
Loss on equity method investees	(76,000,000)	(34,000,000)
Other	(7,000,000)	5,000,000
Total other income (loss), net	76,000,000	(40,000,000)
Accounts Payable and Accrued Liabilities [Abstract]
Accounts payable	521,000,000		$ 527,000,000
Other accrued expenses	1,605,000,000		1,878,000,000
Participations payable	2,583,000,000		2,525,000,000
Programming costs payable	850,000,000		776,000,000
Accrued compensation	651,000,000		1,004,000,000
Accrued interest	295,000,000		320,000,000
Accrued income taxes	261,000,000		162,000,000
Total accounts payable and accrued liabilities	6,766,000,000		7,192,000,000
Other Noncurrent Liabilities [Abstract]
Noncurrent tax and interest reserves	1,628,000,000		1,567,000,000
Participations payable	1,939,000,000		1,780,000,000
Programming costs payable	786,000,000		827,000,000
Noncurrent pension and post-retirement liabilities	940,000,000		954,000,000
Deferred compensation	509,000,000		491,000,000
Other noncurrent liabilities	713,000,000		722,000,000
Total other noncurrent liabilities	6,515,000,000		$ 6,341,000,000
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative arrangement, income statement classifications and amounts, costs of revenue	93,000,000	$ 73,000,000
Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative arrangement, shortfall	45,000,000
Minimum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative arrangement, shortfall	$ 30,000,000

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Supplementary Information - Condensed Consolidating Financial Statements - Balance Sheet (Details) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets
Cash and equivalents	$ 1,450	$ 1,539	$ 1,540	$ 2,155
Receivables, net	8,540	8,699
Inventories	1,983	2,062
Prepaid expenses and other current assets	935	1,185
Total current assets	12,908	13,485
Noncurrent inventories and theatrical film and television production costs	7,923	7,916
Investments in amounts due to and from consolidated subsidiaries	0	0
Investments, including available-for-sale securities	3,412	3,337
Property, plant and equipment, net	2,462	2,510
Intangible assets subject to amortization, net	738	783
Intangible assets not subject to amortization	7,005	7,005
Goodwill	27,738	27,752
Other assets	3,463	3,178
Total assets	65,649	65,966
Current liabilities
Accounts payable and accrued liabilities	6,766	7,192
Deferred revenue	588	564
Debt due within one year	808	1,947
Total current liabilities	8,162	9,703
Long-term debt	22,402	22,392
Deferred income taxes	2,620	2,678
Deferred revenue	493	486
Other noncurrent liabilities	6,515	6,341
Redeemable noncontrolling interest	30	29
Equity
Due to (from) Time Warner Inc. and subsidiaries	0	0
Other shareholders’ equity	25,425	24,335
Total Time Warner Inc. shareholders’ equity	25,425	24,335
Noncontrolling interest	2	2
Total equity	25,427	24,337	23,844	23,619
Total liabilities and equity	65,649	65,966
Consolidation, Eliminations
Current assets
Cash and equivalents	0	0	0	0
Receivables, net	(36)	(42)
Inventories	(32)	(30)
Prepaid expenses and other current assets	0	0
Total current assets	(68)	(72)
Noncurrent inventories and theatrical film and television production costs	(31)	(41)
Investments in amounts due to and from consolidated subsidiaries	(72,777)	(72,686)
Investments, including available-for-sale securities	(5)	(6)
Property, plant and equipment, net	0	0
Intangible assets subject to amortization, net	0	0
Intangible assets not subject to amortization	0	0
Goodwill	0	0
Other assets	(229)	(249)
Total assets	(73,110)	(73,054)
Current liabilities
Accounts payable and accrued liabilities	(92)	(109)
Deferred revenue	(7)	(14)
Debt due within one year	0	0
Total current liabilities	(99)	(123)
Long-term debt	0	0
Deferred income taxes	(4,895)	(5,144)
Deferred revenue	0	0
Other noncurrent liabilities	(1,360)	(1,336)
Redeemable noncontrolling interest	0	0
Equity
Due to (from) Time Warner Inc. and subsidiaries	55,877	53,235
Other shareholders’ equity	(122,633)	(119,686)
Total Time Warner Inc. shareholders’ equity	(66,756)	(66,451)
Noncontrolling interest	0	0
Total equity	(66,756)	(66,451)
Total liabilities and equity	(73,110)	(73,054)
Parent Company
Current assets
Cash and equivalents	300	617	971	976
Receivables, net	116	118
Inventories	0	0
Prepaid expenses and other current assets	409	639
