<PAGE>
<PAGE>
PROSPECTUS SUPPLEMENT FILED PURSUANT
(TO PROSPECTUS DATED JANUARY 27, 1998) TO RULE 424(b)(5)
File No. 333-44255
$600,000,000
TIME WARNER INC.
UNCONDITIONALLY GUARANTEED BY
TIME WARNER COMPANIES, INC.
AND
TURNER BROADCASTING SYSTEM, INC.
6 7/8% DEBENTURES DUE 2018
------------------------------
The 6 7/8% Debentures due 2018 (the 'Debentures') are offered by Time
Warner Inc. (the 'Issuer'), and are unconditionally guaranteed by Time Warner
Companies, Inc. ('TWC') and Turner Broadcasting System, Inc. ('TBS', and
together with TWC, the 'Guarantors'). Interest on the Debentures will be payable
semi-annually on June 15 and December 15 of each year, commencing December 15,
1998. The Debentures will not be subject to any sinking fund. The Debentures
will mature on June 15, 2018 and will not be redeemable prior to maturity. See
'Description of the Debentures and the Guarantees'. The Debentures will be
irrevocably, fully and unconditionally guaranteed (the 'Guarantees') on an
unsecured basis by the Guarantors. The Debentures and each Guarantee will be
senior securities and a senior obligation of the Issuer and each Guarantor,
respectively, ranking equally with all other unsubordinated and unsecured
indebtedness and other obligations of the Issuer and each Guarantor,
respectively. The Issuer is a holding company that derives its operating income
and cash flow from the Guarantors. The Guarantors are also holding companies.
See 'Holding Company Structure'. The Issuer and its subsidiaries are
collectively referred to as the 'Company'.
The Debentures will be represented by Book-Entry Securities registered in
the name of The Depository Trust Company ('DTC') or its nominee. Interests in
such Book-Entry Securities will be shown on, and transfer thereof will be
effected only through, records maintained by DTC and its participants. Except as
described herein, Debentures in definitive form will not be issued. Settlement
for the Debentures will be made in immediately available funds. So long as the
Debentures are registered in the name of DTC or its nominee, the Debentures will
trade in DTC's Same-Day Funds Settlement System and secondary market trading
activity in the Debentures will therefore settle in immediately available funds.
See 'Description of the Debentures and the Guarantees'.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) ISSUER(1)(3)
<S> <C> <C> <C>
Per Debenture............................................... 98.906% .875% 98.031%
Total....................................................... $593,436,000 $5,250,000 $588,186,000
</TABLE>
(1) Plus accrued interest, if any, from June 8, 1998.
(2) Each of the Issuer and the Guarantors has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
(3) Before deducting estimated expenses of $800,000. See 'Underwriters'.
------------------------
The Debentures are offered, subject to prior sale, when, as and if accepted
by the several Underwriters and subject to approval of certain legal matters by
Shearman & Sterling, counsel for the Underwriters. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that delivery of the Debentures will be made on or about
June 8, 1998 through the book-entry facilities of The Depository Trust Company,
against payment therefor in immediately available funds.
------------------------
Joint Bookrunners
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
------------------------
Co-Managers
BEAR, STEARNS & CO. INC. WASSERSTEIN PERELLA SECURITIES, INC.
------------------------
The date of this Prospectus Supplement is June 3, 1998.
<PAGE>
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS AND THE PURCHASE OF DEBENTURES
TO COVER SYNDICATE SHORT POSITIONS, SYNDICATE SHORT-COVERING TRANSACTIONS AND
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE 'UNDERWRITERS'.
S-2
<PAGE>
<PAGE>
THE COMPANY
The following summary of the business of the Company is qualified in its
entirety by and should be read together with the more detailed information and
financial statements included or incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.
The Company is the world's leading media and entertainment company and has
interests in four fundamental areas of business: Entertainment, consisting
principally of interests in filmed entertainment, television production,
television broadcasting, recorded music and music publishing; Cable Networks,
consisting principally of interests in cable television programming; Publishing,
consisting principally of interests in magazine publishing, book publishing and
direct marketing; and Cable, consisting principally of interests in cable
television systems. Each of the Issuer and the Guarantors is a holding company
that derives its operating income and cash flow from its subsidiaries and
investments. The assets of the Issuer consist primarily of its investments in
TWC and TBS. The assets of TWC consist primarily of its investments in its
consolidated and unconsolidated subsidiaries, including Time Warner
Entertainment Company, L.P. ('TWE'). The assets of TBS consist primarily of
investments in its consolidated and unconsolidated subsidiaries. The ability of
the Issuer and the Guarantors to service their respective indebtedness and other
liabilities, including the Debentures and the Guarantees, respectively, is
dependent primarily upon the earnings and cash flow of their respective
consolidated and unconsolidated subsidiaries and the distribution or other
payment to them of such earnings and cash flow. See 'Holding Company Structure'.
The Issuer became the parent of TWC and TBS on October 10, 1996 upon the
merger of TWC and TBS with separate subsidiaries of the Issuer (the 'TBS
Transaction'), as more fully described in the accompanying Prospectus.
The principal executive offices of each of the Issuer and TWC are located
at 75 Rockefeller Plaza, New York, NY 10019 and the telephone number of each is
(212) 484-8000. The principal executive offices of TBS are located at One CNN
Center, Atlanta, Georgia 30303 and the telephone number of TBS is (404)
827-1700.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for each of the Issuer, TWC and TBS
are set forth below for the periods indicated. For periods in which earnings
before fixed charges were insufficient to cover fixed charges, the dollar amount
of coverage deficiency (in millions), instead of the ratio, is disclosed.
The ratios of earnings to fixed charges (or coverage deficiencies) of TBS
for all post-merger periods have been adjusted to reflect the Issuer's basis of
accounting. The ratios of earnings to fixed charges (or coverage deficiencies)
of TBS for all pre-merger periods are reflected at TBS's historical cost basis
of accounting. Certain reclassifications have been made to TBS's ratios of
earnings to fixed charges for pre-merger periods to conform to the post-merger
presentation.
The ratio of earnings to fixed charges of each of the Issuer and TWC for
the three months ended March 31, 1998 reflects the transfer of cable television
systems (or interests therein) serving approximately 650,000 subscribers that
were formerly owned by subsidiaries of TWC to the TWE-Advance/Newhouse
Partnership, subject to approximately $1 billion of debt, in exchange for common
and preferred partnership interests therein, as well as certain related
transactions.
The ratio of earnings to fixed charges of each of the Issuer and TWC for
1996 reflects (a) the use of approximately $1.55 billion of net proceeds from
the issuance of 1.6 million shares of Series M exchangeable preferred stock,
having an aggregate liquidation preference of $1.6 billion, to reduce
outstanding indebtedness, (b) the acquisition of Cablevision Industries
Corporation and related companies, including the assumption or incurrence of
approximately $2 billion of indebtedness and, with respect to the Issuer only,
(c) the TBS Transaction, including the assumption of approximately $2.8 billion
of indebtedness.
The ratio of earnings to fixed charges of each of the Issuer and TWC for
1995 reflects (a) the acquisition of KBLCOM Incorporated and Summit
Communications Group, Inc., including the
S-3
<PAGE>
<PAGE>
assumption or incurrence of approximately $1.3 billion of indebtedness and (b)
the exchange by Toshiba Corporation and ITOCHU Corporation of their direct and
indirect interests in TWE.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuer........................................................ 1.1x 1.7x 1.6x 1.1x 1.1x 1.1x 1.1x
TWC........................................................... 1.2x 1.8x 1.6x 1.1x 1.1x 1.1x 1.1x
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
MARCH 31, THREE MONTHS NINE MONTHS DECEMBER 31,
----------------------- YEAR ENDED ENDED ENDED ------------------------
1998 1997 DECEMBER 31, 1997 DECEMBER 31, 1996 SEPTEMBER 30, 1996 1995 1994 1993
---------- ---------- ------------------ ------------------ ------------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TBS........ $(8) $(22) 2.1x 1.6x $(44) 1.7x 1.3x 1.6x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
were calculated by adding (i) pretax income, (ii) interest expense, including
previously capitalized interest amortized to expense and the portion of rents
representative of an interest factor for the Issuer, TWC and TBS and their
respective majority-owned subsidiaries, (iii) the Issuer's, TWC's and TBS's
respective proportionate share of the items included in (ii) above for their
50%-owned companies, (iv) preferred stock dividend requirements of
majority-owned subsidiaries, (v) minority interest in the income of majority-
owned subsidiaries that have fixed charges and (vi) the amount of undistributed
losses of each of the Issuer's, TWC's and TBS's less than 50%-owned companies.
Fixed charges consist of (i) interest expense, including interest capitalized
and the portion of rents representative of an interest factor for the Issuer,
TWC and TBS and their respective majority-owned subsidiaries, (ii) the Issuer's,
TWC's and TBS's respective proportionate share of such items for their 50%-owned
companies and (iii) preferred stock dividend requirements of majority-owned
subsidiaries. Earnings as defined include significant noncash charges for
depreciation and amortization. Fixed charges of the Issuer and TWC for the three
months ended March 31, 1998 and 1997 and the years ended December 31, 1997,
1996, 1995 and 1994 include noncash interest expense of $15 million, $25
million, $96 million, $91 million, $176 million and $219 million, respectively,
principally relating to TWC's Liquid Yield Option'tm' Notes due 2012 and 2013
and, in 1995 and 1994 only, TWC's Redeemable Reset Notes due 2002. Fixed charges
of the Issuer for the three months ended March 31, 1997 and the years ended
December 31, 1997 and 1996 include an additional $2 million, $2 million and $5
million, respectively, in noncash interest expense relating to TBS's zero coupon
convertible notes due 2007. Fixed charges of TBS include noncash interest
expense of $2 million, $2 million, $5 million, $14 million, $18 million, $17
million and $29 million for the three months ended March 31, 1997, the year
ended December 31, 1997, the three months ended December 31, 1996, the nine
months ended September 30, 1996 and the years ended December 31, 1995, 1994 and
1993, respectively.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Debentures
(aggregating approximately $588 million) will be initially used by the Company
to reduce outstanding bank and other short-term indebtedness. Thereafter, the
Company expects to reborrow under its bank credit facilities to either (i)
purchase shares of its common stock under its existing forward purchase contract
with certain banks to partially satisfy conversion obligations under TWC's
outstanding Liquid Yield Option'tm' Notes due 2013 (the 'LYONs'), which have
been called for redemption on June 22, 1998, or (ii) pay the redemption price of
any LYONs that are redeemed.
