TIME WARNER INC/, PRE 14A, 1999-03-19

TIME WARNER INC/
PRE 14A, 1999-03-19
MOTION PICTURE & VIDEO TAPE PRODUCTION

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

------------------------

TIME WARNER INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)

------------------------

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:.........

2) Aggregate number of securities to which transaction applies:............

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):..............

4) Proposed maximum aggregate value of transaction:........................

5) Total Fee Paid..........................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:.................................................

2) Form, Schedule or Registration Statement No.:...........................

3) Filing Party:...........................................................

4) Date Filed:.............................................................

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PRELIMINARY COPY

[LOGO]

March , 1999

Dear Stockholder:

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Time Warner Inc. on Thursday, May 20, 1999, beginning at 10:00 A.M., local
time, at the Warner Bros. Studio, 4000 Warner Boulevard, Burbank, California
91522. A map indicating directions is on the back cover of the Proxy Statement.
I look forward to greeting those of you who are able to attend the Meeting.

Please vote on all the matters listed in the enclosed Notice of Annual
Meeting of Stockholders. Your Board of Directors recommends a vote 'FOR' the
proposals listed as items 1 through 5 in the Notice and described in the
enclosed Proxy Statement.

Whether or not you plan to attend in person, it is important that your
shares be represented and voted at the Meeting. After reading the enclosed
Notice and Proxy Statement, please sign, date and mail the proxy card or voting
instructions in the envelope provided. This year, many stockholders will have a
choice of voting by telephone, over the Internet or by using a traditional proxy
or instruction card. Check your card or other information forwarded by your
broker, bank or other holder of record to see which options are available to
you.

Because of security procedures required for access to the Warner Bros.
Studio, if you plan to attend the Meeting, you must bring the Admission Ticket
(which admits two people) included with the Notice and Proxy Statement or a Time
Warner employee identification card. YOU WILL NOT BE PERMITTED INTO THE STUDIO
WITHOUT ONE OF THESE. If you have not received an Admission Ticket, please
contact the Shareholder Relations Department at (212) 484-6971.

Sincerely,

Gerald M. Levin
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GERALD M. LEVIN
Chairman of the Board
and Chief Executive Officer

PRELIMINARY COPY

TIME WARNER INC.

75 Rockefeller Plaza
New York, NY 10019

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999

The Annual Meeting (the 'Annual Meeting') of Stockholders of Time Warner
Inc., a Delaware corporation (the 'Company'), will be held on Thursday, May 20,
1999 at the Warner Bros. Studio, 4000 Warner Boulevard, Burbank, California
91522 (see directions on back cover), commencing at 10:00 A.M., local time, for
the following purposes:

1. To elect 13 directors for a term of one year and until their
successors are duly elected and qualified;

2. To consider and approve a proposed amendment to the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares;

3. To consider and approve the Time Warner Inc. 1999 Restricted Stock
Plan;

4. To consider and approve amendments to the Time Warner 1988
Restricted Stock Plan for Non-Employee Directors;

5. To approve the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Company for 1999; and

6. To transact such other business as may properly come before the
Annual Meeting.

Only holders of the Company's common stock and preferred stock at the close
of business on March 29, 1999, the record date, are entitled to vote on some or
all of the matters listed in this Notice of Annual Meeting.

TIME WARNER INC.

PETER R. HAJE
Secretary

March , 1999

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THE ANNUAL MEETING WILL START PROMPTLY AT 10:00 A.M. TO AVOID DISRUPTION,
ADMISSION MAY BE LIMITED ONCE THE MEETING STARTS. PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PRE-ADDRESSED REPLY
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. ANY RECORD
HOLDER WHO IS PRESENT AT THE MEETING MAY VOTE IN PERSON INSTEAD OF BY PROXY,
THEREBY CANCELLING ANY PREVIOUS PROXY. YOU MAY NOT APPOINT MORE THAN THREE
PERSONS TO ACT AS YOUR PROXY AT THE MEETING.
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YOU WILL BE REQUIRED TO SHOW THE ENCLOSED ADMISSION TICKET OR A
COMPANY ID CARD TO ATTEND THE ANNUAL MEETING.

