SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 14, 1996
TIME WARNER INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12259 13-3527249
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 Rockefeller Plaza, New York, NY 10019
(Address of principal executive offices) (zip code)
(212) 484-8000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Time Warner Inc. ("New Time Warner") was formerly known as TW
Inc. New Time Warner is the parent company of Time Warner
Companies, Inc. ("Old Time Warner"), which was previously known as
"Time Warner Inc." until October 10, 1996, when it became a wholly
owned subsidiary of New Time Warner in connection with the
acquisition by New Time Warner of the remaining 80% interest in
Turner Broadcasting System, Inc. ("TBS") that was not already owned
by Old Time Warner, as more fully described herein. References
herein to "Time Warner" refer to Old Time Warner prior to October
10, 1996 and New Time Warner thereafter. Time Warner and Time
Warner Entertainment Company, L.P. ("TWE"), a partnership in which
certain wholly owned subsidiaries of Time Warner own general and
limited partnership interests in 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 ("Senior
Capital") and junior priority capital ("Series B Capital") of TWE,
have completed the transactions described below:
(i) on October 10, 1996, New Time Warner acquired the
remaining 80% interest in TBS that was not already owned by Old
Time Warner (the "TBS Transaction"). The transaction was structured
so that each of Old Time Warner and TBS became separate, wholly
owned subsidiaries of New Time Warner which will combine, for
financial reporting purposes, the consolidated net assets and
operating results of Old Time Warner and TBS. In connection
therewith, each issued and outstanding share of each class of
capital stock of Old Time Warner was converted into one share of a
substantially identical class of capital stock of New Time Warner.
In connection with the TBS Transaction, New Time Warner
issued (i) approximately 173.4 million shares of common stock, par
value $.01 per share (including 50.6 million shares of a special
class of non-redeemable common stock having 1/100th of a vote per
share ("LMCN-V Class Common Stock") which were received by affiliates
of Liberty Media Corporation ("LMC"), a former shareholder of TBS
and a subsidiary of Tele-Communications, Inc.) in exchange for
shares of TBS capital stock and (ii) approximately 14 million stock
options to replace all outstanding TBS stock options. In addition,
New Time Warner agreed to issue to LMC and its affiliates at a
later date an additional five million shares of LMCN-V Class Common
Stock and $67 million of consideration payable, at the election of
New Time Warner, in cash or additional shares of LMCN-V Class Common
Stock, pursuant to a separate option and non-competition agreement
(the "SSSI Agreement") that will provide, if New Time Warner
exercises its option, for Southern Satellite Systems, Inc., a
subsidiary of LMC, to provide certain satellite uplink and
distribution services for WTBS, a broadcast television station
owned by TBS, in the event that WTBS is converted to a
copyright-paid cable television programming service. The New Time
Warner common stock, or, prior to the consummation of the TBS
Transaction, the Old Time Warner common stock, are referred to
herein as the "Common Stock";
(ii) on April 11, 1996, Time Warner issued 1.6 million
shares of 10-1/4% Series K exchangeable preferred stock ("Series K
Preferred Stock") for approximately $1.55 billion of net proceeds.
Such proceeds were used by Time Warner to redeem all $250 million
principal amount of its outstanding 8.75% Debentures due 2017 (the
"8.75% Debentures") for $265 million (including redemption premiums
and accrued interest thereon of $15 million) and to reduce
indebtedness of TWI Cable Inc. ("TWI Cable"), a wholly owned
subsidiary of Time Warner, under the New Credit Agreement (as
defined hereinafter) by approximately $1.3 billion. The issuance of
the Series K Preferred Stock and the use of the proceeds therefrom
to reduce outstanding indebtedness of Time Warner are referred to
herein as the "Series K Refinancing". In connection with the TBS
Transaction, all shares of the privately-placed Series K Preferred
Stock of Old Time Warner were converted into registered shares of
Series M exchangeable preferred stock of New Time Warner with
substantially identical terms;
(iii) on February 1, 1996, Time Warner redeemed the
remaining $1.2 billion principal amount of 8.75% Convertible
Subordinated Debentures due 2015 (the "8.75% Convertible
Debentures") for $1.28 billion, including redemption premiums and
accrued interest thereon (the "February 1996 Redemption"). In
addition, in September 1995, Time Warner redeemed approximately $1
billion principal amount of 8.75% Convertible Debentures for $1.06
billion, including redemption premiums and accrued interest thereon
(the "September 1995 Redemption"). The September 1995 Redemption
was financed with (1) approximately $500 million of proceeds raised
in June 1995 from the issuance of 7.75% notes due 2005 (the "7.75%
Notes"), (2) $363 million of net proceeds raised in August 1995
from the issuance of approximately 12.1 million Time
Warner-obligated mandatorily redeemable preferred securities of a
subsidiary ("PERCS") that are redeemable for cash or, at Time
Warner's option, approximately 12.1 million shares of Hasbro, Inc.
common stock owned by Time Warner and that pay cash distributions
at a rate of 4% per annum and (3) available cash and equivalents
(the "1995 Convertible Debt Refinancing"). The February 1996
Redemption was financed with (1) $557 million of net proceeds
raised in December 1995 from the issuance of Time Warner-obligated
mandatorily redeemable preferred securities of a subsidiary
("Preferred Trust Securities") that pay cash distributions at a
rate of 8-7/8% per annum and (2) proceeds raised from the $750
million issuance of debentures in January 1996, consisting of (i)
$400 million principal amount of 6.85% debentures due 2026, which
are redeemable at the option of the holders thereof in 2003, (ii)
$200 million principal amount of 8.3% discount debentures due 2036,
which do not pay cash interest until 2016, (iii) $166 million
principal amount of 7.48% debentures due 2008 and (iv) $150 million
principal amount of 8.05% debentures due 2016 (collectively
referred to herein as the "January 1996 Debentures"). The issuance
of the Preferred Trust Securities and the January 1996 Debentures,
together with the February 1996 Redemption are collectively
referred to herein as the "1996 Convertible Debt Refinancing". The
1995 Convertible Debt Refinancing and the 1996 Convertible Debt
Refinancing are collectively referred to herein as the "Convertible
Debt Refinancings";
(iv) on January 4, 1996 (as previously reported on the Form
8-K of Time Warner dated January 4, 1996), Time Warner completed
its acquisition of Cablevision Industries Corporation ("CVI") and
certain affiliated entities of CVI (the "Gerry Companies" and
collectively, the "CVI Acquisition"). CVI and the Gerry Companies
owned cable television systems serving approximately 1.3 million
subscribers;
(v) on October 2, 1995 and September 5, 1995 (as previously
reported on the Form 8-K of Time Warner dated August 31, 1995),
Toshiba Corporation ("Toshiba") and ITOCHU Corporation ("ITOCHU"),
respectively, each exchanged (1) their 5.61% pro rata equity
interests in TWE, (2) their 6.25% residual equity interests in TW
Service Holding I, L.P. and TW Service Holding II, L.P., each of
which owned certain assets related to the TWE businesses (the "Time
Warner Service Partnerships") and (3) their options to increase
their interests in TWE under certain circumstances for, in the case
of ITOCHU, 8 million shares of two series of new convertible
preferred stock ("Series G Preferred Stock" and "Series H Preferred
Stock") of Time Warner and, in the case of Toshiba, 7 million
shares of new convertible preferred stock of Time Warner ("Series I
Preferred Stock") and $10 million in cash (the "ITOCHU/Toshiba
Transaction"). As a result of the ITOCHU/Toshiba Transaction, Time
Warner and certain of its wholly owned subsidiaries collectively
now own 74.49% of TWE's Series A Capital and Residual Capital and
100% of TWE's Senior Capital and Series B Capital. A subsidiary of
U S WEST, Inc. ("U S WEST") owns the remaining 25.51% of TWE's
Series A Capital and Residual Capital;
(vi) on August 15, 1995, Time Warner redeemed all of its
$1.8 billion principal amount of outstanding Redeemable Reset Notes
due 2002 (the "Reset Notes") in exchange for new securities (the
"Reset Notes Refinancing"), consisting of approximately $454
million aggregate principal amount of Floating Rate Notes due 2000,
approximately $272 million aggregate principal amount of 7.975%
Notes due 2004, approximately $545 million aggregate principal
amount of 8.11% Debentures due 2006, and approximately $545 million
aggregate principal amount of 8.18% Debentures due 2007
(collectively, the "Exchange Securities");
(vii) on July 6, 1995 (as previously reported on the Form
8-K of Time Warner dated July 6, 1995), Time Warner acquired KBLCOM
Incorporated ("KBLCOM") which owned cable television systems
serving approximately 700,000 subscribers and a 50% interest in
Paragon Communications ("Paragon"), which owned cable television
systems serving an additional 972,000 subscribers (the "KBLCOM
Acquisition"). The other 50% interest in Paragon was already owned
by TWE;
(viii) on June 30, 1995, TWI Cable, TWE and the
TWE-Advance/Newhouse Partnership (as defined below) executed a
five-year revolving credit facility (the "New Credit Agreement").