DESCRIPTION OF THE DEBENTURES AND THE GUARANTEES
The Debentures will be issued under an Indenture dated as of June 1, 1998
(the 'Indenture'), among the Issuer, TWC, TBS and The Chase Manhattan Bank (the
'Trustee'), as Trustee. The following description of the particular terms of the
Debentures offered hereby supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Debt
Securities set forth in the accompanying Prospectus, to which description
reference is hereby made.
S-4
<PAGE>
<PAGE>
Capitalized terms used but not defined herein or in the accompanying Prospectus
have the meanings given to them in the Indenture. Section references are to the
Indenture unless otherwise indicated.
GENERAL
The Debentures will bear interest at an annual rate of 6.875%, payable
semiannually on June 15 and December 15 of each year, commencing December 15,
1998 (each an 'Interest Payment Date'), to holders of record at the close of
business on the June 1 or December 1 next preceding each such Interest Payment
Date. The Debentures will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. The principal of and
interest on the Debentures will be payable and the transfer of the Debentures
will be registrable through DTC as described under ' -- Book Entry System'
below. (Sections 3.05 and 2.02 and Form of Debenture) The Issuer will not charge
a service charge for any registration of transfer or exchange of Debentures;
however, the Issuer may require payment by a Holder of a sum sufficient to cover
any tax, assessment or other governmental charge payable in connection
therewith. (Section 3.05) The Trustee shall authenticate and deliver Debentures
in accordance with the Indenture and the procedures for dating, due execution by
the Issuer and book-entry transfer set forth therein. (Section 3.03)
TERMS OF THE DEBENTURES
The Debentures will be limited to $600,000,000 aggregate principal amount.
The Debentures will mature on June 15, 2018 and will not be redeemable prior to
maturity or entitled to any sinking fund.
GUARANTEES
Under the Guarantees, each of TWC and TBS, as primary obligor and not
merely as surety, will irrevocably and unconditionally guarantee, to each Holder
of Debentures, and to the Trustee and its successors and assigns, (i) the full
and punctual payment of principal of and interest on the Debentures when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Issuer under the Indenture (including obligations to
the Trustee) and the Debentures and (ii) the full and punctual performance
within applicable grace periods of all other obligations of the Issuer under the
Indenture and the Debentures. Each of TWC and TBS further agrees that its
obligations under the Indenture shall be unconditional irrespective of the
absence or existence of any action to enforce the same, the recovery of any
judgment against the Issuer or the other Guarantor or any waiver or amendment of
the provisions of the Indenture or the Securities to the extent that any such
action or similar action would otherwise constitute a legal or equitable defense
of a guarantor (except that each such waiver or amendment shall be effective in
accordance with its terms). The Guarantees constitute guarantees of payment,
performance and compliance and not merely of collection. The obligations of TWC
and TBS to make any payments may be satisfied by causing the Issuer to make such
payments. If any Holder of any Security or the Trustee is required by a court or
otherwise to return to the Issuer, TBS or TWC, or any custodian, trustee,
liquidator or other similar official acting in relation to any of the Issuer,
TBS or TWC, any amount paid by any of them to the Trustee or such Holder, the
Guarantee of TBS and the Guarantee of TWC, to the extent theretofore discharged,
shall be reinstated in full force and effect. Further, TWC and TBS agree to pay
any and all costs and expenses (including reasonable attorneys' fees) incurred
by the Trustee or any Holder in enforcing any of their respective rights under
the Guarantees. The Indenture provides that each of the Guarantees of TWC and
TBS is limited to the maximum amount that can be guaranteed by TWC or TBS,
respectively, without rendering the relevant Guarantee voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. (Article XIII)
RANKING
The Debentures will be senior indebtedness of the Issuer and will be
direct, unsecured obligations of the Issuer, ranking on a parity with all other
unsecured and unsubordinated indebtedness of the Issuer, and the Guarantees will
be a senior obligation of TWC and TBS and will be a direct unsecured
S-5
<PAGE>
<PAGE>
obligation of TWC and TBS, ranking on a parity with all other unsecured and
unsubordinated obligations of TWC and TBS. Each of the Issuer, TWC and TBS is a
holding company and the Debentures and the Guarantees will be effectively
subordinated to all existing and future liabilities, including indebtedness, of
the subsidiaries of the Issuer, TWC and TBS, respectively. See 'Holding Company
Structure'.
CERTAIN COVENANTS
Limitation on Liens. The Indenture provides that neither the Issuer nor any
Material Subsidiary of the Issuer shall incur, create, issue, assume, guarantee
or otherwise become liable for any indebtedness for money borrowed that is
secured by a lien on any asset now owned or hereafter acquired by it unless the
Issuer makes or causes to be made effective provision whereby the Debt
Securities will be secured by such lien equally and ratably with (or prior to)
all other indebtedness thereby secured so long as any such indebtedness shall be
secured. The foregoing restriction does not apply to the following:
(i) liens existing as of the date of the Indenture;
(ii) liens created by Subsidiaries of the Issuer to secure
indebtedness of such Subsidiaries to the Issuer or to one or more other
Subsidiaries of the Issuer;
(iii) liens affecting property of a person existing at the time it
becomes a Subsidiary of the Issuer or at the time it merges into or
consolidates with the Issuer or a Subsidiary of the Issuer or at the time
of a sale, lease or other disposition of all or substantially all of the
properties of such person to the Issuer or its Subsidiaries;
(iv) liens on property existing at the time of the acquisition thereof
or incurred to secure payment of all or a part of the purchase price
thereof or to secure Indebtedness incurred prior to, at the time of, or
within one year after the acquisition thereof for the purpose of financing
all or part of the purchase price thereof;
(v) liens on any property to secure all or part of the cost of
improvements or construction thereon or indebtedness incurred to provide
funds for such purpose in a principal amount not exceeding the cost of such
improvements or construction;
(vi) liens consisting of or relating to the sale, transfer or
financing of motion pictures, video and television programs, sound
recordings, books or rights with respect thereto or with so-called tax
shelter groups or other third-party investors in connection with the
financing of such motion pictures, video and television programming, sound
recordings or books in the ordinary course of business and the granting to
the Issuer or any of its Subsidiaries of rights to distribute such motion
pictures, video and television programming, sound recordings or books;
provided, however, that no such lien shall attach to any asset or right of
the Issuer or its Subsidiaries (other than (1) the motion pictures, video
and television programming, sound recordings, books or rights which were
sold, transferred to or financed by the tax shelter group or third-party
investors in question or the proceeds arising therefrom and (2) the stock
or equity interests of a Subsidiary substantially all of the assets of
which consist of such motion pictures, video and television programming,
sound recordings, books or rights and related proceeds);
(vii) liens on shares of stock, indebtedness or other securities of a
Person that is not a Subsidiary;
(viii) liens on Works which either (1) existed in such Works before
the time of their acquisition and were not created in anticipation thereof,
or (2) were created solely for the purpose of securing obligations to
financiers, producers, distributors, exhibitors, completion guarantors,
inventors, copyright holders, financial institutions or other participants
incurred in the ordinary course of business in connection with the
acquisition, financing, production, completion, distribution or exhibit of
Works.
(ix) any lien on the office building and hotel complex located in
Atlanta, Georgia known as the CNN Center Complex, including the parking
decks for such complex (to the extent such parking decks are owned or
leased by the Issuer or its Subsidiaries), or any portion thereof and all
property
S-6
<PAGE>
<PAGE>
rights therein and the products, revenues and proceeds therefrom created as
part of any mortgage financing or sale-leaseback of the CNN Center Complex;
(x) liens on satellite transponders and all property rights therein
and the products, revenues and proceeds therefrom which secure obligations
incurred in connection with the acquisition, utilization or operation of
such satellite transponders or the refinancing of any such obligations;
(xi) restrictions on the Atlanta National League Baseball Club, Inc.
and Atlanta Hawks, Ltd and their respective assets imposed by Major League
Baseball or the Commissioner of Baseball, and the National Basketball
Association, respectively, including, without limitation, restrictions on
the transferability of the Issuer's or any of its Subsidiaries' interests
therein;
(xii) liens on capital leases entered into after the date of the
Indenture provided that such liens extend only to the property or assets
that are the subject of such capital leases;
(xiii) Liens resulting from progress payments or partial payments
under United States government contracts or subcontracts;
(xiv) other liens arising in connection with indebtedness of the
Issuer and its Subsidiaries in an aggregate principal amount for the Issuer
and its Subsidiaries not exceeding at the time such lien is issued, created
or assumed the greater of (A) 10% of the Consolidated Net Worth of the
Issuer and (B) $500 million; and
(xv) any extensions, renewal or replacement of any lien referred to in
the foregoing clauses (i) through (xiv) inclusive, or of any indebtedness
secured thereby; provided that the principal amount of indebtedness secured
thereby shall not exceed the principal amount of indebtedness so secured at
the time of such extension, renewal or replacement, or at the time the lien
was issued, created or assumed or otherwise permitted, and that such
extension, renewal or replacement lien shall be limited to all or part of
substantially the same property which secured the lien extended, renewed or
replaced (plus improvements on such property). (Section 10.06)
Limitation on Senior Debt. Since the Issuer has reached Investment Grade
Status, and notwithstanding that any series of the Debt Securities may later
cease to have an Investment Grade Rating from either or both of the Rating
Agencies, the Issuer has been released from, and will not be bound by, any
obligation to comply with the restrictive covenant described under 'Limitation
on Senior Debt' in the accompanying Prospectus. Accordingly, such covenant is
not included in the Indenture.