PRELIMINARY COPY

TIME WARNER INC.

75 Rockefeller Plaza
New York, NY 10019

PROXY STATEMENT

This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Time Warner Inc., a Delaware corporation
(the 'Company'), for use at the Annual Meeting of the Company's stockholders
(the 'Annual Meeting') to be held on Thursday, May 20, 1999 at the Warner Bros.
Studio, 4000 Warner Boulevard, Burbank, California 91522, commencing at 10:00
A.M., local time, and at any adjournment or postponement, for the purpose of
considering and acting upon the matters set forth in the accompanying Notice of
Annual Meeting of Stockholders.

This Proxy Statement and accompanying forms of proxy and voting
instructions are first being mailed on or about March , 1999 to stockholders
entitled to vote at the Annual Meeting.

VOTING AT THE ANNUAL MEETING; RECORD DATE; CONFIDENTIAL VOTING

Only holders of record of the Company's voting stock at the close of
business on March 29, 1999, the record date, are entitled to notice of and to
vote at the Annual Meeting. At that time, the number of shares entitled to vote
and their voting rights were:

1,xxx,xxx,xxx shares of Common Stock, par value $.01 per share ('Common
Stock'), each of which is entitled to one vote on all matters properly
submitted at the Annual Meeting;

57,061,942 shares of Series LMCN-V Common Stock, par value $.01 per share
('Series LMCN-V Stock'), each of which is entitled to 1/50 of a vote on
the election of directors; and

xx,xxx,xxx shares of five series of Convertible Preferred Stock, par value
$.10 per share, consisting of 11,000,000 shares of Series D Preferred,
[3,129,302] shares of Series E Preferred, [2,965,810] shares of Series F
Preferred, 700,000 shares of Series I Preferred and [1,808,708] shares of
Series J Preferred (collectively, the 'Voting Preferred Stock'), each of
which is entitled to four votes on all matters properly submitted at the
Annual Meeting.

The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast at the Annual Meeting is necessary to constitute a
quorum. All share numbers in this Proxy Statement have been adjusted to reflect
the two-for-one Common Stock split effected in December 1998 (the 'Stock
Split').

In accordance with the Company's confidential voting policy, all
stockholder proxies, ballots and voting materials will be confidentially
inspected and tabulated by independent inspectors of election and will not be
disclosed to the Company except under certain limited circumstances.

REQUIRED VOTE

A plurality of the votes duly cast is required for the election of
directors.

The affirmative vote of a majority in voting power of the outstanding
shares of Common Stock and Voting Preferred Stock, voting together as a
single class, is required to approve the proposed amendment to the
Company's Restated Certificate of Incorporation (the 'Charter amendment
proposal').

The affirmative vote of a majority of the votes duly cast by the holders
of Common Stock and Voting Preferred Stock, voting together as a single
class, is required to approve the other matters to be acted upon at the
Annual Meeting.

An abstention is deemed 'present' but is not deemed a 'vote cast.' As a
result, abstentions and broker 'non-votes' are not included in the tabulation of
the voting results on the election of directors or issues requiring approval of
a majority of the votes cast and, therefore, do not have the effect of votes in
opposition. However, abstentions and broker 'non-votes' effectively are counted
as votes against in tabulating votes on the Charter amendment proposal. A broker
'non-vote' occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power on that item and has not received instructions from the beneficial
owner. Broker 'non-votes' and the shares as to which a stockholder abstains are
included in determining whether a quorum is present.

PROXIES

All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted as
instructed on those proxies. If no instructions are indicated, the shares will
be voted as recommended by the Board of Directors. No stockholder of record may
appoint more than three persons to act as his or her proxy at the Annual
Meeting.

If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed form of proxy will have
discretion to vote on those matters in accordance with their own judgment to the
same extent as the person signing the proxy would be entitled to vote. In
accordance with the Company's By-laws, the Annual Meeting may be adjourned,
including by the Chairman, in order to permit the solicitation of additional
proxies. The Company does not anticipate that any other matters will be raised
at the Annual Meeting.