The New Credit Agreement enabled such entities to refinance certain
indebtedness assumed in the Acquisitions (as defined below), to
refinance TWE's indebtedness under a pre-existing bank credit
agreement and to finance the ongoing working capital, capital
expenditure and other corporate needs of each borrower (the "Bank
Refinancing"). The Series K Refinancing, the Convertible Debt
Refinancings, the Reset Notes Refinancing and the Bank Refinancing
are referred to herein as the "Debt Refinancings";
(ix) on June 23, 1995, (A) Six Flags Entertainment
Corporation ("Six Flags") was recapitalized, (B) TWE sold 51% of
its interest in Six Flags to an investment group led by Boston
Ventures and (C) TWE granted certain licenses to Six Flags
(collectively, the "Six Flags Transaction");
(x) on May 2, 1995, Time Warner acquired Summit
Communications Group, Inc. ("Summit"), which owned cable television
systems serving approximately 162,000 subscribers (the "Summit
Acquisition");
(xi) on April 1, 1995 (as previously reported on the Form
8-K of Time Warner dated April 1, 1995), TWE closed its transaction
(the "TWE-A/N Transaction") with the Advance/Newhouse Partnership
("Advance/Newhouse"), pursuant to which TWE and Advance/Newhouse
formed the Time Warner Entertainment-Advance/Newhouse Partnership,
a New York general partnership (the "TWE-Advance/Newhouse
Partnership"), and to which Advance/Newhouse and TWE contributed
cable television systems (or interests therein) serving
approximately 4.5 million subscribers, as well as certain foreign
cable investments and certain programming investments that included
Advance/Newhouse's 10% interest in Primestar Partners, L.P. TWE
owns a two-thirds equity interest in the TWE-Advance/Newhouse
Partnership and is the managing partner and Advance/Newhouse owns a
one-third equity interest; and
(xii) during 1995, TWE entered into agreements to sell, or
announced its intention to sell, 17 of its unclustered cable
television systems serving approximately 180,000 subscribers, of
which certain of the transactions closed during 1995 and the
remaining transactions, which are not material, have closed or are
expected to close in 1996 (the "Unclustered Cable Transactions").
The Unclustered Cable Transactions and the Six Flags Transaction
are referred to herein as the "Asset Sale Transactions"; the Summit
Acquisition, KBLCOM Acquisition and CVI Acquisition are referred to
herein as the "Acquisitions"; the Acquisitions and the TWE-A/N
Transaction are referred to herein as the "Cable Transactions" and
the TBS Transaction, the ITOCHU/Toshiba Transaction, the Asset Sale
Transactions, the Cable Transactions and the Debt Refinancings are
referred to herein as the "Transactions".
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Item 7. Financial Statements and Exhibits
(a) Pro Forma Consolidated Condensed Financial Statements
The following pro forma consolidated condensed balance sheet of New
Time Warner at September 30, 1996 gives effect to the TBS
Transaction as if it occurred at such date. The following pro forma
consolidated condensed statement of operations of New Time Warner for
the nine months ended September 30, 1996 gives effect to the TBS
Transaction, the Series K Refinancing and the 1996 Convertible Debt
Refinancing as if the transactions occurred at the beginning of
1995. The ITOCHU/Toshiba Transaction, the Acquisitions, the 1995
Convertible Debt Refinancing, the Reset Notes Refinancing, the Bank
Refinancing, the TWE-A/N Transaction, the Asset Sale Transactions
and, with respect to the balance sheet only, the Series K
Refinancing and the 1996 Convertible Debt Refinancing, are already
reflected in the historical financial statements of Old Time Warner as
of and for the nine months ended September 30, 1996. The pro forma
consolidated condensed statement of operations of New Time Warner for
the year ended December 31, 1995 gives effect to the TBS
Transaction, the Series K Refinancing, the Cable Transactions, the
ITOCHU/Toshiba Transaction, the Debt Refinancings and the Asset
Sale Transactions, as if the transactions occurred at the beginning
of such period. The historical financial position of New Time Warner at
September 30, 1996 and the historical results of operations of New Time
Warner for the nine months ended September 30, 1996 and the year
ended December 31, 1995 reflect the historical financial position
and results of operations of Old Time Warner prior to the
consummation of the TBS Transaction.
The following pro forma consolidated condensed statement of
operations of the Time Warner Entertainment Group (the
"Entertainment Group"), principally consisting of TWE, for the year
ended December 31, 1995 gives effect to the TWE-A/N Transaction,
the Debt Refinancings, the consolidation of Paragon and the Asset
Sale Transactions as if the transactions occurred at the beginning
of such period. Pro forma consolidated condensed financial
statements as of and for the nine months ended September 30, 1996
have not been included herein since all such transactions
consummated by TWE are reflected, in all material respects, in the
historical financial statements of the Entertainment Group as of
and for the nine months ended September 30, 1996.
The pro forma consolidated condensed financial statements should
be read in conjunction with the historical financial statements of
Time Warner and TWE, including the notes thereto, which are
contained in the Old Time Warner Quarterly Report on Form 10-Q for
the nine months ended September 30, 1996 and the Old Time Warner
Annual Report on Form 10-K for the year ended December 31, 1995, as
well as the historical financial statements of (i) Vision Cable
Division of Vision Cable Communications Inc. and Subsidiaries and
Newhouse Broadcasting Cable Division of Newhouse Broadcasting
Corporation and Subsidiaries (which entities contributed
substantially all of their assets to Advance/Newhouse prior to the
closing of the TWE-A/N Transaction), (ii) CVI, (iii) KBLCOM, (iv)
Summit and (v) TBS.
The pro forma consolidated condensed financial statements have
been derived from the historical financial statements of the
respective entities as of and for the nine months ended September
30, 1996 and for the year ended December 31, 1995, except in the
case of (1) the Newhouse Broadcasting Cable Division of Newhouse
Broadcasting Corporation and Subsidiaries, which entities have
different fiscal years and were contributed to the
TWE-Advance/Newhouse Partnership on April 1, 1995; consequently,
such pro forma financial statements have been derived from the
unaudited combined financial statements of such entities for the
three months ended January 31, 1995, (2) the Vision Cable Division
of Vision Cable Communications Inc. and Subsidiaries which were
contributed to the TWE-Advance/Newhouse Partnership on April 1,
1995 and consequently, such pro forma financial statements have
been derived from the unaudited combined financial statements of
such entities for the three months ended March 31, 1995 (which
financial statements, in the case of (1) and (2) have been
previously filed in connection with Old Time Warner's Current
Report on Form 8-K dated May 30, 1995 and are incorporated herein
by reference), (3) Summit, which was acquired on May 2, 1995 and
consequently, such pro forma financial statements have been derived
from the unaudited consolidated financial statements for such
entity for the four months ended May 2, 1995, (4) KBLCOM, which was
acquired on July 6, 1995 and consequently, such pro forma financial
statements have been derived from the unaudited consolidated
financial statements for such entity for the six months ended June
30, 1995, which have been previously filed in connection with Old
Time Warner's Current Report on Form 8-K dated August 14, 1995 and
are incorporated herein by reference and (5) CVI, which was
acquired on January 4, 1996 and consequently, such pro forma
financial statements have been derived from the audited
consolidated financial statements for such entity for the year
ended December 31, 1995, which are incorporated herein by reference
from its Annual Report on Form 10-K for the year ended December 31,
1995. Historical financial statements of TBS are incorporated
herein by reference from its Annual Report to Shareholders
incorporated by reference into its Annual Report on Form 10-K for
the year ended December 31, 1995 and its Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1996.
The pro forma consolidated condensed financial statements are
presented for informational purposes only and are not necessarily
indicative of the financial position or operating results that
would have occurred if the Transactions had been consummated as of
the dates indicated, nor are they necessarily indicative of future
financial conditions or operating results.
TBS Transaction
Pro forma adjustments for the TBS Transaction reflect (1) the
issuance of approximately 173.4 million shares of Common Stock,
including 50.6 million shares of LMCN-V Class Common Stock which were
received by affiliates of LMC, in exchange for shares of TBS
capital stock, (2) the issuance of an additional 5 million shares
of LMCN-V Class Common Stock to be received by LMC and its affiliates
and the payment of $67 million in cash in connection with the SSSI
Agreement, (3) the issuance of approximately 14 million stock
options to replace all outstanding TBS options, (4) the assumption
of approximately $2.8 billion of indebtedness and (5) the payment
of approximately $95 million for transaction costs and other
related liabilities of Time Warner and TBS.
The pro forma consolidated condensed financial statements
reflect an assumption that New Time Warner will elect to satisfy a
portion of the consideration to be paid to LMC and its affiliates
in connection with the SSSI Agreement in cash, rather than in
additional shares of LMCN-V Class Common Stock. Should Time Warner
elect otherwise, the effect on New Time Warner's pro forma financial
condition and operating results would not be material.
The TBS Transaction has been accounted for by the purchase
method of accounting for business combinations and, accordingly,
the cost to acquire such assets has been allocated to the
underlying net assets in proportion to their respective fair
values. The valuations and other studies which will provide the
basis for such an allocation have not been completed. As more fully
described in the notes to the pro forma consolidated condensed
financial statements, a preliminary allocation of the excess of
cost over the book value of the net assets to be acquired has been
made to goodwill.