Limitation on Merger, Consolidation and Certain Sales of Assets. The
Indenture provides that neither the Issuer, TWC nor TBS will merge or
consolidate with or into, or convey or transfer its property substantially as an
entirety to, any Person unless (a) (i) in the case of the Issuer, the successor
is organized and existing under the laws of the United States or any State
thereof or the District of Columbia and (ii) in the case of TWC or TBS, the
successor is either the Issuer or organized and existing under the laws of the
United States or any State thereof or the District of Columbia, (b) (i) in the
case of the Issuer, the successor assumes the Issuer's obligations under the
Indenture and the Debt Securities on the same terms and conditions and (ii) in
the case of TWC or TBS, the successor assumes TWC's or TBS's obligations under
the Indenture and the Guarantees on the same terms and conditions and (c)
immediately after giving effect to such transactions, there is no default under
the Indenture. (Sections 8.01 and 8.02)
Other than the restrictions in the Indenture on liens and incurrence of
Senior Debt described above, the Indenture and the Debt Securities do not
contain any covenants or other provisions designed to afford Holders of Debt
Securities protection in the event of a recapitalization or highly leveraged
transaction involving the Issuer.
CERTAIN DEFINITIONS
The following are certain of the terms defined in the Indenture:
'Consolidated Net Worth' means, with respect to the Issuer, at the
date of any determination, the consolidated stockholders' or owners' equity
of the Issuer and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP consistently applied.
S-7
<PAGE>
<PAGE>
'GAAP' means generally accepted accounting principles as such
principles are in effect as of the date of the Indenture.
'Investment Grade Rating' means a rating equal to or higher than Baa3
(or the equivalent) in the case of Moody's and BBB- (or the equivalent) in
the case of S&P.
'Investment Grade Status' shall be deemed to have been reached on the
date that the Debt Securities have an Investment Grade Rating from both
Rating Agencies.
'Material Subsidiary' means, with respect to the Issuer, any Person
that is a Subsidiary if at the end of the most recent fiscal quarter of the
Issuer, the aggregate amount, determined in accordance with GAAP
consistently applied, of securities of, loans and advances to, and other
investments in, such Person held by the Issuer and its other Subsidiaries
exceeded 10% of the Issuer's Consolidated Net Worth.
'Moody's' means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.
'Person' means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
'Rating Agencies' means Moody's and S&P.
'S&P' means Standard & Poor's Ratings Service or any successor to the
rating agency business thereof.
'Subsidiary' means, with respect to any person, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by
such Person, and any partnership, association, joint venture or other
entity in which such Person owns more than 50% of the equity interests or
has the power to elect a majority of the board of directors or other
governing body.
'Works' means motion pictures, videos, television, interactive or
multi-media programming, audiovisual works, sound recordings, books and
other literary or written material, any software, copyright or other
intellectual property related thereto, acquired directly or indirectly
after the date of the Indenture by purchase, business combination,
production, creation or otherwise, any component of the foregoing or rights
with respect thereto, and all improvements thereon, products and proceeds
thereof and revenues derived therefrom.
BOOK-ENTRY SYSTEM
The Debentures will be represented by one or more securities (the 'Global
Securities') deposited with DTC and registered in the name of a nominee of DTC.
Except as set forth below, the Debentures will be available for purchase in
denominations of $1,000, and integral multiples thereof, in book-entry form
only.
Unless and until certificated Debentures are issued under the limited
circumstances described below, no beneficial owner of a Debenture shall be
entitled to receive a definitive certificate representing a Debenture. So long
as DTC or its nominee is the registered owner of all the Global Securities, DTC
or such nominee, as the case may be, will be considered to be the sole owner or
holder of the Debentures for all purposes of the Indenture. Unless and until
exchanged in whole or in part for the Debentures represented thereby, the Global
Securities may not be transferred except in their entirety by DTC to a nominee
of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any
nominee to a successor depositary or any nominee of such successor.
So long as the Global Securities represent the Debentures, payments of
interest and principal will be made to DTC or its nominee, as the registered
owner of the Global Securities. Payments to beneficial owners of the Debentures
are expected to be made through DTC or its nominee, as described in the
Prospectus. None of the Issuer, the Guarantors, the Trustee, any Paying Agent or
the Registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Global Securities for the Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
S-8
<PAGE>
<PAGE>
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Issuer within 90
days, the Issuer will issue individual Debentures in definitive form in exchange
for the Global Securities representing the Debentures. In addition, the Issuer
may at any time and in its sole discretion determine not to have the Debentures
represented by Global Securities, and, in such event, will issue individual
Debentures in definitive form in exchange for the Global Securities. In either
instance, the Issuer will issue Debentures in definitive form equal in aggregate
principal amount to the Global Securities, in such names and in such principal
amounts as DTC shall request. Debentures so issued in definitive form will be
issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
DTC has advised the Issuer and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of which (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
A further description of DTC's procedures with respect to Global Securities
is set forth in the accompanying Prospectus under 'Global Securities'. DTC has
confirmed to the Issuer, the Underwriters and the Trustee that it intends to
follow such procedures.
HOLDING COMPANY STRUCTURE
Each of the Issuer, TWC and TBS is a holding company, the assets of which
consist primarily of investments in its respective consolidated and
unconsolidated subsidiaries. The assets of the Issuer consist primarily of its
investment in TWC and TBS. The assets of TWC consist primarily of its
investments in its consolidated and unconsolidated subsidiaries, including TWE.
Although the assets of TBS consist primarily of investments in its consolidated
and unconsolidated subsidiaries, TBS also directly owns certain assets that are
used in the operation of WTBS, a television station in Atlanta, Georgia and TBS,
a copyright-paid cable programming service and certain retail stores that
together represent less than 5% of the consolidated assets of TBS at March 31,
1998. A substantial portion of the consolidated liabilities of the Issuer, TWC
and TBS have been incurred by subsidiaries. TWE, which is not consolidated with
either the Issuer or TWC for financial reporting purposes, also has substantial
indebtedness and other liabilities. The rights of the Issuer and the Guarantors
and the rights of their creditors, including Holders of Debentures, to
participate in the distribution of assets of any person in which the Issuer or
the Guarantors owns an equity interest (including any subsidiary and TWE) upon
such person's liquidation or reorganization will be subject to prior claims of
such person's creditors, including trade creditors, except to the extent that
the Issuer or the Guarantors may be a creditor with recognized claims against
such person (in which case the claims of the Issuer and the Guarantors would
still be subject to the prior claims of any secured creditor of such person and
of any holder of indebtedness of such person that is senior to that held by the
Issuer or the Guarantors). Accordingly, the Holders of the Debentures may be
deemed to be effectively subordinated to such claims. As of March 31, 1998, the
consolidated and unconsolidated subsidiaries of the Issuer and Guarantors had an
aggregate of approximately $20 billion of outstanding liabilities, including
indebtedness.
The Issuer's and each Guarantor's ability to service its indebtedness and
other obligations, including the Debentures and the Guarantees, respectively,
and the ability of each of them to pay dividends on its common and/or preferred
stock is dependent primarily upon the earnings and cash flow of their respective
consolidated and unconsolidated subsidiaries and the distribution or other
payment to them of such earnings and cash flow.
S-9
<PAGE>
<PAGE>
The TWE Agreement of Limited Partnership and its bank credit facilities
limit distributions and other transfers of funds to TWC and the Issuer.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
NON-U.S. HOLDERS
The following is a summary of certain United States Federal income tax
consequences that may be relevant to a beneficial owner of the Debentures that
is not (i) a citizen or resident of the United States, (ii) a corporation
created or organized under the laws of the United States or any State thereof or
the District of Columbia or (iii) a person otherwise subject to United States
Federal income taxation on its worldwide income (any of the foregoing, a
'Non-U.S. Holder'). This summary deals only with Non-U.S. Holders that are
initial holders of the Debentures and that will hold the Debentures as capital
assets. It does not address the tax considerations applicable to Non-U.S.
Holders if income or gain in respect of the Debentures is effectively connected
with the conduct of a trade or business in the United States.
Generally, payments of interest made with respect to the Debentures to a
Non-U.S. Holder will not be subject to United States Federal income or
withholding tax, provided that (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Issuer entitled to vote, (ii) the Non-U.S. Holder is not a
controlled foreign corporation for United States tax purposes that is directly
or indirectly related to the Issuer through stock ownership and (iii) the
Non-U.S. Holder complies with applicable certification requirements.
Any capital gain realized on the sale, exchange, retirement or other
disposition of a Debenture by a Non-U.S. Holder will not be subject to United
States Federal income or withholding taxes unless such Non-U.S. Holder is an
individual who is present in the United States for 183 days or more in the
taxable year of such sale, exchange, retirement or other disposition and meets
certain additional requirements.
PURCHASERS OF THE DEBENTURES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES FEDERAL INCOME,
WITHHOLDING AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE DEBENTURES.
BACKUP WITHHOLDING AND INFORMATION REPORTING FOR HOLDERS
Any noncorporate holder of the Debentures may be subject to information
reporting and backup withholding at a rate of 31% on certain amounts paid to the
holder unless such holder provides proof of an applicable exemption (including a
general exemption for Non-U.S. Holders) or correct taxpayer identification
number, and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under the backup withholding rules will
be credited against the holder's Federal income tax liability.
S-10
<PAGE>
<PAGE>
UNDERWRITERS
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Issuer has agreed to sell to each of the Underwriters named
below, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan
Stanley & Co. Incorporated are acting as joint bookrunners, and the Underwriters
have severally agreed to purchase, the respective principal amounts of the
Debentures set forth opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF DEBENTURES
- --------------------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................. $150,000,000
Morgan Stanley & Co. Incorporated.......................................... 150,000,000
Bear, Stearns & Co. Inc.................................................... 150,000,000
Wasserstein Perella Securities, Inc........................................ 150,000,000
----------------
Total........................................................ $600,000,000
----------------
----------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Debentures are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Debentures if any are
taken.
The Underwriters have agreed to reimburse certain fees and expenses of the
Issuer in connection with the offering of the Debentures, including those set
forth on the cover page.
The Issuer has been advised by the Underwriters that they initially propose
to offer the Debentures in part directly to purchasers at the initial public
offering price set forth on the cover page of this Prospectus Supplement and in
part to certain securities dealers at such price less a concession of .50% of
the principal amount of the Debentures. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed .25% of the principal amount of
the Debentures to certain brokers and dealers. After the initial offering of the
Debentures, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Underwriting Agreement provides that each of the Issuer and the
Guarantors will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, and will be
required to contribute to payments which the Underwriters may be required to
make in respect thereof.