Any proxy may be revoked at any time before it is voted by (i) filing with
the Secretary of the Company, at or before the taking of the vote at the Annual
Meeting, a written notice of revocation or a duly executed proxy, in either case
later dated than the prior proxy relating to the same shares or (ii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not of itself revoke a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Time Warner Inc., 75 Rockefeller Plaza,
New York, NY 10019, Attention: Secretary, or hand delivered to the Secretary,
before the taking of the vote at the Annual Meeting.

A copy of the Company's Annual Report to Stockholders for the year 1998,
including financial statements, has been sent simultaneously with this Proxy
Statement or has been previously provided to all stockholders entitled to vote
at the Annual Meeting.

RECOMMENDATIONS OF THE BOARD OF DIRECTORS

The Board of Directors recommends a vote FOR the election of the nominees
for election as directors; FOR approval of the Charter amendment proposal; FOR
approval of the Time Warner Inc. 1999 Restricted Stock Plan; FOR approval of
amendments to the Time Warner 1988 Restricted Stock Plan for Non-Employee
Directors; and FOR approval of the appointment of Ernst & Young LLP as
independent auditors of the Company for 1999.

CORPORATE GOVERNANCE

ELECTION OF DIRECTORS

The Company believes that, in the best interest of its stockholders, a
majority of the members of its Board of Directors should, in the Board's
judgment, have no direct or indirect material economic relationship with the
Company other than as a result of customary directors' compensation or stock
ownership ('Unaffiliated Directors'). Under the Company's By-laws, when the
Board sets the slate of director nominees for election at an annual meeting of
stockholders, it must determine that a majority of its members will be
independent directors within the meaning of the By-laws, assuming the election
of such slate. The Company also has a policy limiting the eligibility for
nomination by the Board of Directors as a non-employee director to persons who
would be less than 70 years old at the time of election.

All the members of the Board of Directors are elected annually. Therefore,
the terms of all of the Company's directors will expire at the Annual Meeting.
The nominees for director at the Annual Meeting will be elected to serve until
the next annual meeting of stockholders and until their successors have been
duly elected and qualified. Each of the nominees is currently a director of the
Company, and was elected by the stockholders. Assuming the election of these
nominees, there will be 13 directors, of whom ten will be Unaffiliated Directors
and three will be Affiliated Directors.

The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the 13 nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of the
nominees. Each nominee elected will continue in office until his or her
successor has been duly elected and qualified, or until his or her earlier
death, resignation or retirement.

The Company expects each nominee for election as a director at the Annual
Meeting to be able to accept such nomination. If any nominee is unable to accept
such nomination, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees.

Set forth below is the principal occupation of, and certain other
information regarding, the 13 nominees. References to the Company prior to the
October 1996 merger (the 'TBS Merger') with Turner Broadcasting System, Inc.
('TBS') are to its predecessor.

NOMINEES FOR ELECTION AT THE ANNUAL MEETING

<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Merv Adelson ....................... 69 CHAIRMAN OF EAST-WEST CAPITAL ASSOCIATES AND FORMER CHAIRMAN AND
1989 CHIEF EXECUTIVE OFFICER OF LORIMAR TELEPICTURES. Mr. Adelson has
served as Chairman of East-West Capital Associates (private
investment company) since April 1989. Mr. Adelson served as Vice
Chairman and a director of Warner Communications Inc. ('WCI') from
January 1989 through August 1991. Prior to that, Mr. Adelson served
as Chairman and Chief Executive Officer of Lorimar Telepictures
Corporation from February 1986 until its acquisition by WCI in
January 1989. He is also a director of 7th Level, Inc. and
Faroudja, Inc. Mr. Adelson is an Unaffiliated Director.

J. Carter Bacot .................... 66 RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE BANK OF NEW YORK.
1996 Mr. Bacot served as Chairman and Chief Executive Officer of The
Bank of New York Company, Inc. and Chairman of The Bank of New York
from 1982 until February 8, 1998 and currently serves as a director
and consultant. He is also a director of Associates First Capital
Corporation and Venator Group, Inc. Mr. Bacot is an Unaffiliated
Director.