New Time Warner expects to realize certain revenue enhancements and
cost reductions as a result of strategic and cost-saving
initiatives relating to the integration of the operations of TBS
into Time Warner's operating structure; however, such incremental
revenues and cost savings have not been reflected in the pro forma
consolidated condensed statements of operations of New Time Warner.
ITOCHU/Toshiba Transaction
Pro forma adjustments for the ITOCHU/Toshiba Transaction reflect
the exchange by each of ITOCHU and Toshiba of (1) its 5.61% pro
rata priority capital and residual equity interests in TWE, (2) its
6.25% residual equity interests in the Time Warner Service
Partnerships and (3) its option to increase its interests in TWE
under certain circumstances, for an aggregate 15 million shares of
convertible preferred stock (Series G Preferred Stock, Series H
Preferred Stock and Series I Preferred Stock) and $10 million in
cash. The ITOCHU/Toshiba Transaction was accounted for by the
purchase method of accounting for business combinations and,
accordingly, the cost to acquire each of ITOCHU and Toshiba's
respective interests in TWE and the Time Warner Service
Partnerships has been allocated to Time Warner's investment in the
Entertainment Group.
Each share of the Series G Preferred Stock, Series H Preferred
Stock and Series I Preferred Stock issued in connection with the
ITOCHU/Toshiba Transaction (i) is convertible, immediately with
respect to the Series G Preferred Stock and Series I Preferred
Stock and after five years (or earlier under certain circumstances)
with respect to the Series H Preferred Stock, into an aggregate
31.2 million shares of Common Stock at a conversion price of $48
per share (based on its $100 per share liquidation value) and
(ii) receives for four years ending September 5, 1999 with respect
to the Series G Preferred Stock and the Series H Preferred Stock
and October 2, 1999, with respect to the Series I Preferred Stock,
an annual dividend per share equal to the greater of $3.75
and an amount equal to the dividends paid on the Common Stock into
which each share may be converted. To the extent that any of
the Series G Preferred Stock, Series H Preferred Stock or Series I
Preferred Stock remains outstanding at the end of the period in which
the minimum $3.75 per share dividend is to be paid, the holders
thereafter will receive dividends equal to the dividends paid on
shares of Common Stock multiplied by the number of shares of
Common Stock into which their shares of such series of preferred stock
are convertible.
Cable Transactions
TWE-A/N Transaction
TWE consolidates the TWE-Advance/Newhouse Partnership and the
one-third equity interest owned by Advance/Newhouse is reflected in
the Entertainment Group's historical financial statements as
minority interest. In accordance with the partnership agreement for
the TWE-Advance/Newhouse Partnership, Advance/Newhouse may require
TWE to purchase its equity interest for fair market value at
specified intervals following the death of both of its principal
shareholders. At any time after April 1, 1998, either partner can
initiate a dissolution in which TWE would receive two-thirds and
Advance/Newhouse would receive one-third of the partnership's net
assets. The assets contributed by TWE and Advance/Newhouse to the
TWE-Advance/Newhouse Partnership were recorded at their
predecessor's historical cost. No gain was recognized by TWE upon
the capitalization of the TWE-Advance/Newhouse Partnership.
Acquisitions
As a result of the Acquisitions, Time Warner has acquired cable
television systems that served approximately 2.2 million
subscribers and a 50% interest in Paragon, which owned cable
television systems serving an additional 972,000 subscribers (the
other 50% interest was already owned by TWE). As described below,
in order to consummate the Acquisitions, Time Warner issued
approximately 5.5 million shares of Common Stock and approximately
$2.1 billion aggregate liquidation value of new series of
convertible preferred stock, and assumed or incurred, directly or
indirectly, approximately $3.3 billion of debt.
In connection with the Summit Acquisition, Time Warner issued
approximately 1.6 million shares of Common Stock and approximately
3.3 million shares of a new series of convertible preferred stock
(formerly "Series C Preferred Stock", and after an exchange in
August 1996 for shares of a new series of convertible preferred
stock with substantially identical terms, "Series J Preferred
Stock") and assumed approximately $140 million of indebtedness. The
Series J Preferred Stock (i) is convertible into 6.8 million shares
of Common Stock at a conversion price of $48 per share (based on
its $100 per share liquidation value) and (ii) receives for five
years ending in May 2000, an annual dividend per share equal to
the greater of $3.75 and an amount equal to the dividends
paid on the Common Stock into which a share of Series J Preferred
Stock may be converted.
In connection with the KBLCOM Acquisition, Time Warner issued
one million shares of Common Stock and 11 million shares of a new
series of convertible preferred stock (the "Series D Preferred
Stock") and assumed or incurred approximately $1.2 billion of
indebtedness, including $102 million of Time Warner's allocable
share of Paragon's indebtedness. The Series D Preferred Stock (i)
is convertible into 22.9 million shares of Common Stock at a
conversion price of $48 per share (based on its $100 per share
liquidation value) and (ii) receives for four years ending in
July 1999, an annual dividend per share equal to the greater of
$3.75 and an amount equal to the dividends paid on the Common
Stock into which a share of Series D Preferred Stock may be converted.
In connection with the CVI Acquisition, Time Warner issued
approximately 2.9 million shares of Common Stock, 3.3 million
shares of a new series of convertible preferred stock (the "Series
E Preferred Stock") and approximately 3 million shares of another
new series of convertible preferred stock (the "Series F Preferred
Stock") and assumed or incurred approximately $2 billion of
indebtedness. The Series E Preferred Stock and Series F Preferred
Stock (i) are convertible into an aggregate of 13.2 million shares
of Common Stock at a conversion price of $48 per share (based on
its $100 per share liquidation value) and (ii) receive, for a
period of five years ending in January 2001, with respect to
the Series E Preferred Stock and a period of four years ending
in January 2000, with respect to the Series F Preferred
Stock, an annual dividend per share equal to the greater of $3.75
and an amount equal to the dividends paid on the Common Stock into
which a share of Series E Preferred Stock or Series F Preferred
Stock may be converted.
To the extent that any of the Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series J Preferred
Stock remains outstanding at the end of the period in which the
minimum $3.75 per share dividend is to be paid, the holders
thereafter will receive dividends equal to the dividends paid on
shares of Common Stock multiplied by the number of shares into
which their shares of such series of preferred stock are
convertible.
The Acquisitions have been accounted for by the purchase method
of accounting for business combinations and, accordingly, the cost
to acquire such assets has been allocated to the underlying net
assets in proportion to their respective fair values. The
valuations and other studies which provided the basis for such
allocations for the Summit Acquisition and the KBLCOM Acquisition
have been completed and resulted in an allocation of the excess of
cost over the book value of the net assets acquired principally to
investments and cable television franchises in proportion to their
respective fair values. However, with respect to the CVI Acquisition,
such valuations and other studies have yet to be completed and
accordingly, a preliminary allocation of the excess of cost over
the book value of the net assets acquired has been made principally
to cable television franchises, as more fully described in the
notes to the pro forma consolidated condensed financial statements.
In connection with the Cable Transactions, TWE entered into
management services agreements pursuant to which TWE is responsible
for the management and operations of a majority of the cable
television systems owned by Time Warner and the
TWE-Advance/Newhouse Partnership. The historical consolidated
statements of operations of Time Warner and the Entertainment Group
for the nine months ended September 30, 1996 and the pro forma
consolidated condensed statements of operations of Time Warner and
the Entertainment Group for the year ended December 31, 1995 each
reflect annual management fees to be paid by Time Warner and the
TWE-Advance/Newhouse Partnership to TWE, based on an allocation,
which management believes to be reasonable, of the corporate
expenses of the cable division of TWE in proportion to the
respective number of cable subscribers of Time Warner and the
TWE-Advance/Newhouse Partnership to be managed by TWE's cable
division as a percentage of the aggregate number of subscribers of
all cable television systems to be managed by TWE's cable division.
As a result of TWE's management of the Time Warner and the
TWE-Advance/Newhouse Partnership-owned cable television systems,
the pro forma consolidated condensed statement of operations of
Time Warner for the year ended December 31, 1995 also reflects
certain reductions in corporate expenses of the acquired entities
relating to the closing of certain corporate and regional
facilities and the termination of related personnel as a direct
result of the integration of the acquired operations into Time
Warner's and TWE's operating structure.
Debt Refinancings
In the aggregate, proceeds of $8.856 billion were raised in
connection with the Debt Refinancings. Such proceeds were used,
together with approximately $171 million of available cash and
equivalents, to repay or redeem $8.812 billion of indebtedness,
plus redemption premiums and accrued interest thereon of $165
million and financing costs of $50 million.