Until the distribution of the Debentures is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the Debentures. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the Debentures. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Debentures.
If the Underwriters create a short position in the Debentures in connection
with the offering, i.e., if they sell more than the aggregate principal amount
of Debentures that is set forth on the cover page of this Prospectus Supplement,
the Underwriters may reduce that short position by purchasing Debentures in the
open market.
The Underwriters may also impose a penalty bid on certain Underwriters and
selling group members. This means that if the Underwriters purchase Debentures
in the open market to reduce the Underwriters' short position or to stabilize
the price of the Debentures, they may reclaim the amount of the selling
concession from the Underwriters and selling group members who sold those
Debentures as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
S-11
<PAGE>
<PAGE>
None of the Issuer, the Guarantors or any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Debentures. In
addition, none of the Issuer, the Guarantors or any of the Underwriters makes
any representation that the Underwriters will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
From time to time the Underwriters have provided, and continue to provide,
investment banking services to the Issuer and the Guarantors for which customary
compensation has been and will be received.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Issuer and the Guarantors
by Cravath, Swaine & Moore, New York, New York, and for the Underwriters by
Shearman & Sterling, New York, New York.
S-12
<PAGE>
<PAGE>
PROSPECTUS
TIME WARNER INC.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED BY
TIME WARNER COMPANIES, INC.
AND
TURNER BROADCASTING SYSTEM, INC.
Time Warner Inc. (the 'Issuer') may offer from time to time, together or
separately, unsecured notes, debentures or other evidences of indebtedness
('Debt Securities'), having an aggregate initial public offering price not to
exceed $1,000,000,000 (including the U.S. dollar equivalent of securities for
which the initial public offering price is denominated in one or more foreign
currencies or composite currencies). The Debt Securities may be offered in one
or more series, in amounts, at prices and on terms determined at the time of
sale and set forth in a supplement to this Prospectus (a 'Prospectus
Supplement').
The Debt Securities will be irrevocably, fully and unconditionally
guaranteed (the 'Guarantees') on an unsecured basis by each of Time Warner
Companies, Inc. ('TWC') and Turner Broadcasting System, Inc. ('TBS'). TWC and
TBS are wholly owned subsidiaries of the Issuer. The Issuer is a holding company
that derives its operating income and cash flow primarily from TWC and TBS. The
assets of the Issuer consist primarily of its investments in TWC and TBS, and
the assets of TWC and TBS consist primarily of investments in their respective
consolidated and unconsolidated subsidiaries. The Issuer and its consolidated
and unconsolidated subsidiaries are collectively referred to as the 'Company'.
Unless otherwise specified in an accompanying Prospectus Supplement, the
Debt Securities and the Guarantees will be senior securities of the Issuer, TWC
and TBS, respectively, ranking equally with all other unsubordinated and
unsecured indebtedness and other obligations of the Issuer, TWC and TBS,
respectively.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement, including, where applicable, the specific designation, aggregate
principal amount, currency, denomination, maturity (which may be fixed or
extendible), priority, interest rate (or manner of calculation thereof), if any,
time of payment of interest, if any, terms for any redemption, terms for any
repayment at the option of the holder, terms for any sinking fund payments, the
initial public offering price, provisions regarding original issue discount
securities, additional covenants and any other specific terms of such Debt
Securities.
The Prospectus Supplement will also contain information, where applicable,
about certain United States Federal income tax considerations relating to, and
any listing on a securities exchange of, the Debt Securities covered by the
Prospectus Supplement.
The Debt Securities may be issued only in registered form, including in the
form of one or more global securities ('Global Securities'), unless otherwise
set forth in the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Debt Securities may be offered directly, through agents designated from
time to time or through dealers or underwriters. If any agents of the Issuer,
TWC or TBS or any dealers or underwriters are involved in the offering of the
Debt Securities in respect of which this Prospectus is being delivered, the
names of such agents, dealers or underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The net proceeds to
the Issuer from such sale will also be set forth in the Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 27, 1998.
<PAGE>
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE 'PLAN OF DISTRIBUTION'.
------------------------
AVAILABLE INFORMATION
The Issuer is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). TWC and TBS are not
required to file periodic reports and other information under the Exchange Act.
Instead, information with respect to TWC and TBS is provided, to the extent
required by the Commission, in the required filings made by the Issuer. Reports,
proxy statements and other information filed by the Issuer with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048; and Citicorp Center, 500 West Madison Street (Suite
1400), Chicago, Illinois 60661; and copies of such material may be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates, or through the World Wide Web (http://www.sec.gov). Such
reports, proxy statements and other information may also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York, on which one or more of the Issuer's securities are listed.
This Prospectus constitutes a part of a Registration Statement filed by the
Issuer, TWC and TBS with the Commission under the Securities Act of 1933, as
amended (the 'Securities Act'). This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Issuer, TWC, TBS and the Debt Securities. Statements contained herein concerning
the provisions of any document are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an Exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Issuer (File No.
001-12259) are incorporated by reference in this Prospectus:
(a) the Issuer's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended by Forms 10K/A dated March 27, 1997 and June
26, 1997 (as amended, the 'Issuer's 1996 Form 10-K');
(b) the Issuer's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(c) the Issuer's Current Reports on Form 8-K dated March 21, 1997,
October 15, 1997, October 27, 1997 and November 13, 1997.
All documents and reports subsequently filed by the Issuer pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus or any Prospectus Supplement to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes
2
<PAGE>
<PAGE>
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any Prospectus Supplement.
The Issuer will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement are delivered, upon the written or oral request of such person, a
copy of any or all the documents incorporated herein by reference, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference in such documents, and any other documents specifically identified
herein as incorporated by reference into the Registration Statement to which
this Prospectus relates or into such other documents. Requests should be
addressed to: Shareholder Relations Department, Time Warner Inc., 75 Rockefeller
Plaza, New York, New York 10019; telephone: (212) 484-6971.
THE COMPANY
The Company, the world's leading media and entertainment company, has
interests in four fundamental areas of business: Entertainment, consisting
principally of interests in filmed entertainment, television production,
television broadcasting, recorded music and music publishing; Cable Networks,
consisting principally of interests in cable television programming; Publishing,
consisting principally of interests in magazine publishing, book publishing and
direct marketing; and Cable, consisting principally of interests in cable
television systems. Each of the Issuer, TWC and TBS is a holding company that
derives its operating income and cash flow primarily from its subsidiaries and
investments. The assets of the Issuer consist primarily of its investments in
TWC and TBS. The assets of TWC consist primarily of its investments in its
consolidated and unconsolidated subsidiaries, including Time Warner
Entertainment Company, L.P. ('TWE'). The assets of TBS consist primarily of
investments in its consolidated and unconsolidated subsidiaries. The ability of
the Issuer, TWC and TBS to service their respective indebtedness and other
liabilities, including the Debt Securities and the Guarantees, is dependent
primarily upon the earnings and cash flow of their respective consolidated and
unconsolidated subsidiaries and the distribution or other payment of such
earnings and cash flow to the Issuer, TWC and TBS. See 'Holding Company
Structure'.
The Issuer became the parent of TWC and TBS on October 10, 1996 upon the
merger of TWC and TBS with separate subsidiaries of the Issuer (the 'TBS
Transaction'), as more fully described below. In connection therewith, the
Issuer changed its name to Time Warner Inc. from TW Inc. and TWC changed its
name from Time Warner Inc. to Time Warner Companies, Inc.
TWE was formed as a Delaware limited partnership in 1992 to own and operate
substantially all of the business of Warner Bros., Home Box Office and the cable
television businesses owned and operated by TWC prior to such date. TWC and
certain of its wholly owned subsidiaries own general and limited partnership
interests aggregating 74.49% of the pro rata priority capital ('Series A
Capital') and residual equity capital ('Residual Capital') of TWE and 100% of
the senior priority capital and junior priority capital of TWE. The remaining
25.51% limited partnership interests in the Series A Capital and Residual
Capital of TWE are held by a subsidiary of U S WEST, Inc. TWC does not
consolidate TWE and certain related companies (the 'Entertainment Group') for
financial reporting purposes.
TBS TRANSACTION
On October 10, 1996, pursuant to an Amended and Restated Agreement and Plan
of Merger dated as of September 22, 1995, as amended, among the Issuer, TWC, TBS
and certain of their wholly owned subsidiaries, among other things: (a) each of
TWC and TBS became a wholly owned subsidiary of the Issuer through a merger with
a subsidiary of the Issuer, (b) each outstanding share of common stock of TWC,
other than shares held directly or indirectly by TWC, was converted into one
share of common stock of the Issuer, (c) each outstanding share of preferred
stock of TWC was converted into one share of a substantially identical series of
preferred stock of the Issuer, (d) each outstanding share of common stock of
TBS, other than shares held directly or indirectly by the Issuer or TWC or in
the treasury of TBS, was converted into the right to receive 0.75 shares of
common stock of the Issuer and (e) each outstanding share of preferred stock of
TBS, other than shares held directly or indirectly by the Issuer or TWC, was
converted into the right to receive 4.8 shares of common stock of the Issuer.
Additional
3
<PAGE>
<PAGE>
information on the TBS Transaction is set forth in Note 2 to the Issuer's
consolidated financial statements included in the Issuer's 1996 Form 10-K, which
is incorporated by reference herein.
RECIPROCAL GUARANTEES OF EXISTING INDEBTEDNESS
In order to integrate TBS into the Issuer's operating structure and
simplify the credit structure of the Issuer, TWC and TBS such that the financial
risks associated with investing in the indebtedness of any one of the three
companies are substantially equivalent to those associated with investing in the
indebtedness of any of the other companies, prior to the date of the
Registration Statement of which this Prospectus forms a part, the Issuer, TWC
and TBS entered into the following guarantees of outstanding publicly traded
indebtedness ('Outstanding Securities') of TWC and TBS:
The Issuer, as primary obligor and not merely as surety, has irrevocably
and unconditionally guaranteed (the 'Downstream Guarantees') (a) the full and
punctual payment of principal of and interest on the Outstanding Securities of
each of TWC and TBS when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of TWC and TBS under
the Outstanding Securities of TWC and TBS and the indentures relating to the
Outstanding Securities (including the obligations to the respective trustees)
and (b) the full and punctual performance within applicable grace periods of all
other obligations of TWC and TBS under the Outstanding Securities and the
respective indentures.