Total current assets	825	1,374
Noncurrent inventories and theatrical film and television production costs	0	0
Investments in amounts due to and from consolidated subsidiaries	48,770	48,212
Investments, including available-for-sale securities	297	274
Property, plant and equipment, net	52	48
Intangible assets subject to amortization, net	0	0
Intangible assets not subject to amortization	0	0
Goodwill	0	0
Other assets	533	520
Total assets	50,477	50,428
Current liabilities
Accounts payable and accrued liabilities	754	687
Deferred revenue	0	0
Debt due within one year	295	1,434
Total current liabilities	1,049	2,121
Long-term debt	19,331	19,318
Deferred income taxes	2,620	2,678
Deferred revenue	0	0
Other noncurrent liabilities	2,052	1,976
Redeemable noncontrolling interest	0	0
Equity
Due to (from) Time Warner Inc. and subsidiaries	0	0
Other shareholders’ equity	25,425	24,335
Total Time Warner Inc. shareholders’ equity	25,425	24,335
Noncontrolling interest	0	0
Total equity	25,425	24,335
Total liabilities and equity	50,477	50,428
Guarantor Subsidiaries
Current assets
Cash and equivalents	98	91	79	288
Receivables, net	1,237	1,294
Inventories	574	528
Prepaid expenses and other current assets	107	91
Total current assets	2,016	2,004
Noncurrent inventories and theatrical film and television production costs	1,891	1,929
Investments in amounts due to and from consolidated subsidiaries	10,915	11,319
Investments, including available-for-sale securities	449	441
Property, plant and equipment, net	415	423
Intangible assets subject to amortization, net	0	0
Intangible assets not subject to amortization	2,007	2,007
Goodwill	9,880	9,880
Other assets	506	385
Total assets	28,079	28,388
Current liabilities
Accounts payable and accrued liabilities	814	854
Deferred revenue	75	67
Debt due within one year	511	511
Total current liabilities	1,400	1,432
Long-term debt	3,062	3,065
Deferred income taxes	2,872	3,011
Deferred revenue	26	26
Other noncurrent liabilities	1,885	1,886
Redeemable noncontrolling interest	0	0
Equity
Due to (from) Time Warner Inc. and subsidiaries	(54,590)	(52,869)
Other shareholders’ equity	73,424	71,837
Total Time Warner Inc. shareholders’ equity	18,834	18,968
Noncontrolling interest	0	0
Total equity	18,834	18,968
Total liabilities and equity	28,079	28,388
Non-Guarantor Subsidiaries
Current assets
Cash and equivalents	1,052	831	$ 490	$ 891
Receivables, net	7,223	7,329
Inventories	1,441	1,564
Prepaid expenses and other current assets	419	455
Total current assets	10,135	10,179
Noncurrent inventories and theatrical film and television production costs	6,063	6,028
Investments in amounts due to and from consolidated subsidiaries	13,092	13,155
Investments, including available-for-sale securities	2,671	2,628
Property, plant and equipment, net	1,995	2,039
Intangible assets subject to amortization, net	738	783
Intangible assets not subject to amortization	4,998	4,998
Goodwill	17,858	17,872
Other assets	2,653	2,522
Total assets	60,203	60,204
Current liabilities
Accounts payable and accrued liabilities	5,290	5,760
Deferred revenue	520	511
Debt due within one year	2	2
Total current liabilities	5,812	6,273
Long-term debt	9	9
Deferred income taxes	2,023	2,133
Deferred revenue	467	460
Other noncurrent liabilities	3,938	3,815
Redeemable noncontrolling interest	30	29
Equity
Due to (from) Time Warner Inc. and subsidiaries	(1,287)	(366)
Other shareholders’ equity	49,209	47,849
Total Time Warner Inc. shareholders’ equity	47,922	47,483
Noncontrolling interest	2	2
Total equity	47,924	47,485
Total liabilities and equity	$ 60,203	$ 60,204

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Supplementary Information - Condensed Consolidating Financial Statements - Statement of Operations (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues	$ 7,735	$ 7,308
Costs of revenues	(4,333)	(4,005)
Selling, general and administrative	(1,275)	(1,251)
Amortization of intangible assets	(45)	(48)
Restructuring and severance costs	(12)	(5)
Asset impairments	(1)	(3)
Gain on operating assets, net	7	0
Operating income	2,076	1,996
Equity in pretax income (loss) of consolidated subsidiaries	0	0
Interest expense, net	(259)	(284)
Other income (loss), net	76	(40)
Income from continuing operations before income taxes	1,893	1,672
Income tax provision	(470)	(498)