Pro forma adjustments for the Debt Refinancings in the nine
months ended September 30, 1996 and the year ended December 31,
1995 reflect proceeds of (1) $1.552 billion received from the
issuance of the Series K Preferred Stock and (2) approximately $750
million received from the issuance of the January 1996 Debentures,
which have a weighted average interest rate of 7.3%, and the use of
(1) $721 million of such proceeds, together with $557 million of
net proceeds received from the issuance of the Preferred Trust
Securities (8-7/8% yield) in December 1995, to finance the 1996
Convertible Debt Refinancing ($1.226 billion principal amount, plus
redemption premiums and accrued interest thereon of $52 million),
(2) $265 million to redeem all of Time Warner's outstanding 8.75%
Debentures ($250 million principal amount, plus redemption premiums
and accrued interest thereon of $15 million) and (3) approximately
$1.287 billion to reduce outstanding indebtedness of TWI Cable
under the New Credit Agreement.
Pro forma adjustments for the year ended December 31, 1995 also
reflect additional aggregate proceeds received of $6.554 billion,
consisting of (1) borrowings of $5.134 billion in the aggregate
under the New Credit Agreement, (2) approximately $500 million of
proceeds received from the issuance of the 7.75% Notes, (3) $363
million of net proceeds received from the issuance of the PERCS (4%
yield) and (4) the receipt of $557 million of net proceeds from the
issuance of the Preferred Trust Securities (8-7/8% yield) and
additional repayments of $6.197 billion consisting of (1) $1.184
billion of indebtedness assumed in the CVI Acquisition (plus
redemption premiums thereon of $16 million), (2) $1.086 billion of
indebtedness assumed or incurred in the KBLCOM Acquisition (plus
redemption premiums and accrued interest thereon of $19 million),
(3) $204 million of Paragon indebtedness, funded equally by Time
Warner and TWE, (4) $2.575 billion of indebtedness of TWE under a
pre-existing bank credit agreement, (5) $1 billion principal amount
of the 8.75% Convertible Debentures (plus redemption premiums and
accrued interest thereon of $63 million) and (6) $50 million to pay
for financing costs.
In addition to the $8.856 billion of refinancings described
above, $289 million was borrowed under the New Credit Agreement,
consisting of $211 million to consummate the CVI Acquisition and
$78 million to pay for transaction costs. Pro forma adjustments for
the Debt Refinancings also reflect the noncash redemption of $1.8
billion principal amount of outstanding Reset Notes (8.7% yield) in
exchange for an equal amount of Exchange Securities at a weighted
average interest rate of 7.9% in the year ended December 31, 1995.
Based on the average LIBOR rates in effect during the nine
months ended September 30, 1996 and the year ended December 31,
1995, LIBOR has been assumed to be 5.5% and 6% per annum,
respectively, and accordingly, the pro forma consolidated condensed
statements of operations reflect interest on borrowings under the
New Credit Agreement at estimated rates of (i) 6.375% and 6.875%
per annum, respectively, for TWI Cable and (ii) 6% and 6.5% per
annum, respectively, for each of TWE and the TWE-Advance/Newhouse
Partnership. Each 12.5 basis point increase in the pro forma
interest rate applicable to the aggregate $4.136 billion of
net borrowings outstanding under the New Credit Agreement would
have the approximate effect of increasing Time Warner's annual
interest expense and net loss by $2 million and $3 million, respectively,
and in the case of borrowings by TWE and the TWE-Advance/Newhouse
Partnership only, of increasing TWE's annual interest expense
and decreasing its net income by $3 million each.
Asset Sale Transactions
The Asset Sale Transactions for the year ended December 31, 1995
reflect the disposition by TWE on June 23, 1995 of 51% of its
interest in Six Flags, the payment by Six Flags of certain
intercompany indebtedness and licensing fees to TWE in connection
therewith, and the sale and planned sale of certain unclustered
cable television systems for aggregate gross proceeds of
approximately $1.18 billion. TWE has deconsolidated Six Flags
effective as of June 23, 1995 and accounts for its remaining 49%
interest in Six Flags under the equity method of accounting. As a
result of these transactions, TWE expects a cumulative debt
reduction of approximately $1.045 billion, substantially all of
which is already reflected in TWE's historical balance sheet at
September 30, 1996. TWE expects to realize aggregate income of
approximately $375 million as a result of the Asset Sale
Transactions, of which a portion of such income was deferred by TWE
principally as a result of its guarantee of certain third-party,
zero-coupon indebtedness of Six Flags due in 1999. The effects of
the sale of certain of the unclustered cable television systems
that have closed or are expected to close in 1996 are not material
to the pro forma financial condition and results of operations of
either the Entertainment Group or Time Warner and, accordingly,
have not been reflected in the pro forma consolidated financial
statements as of and for the nine months ended September 30, 1996
included herein.
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
September 30, 1996
(millions, unaudited)
TBS Transaction
Time Warner TBS Pro Forma Time Warner
Historical Historical(a) Adjustments(b) Pro Forma
A S S E T S
Cash and equivalents $ 402 $ 84 $ - $ 486
Other current assets 2,841 1,651 (190) 4,302
Total current assets 3,243 1,735 (190) 4,788
Investments in and amounts
due to and from
Entertainment Group 5,993 - - 5,993
Other investments 2,506 - (557) 1,949
Noncurrent inventories - 2,083 - 2,083
Property, plant and
equipment 1,505 386 - 1,891
Cable television franchises 3,930 - - 3,930
Goodwill 5,766 258 6,484 12,508
Other assets 1,524 420 - 1,944
Total assets $24,467 $4,882 $5,737 $35,086
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 2,772 $1,001 $ - $ 3,773
Long-term debt 9,949 2,765 162 12,876
Borrowings against future
stock option proceeds 425 - - 425
Deferred income taxes 3,935 518 - 4,453
Other long-term liabilities 1,228 146 - 1,374
Time Warner-obligated
mandatorily redeemable
preferred securities of
subsidiaries(1) 949 - - 949
Series K exchangeable
preferred stock 1,629 - - 1,629
Shareholders' equity:
Preferred stock 36 - (32) 4
Common stock 385 - (379) 6
Paid-in capital 5,791 - 6,438 12,229
Unrealized gains on
certain marketable
securities 182 - - 182
TBS shareholders' equity - 452 (452) -
Accumulated deficit (2,814) - - (2,814)
Total shareholders' equity 3,580 452 5,575 9,607
Total liabilities and
shareholders' equity $24,467 $4,882 $5,737 $35,086
_______________
(1) Includes $374 million of preferred securities that are
redeemable for cash or, at Time Warner's option, approximately 12.1
million shares of Hasbro, Inc. common stock owned by Time Warner.
See accompanying notes.
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1996
(millions, except per share amounts; unaudited)
Subtotal
Time
Time Warner Debt Warner
Historical Refinancings(c) Pro Forma
Revenues $6,364 $ - $ 6,364
Cost of revenues* 3,809 - 3,809
Selling, general and administrative* 2,091 - 2,091
Operating expenses 5,900 - 5,900
Business segment operating income (loss) 464 - 464
Equity in pretax income of
Entertainment Group 270 - 270
Interest and other, net (854) 38 (816)
Corporate expenses (52) - (52)
Income (loss) before income taxes (172) 38 (134)
Income tax (provision) benefit (43) (16) (59)
Income (loss) before extraordinary item (215) 22 (193)
Preferred dividend requirements (180) (51) (231)
Loss before extraordinary
item applicable to common shares $ (395) $ (29) $(424)
Loss before extraordinary item
per common share $(1.02) $(.07) $(1.09)
Average common shares 388.7 388.7
_______________
* Includes depreciation and
amortization expense of: $ 677 $ - $ 677
(cont'd)
TBS Transaction
TBS Pro Forma Time Warner
Historical(d) Adjustments(e) Pro Forma
Revenues $2,761 $ - $9,125
Cost of revenues* 1,935 154 5,898
Selling, general and administrative* 725 - 2,816
Operating expenses 2,660 154 8,714
Business segment operating income (loss) 101 (154) 411
Equity in pretax income of
Entertainment Group - - 270
Interest and other, net (143) 8 (951)
Corporate expenses - - (52)
Income (loss) before income taxes (42) (146) (322)
Income tax (provision) benefit 22 14 (23)
Income (loss) before extraordinary item (20) (132) (345)
Preferred dividend requirements - - (231)
Loss before extraordinary
item applicable to common shares $ (20) $(132) $(576)
Loss before extraordinary item
per common share $(1.02)
Average common shares 567.1
_______________
* Includes depreciation and
amortization expense of: $ 141 $ 120 $ 938
See accompanying notes.
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(millions, except per share amounts; unaudited)
TBS Transaction
Subtotal TBS Pro Forma Time Warner
Time Warner Histori- Adjust- Pro
Pro Forma cal(d) ments(e) Forma
Revenues $ 8,742 $3,437 $ - $12,179
Cost of revenues* 5,236 2,166 208 7,610
Selling, general and administrative* 2,850 889 - 3,739
Operating expenses 8,086 3,055 208 11,349
Business segment operating
income (loss) 656 382 (208) 830
Equity in pretax income of
Entertainment Group 286 - - 286
Interest and other, net (926) (209) (7) (1,142)
Corporate expenses (74) - - (74)
Income (loss) before income taxes (58) 173 (215) (100)
Income tax (provision) benefit (132) (70) 26 (176)
Income (loss) before extraordinary item (190) 103 (189) (276)
Preferred dividend requirements (316) - - (316)
Income (loss) before extraordinary
item applicable to common shares $(506) $ 103 $(189) $(592)
Loss before extraordinary item
per common share $(1.30) $(1.05)
Average common shares 387.7 566.1
_______________
* Includes depreciation and
amortization expense of: $ 935 $ 189 $161 $1,285
See accompanying notes.