Each of TWC and TBS, as primary obligor and not merely as surety, has
irrevocably and unconditionally guaranteed (the 'Cross Guarantees') (a) the full
and punctual payment of principal of and interest on the Outstanding Securities
of the other party when due, whether at maturity, by acceleration, by redemption
or otherwise, and all other monetary obligations of the other party under the
Outstanding Securities of such other party and the indentures relating to such
Outstanding Securities (including the obligations to the respective trustees)
and (b) the full and punctual performance within applicable grace periods of all
other obligations of the other party under such Outstanding Securities and the
respective indentures. The maximum aggregate amount of the Cross Guarantee by
TBS shall not exceed the maximum amount that can be guaranteed by TBS without
rendering such guarantee voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
The Issuer's and TWC's principal executive offices are located at 75
Rockefeller Plaza, New York, New York 10019. TBS's principal executive offices
are located at One CNN Center, Atlanta, Georgia 30303.
RATIO OF EARNINGS TO FIXED CHARGES
The historical ratios of earnings to fixed charges for each of the Issuer,
TWC and TBS and the pro forma ratios of earnings to fixed charges for each of
the Issuer and TWC are set forth below for the periods indicated. For periods in
which earnings before fixed charges were insufficient to cover fixed charges,
the dollar amount of coverage deficiency (in millions), instead of the ratio, is
disclosed. The ratios of earnings to fixed charges of the Issuer and TWC for all
periods after 1992 reflect the deconsolidation of the Entertainment Group,
principally TWE, effective January 1, 1993.
The ratios of earnings to fixed charges of TBS for all post-merger periods
have been adjusted to reflect the Issuer's basis of accounting. The ratios of
earnings to fixed charges (or coverage deficiencies) of TBS for all pre-merger
periods are reflected at TBS's historical cost basis of accounting. Certain
reclassifications have been made to TBS's ratios of earnings to fixed charges
for pre-merger periods to conform to the post-merger presentation.
The historical ratio of earnings to fixed charges of each of the Issuer and
TWC for 1996 reflects (a) the use of approximately $1.55 billion of net proceeds
from the issuance of 1.6 million shares of Series M exchangeable preferred
stock, having an aggregate liquidation preference of $1.6 billion to reduce
outstanding indebtedness (the 'Preferred Stock Refinancing'), (b) the
acquisition of Cablevision Industries Corporation and related companies,
including the assumption or incurrence of approximately $2 billion of
indebtedness and, with respect to the Issuer only, (c) the TBS Transaction,
including the assumption of approximately $2.8 billion of indebtedness.
4
<PAGE>
<PAGE>
The historical ratio of earnings to fixed charges of each of the Issuer and
TWC for 1995 reflects (a) the acquisition of KBLCOM Incorporated and Summit
Communications Group, Inc., including the assumption or incurrence of
approximately $1.3 billion of indebtedness and (b) the exchange by Toshiba
Corporation and ITOCHU Corporation of their direct and indirect interests in
TWE.
The historical ratio of earnings to fixed charges of each of the Issuer and
TWC for 1993 reflects the issuance of $6.1 billion of long-term debt and the use
of $500 million of cash and equivalents for the exchange or redemption of
preferred stock having an aggregate liquidation preference of $6.4 billion. The
historical ratio of earnings to fixed charges for 1992 reflects the
capitalization of TWE on June 30, 1992 and associated refinancings, and the
acquisition of the 18.7% minority interest in American Television and
Communications Corporation as of June 30, 1992, using the purchase method of
accounting for business combinations.
The pro forma ratios of earnings to fixed charges for each of the Issuer
and TWC for the nine months ended September 30, 1997 and the year ended December
31, 1996 give effect to (i) the agreed-upon transfer by a wholly owned
subsidiary of TWC of cable television systems serving an aggregate of
approximately 667,000 subscribers to the Time Warner
Entertainment-Advance/Newhouse Partnership, ('TWE-A/N'), a partnership currently
owned 66.7% by TWE and 33.3% by the Advance/Newhouse Partnership, subject to
approximately $1 billion of debt, in exchange for common and preferred
partnership interests therein, as well as certain related transactions (the
'TWE-A/N Transfers'), pursuant to an agreement entered into by such subsidiary
on October 27, 1997 with TWE-A/N and each of its partners and (ii) with respect
to 1996 only, (a) the Preferred Stock Refinancing and certain other debt
refinancings and (b) with respect to the Issuer only, the TBS Transaction, as if
such transactions had occurred at the beginning of such periods. The pro forma
information presented below should be read in conjunction with the pro forma
consolidated condensed financial statements contained in the Issuer's Current
Report on Form 8-K dated November 13, 1997 and incorporated herein by reference.
Such pro forma amounts are presented for informational purposes only and are not
necessarily indicative of the actual ratios that would have occurred if such
transactions had been consummated as of the dates indicated, nor are they
necessarily indicative of future results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------------
PRO FORMA PRO FORMA
1997 1997 1996 1996 1996 1995 1994 1993 1992
--------- ---- ---- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuer............................... 1.4x 1.4x 1.0x 1.1x 1.1x 1.1x 1.1x 1.1x 1.4x
TWC.................................. 1.4x 1.4x 1.0x 1.2x 1.1x 1.1x 1.1x 1.1x 1.4x
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ENDED ENDED ----------------------------
SEPTEMBER 30, 1997 DECEMBER 31, 1996 SEPTEMBER 30, 1996 1995 1994 1993 1992
------------------ ----------------- ------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
TBS.................... 1.8x 1.6x $ (44) 1.7x 1.3x 1.6x 1.4x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
were calculated by adding (i) pretax income, (ii) interest expense, including
previously capitalized interest amortized to expense and the portion of rents
representative of an interest factor for the Issuer, TWC and TBS and their
respective majority-owned subsidiaries, (iii) the Issuer's, TWC's and TBS's
respective proportionate share of the items included in (ii) above for their
50%-owned companies, (iv) preferred stock dividend requirements of
majority-owned subsidiaries, (v) minority interest in the income of
majority-owned subsidiaries that have fixed charges and (vi) the amount of
undistributed losses of each of the Issuer's, TWC's and TBS's less than
50%-owned companies. Fixed charges consist of (i) interest expense, including
interest capitalized and the portion of rents representative of an interest
factor for the Issuer, TWC and TBS and their respective majority-owned
subsidiaries, (ii) the Issuer's, TWC's and TBS's respective proportionate share
of such items for their 50%-owned companies and (iii) preferred stock dividend
requirements of majority-owned subsidiaries. Earnings as defined include
significant noncash charges for depreciation and amortization. Historical fixed
charges of the Issuer and TWC for the nine months ended September 30, 1997 and
1996 and the years ended December 31, 1996, 1995 and 1994 include noncash
interest expense of $73 million, $68 million, $91 million, $176 million and $219
5
<PAGE>
<PAGE>
million, respectively, principally relating to TWC's Liquid Yield Option Notes
due 2012 and 2013 and, in 1995 and 1994 only, TWC's Redeemable Reset Notes due
2002. Historical fixed charges of the Issuer for the nine months ended September
30, 1997 and the year ended December 31, 1996 include an additional $2 million
and $5 million, respectively, in noncash interest expense relating to TBS's zero
coupon convertible notes due 2007. Pro forma fixed charges of the Issuer for the
year ended December 31, 1996 similarly include an additional $14 million in
noncash interest expense relating to TBS's zero coupon convertible notes due
2007 for the period prior to the consummation of the TBS Transaction. Historical
fixed charges of TBS include noncash interest expense of $2 million, $5 million,
$14 million, $18 million, $17 million, $29 million and $34 million for the nine
months ended September 30, 1997, the three months ended December 31, 1996 and
the nine months ended September 30, 1996 and the years ended December 31, 1995,
1994, 1993 and 1992, respectively.
USE OF PROCEEDS
Except as otherwise set forth in the Prospectus Supplement, the net
proceeds to the Issuer from the sale of Debt Securities will be used to
repurchase, redeem or otherwise repay indebtedness of the Issuer and its
subsidiaries, including TWC and/or TBS. Additional information on the use of net
proceeds from the sale of any particular Debt Securities will be set forth in
the Prospectus Supplement relating to such Debt Securities.
6
<PAGE>
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES AND THE GUARANTEES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions will not apply to such
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities.
The Debt Securities will be issued from time to time in series under an
Indenture (the 'Indenture'), between the Issuer and The Chase Manhattan Bank
(the 'Trustee'), as Trustee. The statements set forth below are brief summaries
of certain provisions contained in the Indenture, which summaries do not purport
to be complete and are qualified in their entirety by reference to the
Indenture, a copy of which is an Exhibit to the Registration Statement of which
this Prospectus is a part. Numerical references in parentheses below are to
articles or sections of the Indenture, unless otherwise indicated. Wherever
defined terms are used but not defined herein, such terms shall have the
meanings assigned to them in the Indenture, it being intended that such
referenced articles and sections of the Indenture and such defined terms shall
be incorporated herein by reference.
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and Debt Securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by the
Issuer. Any such limit applicable to a particular series will be specified in
the Prospectus Supplement relating to that series.
Reference is made to the Prospectus Supplement for the following terms of
each series of Debt Securities in respect to which this Prospectus is being
delivered: (i) the designation, date, aggregate principal amount, currency or
currency unit of payment if other than United States dollars and authorized
denominations of such Debt Securities; (ii) the date or dates on which such Debt
Securities will mature (which may be fixed or extendible); (iii) the rate or
rates (or manner of calculation thereof), if any, per annum at which such Debt
Securities will bear interest; (iv) the dates, if any, on which such interest
will be payable, (v) the terms of any mandatory or optional redemption
(including any sinking, purchase or analogous fund) and any purchase at the
option of holders (including whether any such purchase may be paid in cash,
common stock or other securities or property); (vi) whether such Debt Securities
are to be issued in the form of Global Securities and, if so, the identity of
the Depository with respect to such Global Securities; and (vii) any other
specific terms.