Income from continuing operations	1,423	1,174
Discontinued operations, net of tax	0	40
Net income	1,423	1,214
Less Net loss attributable to noncontrolling interests	1	0
Net income attributable to Time Warner Inc. shareholders	1,424	1,214
Comprehensive income	1,406	1,170
Less Comprehensive loss attributable to noncontrolling interests	1	0
Comprehensive income attributable to Time Warner Inc. shareholders	1,407	1,170
Consolidation, Eliminations
Income Statement [Abstract]
Revenues	(221)	(237)
Costs of revenues	191	187
Selling, general and administrative	27	47
Amortization of intangible assets	0	0
Restructuring and severance costs	0	0
Asset impairments	0	0
Gain on operating assets, net	0
Operating income	(3)	(3)
Equity in pretax income (loss) of consolidated subsidiaries	(4,213)	(3,925)
Interest expense, net	1	2
Other income (loss), net	1	(1)
Income from continuing operations before income taxes	(4,214)	(3,927)
Income tax provision	1,201	1,190
Income from continuing operations	(3,013)	(2,737)
Discontinued operations, net of tax	0	(80)
Net income	(3,013)	(2,817)
Less Net loss attributable to noncontrolling interests	(2)
Net income attributable to Time Warner Inc. shareholders	(3,015)	(2,817)
Comprehensive income	(3,008)
Less Comprehensive loss attributable to noncontrolling interests	(2)
Comprehensive income attributable to Time Warner Inc. shareholders	(3,010)	(2,740)
Parent Company
Income Statement [Abstract]
Revenues	0	0
Costs of revenues	0	0
Selling, general and administrative	(105)	(120)
Amortization of intangible assets	0	0
Restructuring and severance costs	0	0
Asset impairments	0	(2)
Gain on operating assets, net	0
Operating income	(105)	(122)
Equity in pretax income (loss) of consolidated subsidiaries	2,203	2,028
Interest expense, net	(208)	(247)
Other income (loss), net	3	13
Income from continuing operations before income taxes	1,893	1,672
Income tax provision	(470)	(498)
Income from continuing operations	1,423	1,174
Discontinued operations, net of tax	0	40
Net income	1,423	1,214
Less Net loss attributable to noncontrolling interests	1
Net income attributable to Time Warner Inc. shareholders	1,424	1,214
Comprehensive income	1,406
Less Comprehensive loss attributable to noncontrolling interests	1
Comprehensive income attributable to Time Warner Inc. shareholders	1,407	1,170
Guarantor Subsidiaries
Income Statement [Abstract]
Revenues	2,020	1,983
Costs of revenues	(923)	(953)
Selling, general and administrative	(311)	(312)
Amortization of intangible assets	0	0
Restructuring and severance costs	(2)	(4)
Asset impairments	0	0
Gain on operating assets, net	0
Operating income	784	714
Equity in pretax income (loss) of consolidated subsidiaries	1,453	1,426
Interest expense, net	(68)	(76)
Other income (loss), net	0	(3)
Income from continuing operations before income taxes	2,169	2,061
Income tax provision	(613)	(618)
Income from continuing operations	1,556	1,443
Discontinued operations, net of tax	0	40
Net income	1,556	1,483
Less Net loss attributable to noncontrolling interests	1
Net income attributable to Time Warner Inc. shareholders	1,557	1,483
Comprehensive income	1,562
Less Comprehensive loss attributable to noncontrolling interests	1
Comprehensive income attributable to Time Warner Inc. shareholders	1,563	1,453
Non-Guarantor Subsidiaries
Income Statement [Abstract]
Revenues	5,936	5,562
Costs of revenues	(3,601)	(3,239)
Selling, general and administrative	(886)	(866)
Amortization of intangible assets	(45)	(48)
Restructuring and severance costs	(10)	(1)
Asset impairments	(1)	(1)
Gain on operating assets, net	7
Operating income	1,400	1,407
Equity in pretax income (loss) of consolidated subsidiaries	557	471
Interest expense, net	16	37
Other income (loss), net	72	(49)
Income from continuing operations before income taxes	2,045	1,866
Income tax provision	(588)	(572)
Income from continuing operations	1,457	1,294
Discontinued operations, net of tax	0	40
Net income	1,457	1,334
Less Net loss attributable to noncontrolling interests	1
Net income attributable to Time Warner Inc. shareholders	1,458	1,334
Comprehensive income	1,446
Less Comprehensive loss attributable to noncontrolling interests	1
Comprehensive income attributable to Time Warner Inc. shareholders	$ 1,447	$ 1,287