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(millions, except per share amounts; unaudited)
Summit KBLCOM CVI
Time Warner Acqui- Acqui- Acqui-
Historical sition(f) sition(g) sition(h)
Revenues $8,067 $ 22 $ 139 $ 514
Cost of revenues* 4,682 15 110 429
Selling, general and
administrative* 2,688 7 49 106
Operating expenses 7,370 22 159 535
Business segment operating
income (loss) 697 - (20) (21)
Equity in pretax income of
Entertainment Group 256 - - -
Interest and other, net (877) (5) (46) (136)
Corporate expenses (74) - - -
Income (loss) before income taxes 2 (5) (66) (157)
Income tax (provision) benefit (126) 1 24 38
Income (loss) before extraordinary
item (124) (4) (42) (119)
Preferred dividend requirements (52) (4) (21) (24)
Income (loss) before extraordinary
item applicable to
common shares $(176) $ (8) $ (63) $(143)
Income (loss) before extraordinary
item per common share $(.46) $(.02) $(.17) $(.36)
Average common shares 383.8 .5 .5 2.9
_______________
* Includes depreciation and
amortization expense of: $ 559 $ 11 $ 84 $ 281
(cont'd)
ITOCHU/
Debt TWE Toshiba Subtotal
Refinanc- Trans- Trans- Time Warner
ings(c) actions(i) actions(j) Pro Forma
Revenues $ - $ - $ - $8,742
Cost of revenues* - - - 5,236
Selling, general and
administrative* - - - 2,850
Operating expenses - - - 8,086
Business segment operating
income (loss) - - - 656
Equity in pretax income of
Entertainment Group 13 17 - 286
Interest and other, net 167 - (29) (926)
Corporate expenses - - - (74)
Income (loss) before income taxes 180 17 (29) (58)
Income tax (provision) benefit (74) (6) 11 (132)
Income (loss) before
extraordinary item 106 11 (18) (190)
Preferred dividend requirements (173) - (42) (316)
Income (loss) before extraordinary
item applicable to
common shares $ (67) $ 11 $ (60) $ (506)
Income (loss) before extraordinary
item per common share $(.17) $ .03 $ (.15) $(1.30)
Average common shares - - - 387.7
_______________
* Includes depreciation and
amortization expense of: $ - $ - $ - $ 935
See accompanying notes.
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(a) Reflects the historical financial position of TBS at September 30,
1996, including $2.8 billion of long-term indebtedness.
(b) Pro forma adjustments to record the TBS Transaction
reflect (1) a reclassification in shareholders' equity from common
stock and preferred stock to paid-in capital to reflect the
reduction in the par value, in the case of common stock, from $1.00
per share to $.01 per share, and, in the case of preferred stock,
from $1.00 per share to $.10 per share, (2) the issuance of (i)
173.4 million shares of Common Stock, including 50.6 million shares
of LMCN-V Class Common Stock received by affiliates of LMC, in
exchange for shares of TBS capital stock, (ii) an additional 5
million shares of LMCN-V Class Common Stock to be received by LMC and
its affiliates in connection with the SSSI Agreement and (iii)
approximately 14 million stock options to replace all outstanding
TBS stock options, valued at an aggregate of $6.027 billion for pro
forma purposes based on a Common Stock price of $33.25 per share,
(3) the writeoff of approximately $258 million of pre-existing
goodwill of TBS and approximately $190 million of TBS inventory to
conform TBS's accounting policy with respect to the capitalization
and amortization of film exploitation costs to Time Warner's
accounting policy, (4) the incurrence of $162 million of additional
indebtedness for the payment of (i) $67 million in connection with
the SSSI Agreement and (ii) $95 million in connection with
transaction costs and other related liabilities of Time Warner and
TBS, (5) the allocation of the excess of the purchase price over
the book value of the net assets acquired of $6.742 billion to
goodwill and (6) the elimination of (i) Old Time Warner's
historical investment in TBS in the amount of $557 million and (ii)
TBS's historical stockholders' equity in the amount of $452 million.
(c) Pro forma adjustments to record the Debt Refinancings for
the nine months ended September 30, 1996 and the year ended
December 31, 1995 reflect an increase in noncash preferred dividend
requirements of $51 million and $173 million, respectively,
relating to the payment of Series K Preferred Stock dividends, at a
rate of 10-1/4% per annum, payable quarterly. For purposes of Time
Warner's pro forma consolidated condensed financial statements,
such dividend requirements have been assumed to have been satisfied
in-kind, through the issuance of additional shares of Series K
Preferred Stock with an aggregate liquidation preference equal to
the amount of such dividends.
Pro forma adjustments to record the Debt Refinancings for the
nine months ended September 30, 1996 also reflect interest savings
of $38 million resulting from (1) the issuance of the January 1996
Debentures for approximately $750 million of proceeds and the use
of $721 million of such proceeds, together with $557 million of
available cash and equivalents related to the issuance of the
Preferred Trust Securities, to redeem $1.226 billion principal
amount of 8.75% Convertible Debentures for an aggregate redemption
price of $1.278 billion, including redemption premiums and accrued
interest thereon of $52 million and (2) the issuance of 1.6 million
shares of Series K Preferred Stock for approximately $1.552 billion
of net proceeds and the use of (i) $265 million of such proceeds to
redeem all $250 million principal amount of Time Warner's
outstanding 8.75% Debentures (plus redemption premiums and accrued
interest thereon of $15 million) and (ii) the remaining $1.287
billion of such proceeds to reduce outstanding indebtedness of TWI
Cable under the New Credit Agreement.
Pro forma adjustments to record the Debt Refinancings for the
year ended December 31, 1995 also reflect savings in financing
costs of $180 million from (1) $5.134 billion of aggregate
borrowings under the New Credit Agreement which were used: (i) to
repay or redeem $1.184 billion of indebtedness assumed in the CVI
Acquisition, plus redemption premiums thereon of $16 million, (ii)
to refinance $1.086 billion of indebtedness assumed or incurred in
the KBLCOM Acquisition, plus redemption premiums and accrued
interest thereon of $19 million, (iii) to repay $204 million of
Paragon indebtedness, funded equally by Time Warner and TWE, (iv)
to repay $2.575 billion of indebtedness under a pre-existing bank
credit agreement and (v) to pay for $50 million of financing costs,
(2) the redemption of $2.226 billion principal amount of 8.75%
Convertible Debentures for an aggregate redemption price of $2.341
billion, including redemption premiums and accrued interest thereon
of $115 million, using (i) proceeds from the $750 million issuance
of the January 1996 Debentures, (ii) $557 million of net proceeds
raised from the issuance of the Preferred Trust Securities in
December 1995, (iii) $363 million of net proceeds raised from the
issuance of the PERCS in August 1995, (iv) approximately $500
million of proceeds raised from the issuance of the 7.75% Notes in
June 1995 and (v) approximately $171 million of available cash and
equivalents, (3) the August 1995 noncash redemption of $1.8 billion
principal amount of outstanding Reset Notes in exchange for an
equal amount of Exchange Securities and (4) the issuance of 1.6
million shares of Series K Preferred Stock for approximately $1.552
billion of net proceeds and the use of (i) $265 million of such
proceeds to redeem all $250 million principal amount of Time
Warner's outstanding 8.75% Debentures (plus redemption premiums and
accrued interest thereon of $15 million) and (ii) the remaining
$1.287 billion of such proceeds to reduce outstanding indebtedness
of TWI Cable under the New Credit Agreement, as set forth below (in
millions).
All pro forma adjustments to record the Debt Refinancings for the
nine months ended September 30, 1996 and the year ended December
31, 1995 reflect the incremental effect on Time Warner's operating
results from each refinancing that had closed during the period.