Stephen F. Bollenbach .............. 56 PRESIDENT AND CHIEF EXECUTIVE OFFICER OF HILTON HOTELS CORPORATION.
1997 Mr. Bollenbach has served as President and Chief Executive Officer
of Hilton Hotels Corporation (lodging) since February 1996. Prior
to that, Mr. Bollenbach was Senior Executive Vice President and
Chief Financial Officer of The Walt Disney Company (entertainment)
from April 1995 until February 1996 and President and Chief
Executive Officer of Host Marriott Corporation (lodging) from
October 1993 to April 1995. He is also a director of Hilton Hotels
Corporation, Kmart Corporation, Ladbroke Group PLC and Park Place
Entertainment Corporation (Chairman). Mr. Bollenbach is an
Unaffiliated Director.

John C. Danforth ................... 62 PARTNER, BRYAN CAVE LLP AND FORMER UNITED STATES SENATOR. Mr.
1998 Danforth has been a partner at Bryan Cave LLP (attorneys) since
January 1995. Prior to that, Mr. Danforth served as a United States
Senator representing the state of Missouri from 1976 until January
1995. He is also a director of Cerner Corporation, The Dow
Chemical Company and General American Life Insurance Company.
Mr. Danforth is an Unaffiliated Director.
</TABLE>

<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Beverly Sills Greenough ............ 69 CHAIRMAN OF LINCOLN CENTER FOR THE PERFORMING ARTS. Mrs. Greenough
1989 has served as the Chairman of Lincoln Center for the Performing
Arts since June 1994, having served as a Managing Director of The
Metropolitan Opera from 1991. Mrs. Greenough served as a director
of WCI from 1982 to 1990. She is also a director of American
Express Company and Human Genome Science Inc. Mrs. Greenough is an
Unaffiliated Director.

Gerald Greenwald ................... 63 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF UAL CORPORATION AND UNITED
1997 AIRLINES, INC. Mr. Greenwald has served as Chairman and Chief
Executive Officer of UAL Corporation (airline holding company) and
United Airlines, Inc. since July 1994. Prior to that, he served as
Chairman of Tatra, a Czech Republic truck manufacturer, from March
1993 to July 1994. He is also a director of Aetna Inc. Mr.
Greenwald is an Unaffiliated Director.

Carla A. Hills ..................... 65 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF HILLS & COMPANY AND FORMER
1993 UNITED STATES TRADE REPRESENTATIVE. Ambassador Hills became
Chairman and Chief Executive Officer of Hills & Company
(international trade and investment consultants) in March 1993,
having served in President Bush's Cabinet as the United States
Trade Representative from February 1989 to January 20, 1993.
Ambassador Hills is also a director of American International
Group, Inc., Chevron Corporation, Lucent Technologies Inc. and TCW
Group, Inc. Ambassador Hills is an Unaffiliated Director.

Gerald M. Levin .................... 59 CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF THE
1988 COMPANY. Mr. Levin became Chairman of the Board of Directors and
Chief Executive Officer of the Company on January 21, 1993 having
served in other executive positions at the Company prior to that.
He previously served as a director of the Company from 1983 until
January 1987. He is also a member of the Board of Representatives
of Time Warner Entertainment Company, L.P. and a director of The
New York Stock Exchange, Inc. Mr. Levin is an Affiliated Director.

Reuben Mark ........................ 60 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF COLGATE- PALMOLIVE COMPANY.
1993 Mr. Mark has served as the Chief Executive Officer of
Colgate-Palmolive Company (consumer products) since May 1984. In
May 1986, he was elected Chairman. Mr. Mark is also a director of
Citigroup Inc. and Pearson plc. Mr. Mark is an Unaffiliated
Director.
</TABLE>

<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael A. Miles ................... 59 FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF PHILIP
1995 MORRIS COMPANIES INC. Mr. Miles served as Chairman of the Board and
Chief Executive Officer of Philip Morris Companies Inc. (consumer
products) from September 1991 until July 1994. He is also a
director of The Allstate Corporation, Dell Computer Corporation,
Morgan Stanley, Dean Witter, Discover & Co. and Sears, Roebuck and
Co. and is a Special Limited Partner in Forstmann Little & Co. Mr.
Miles is an Unaffiliated Director.