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Supplementary Information - Condensed Consolidating Financial Statements - Statement of Cash Flows (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATIONS
Net income	$ 1,423	$ 1,214
Less Discontinued operations, net of tax	0	(40)
Net income from continuing operations	1,423	1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization	165	167
Amortization of film and television costs	2,203	2,112
Asset impairments	1	3
(Gain) loss on investments and other assets, net	(166)	11
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	0	0
Equity in losses of investee companies, net of cash distributions	93	50
Equity-based compensation	57	108
Deferred income taxes	(44)	113
Changes in operating assets and liabilities, net of acquisitions	(2,266)	(2,981)
Intercompany	0	0
Cash provided by operations from continuing operations	1,466	757
Cash used by operations from discontinued operations	(5)	(4)
Cash provided by operations	1,461	753
INVESTING ACTIVITIES
Investments in available-for-sale securities	0	(5)
Investments and acquisitions, net of cash acquired	(168)	(93)
Capital expenditures	(98)	(75)
Advances to (from) parent and consolidated subsidiaries	0	0
Other investment proceeds	240	18
Cash used by investing activities	(26)	(155)
FINANCING ACTIVITIES
Borrowings	0	2
Debt repayments	(1,144)	(152)
Proceeds from exercise of stock options	56	56
Excess tax benefit from equity instruments	0	27
Principal payments on capital leases	(3)	(3)
Repurchases of common stock	0	(711)
Dividends paid	(316)	(322)
Other financing activities	(117)	(110)
Change in due to/from parent and investment in segment	0	0
Cash used by financing activities	(1,524)	(1,213)
DECREASE IN CASH AND EQUIVALENTS	(89)	(615)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	1,539	2,155
CASH AND EQUIVALENTS AT END OF PERIOD	1,450	1,540
Consolidation, Eliminations
OPERATIONS
Net income	(3,013)	(2,817)
Less Discontinued operations, net of tax	0	80
Net income from continuing operations	(3,013)	(2,737)
Adjustments for noncash and nonoperating items:
Depreciation and amortization	0	0
Amortization of film and television costs	(12)	(7)
Asset impairments	0	0
(Gain) loss on investments and other assets, net	0	0
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	4,213	3,925
Equity in losses of investee companies, net of cash distributions	0	(1)
Equity-based compensation	0	0
Deferred income taxes	222	(50)
Changes in operating assets and liabilities, net of acquisitions	(1,415)	(1,133)
Intercompany	0	0
Cash provided by operations from continuing operations	(5)	(3)
Cash used by operations from discontinued operations	0	0
Cash provided by operations	(5)	(3)
INVESTING ACTIVITIES
Investments in available-for-sale securities		0
Investments and acquisitions, net of cash acquired	0	0
Capital expenditures	0	0
Advances to (from) parent and consolidated subsidiaries	(1,973)	(1,579)
Other investment proceeds	0	0
Cash used by investing activities	(1,973)	(1,579)
FINANCING ACTIVITIES
Borrowings		0
Debt repayments	0	0
Proceeds from exercise of stock options	0	0
Excess tax benefit from equity instruments		0
Principal payments on capital leases	0	0
Repurchases of common stock		0
Dividends paid	0	0
Other financing activities	1	2
Change in due to/from parent and investment in segment	1,977	1,580
Cash used by financing activities	1,978	1,582
DECREASE IN CASH AND EQUIVALENTS	0	0
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	0	0
CASH AND EQUIVALENTS AT END OF PERIOD	0	0
Parent Company
OPERATIONS
Net income	1,423	1,214
Less Discontinued operations, net of tax	0	(40)
Net income from continuing operations	1,423	1,174
Adjustments for noncash and nonoperating items:
Depreciation and amortization	3	2
Amortization of film and television costs	0	0
Asset impairments	0	2
(Gain) loss on investments and other assets, net	(22)	(3)
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	(2,203)	(2,028)
Equity in losses of investee companies, net of cash distributions	6	(8)
Equity-based compensation	11	42
Deferred income taxes	(44)	113
Changes in operating assets and liabilities, net of acquisitions	342	123
Intercompany	0	0
Cash provided by operations from continuing operations	(484)	(583)
Cash used by operations from discontinued operations	0	0
Cash provided by operations	(484)	(583)