Unless otherwise set forth in the Prospectus Supplement, interest on
outstanding Debt Securities will be paid to holders of record on the date which
is 15 days prior to the date such interest is to be paid. Unless otherwise
specified in the Prospectus Supplement, Debt Securities will be issued in fully
registered form only and in denominations of $1,000 and integral multiples
thereof. Unless otherwise specified in the Prospectus Supplement, the principal
amount of the Debt Securities will be payable at the corporate trust office of
the Trustee in New York, New York. The Debt Securities may be presented for
transfer or exchange at such office unless otherwise specified in the Prospectus
Supplement, subject to the limitations provided in the Indenture, without any
service charge, but the Issuer may require payment of a sum sufficient to cover
any tax or other governmental charges payable in connection therewith. (Section
3.05)
GUARANTEES
Under the Guarantees, each of TWC and TBS, as primary obligor and not
merely as surety, will irrevocably and unconditionally guarantee, to each Holder
of Debt Securities, and to the Trustee and its successors and assigns, (i) the
full and punctual payment of principal of and interest on the Debt Securities
when due, whether at maturity, by acceleration, by redemption or otherwise, and
all other monetary obligations of the Issuer under the Indenture (including
obligations to the Trustee) and the Debt Securities and (ii) the full and
punctual performance within applicable grace periods of all other obligations of
the Issuer under the Indenture and the Debt Securities. The Guarantees
constitute guarantees of payment, performance and compliance and not merely of
collection. The obligations of TWC and TBS to make any payments may be satisfied
by causing the Issuer to make such payments. Further, TWC and TBS agree to pay
any and all costs and expenses (including reasonable attorneys'
7
<PAGE>
<PAGE>
fees) incurred by the Trustee or any Holder of Debt Securities in enforcing any
of their respective rights under the Guarantees. The Indenture provides that
each of the Guarantees of TWC and TBS is limited to the maximum amount that can
be guaranteed by TWC or TBS, respectively, without rendering the relevant
Guarantee voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
(Article XIII)
RANKING
Unless otherwise specified in a Prospectus Supplement for a particular
series of Debt Securities, all series of Debt Securities will be senior
indebtedness of the Issuer and will be direct, unsecured obligations of the
Issuer, ranking on a parity with all other unsecured and unsubordinated
obligations of the Issuer, and the Guarantees will be senior obligations of TWC
and TBS and will be direct unsecured obligations of TWC and TBS, ranking on a
parity with all other unsecured and unsubordinated obligations of TWC and TBS.
Each of the Issuer, TWC and TBS is a holding company and the Debt Securities and
the Guarantees will be effectively subordinated to all existing and future
liabilities, including indebtedness, of the subsidiaries of the Issuer, TWC and
TBS, respectively. See 'Holding Company Structure'.
CERTAIN COVENANTS
Limitation on Liens. The Indenture provides that neither the Issuer nor any
Material Subsidiary of the Issuer shall incur, create, issue, assume, guarantee
or otherwise become liable for any indebtedness for money borrowed that is
secured by a lien on any asset now owned or hereafter acquired by it unless the
Issuer makes or causes to be made effective provision whereby the Debt
Securities will be secured by such lien equally and ratably with (or prior to)
all other indebtedness thereby secured so long as any such indebtedness shall be
secured. The foregoing restriction does not apply to the following:
(i) liens existing as of the date of the Indenture;
(ii) liens created by Subsidiaries of the Issuer to secure
indebtedness of such Subsidiaries to the Issuer or to one or more other
Subsidiaries of the Issuer;
(iii) liens affecting property of a person existing at the time it
becomes a Subsidiary of the Issuer or at the time it merges into or
consolidates with the Issuer or a Subsidiary of the Issuer or at the time
of a sale, lease or other disposition of all or substantially all of the
properties of such person to the Issuer or its Subsidiaries;
(iv) liens on property existing at the time of the acquisition thereof
or incurred to secure payment of all or a part of the purchase price
thereof or to secure Indebtedness incurred prior to, at the time of, or
within one year after the acquisition thereof for the purpose of financing
all or part of the purchase price thereof;
(v) liens on any property to secure all or part of the cost of
improvements or construction thereon or indebtedness incurred to provide
funds for such purpose in a principal amount not exceeding the cost of such
improvements or construction;
(vi) liens consisting of or relating to the sale, transfer or
financing of motion pictures, video and television programs, sound
recordings, books or rights with respect thereto or with so-called tax
shelter groups or other third-party investors in connection with the
financing of such motion pictures, video and television programming, sound
recordings or books in the ordinary course of business and the granting to
the Issuer or any of its Subsidiaries of rights to distribute such motion
pictures, video and television programming, sound recordings or books;
provided, however, that no such lien shall attach to any asset or right of
the Issuer or its Subsidiaries (other than the motion pictures, video and
television programming, sound recordings, books or rights which were sold,
transferred to or financed by the tax shelter group or third-party
investors in question or the proceeds arising therefrom);
(vii) liens on shares of stock, indebtedness or other securities of a
Person that is not a Subsidiary;
8
<PAGE>
<PAGE>
(viii) liens on Works which either (1) existed in such Works before
the time of their acquisition and were not created in anticipation thereof,
or (2) were created solely for the purpose of securing obligations to
financiers, producers, distributors, exhibitors, completion guarantors,
inventors, copyright holders, financial institutions or other participants
incurred in the ordinary course of business in connection with the
acquisition, financing, production, completion, distribution or exhibition
of Works.
(ix) any lien on the office building and hotel complex located in
Atlanta, Georgia known as the CNN Center Complex, including the parking
decks for such complex (to the extent such parking decks are owned or
leased by the Issuer or its Subsidiaries), or any portion thereof and all
property rights therein and the products, revenues and proceeds therefrom
created as part of any mortgage financing or sale-leaseback of the CNN
Center Complex;
(x) liens on satellite transponders and all property rights therein
and the products, revenues and proceeds therefrom which secure obligations
incurred in connection with the acquisition, utilization or operation of
such satellite transponders or the refinancing of any such obligations;
(xi) restrictions on the Atlanta National League Baseball Club, Inc.
and Atlanta Hawks, Ltd and their respective assets imposed by Major League
Baseball or the Commissioner of Baseball, and the National Basketball
Association, respectively, including, without limitation, restrictions on
the transferability of the Issuer's or any of its Subsidiaries' interests
therein;
(xii) liens on capital leases entered into after the date of the
Indenture provided that such liens extend only to the property or assets
that are the subject of such capital leases;
(xiii) Liens resulting from progress payments or partial payments
under United States government contracts or subcontracts;
(xiv) other liens arising in connection with indebtedness of the
Issuer and its Subsidiaries in an aggregate principal amount for the Issuer
and its Subsidiaries not exceeding at the time such lien is issued, created
or assumed the greater of (A) 10% of the Consolidated Net Worth of the
Issuer and (B) $500 million; and
(xv) any extensions, renewal or replacement of any lien referred to in
the foregoing clauses (i) through (xiv) inclusive, or of any indebtedness
secured thereby; provided that the principal amount of indebtedness secured
thereby shall not exceed the principal amount of indebtedness so secured at
the time of such extension, renewal or replacement, or at the time the lien
was issued, created or assumed or otherwise permitted, and that such
extension, renewal or replacement lien shall be limited to all or part of
substantially the same property which secured the lien extended, renewed or
replaced (plus improvements on such property). (Section 10.06)
Limitation on Senior Debt. Subject to the covenant termination provisions
of the following paragraph, the Indenture provides that the Issuer will not, and
will not permit any of its Subsidiaries to, incur, create, issue, assume,
guarantee or otherwise become directly or indirectly liable for (collectively,
'incur') any Senior Debt, if after giving effect to such incurrence of Senior
Debt, determined on a pro forma basis as if such incurrence had occurred on the
first day of the Test Period, the Consolidated Cash Flow Coverage Ratio for the
Issuer and its Subsidiaries for the Test Period would be less than 1.5 to 1;
provided, however, that the foregoing restrictions will not apply to TWE or any
of its Subsidiaries to the extent that the application of such restrictions
would be prohibited under, or cause a violation of, TWE's bank credit agreement
as in effect from time to time or any successor or replacement credit agreement.
(Section 10.07)
After the Issuer has reached Investment Grade Status, and notwithstanding
that any series of the Debt Securities may later cease to have an Investment
Grade Rating from either or both of the Rating Agencies, the Issuer will be
released from its obligations to comply with the restrictive covenant described
under 'Limitation on Senior Debt'.
Limitation on Merger, Consolidation and Certain Sales of Assets. The
Indenture provides that neither the Issuer, TWC nor TBS will merge or
consolidate with or into, or convey or transfer its property substantially as an
entirety to, any Person unless (a) the successor is organized and existing under
the laws of the United States or any State or the District of Columbia, (b) (i)
in the case of the
9
<PAGE>
<PAGE>
Issuer, the successor assumes the Issuer's obligations under the Indenture and
the Debt Securities on the same terms and conditions and (ii) in the case of TWC
or TBS, the successor assumes TWC or TBS's obligations under the Indenture and
the Guarantees on the same terms and conditions and (c) immediately after giving
effect to such transactions, there is no default under the Indenture. (Sections
8.01 and 8.02)
Other than the restrictions in the Indenture on liens and incurrence of
Senior Debt described above, the Indenture and the Debt Securities do not
contain any covenants or other provisions designed to afford Holders of Debt
Securities protection in the event of a recapitalization or highly leveraged
transaction involving the Issuer.
Any additional covenants of the Issuer, TWC or TBS pertaining to a series
of Debt Securities will be set forth in a Prospectus Supplement relating to such
series of Debt Securities.
CERTAIN DEFINITIONS
The following are certain of the terms defined in the Indenture:
'Consolidated Cash Flow' means, with respect to the Issuer, for any
period, the net income of the Issuer and its Subsidiaries as determined on
a consolidated basis in accordance with GAAP consistently applied, plus the
sum of depreciation, amortization, other noncash charges which reduce net
income, income tax expense and interest expense, in each case to the extent
deducted in determining such net income, and excluding extraordinary gains
or losses. Notwithstanding the foregoing, for purposes of determining the
Consolidated Cash Flow of the Issuer, there shall be included, in respect
of each other Person that is accounted for by the Issuer on the equity
method (as determined in accordance with GAAP), the Issuer's proportionate
amount of such other Person's and its Subsidiaries' consolidated net
income, depreciation, amortization, other noncash charges which reduce net
income, income tax expense and interest expense, in each case to the extent
deducted in determining such other Person's net income, excluding
extraordinary gains and losses.