Richard D. Parsons ................. 50 PRESIDENT OF THE COMPANY. Mr. Parsons became President of the Company
1991 on February 1, 1995. Prior to that, Mr. Parsons served as the
Chairman and Chief Executive Officer of The Dime Savings Bank of
New York, FSB from January 1991. He served as a director of
American Television and Communications Corporation, then an
82%-owned subsidiary of the Company, from 1989 until 1991 and is
currently also a director of Citigroup Inc. and Philip Morris
Companies Inc. and a member of the Board of Representatives of Time
Warner Entertainment Company, L.P. Mr. Parsons is an Affiliated
Director.

R.E. Turner ........................ 60 VICE CHAIRMAN OF THE COMPANY. Mr. Turner became Vice Chairman of the
1996 Company upon consummation of the TBS Merger on October 10, 1996.
Prior to that, Mr. Turner served as Chairman of the Board and
President of TBS from 1970. Mr. Turner is an Affiliated Director.

Francis T. Vincent, Jr. ............ 60 CHAIRMAN OF VINCENT ENTERPRISES. Mr. Vincent has been a private
1993 investor at Vincent Enterprises since January 1, 1995. Prior to
that, Mr. Vincent served as the Commissioner of Major League
Baseball from September 1989 until September 1992. He is also a
director of General Cigar Holdings, Inc., Oakwood Homes Corporation
and Westfield America Corporation. Mr. Vincent is an Unaffiliated
Director.
</TABLE>

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has designated five principal standing committees.
The Company believes that it is in the best interest of the Company's
stockholders that each of the Audit, Compensation and Nominating and Governance
Committees be composed of at least a majority of Unaffiliated Directors. As
noted below, each of the five standing Board committees, except the Values and
Human Development Committee, is composed entirely of Unaffiliated Directors. The
current members and functions of the Board's committees are as follows:

Audit Committee. The Audit Committee is composed entirely of Unaffiliated
Directors. Its members are Messrs. Bacot, Danforth and Miles (Chair). The
functions of the Audit Committee, which met three times during 1998, include the
review of (i) the professional services and independence of the Company's
independent auditors; (ii) material changes in accounting policies and financial
reporting practices and material developments in financial reporting standards
in consultation with the independent auditors and management; (iii) the plan and
scope of the annual external audit as recommended by the independent auditors;
(iv) the adequacy of the Company's internal accounting controls and the results
of material internal audits in consultation with the independent auditors and
the Company's chief internal auditor; (v) the Company's annual financial
statements and the results of each external audit in consultation with
management and the independent auditors; and (vi) the auditing and accounting
principles and practices to be used in the preparation of the Company's
financial statements in consultation with the Company's independent auditors and
the Company's principal financial officer and principal accounting officer. The
Audit Committee also oversees the Company's compliance program.

The Audit Committee has authority to consider the qualification of the
Company's independent auditors and make recommendations to the Board of
Directors as to their selection, approve any material non-audit services to be
rendered to the Company and review and resolve any differences of opinion
between such independent auditors and management relating to the preparation of
the annual financial statements.

Compensation Committee. The Compensation Committee is composed entirely of
Unaffiliated Directors. Its members are Mr. Bollenbach, Ambassador Hills and
Messrs. Mark (Chair) and Vincent. The Compensation Committee, which met five
times during 1998, has authority to engage independent compensation consultants
to assist the Committee in its review of the Company's executive compensation.
The Compensation Committee also has authority, as delegated by the Board of
Directors, to review and approve the Company's employee benefit plans and
administer its executive compensation plans. The Compensation Committee, after
receiving and considering the recommendations of the Company's Chief Executive
Officer, approves the salaries and incentive compensation (including the grant
of stock options) and employment arrangements of the executive officers of the
Company. See 'Compensation Committee Report on Compensation of Executive
Officers of the Company.'