INVESTING ACTIVITIES
Investments in available-for-sale securities		0
Investments and acquisitions, net of cash acquired	(21)	(9)
Capital expenditures	0	(7)
Advances to (from) parent and consolidated subsidiaries	1,543	1,471
Other investment proceeds	20	15
Cash used by investing activities	1,542	1,470
FINANCING ACTIVITIES
Borrowings		0
Debt repayments	(1,144)	0
Proceeds from exercise of stock options	56	56
Excess tax benefit from equity instruments		27
Principal payments on capital leases	0	0
Repurchases of common stock		(711)
Dividends paid	(316)	(322)
Other financing activities	29	58
Change in due to/from parent and investment in segment	0	0
Cash used by financing activities	(1,375)	(892)
DECREASE IN CASH AND EQUIVALENTS	(317)	(5)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	617	976
CASH AND EQUIVALENTS AT END OF PERIOD	300	971
Guarantor Subsidiaries
OPERATIONS
Net income	1,556	1,483
Less Discontinued operations, net of tax	0	(40)
Net income from continuing operations	1,556	1,443
Adjustments for noncash and nonoperating items:
Depreciation and amortization	27	27
Amortization of film and television costs	735	768
Asset impairments	0	0
(Gain) loss on investments and other assets, net	5	0
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	(1,453)	(1,426)
Equity in losses of investee companies, net of cash distributions	0	0
Equity-based compensation	23	30
Deferred income taxes	(127)	37
Changes in operating assets and liabilities, net of acquisitions	(12)	(330)
Intercompany	605	616
Cash provided by operations from continuing operations	1,359	1,165
Cash used by operations from discontinued operations	0	0
Cash provided by operations	1,359	1,165
INVESTING ACTIVITIES
Investments in available-for-sale securities		0
Investments and acquisitions, net of cash acquired	(9)	(14)
Capital expenditures	(32)	(13)
Advances to (from) parent and consolidated subsidiaries	429	108
Other investment proceeds	0	0
Cash used by investing activities	388	81
FINANCING ACTIVITIES
Borrowings		0
Debt repayments	0	(150)
Proceeds from exercise of stock options	0	0
Excess tax benefit from equity instruments		0
Principal payments on capital leases	(3)	(3)
Repurchases of common stock		0
Dividends paid	0	0
Other financing activities	(16)	(25)
Change in due to/from parent and investment in segment	(1,721)	(1,277)
Cash used by financing activities	(1,740)	(1,455)
DECREASE IN CASH AND EQUIVALENTS	7	(209)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	91	288
CASH AND EQUIVALENTS AT END OF PERIOD	98	79
Non-Guarantor Subsidiaries
OPERATIONS
Net income	1,457	1,334
Less Discontinued operations, net of tax	0	(40)
Net income from continuing operations	1,457	1,294
Adjustments for noncash and nonoperating items:
Depreciation and amortization	135	138
Amortization of film and television costs	1,480	1,351
Asset impairments	1	1
(Gain) loss on investments and other assets, net	(149)	14
Excess (deficiency) of distributions over equity in pretax income of consolidated subsidiaries, net of cash distributions	(557)	(471)
Equity in losses of investee companies, net of cash distributions	87	59
Equity-based compensation	23	36
Deferred income taxes	(95)	13
Changes in operating assets and liabilities, net of acquisitions	(1,181)	(1,641)
Intercompany	(605)	(616)
Cash provided by operations from continuing operations	596	178
Cash used by operations from discontinued operations	(5)	(4)
Cash provided by operations	591	174
INVESTING ACTIVITIES
Investments in available-for-sale securities		(5)
Investments and acquisitions, net of cash acquired	(138)	(70)
Capital expenditures	(66)	(55)
Advances to (from) parent and consolidated subsidiaries	1	0
Other investment proceeds	220	3
Cash used by investing activities	17	(127)
FINANCING ACTIVITIES
Borrowings		2
Debt repayments	0	(2)
Proceeds from exercise of stock options	0	0
Excess tax benefit from equity instruments		0
Principal payments on capital leases	0	0
Repurchases of common stock		0
Dividends paid	0	0
Other financing activities	(131)	(145)
Change in due to/from parent and investment in segment	(256)	(303)
Cash used by financing activities	(387)	(448)
DECREASE IN CASH AND EQUIVALENTS	221	(401)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	831	891
CASH AND EQUIVALENTS AT END OF PERIOD	$ 1,052	$ 490