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
Equity in Pretax Equity in Pretax
Income of Income of
Interest and Entertainment Interest and Entertainment
Other, Net Group Other, Net Group
Increase (Decrease)
Borrowings by TWI Cable,
TWE and the TWE-Advance/
Newhouse Partnership in
the amounts of $1.218
billion, $2.702 billion,
and $14 million, respectively,
under the New Credit Agree-
ment, at estimated annual
interest rates of 6.875%,
6.5% and 6.5%, respectively,
for the year ended
December 31, 1995 - - $ 42 $ 88
Pro forma borrowings by
TWI Cable of $1.2 billion
under the New Credit
Agreement to refinance
CVI debt, at an estimated
annual interest rate of
6.875% for the year ended
December 31, 1995 - - 83 -
Repayment of $1.287
billion of TWI Cable
indebtedness under
the New Credit
Agreement (23) - (89) -
Redemption of $250
million principal amount
of 8.75% Debentures (8) - (22) -
Pro forma issuance by
Time Warner of $750 million
of January 1996 Debentures
in connection with the
1996 Convertible Debt
Refinancing, at a weighted
average interest
rate of 7.3% 2 - 55 -
Issuance by Time Warner
of $575 million liquidation
amount of Preferred
Trust Securities
(8-7/8% yield) - - 47 -
Issuance by Time Warner
of $500 million of 7.75%
Notes and approximately
12.1 million PERCS
(4% yield) - - 28 -
Issuance by Time Warner
of $1.8 billion of Exchange
Securities at a weighted
average interest rate of
7.9% for the year ended
December 31, 1995 - - 90 -
Repayment by TWE of
$2.575 billion of
indebtedness under the
pre-existing TWE bank
credit agreement - - - (84)
Repayment by TWI Cable
of $1.184 billion of
indebtedness assumed in
the CVI Acquisition - - (87) -
Repayment by TWI Cable
of $1.086 billion of
indebtedness assumed in
the KBLCOM Acquisition - - (57) -
Repayment of $226 million of
Paragon's indebtedness, of which
$102 million was funded by each
of Time Warner and TWE, and
the remainder was funded by
Paragon's available cash
and equivalents - - - (9)
Redemption of $2.226
billion principal
amount of 8.75% Convertible
Debentures, consisting
of $1 billion principal
amount redeemed in
September 1995 and
$1.226 billion principal
amount redeemed in
February 1996 (9) - (169) -
Redemption of $1.8 billion
of Time Warner's Reset
Notes (8.7% yield) - - (93) -
Amortization of $29
million of deferred
financing costs incurred
by Time Warner in
connection with
issuance of the PERCS
and the Preferred Trust
Securities - - 4 -
Amortization of $11
million and $39 million
of deferred financing
costs allocated to
Time Warner and the
Entertainment Group,
respectively, in
connection with
obtaining the New Credit
Agreement on a
straight-line basis
for a five-year period - - 1 4
Reduction of historical
amortization of deferred
financing costs recorded
with respect to the pre-existing
TWE credit agreement - - - (12)
Net decrease in
financing costs $(38) $ - $(167) $(13)
Income taxes of $16 million and $74 million, respectively, have
been provided at a 41% tax rate on the aggregate net reduction in
financing costs.
(d) Reflects the historical operating results of TBS for the
nine months ended September 30, 1996 and the year ended December
31, 1995, including certain reclassifications to conform to Time
Warner's financial statement presentation.
(e) Pro forma adjustments to record the TBS Transaction for
the nine months ended September 30, 1996 and the year ended
December 31, 1995 reflect (1) the exclusion of $9 million and $10
million, respectively, of merger costs directly related to the TBS
Transaction expensed by TBS in each respective period, (2) an
increase of $154 million and $208 million, respectively, in cost of
revenues consisting of (i) a $7 million and $8 million reduction,
respectively, of TBS's historical amortization of pre-existing
goodwill, (ii) a $127 million and $169 million increase,
respectively, in amortization with respect to the excess cost to
acquire TBS that has been allocated to goodwill and amortized on a
straight-line basis over a forty-year period and (iii) a $34
million and $47 million increase, respectively, in the amortization
of capitalized film exploitation costs to conform TBS's accounting
policy to Time Warner's accounting policy, (3) an increase of $8
million and $9 million, respectively, in interest expense on the
$162 million of additional indebtedness for the payment of (i) $67
million related to the SSSI Agreement and (ii) $95 million of
transaction costs and other related liabilities of Time Warner and
TBS, (4) a decrease of $7 million and an increase of $8 million,
respectively, in interest and other, net due to the elimination of
Old Time Warner's historical equity accounting for its investment
in TBS and (5) a decrease of $14 million and $26 million,
respectively, in income tax expense as a result of income taxes
provided at a 41% tax rate.
(f) Reflects the historical operating results of Summit for
the four-month pre-acquisition period ending May 2, 1995, as well
as certain pro forma adjustments directly related to the Summit
Acquisition. The pro forma adjustments reflect (1) the exclusion of
an aggregate $15 million of net income relating to (i) Summit's
broadcasting operations that were sold by Summit prior to the
closing of the Summit Acquisition and (ii) reductions in Summit's
corporate expenses principally relating to the closure of Summit's
corporate facilities and the termination of related personnel as a
direct result of the integration of Summit's operations into Time
Warner's and TWE's operating structure, (2) an increase of $8
million in cost of revenues with respect to the amortization of the
excess cost to acquire Summit that has been allocated to (i) cable
television franchises in the amount of $372 million and amortized
on a straight-line basis over a twenty-year period and (ii)
goodwill in the amount of $146 million and amortized on a
straight-line basis over a forty-year period, (3) an increase of $1
million in selling, general and administrative expenses with
respect to payments to be made to TWE for its management of
Summit's cable television systems, (4) a decrease of $3 million in
income tax expense as a result of income tax benefits provided at a
41% tax rate on the additional amortization expense and management
fees to be paid to TWE and (5) an increase of $4 million in
preferred dividend requirements of the Series J Preferred Stock
issued in connection with the Summit Acquisition.
(g) Reflects the historical operating results of KBLCOM for
the six-month pre-acquisition period ending July 6, 1995 as well as
certain pro forma adjustments directly related to the KBLCOM
Acquisition. The pro forma adjustments reflect (1) the exclusion of
an aggregate $19 million of net losses relating to (i) interest
costs on the portion of KBLCOM's indebtedness that has not been
assumed by Time Warner and (ii) reductions in KBLCOM's corporate
expenses principally relating to the closure of KBLCOM's corporate
and regional facilities and the termination of related personnel as
a direct result of the integration of KBLCOM's operations into Time
Warner's and TWE's operating structure, (2) an increase of $39
million in cost of revenues consisting of a $7 million reduction of
KBLCOM's historical amortization of pre-existing goodwill and a $46
million increase in amortization with respect to the excess cost to
acquire KBLCOM that has been allocated to (i) investments in the
amount of $655 million and amortized on a straight-line basis over
a twenty-year period, (ii) cable television franchises in the
amount of $859 million and amortized on a straight-line basis over
a twenty-year period and (iii) goodwill in the amount of $586
million and amortized on a straight-line basis over a forty-year
period, (3) an increase of $4 million in selling, general and
administrative expenses with respect to payments to be made to TWE
for its management of certain of KBLCOM's cable television systems,
(4) a decrease of $17 million in income tax expense as a result of
income tax benefits provided at a 41% tax rate on the additional
amortization expense and management fees to be paid to TWE and (5)
an increase of $21 million in preferred dividend requirements of
the Series D Preferred Stock issued in the KBLCOM Acquisition.
(h) Reflects the historical operating results of CVI and the
Gerry Companies for the year ended December 31, 1995, as well as
certain pro forma adjustments directly related to the CVI
Acquisition. The pro forma adjustments reflect (1) the exclusion of
$97 million of net losses with respect to costs directly related to
the CVI Acquisition and reductions in the corporate expenses of CVI
and the Gerry Companies principally relating to the closing of
certain corporate and regional facilities and the termination of
related personnel as a direct result of the integration of the
operations of CVI and the Gerry Companies into Time Warner's and
TWE's operating structure, (2) an increase of $108 million in cost
of revenues consisting of a $12 million reduction of CVI's
historical amortization of pre-existing goodwill and a $120 million
increase in amortization with respect to the excess cost to acquire
CVI and the Gerry Companies that has been allocated to (i) cable
television franchises in the amount of $2.061 billion and amortized
on a straight-line basis over a twenty-year period and (ii)
goodwill in the amount of $688 million and amortized on a
straight-line basis over a forty-year period, (3) an increase of
$15 million in selling, general and administrative expenses with
respect to payments to be made to TWE for its management of the
cable television systems of CVI and the Gerry Companies, (4) an
increase of $19 million in interest expense on the $277 million of
borrowings under the New Credit Agreement, which were used to
consummate the CVI Acquisition and to pay for transaction costs and
other related liabilities, (5) a decrease of $57 million in income
tax expense as a result of income tax benefits provided at a 41%
tax rate on the additional amortization expense, interest expense
and management fees to be paid to TWE and (6) an increase of $24
million in preferred dividend requirements of the Series E Preferred
Stock and Series F Preferred Stock issued in the CVI Acquisition.
(i) Pro forma adjustments for the year ended December 31,
1995 to record $17 million of increased income from Time Warner's
equity in the pretax income of the Entertainment Group reflect the
aggregate effect on TWE's operating results from (1) the TWE-A/N
Transaction, (2) the fees to be earned by TWE with respect to its
management of certain of Time Warner's cable television systems and
(3) the Asset Sale Transactions, as more fully described in the
notes to the Entertainment Group pro forma consolidated condensed
financial statements contained elsewhere herein.
TWE's consolidation of Paragon, as more fully described in the
notes to the Entertainment Group pro forma consolidated condensed
financial statements contained elsewhere herein, has no pro forma
effect on the net income of TWE and, accordingly, the consolidation
of Paragon has no effect on the pro forma operating results of Time
Warner for the year ended December 31, 1995.