'Consolidated Cash Flow Coverage Ratio' means, for any period, the
ratio for such period of Consolidated Cash Flow to Consolidated Interest
Expense. In determining the Consolidated Cash Flow Coverage Ratio, effect
shall be given to the application of the proceeds of Senior Debt whose
incurrence is being tested to the extent such proceeds are to be used to
repay or refinance other Senior Debt.
'Consolidated Interest Expense' means, with respect to the Issuer, for
any period, cash interest expense of the Issuer and its Subsidiaries on
Senior Debt for such period other than the amount amortized during such
period in respect of all fees paid in connection with the incurrence of
such Senior Debt, such expense to be determined on a consolidated basis in
accordance with GAAP consistently applied. Notwithstanding the foregoing,
for purposes of determining the Consolidated Interest Expense of the
Issuer, there shall be included, in respect of each other Person that is
accounted for by the Issuer on the equity method (as determined in
accordance with GAAP), the Issuer's proportionate amount of the cash
interest expense of such other Person and its Subsidiaries on Senior Debt
for the relevant period other than the amount amortized during such period
in respect of all fees paid in connection with the incurrence of such
Senior Debt, such expense to be determined on a consolidated basis in
accordance with GAAP consistently applied.
'Consolidated Net Worth' means, with respect to the Issuer, at the
date of any determination, the consolidated stockholders' or owners' equity
of the Issuer and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP consistently applied.
'GAAP' means generally accepted accounting principles as such
principles are in effect as of the date of the Indenture.
'Investment Grade Rating' means a rating equal to or higher than Baa3
(or the equivalent) by Moody's and BBB - (or the equivalent) by S&P.
'Investment Grade Status' shall be deemed to have been reached on the
date that the Debt Securities have an Investment Grade Rating from both
Rating Agencies.
10
<PAGE>
<PAGE>
'Material Subsidiary' means, with respect to the Issuer, any Person
that is a Subsidiary if at the end of the most recent fiscal quarter of the
Issuer, the aggregate amount, determined in accordance with GAAP
consistently applied, of securities of, loans and advances to, and other
investments in, such Person held by the Issuer and its other Subsidiaries
exceeded 10% of the Issuer's Consolidated Net Worth.
'Moody's' means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.
'Person' means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
'Rating Agencies' means Moody's and S&P.
'S&P' means Standard & Poor's Ratings Service or any successor to the
rating agency business thereof.
'Senior Debt' means, with respect to any Person, all indebtedness of
such Person in respect of money borrowed, determined in accordance with
GAAP consistently applied, other than indebtedness as to which the
instrument governing such indebtedness provides that such indebtedness is,
or which is in effect, subordinated or junior in right of payment to any
other indebtedness of such Person.
'Subsidiary' means, with respect to any Person, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by
such Person, and any partnership, association, joint venture or other
entity in which such Person owns more than 50% of the equity interests or
has the power to elect a majority of the board of directors or other
governing body.
'Test Period' means, with respect to any date, the period consisting
of the most recent four full fiscal quarters for which financial
information is generally available.
'Works' means motion pictures, video, television, interactive or
multi-media programming, audio-visual works, sound recordings, books and
other literary or written material, any software, copyright or other
intellectual property related thereto, acquired directly or indirectly
after the date of the Indenture by purchase, business combination,
production, creation or otherwise, any component of the foregoing or rights
with respect thereto, and all improvements thereon, products and proceeds
thereof and revenues derived therefrom.
DEFEASANCE
The Indenture provides that the Issuer (and to the extent applicable, TWC
and TBS), at its option, (a) will be Discharged from any and all obligations in
respect of any series of Debt Securities (except in each case for certain
obligations to register the transfer or exchange of Debt Securities, replace
stolen, lost or mutilated Debt Securities, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with the covenants described
above under 'Certain Covenants' and any other restrictive covenants described in
a Prospectus Supplement relating to such series of Debt Securities, and certain
Events of Default (other than those arising out of the failure to pay interest
or principal on the Debt Securities of a particular series and certain events of
bankruptcy, insolvency and reorganization) will no longer constitute Events of
Default with respect to such series of Debt Securities, in each case if the
Issuer deposits with the applicable Trustee, in trust, money or the equivalent
in securities of the government which issued the currency in which the Debt
Securities are denominated or government agencies backed by the full faith and
credit of such government, or a combination thereof, which through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal (including any
mandatory sinking fund payments) of, and interest on, such series on the dates
such payments are due in accordance with the terms of such series. To exercise
any such option, the Issuer is required, among other things, to deliver to the
Trustee an opinion of counsel to the effect that (i) the deposit and related
defeasance would not cause the Holders of such series to recognize income, gain
or loss for Federal income tax purposes and, in the case of a Discharge pursuant
to clause (a), accompanied by a ruling to
11
<PAGE>
<PAGE>
such effect received from or published by the United States Internal Revenue
Service and (ii) the creation of the defeasance trust will not violate the
Investment Company Act of 1940, as amended. In addition, the Issuer is required
to deliver to the Trustee an Officers' Certificate stating that such deposit was
not made by the Issuer with the intent of preferring the Holders over other
creditors of the Issuer or with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or others. (Article IV)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein with
respect to any series of Debt Securities issued thereunder shall have happened
and be continuing, either the Trustee thereunder or the Holders of 25% in
aggregate principal amount of the outstanding Debt Securities of such series (or
25% in aggregate principal amount of all outstanding Debt Securities under the
Indenture, in the case of certain Events of Default affecting all series of Debt
Securities under the Indenture) may declare the principal of all the Debt
Securities of such series to be due and payable. (Section 5.02)
Events of Default in respect of any series are defined in the Indenture as
being: (i) default for 30 days in payment of any interest installment with
respect to such series; (ii) default in payment of principal of, or premium, if
any, on, or any sinking fund or analogous payment with respect to, Debt
Securities of such series when due at their stated maturity, by declaration or
acceleration, when called for redemption or otherwise; (iii) default for 90 days
after notice to the Issuer (or TWC or TBS, if applicable) by the Trustee
thereunder or by Holders of 25% in aggregate principal amount of the outstanding
Debt Securities of such series in the performance of any covenant pertaining to
Debt Securities of such series; (iv) failure to pay when due, upon final
maturity or upon acceleration, the principal amount of any indebtedness for
money borrowed of the Issuer, TWC or TBS in excess of $50 million, if such
indebtedness is not discharged, or such acceleration is not annulled, within 60
days after written notice; (v) certain events of bankruptcy, insolvency and
reorganization with respect to the Issuer or any Material Subsidiary thereof
which is organized under the laws of the United States or any political
sub-division thereof and (vi) any Guarantee, ceasing to be, or asserted by any
Guarantor as not being, in full force and effect, enforceable according to its
terms, except to the extent contemplated by the Indenture. (Section 5.01)
Any additions, deletions or other changes to the Events of Default which
will be applicable to a series of Debt Securities will be described in the
Prospectus Supplement relating to such series of Debt Securities.
The Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to the Debt Securities of any
series, give to the Holders of the Debt Securities of such series notice of all
uncured and unwaived defaults known to it; provided that, except in the case of
default in the payment of principal of, premium, if any, or interest, if any, on
any of the Debt Securities of such series, the Trustee thereunder will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the Holders of the Debt
Securities of such series. The term 'default' for the purpose of this provision
means the happening of any of the Events of Default specified above, except that
any grace period or notice requirement is eliminated. (Section 6.02)
The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default to act with the required standard
of care, to be indemnified by the Holders of the Debt Securities before
proceeding to exercise any right or power under the Indenture at the request of
Holders of the Debt Securities. (Section 6.03)
The Indenture provides that the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee or exercising any trust or power conferred on the Trustee in respect of
such series, subject to certain conditions. (Section 5.12)
The Indenture includes a covenant that the Issuer will file annually with
the Trustee a certificate of no default or specifying any default that exists.
(Section 10.04)
12
<PAGE>
<PAGE>
In certain cases, the Holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of such series waive any past default or Event of Default with
respect to the Debt Securities of such series except, among other things, a
default not theretofore cured in payment of the principal of, or premium, if
any, or interest, if any, on any of the Debt Securities of such series.
(Sections 5.13)
MODIFICATION OF THE INDENTURE
The Issuer and the Trustee may, without the consent of the Holders of the
Debt Securities, enter into indentures supplemental to the Indenture for, among
others, one or more of the following purposes: (i) to evidence the succession of
another Person to the Issuer, TWC or TBS, and the assumption by such successor
of the Issuer's, TWC's or TBS's obligations under the Indenture and the Debt
Securities of any series or the Guarantees relating thereto; (ii) to add
covenants of the Issuer, TWC or TBS, or surrender any rights of the Issuer, TWC
or TBS, for the benefit of the Holders of Debt Securities of any or all series;
(iii) to cure any ambiguity, or correct any inconsistency in the Indenture; (iv)
to evidence and provide for the acceptance of any successor Trustee with respect
to one or more series of Debt Securities or to facilitate the administration of
the trusts thereunder by one or more trustees in accordance with the Indenture;
(v) to establish the form or terms of any series of Debt Securities; and (vi) to
provide any additional Events of Default. (Section 9.01)
The Indenture contains provisions permitting the Issuer and the Trustee
thereunder, with the consent of the Holders of a majority in principal amount of
the outstanding Debt Securities of all series to be affected voting as a single
class, to execute supplemental indentures adding any provisions to or changing
or eliminating any of the provisions of the Indenture or modifying the rights of
the Holders of the Debt Securities of such series to be affected, except that no
such supplemental indenture may, without the consent of the Holders of affected
Debt Securities, among other things, change the fixed maturity of any Debt
Securities, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce the number of shares of any
common stock or other securities to be delivered by the Issuer in respect of a
conversion of any convertible Debt Securities, or amend or modify the terms of
either Guarantee in a manner adverse to the Holders or reduce the aforesaid
percentage of Debt Securities of any series the consent of the Holders of which
is required for any such supplemental indenture. (Section 9.02)
THE TRUSTEE
The Chase Manhattan Bank is the Trustee under the Indenture. The Trustee is
a depository for funds and performs other services for, and transacts other
banking business with, the Company in the normal course of business.