Income taxes of $6 million have been provided in the year ended
December 31, 1995 at a 41% tax rate on the aggregate increase in
income from Time Warner's equity in the pretax income of the
Entertainment Group, adjusted for certain temporary differences.
(j) Pro forma adjustments to record the ITOCHU/Toshiba
Transaction for the year ended December 31, 1995 reflect (1) an
increase of $29 million in interest and other, net, consisting of
(i) an increase of $16 million with respect to the amortization of
the $417 million aggregate excess cost to acquire the minority
interests in TWE held by ITOCHU and Toshiba, which will be
amortized on a straight-line basis over a twenty-year period and
(ii) an increase of $13 million with respect to the elimination of
historical amortization related to Time Warner's excess interest in
the net assets of TWE over the net book value of its investment in
TWE, which resulted from the initial investments in TWE by ITOCHU
and Toshiba, (2) a decrease of $11 million in income tax expense as
a result of income tax benefits provided at a 41% tax rate and (3)
an increase of $42 million in preferred dividend requirements of
the preferred stock issued in the ITOCHU/Toshiba Transaction.
<PAGE>
<PAGE>
TIME WARNER ENTERTAINMENT GROUP
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(millions, unaudited)
Entertainment Consolidation
Group TWE-A/N of
Historical Transaction(a) Paragon(b)
Revenues $9,629 $ 137 $ 179
Cost of revenues* 6,639 51 147
Selling, general and
administrative* 1,998 56 31
Operating expenses 8,637 107 178
Business segment operating
income (loss) 992 30 1
Interest and other, net (539) - (1)
Minority interest (133) (27) -
Corporate expenses (64) - -
Income (loss) before income taxes 256 3 -
Income tax (provision) benefit (86) - -
Income (loss) before extraordinary
item $ 170 $ 3 $ -
_______________
* Includes depreciation and
amortization expense of: $1,060 $ 26 $ 36
(cont'd)
TWI-TWE Asset Sale Entertainment
Debt Management Trans- Group
Refinancings(c) Fees (d) actions(e) Pro Forma
Revenues $ - $ 20 $ (279) $9,686
Cost of revenues* - - (209) 6,628
Selling, general and
administrative* - - (21) 2,064
Operating expenses - - (230) 8,692
Business segment operating
income (loss) - 20 (49) 994
Interest and other, net 13 - 43 (484)
Minority interest - - - (160)
Corporate expenses - - - (64)
Income (loss) before income taxes 13 20 (6) 286
Income tax (provision) benefit - - 3 (83)
Income (loss) before extraordinary
item $ 13 $ 20 $ (3) $ 203
_______________
* Includes depreciation and
amortization expense of: $ - $ - $ (44) $1,078
See accompanying notes.
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE ENTERTAINMENT GROUP PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
(a) Reflects the historical operating results of Advance/Newhouse
for the three months ended March 31, 1995 (and for the three
months ended January 31, 1995 with respect to certain
contributed businesses which have different fiscal years), as well
as certain pro forma adjustments directly related thereto. The pro
forma adjustments reflect (1) an increase of $1 million in cost of
revenues with respect to TWE's amortization of transaction costs on
a straight-line basis over a three-year period and (2) an increase
of $27 million in minority interest, representing
Advance/Newhouse's minority interest in the net income of the
TWE-Advance/Newhouse Partnership, including their one-third share
of $45 million of annual management fees to be paid by the
partnership to TWE.
(b) Pro forma adjustments reflect the consolidation of
Paragon's operating results as a result of TWE's control over the
management of such entity for the six month period prior to TWE's
consolidation of Paragon effective as of July 6, 1995, offset by
Time Warner's minority share of the net income of Paragon in the
amount of $24 million.
(c) Pro forma adjustments to record the Debt Refinancings for
the year ended December 31, 1995 reflect lower interest costs of
$13 million from (i) $2.716 billion of aggregate borrowings under
the New Credit Agreement, which were used to refinance $2.677
billion of indebtedness (plus $39 million of related financing
costs) and (ii) the repayment of $102 million of Paragon's
indebtedness funded by Time Warner, as set forth below (in
millions).
All pro forma adjustments to record the Debt Refinancings for the
year ended December 31, 1995 reflect the incremental effect on the
Entertainment Group's operating results from each refinancing that
had closed during the period.
Year Ended
December 31, 1995
Increase (Decrease)
Borrowings by TWE and the TWE-Advance/Newhouse Partnership
in the amounts of $2.702 billion and $14 million, respectively,
under the New Credit Agreement, at estimated annual interest rates
for each borrower of 6.5% for the year ended December 31, 1995 $ 88
Repayment by TWE of $2.575 billion of indebtedness under the
pre-existing TWE bank credit agreement (84)
Repayment of $226 million of Paragon's indebtedness of which $102
million was funded by each of TWE and Time Warner, and the
remainder was funded by Paragon's available cash and equivalents (9)
Amortization of an allocable $39 million of deferred financing
costs in connection with obtaining the New Credit Agreement on a
straight-line basis for a five-year period 4
Reduction of historical amortization of deferred financing costs
recorded with respect to the pre-existing TWE credit agreement (12)
Net decrease in interest costs $(13)
(d) Pro forma adjustments for the year ended December 31,
1995 reflect fees to be received from Time Warner in the amount of
$20 million with respect to TWE's management of certain of Time
Warner's cable television systems.
(e) Pro forma adjustments to record a decrease of $3 million
in net income from the Asset Sale Transactions for the year ended
December 31, 1995 reflect (1) the deconsolidation of the operating
results of Six Flags for the periods prior to the consummation of
the Six Flags Transaction in June 1995, (2) the elimination of the
operating results of the cable television systems sold or to be
sold and (3) a decrease in interest expense, representing interest
savings from the repayment by TWE of indebtedness under the New
Credit Agreement using the aggregate net proceeds received in these
transactions. TWE will realize aggregate income of approximately
$375 million on these transactions, of which a portion of such
income has been deferred by TWE principally as a result of its
guarantee of third-party, zero-coupon indebtedness of Six Flags due
in 1999. The effects of the sale of certain of the unclustered
cable television systems that have closed or are expected to close
in 1996 are not material to the pro forma financial condition and
results of operations of either the Entertainment Group or Time
Warner and, accordingly, have not been reflected in the pro forma
consolidated financial statements as of and for the nine months
ended September 30, 1996 included herein.
<PAGE>
(b) Financial statements of businesses acquired:
(i) Newhouse Broadcasting Cable Division of Newhouse Broadcasting
Corporation and Subsidiaries (the documents listed in this paragraph
(i) being referred to as the "Financial Statements of Newhouse
Broadcasting Cable Division of Newhouse Broadcasting Corporation"):
(A) Unaudited Condensed Financial Statements as of January 31,
1995 and for each of the six months ended January 31, 1995 and
1994; and
(B) Financial Statements as of July 31, 1994 and 1993 and for
each of the years ended July 31, 1994, 1993 and 1992, including the
report thereon of Ernst & Young LLP, independent auditors.
(ii) Vision Cable Division of Vision Cable Communications, Inc. and
Subsidiaries (the documents listed in this paragraph (ii) being referred
to as the "Financial Statements of Vision Cable Division of Vision Cable
Communications, Inc."):
(A) Unaudited Condensed Financial Statements as of March 31,
1995 and for each of the three months ended March 31, 1995 and
1994; and
(B) Financial Statements as of December 31, 1994 and for each
of the years ended December 31, 1994 and 1993, including the report
thereon of Ernst & Young LLP.
(iii) Cablevision Industries Corporation and Subsidiaries (the
documents listed in this paragraph (iii) being referred to as the
"Financial Statements of Cablevision Industries Corporation"):
(A) Consolidated Financial Statements as of and for the year
ended December 31, 1995, including the report thereon of Ernst &
Young LLP; and
(B) Consolidated Financial Statements as of December 31, 1994
and for each of the years ended December 31, 1994 and 1993,
including the report thereon of Arthur Andersen LLP.
(iv) Turner Broadcasting System, Inc. (the documents listed in
this paragraph (iv) being referred to as the "Financial Statements
of Turner Broadcasting System, Inc."):
(A) Unaudited Consolidated Condensed Financial Statements as
of September 30, 1996 and for each of the nine months ended
September 30, 1996 and 1995; and
(B) Consolidated Financial Statements as of December 31, 1995
and 1994 and for each of the years ended December 31, 1995, 1994
and 1993, including the report thereon of Price Waterhouse LLP.
(v) KBLCOM Incorporated (the documents listed in this
paragraph (v) being referred to as the "Financial Statements of
KBLCOM Incorporated"):
(A) Unaudited Consolidated Financial Statements as of June
30, 1995 and for each of the six months ended June 30, 1995 and
1994; and
(B) Consolidated Financial Statements as of December 31, 1994
and 1993 and for each of the years ended December 31, 1994, 1993
and 1992, including the report thereon of Deloitte & Touche LLP.