GOVERNING LAW
The Indenture will be governed by, and construed in accordance with, the
laws of the State of New York.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depository (the 'Depository') identified in the Prospectus Supplement
relating to such series. Global Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Debt Securities represented
thereby, a Global Security may not be transferred except as a whole by the
Depository for such Global Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by the Depository or any nominee of such Depository to a successor
Depository or any nominee of such successor.
13
<PAGE>
<PAGE>
The specific terms of the depository arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise specified in the Prospectus Supplement, the Issuer
anticipates that the following provisions will apply to depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ('Participants'). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Issuer if such Debt Securities are offered and sold
directly by the Issuer. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, pledge or transfer beneficial interests in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depository for such Global Security and, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture. The Issuer understands
that under existing industry practices, if the Issuer requests any action of
holders or if an owner of a beneficial interest in a Global Security desires to
give or take any action which a holder is entitled to give or take under the
Indenture, the Depository for such Global Security would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize beneficial owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of and any premium and any interest on individual
Debt Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Debt Securities. None of the Issuer, the Trustee, any paying agent or the
registrar for such Debt Securities will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Issuer expects that the Depository for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depository or its nominee. The Issuer also expects that payments by Participants
to owners of beneficial interests in such Global Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in 'street name'. Such payments will be the responsibility of
such Participants.
If a Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is not
appointed by the Issuer within 90 days, the
14
<PAGE>
<PAGE>
Issuer will issue individual Debt Securities of such series in exchange for the
Global Security representing such series of Debt Securities. In addition, the
Issuer may, at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities,
determine not to have any Debt Securities of such series represented by one or
more Global Securities and, in such event, will issue individual Debt Securities
of such series in exchange for the Global Security or Securities representing
such series of Debt Securities. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the
Issuer, of $1,000 and integral multiples thereof. Any Debt Securities issued in
definitive form in exchange for a Global Security will be registered in such
name or names as the Depository shall instruct the Trustee. It is expected that
such instructions will be based upon directions received by the Depository from
Participants with respect to ownership of beneficial interests in such Global
Security.
HOLDING COMPANY STRUCTURE
Each of the Issuer, TWC and TBS is a holding company, the assets of which
consist primarily of investments in its consolidated and unconsolidated
subsidiaries. The assets of the Issuer consist primarily of its investment in
TWC and TBS. The assets of TWC consist primarily of its investments in its
consolidated and unconsolidated subsidiaries, including TWE. Although the assets
of TBS consist primarily of investments in its consolidated and unconsolidated
subsidiaries, TBS also directly owns certain assets that are used in the
operation of WTBS, a television station in Atlanta, Georgia and TBS, a
copyright-paid cable programming service and certain retail stores that together
represent less than 5% of the consolidated assets of TBS at December 31, 1996. A
substantial portion of the consolidated liabilities of the Issuer, TWC and TBS
have been incurred by subsidiaries. TWE, which is not consolidated with either
the Issuer or TWC for financial reporting purposes, also has substantial
indebtedness and other liabilities. The rights of the Issuer and the Guarantors
and the rights of their creditors, including Holders of Debt Securities, to
participate in the distribution of assets of any person in which the Issuer or
the Guarantors owns an equity interest (including any subsidiary and TWE) upon
such person's liquidation or reorganization will be subject to prior claims of
such person's creditors, including trade creditors, except to the extent that
the Issuer or the Guarantors may be a creditor with recognized claims against
such person (in which case the claims of the Issuer and the Guarantors would
still be subject to the prior claims of any secured creditor of such person and
of any holder of indebtedness of such person that is senior to that held by the
Issuer or the Guarantors). Accordingly, the Holders of Debt Securities may be
deemed to be effectively subordinated to such claims.
The ability of the Issuer and the Guarantors to service their respective
indebtedness and other obligations, including the Debt Securities and the
Guarantees, and the ability of each of them to pay dividends on its common
and/or preferred stock is dependent primarily upon the earnings and cash flow of
their respective consolidated and unconsolidated subsidiaries and the
distribution or other payment to them of such earnings and cash flow. The TWE
Agreement of Limited Partnership and its bank credit facilities limit
distributions and other transfers of funds to the Issuer and TWC.
Additional information concerning the indebtedness of the Issuer, TWC and
TBS and their subsidiaries will be set forth in the Prospectus Supplement.
PLAN OF DISTRIBUTION
The Issuer may sell the Debt Securities to one or more underwriters or
dealers for public offering and sale by them or may sell the Debt Securities to
investors directly or through agents. The Prospectus Supplement with respect to
the Debt Securities offered thereby describes the terms of the offering of such
Debt Securities and the method of distribution of the Debt Securities offered
thereby and identifies any firms acting as underwriters, dealers or agents in
connection therewith.
The Debt Securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at prices
determined as specified in the Prospectus Supplement. In connection with the
sale of the Debt Securities, underwriters, dealers or agents may be deemed to
have received compensation from the Issuer in the form of underwriting discounts
or commissions and may also receive commissions from purchasers of the Debt
Securities for whom they
15
<PAGE>
<PAGE>
may act as agent. Underwriters may sell the Debt Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters or commissions from the
purchasers for whom they may act as agent. Certain of the underwriters, dealers
or agents who participate in the distribution of the Debt Securities may engage
in other transactions with, and perform other services for, the Issuer, TWC and
TBS in the ordinary course of business.
Any underwriting compensation paid by the Issuer to underwriters or agents
in connection with the offering of the Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to dealers, are set forth in
the Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Debt Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
the resale of the Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
the Issuer, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
Certain legal matters in connection with the Debt Securities will be passed
upon for the Issuer, TWC and TBS by Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, New York and for the Underwriters, if any, named in
a Prospectus Supplement, by Shearman & Sterling, 599 Lexington Avenue, New York,
New York.
EXPERTS
The consolidated financial statements and schedules of the Issuer and TWE
appearing in the Issuer's 1996 Form 10-K and the combined financial statements
of the Time Warner Service Partnerships incorporated by reference therein, have
been audited by Ernst & Young LLP, Independent Auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. Such
financial statements and schedules are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Cablevision Industries Corporation
at December 31, 1995, and for the year then ended, incorporated by reference in
this Prospectus from the Issuer's Current Report on Form 8-K dated November 13,
1997, have been audited by Ernst & Young LLP, Independent Auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Cablevision Industries Corporation
as of December 31, 1994, and for each of the two years in the period ended
December 31, 1994, incorporated by reference in this Prospectus from the
Issuer's Current Report on Form 8-K dated November 13, 1997, have been audited
by Arthur Andersen LLP, Independent Public Accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements have been incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Paragon Communications as of December 31, 1993
and 1994, and for each of the three years in the period ended December 31, 1994,
incorporated by reference in this Prospectus from the Issuer's 1996 Form 10-K,
and the consolidated financial statements of TBS, as of December 31, 1994 and
1995, and for the three years in the period ended December 31, 1995,
incorporated by reference in this Prospectus from the Issuer's Current Report on
Form 8-K dated November 13, 1997, have been audited by Price Waterhouse LLP,
Independent Accountants, as set forth in their reports thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or any
accompanying Prospectus Supplement in connection with the offer
16
<PAGE>
<PAGE>
made by this Prospectus or any Prospectus Supplement, and, if given or made,
such other information or representations must not be relied upon as having been
authorized by the Issuer, TWC or TBS or by any underwriter, dealer or agent.
This Prospectus and any Prospectus Supplement do not constitute an offer to sell
or a solicitation of an offer to buy any securities other than those to which
they relate. Neither the delivery of this Prospectus and any accompanying
Prospectus Supplement nor any sale of or offer to sell the Debt Securities
offered hereby shall, under any circumstances, create an implication that there
has been no change in the affairs of the Issuer, TWC or TBS or that the
information herein is correct as of any time after the date hereof. This
Prospectus and any accompanying Prospectus Supplement do not constitute an offer
to sell or a solicitation of an offer to buy any of the Debt Securities offered
hereby in any State to any person to whom it is unlawful to make such offer or
solicitation in such State.
17
<PAGE>
<PAGE>
_____________________________________ _____________________________________
NO PERSON IS AUTHORIZED BY THE ISSUER OR THE GUARANTORS OR BY THE UNDERWRITERS
OR ANY DEALER TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. NEITHER
THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY
SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE ON WHICH SUCH
INFORMATION IS GIVEN.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................................................................................ S-3
Ratio of Earnings to Fixed Charges......................................................................... S-3
Use of Proceeds............................................................................................ S-4
Description of the Debentures and the Guarantees........................................................... S-4
Holding Company Structure.................................................................................. S-9
Certain United States Federal Income Tax Considerations.................................................... S-10
Underwriters............................................................................................... S-11
Legal Opinions............................................................................................. S-12
PROSPECTUS
Available Information...................................................................................... 2
Information Incorporated by Reference...................................................................... 2
The Company................................................................................................ 3
Ratio of Earnings to Fixed Charges......................................................................... 4
Use of Proceeds............................................................................................ 6
Description of the Debt Securities and the Guarantees...................................................... 7
Global Securities.......................................................................................... 13
Holding Company Structure.................................................................................. 15
Plan of Distribution....................................................................................... 15
Legal Opinions............................................................................................. 16
Experts.................................................................................................... 16
</TABLE>
$600,000,000
TIME WARNER INC.
UNCONDITIONALLY GUARANTEED BY
TIME WARNER COMPANIES, INC.
AND
TURNER BROADCASTING SYSTEM, INC.
6 7/8% DEBENTURES DUE 2018
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
JOINT BOOKRUNNERS
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
CO-MANAGERS
BEAR, STEARNS & CO. INC.
WASSERSTEIN PERELLA SECURITIES, INC.
JUNE 3, 1998
_____________________________________ _____________________________________
<PAGE>