(c) Pro forma Consolidated Condensed Financial Statements:
(i) Time Warner Inc.:
(A) Pro Forma Consolidated Condensed Balance Sheet as of
September 30, 1996;
(B) Pro Forma Consolidated Condensed Statements of Operations
for the nine months ended September 30, 1996 and the year ended
December 31, 1995; and
(C) Notes to Pro Forma Consolidated Condensed Financial Statements.
(ii) Entertainment Group:
(A) Pro Forma Consolidated Condensed Statement of Operations
for the year ended December 31, 1995; and
(B) Notes to Pro Forma Consolidated Condensed Statement of Operations.
(d) Exhibits:
(i) Exhibit 23(a): Consent of Ernst & Young LLP.
(ii) Exhibit 23(b): Consent of Arthur Andersen LLP.
(iii) Exhibit 23(c): Consent of Price Waterhouse LLP.
(iv) Exhibit 23(d): Consent of Deloitte & Touche LLP.
(v) Exhibit 99(a): Financial Statements of Newhouse
Broadcasting Cable Division of Newhouse Broadcasting Corporation
(incorporated by reference from Exhibit 99(b) of the Current Report
on Form 8-K of Time Warner Inc. dated May 30, 1995 and Exhibit
99(e) of the Current Report on Form 8-K of Time Warner Inc. dated
August 14, 1995).
(vi) Exhibit 99(b): Financial Statements of Vision Cable
Division of Vision Cable Communications, Inc. (incorporated by
reference from Exhibit 99(c) of the Current Report on Form 8-K of
Time Warner Inc. dated May 30, 1995 and Exhibit 99(d) of the
Current Report on Form 8-K of Time Warner Inc. dated August 14, 1995).
(vii) Exhibit 99(c): Financial Statements of Cablevision
Industries Corporation (incorporated by reference from pages 23 to
39 of the Annual Report on Form 10-K for the year ended December
31, 1995 of Cablevision Industries Corporation).
(viii) Exhibit 99(d): Financial Statements of Turner
Broadcasting System, Inc. (incorporated by reference from pages 31
to 53 of the Annual Report to Shareholders incorporated by
reference into the Annual Report on Form 10-K for the year ended
December 31, 1995 of Turner Broadcasting System, Inc. and from
pages 2 to 9 of the Quarterly Report on Form 10-Q for the nine
months ended September 30, 1996 of Turner Broadcasting System, Inc.).
(ix) Exhibit 99(e): Financial Statements of KBLCOM
Incorporated (incorporated by reference from Exhibit 99(f) of the
Current Report on Form 8-K of Time Warner Inc. dated May 30, 1995
and Exhibit 99(c) of the Current Report on Form 8-K of Time Warner
Inc. dated August 14, 1995).
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York, State of New York, on November 14, 1996.
TIME WARNER INC.
By: /s/ Richard J. Bressler
Name: Richard J. Bressler
Title: Senior Vice President
and Chief Financial Officer
<PAGE>
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
No. Description of Exhibits Number
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Arthur Andersen LLP, Independent Public
Accountants.
23.3 Consent of Price Waterhouse LLP, Independent Accountants.
23.4 Consent of Deloitte & Touche LLP, Independent Auditors.
99(a) Financial Statements of Newhouse Broadcasting Cable
Division of Newhouse Broadcasting Corporation
(incorporated by reference from Exhibit 99(b) of the
Current Report on Form 8-K of Time Warner Inc. Dated
May 30, 1995 and Exhibit 99(e) of the Current Report
on Form 8-K of Time Warner Inc. Dated August 14, 1995). *
99(b) Financial Statements of Vision Cable Division of Vision
Cable Communications, Inc. (incorporated by reference
from Exhibit 99(c) of the Current Report on Form 8-K of
Time Warner Inc. Dated May 30, 1995 and Exhibit 99(d)
of the Current Report on Form 8-K of Time Warner Inc.
Dated August 14, 1995). *
99(c) Financial Statements of Cablevision Industries
Corporation (incorporated by reference from pages 23
to 39 of the Annual Report on Form 10-K for the year
ended December 31, 1995 of Cablevision Industries
Corporation). *
99(d) Financial Statements of Turner Broadcasting System,
Inc. (incorporated by reference from pages 31 to 53 of
the Annual Report to Shareholders incorporated by
reference into the Annual Report on Form 10-K for the
year ended December 31, 1995 of Turner Broadcasting
System, Inc. and from pages 2 to 9 of the Quarterly
Report on Form 10-Q for the nine months ended September
30, 1996 of Turner Broadcasting System, Inc.) *
99(e) Financial Statements of KBLCOM Incorporated (incorporated
by reference from Exhibit 99(f) of the Current Report on
Form 8-K of Time Warner Inc. Dated May 30, 1995 and
Exhibit 99(c) of the Current Report on Form 8-K of Time
Warner Inc. Dated August 14, 1995). *
______________
* Incorporated by reference.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference of (i) our
report dated March 8, 1996, with respect to the consolidated
financial statements and schedule of Cablevision Industries
Corporation and Subsidiaries ("Cablevision") included in
Cablevision's Annual Report on Form 10-K for the year ended
December 31, 1995, and (ii) our reports dated July 28, 1995 with
respect to the financial statements of Newhouse Broadcasting
Cable Division of Newhouse Broadcasting Corporation and
Subsidiaries and Vision Cable Division of Vision Cable
Communications Inc. and Subsidiaries included in the Current
Report on Form 8-K of Time Warner Inc., formerly named TW Inc.
("Time Warner") dated August 14, 1995, from the Current Report
on Form 8-K of Time Warner dated November 14, 1996, in each of
the following:
1. Registration Statement No. 333-11471 on Form S-4
for Time Warner Inc. (formerly named TW Inc.)
2. Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
3. Post-Effective Amendment No. 2 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
4. Post-Effective Amendment No. 3 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
5. Post-Effective Amendment No. 4 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
6. Post-Effective Amendment No. 5 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
7. Registration Statement on Form S-8 and Post
Effective Amendment No. 1 of Time Warner Inc. (formerly named TW
Inc.)(Registration No. 333-14053)
8. Registration Statement on Form S-3 (Registration
No. 333-14611) of Time Warner Inc. (formerly named TW Inc.)
ERNST & YOUNG LLP
New York, New York
November 13, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated March 1, 1995,
with respect to Cablevision Industries Corporation's Form 10-K
for the year ended December 31, 1994, and to all references to
our Firm included in each of the following:
1. Registration Statement No. 333-11471 on Form S-4
for Time Warner Inc. (formerly named TW Inc.)
2. Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
3. Post-Effective Amendment No. 2 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
4. Post-Effective Amendment No. 3 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
5. Post-Effective Amendment No. 4 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
6. Post-Effective Amendment No. 5 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
7. Registration Statement on Form S-8 and Post
Effective Amendment No. 1 of Time Warner Inc. (formerly named TW
Inc.)(Registration No. 333-14053)
8. Registration Statement on Form S-3 (Registration
No. 333-14611) of Time Warner Inc. (formerly named TW Inc.)
ARTHUR ANDERSEN LLP
Stamford, Connecticut
November 13, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference of our
report dated February 5, 1996, which appears on page 53 of Turner
Broadcasting System, Inc.'s 1995 Annual Report to Shareholders,
which is incorporated by reference in Turner Broadcasting System,
Inc.'s Annual Report on Form 10-K for the year ended December 31,
1995 and which report has been incorporated by reference in the
Current Report on Form 8-K of Time Warner Inc. (formerly named
TW Inc.) dated November 14, 1996, in each of the following:
1. Registration Statement No. 333-11471 on Form S-4
for Time Warner Inc. (formerly named TW Inc.)
2. Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
3. Post-Effective Amendment No. 2 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
4. Post-Effective Amendment No. 3 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
5. Post-Effective Amendment No. 4 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
6. Post-Effective Amendment No. 5 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
7. Registration Statement on Form S-8 and Post
Effective Amendment No. 1 of Time Warner Inc. (formerly named TW
Inc.)(Registration No. 333-14053)
8. Registration Statement on Form S-3 (Registration
No. 333-14611) of Time Warner Inc. (formerly named TW Inc.)
PRICE WATERHOUSE LLP
Atlanta, Georgia
November 13, 1996
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference of our report
dated April 20, 1995, with respect to the consolidated financial
statements of KBLCOM Incorporated included in this Form 8-K of
Time Warner Inc. dated November 14, 1996, in each of the
following:
1. Registration Statement No. 333-11471 on Form S-4
for Time Warner Inc. (formerly named TW Inc.)
2. Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
3. Post-Effective Amendment No. 2 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
4. Post-Effective Amendment No. 3 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
5. Post-Effective Amendment No. 4 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
6. Post-Effective Amendment No. 5 to Registration
Statement on Form S-4 (Registration No. 333-11471) filed on Form
S-8 of Time Warner Inc. (formerly named TW Inc.)
7. Registration Statement on Form S-8 and Post
Effective Amendment No. 1 of Time Warner Inc. (formerly named TW
Inc.)(Registration No. 333-14053)
8. Registration Statement on Form S-3 (Registration
No. 333-14611) of Time Warner Inc. (formerly named TW Inc.)
DELOITTE & TOUCHE LLP
Houston, Texas
November 14, 1996