Nominating and Governance Committee. The Nominating and Governance
Committee is composed entirely of Unaffiliated Directors. Its members are Mr.
Adelson, Mrs. Greenough and Messrs. Miles and Vincent (Chair). The Nominating
and Governance Committee, which met three times during 1998, has authority to
review the size, composition, functioning and level of compensation of the Board
of Directors and recommends nominees to serve on the Board of Directors and
considers the qualifications of candidates for election as directors. Nominees
to the Board of Directors are selected on the basis of recognized achievements
and their ability to bring various skills, experience and diverse perspectives
to the deliberations of the Board of Directors. In carrying out its
responsibilities, the Nominating and Governance Committee will consider
candidates recommended by other directors, employees and stockholders. Written
suggestions for nominees should be sent to the Secretary of the Company.

The Company's By-laws provide that any stockholder of record who is
entitled to vote for the election of directors may nominate persons for election
as directors only if timely written notice in proper form of the intent to make
a nomination at a meeting of stockholders is received by the Secretary of Time
Warner at 75 Rockefeller Plaza, New York, NY 10019. To be timely and in proper
form under the By-laws, the notice generally must be delivered not less than 70
nor more than 120 days prior to the date of the meeting at which directors are
to be elected and must contain prescribed information about the proponent and
each nominee, including such information

about each nominee as would have been required to be included in a proxy
statement filed pursuant to the rules of the Securities and Exchange Commission
had such nominee been nominated by the Board of Directors.

Finance Committee. The Finance Committee is composed entirely of
Unaffiliated Directors. Its members are Messrs. Adelson (Chair), Bacot,
Bollenbach and Greenwald. The Finance Committee, which met six times during
1998, has authority to review and make recommendations to the Board of Directors
concerning the financial structure and financial condition of the Company and
its subsidiaries, including annual budgets, long-term financial plans, corporate
borrowings, investments, capital expenditures, long-term commitments and the
issuance of stock. The Finance Committee also has the authority to approve such
matters that are consistent with the general financial policies and direction
from time to time determined by the Board of Directors.

Values and Human Development Committee. The Values and Human Development
Committee was established in May 1998. Its members are Mr. Danforth, Mrs.
Greenough (Chair) and Messrs. Greenwald, Mark and Parsons. The Committee, which
met twice during 1998, has the mandate to provide guidance and oversight to the
Company's management in its (i) development and articulation of the Company's
core values, commitments and social responsibilities; (ii) development of
strategies for ensuring the Company's involvement in the communities in which it
does business; (iii) its establishment of a strategy for developing its human
resources and leadership for the future; and (iv) efforts to find practical ways
to increase workforce diversity at all levels and to evaluate the Company's
performance in advancing the goal of greater workforce diversity.

During 1998, the Board of Directors met seven times and no director
attended fewer than 75% of the total number of meetings of the Board of
Directors and the committees of which he or she was a member, except for Mr.
Turner, who attended five of the six regularly scheduled Board meetings.

DIRECTOR COMPENSATION

During 1998, each Unaffiliated Director received $60,000 as an annual
retainer, half of which was paid in cash (unless deferred by the director) and
the remaining half in shares of Common Stock under the 1988 Restricted Stock
Plan for Non-Employee Directors (the 'Directors' Restricted Stock Plan'), and an
award of options covering 3,000 shares of Common Stock under the Time Warner
1996 Stock Option Plan for Non-Employee Directors (the 'Directors' Option
Plan'). Effective January 1, 1999, the cash portion of the annual retainer was
increased to $40,000. If the proposed amendments to the Directors' Restricted
Stock Plan, discussed below under 'Approval of Amendments to the 1988 Restricted
Stock Plan for Non-Employee Directors,' are adopted, the annual grant of Common
Stock under such Plan would be increased to a market value of $40,000, effective
for 1999 and thereafter until changed by the Board of Directors. No additional
compensation is paid for service as a committee chair or member or for
attendance at special meetings of the Board or a Board committee. Unaffiliated
Directors are reimbursed for expenses incurred in attending Board and committee
meetings, including those for travel, food and lodging.

Directors who are officers of or employed by the Company or any of its
subsidiaries are not additionally compensated for their Board and committee
activities.

Under the Directors' Restricted Stock Plan, which was approved by
stockholders of the Company, each Unaffiliated Director has generally been
issued an annual grant of shares of Common Stock ('Restricted Shares') having a
market value of $30,000. During the restriction period provided under the
Directors' Restricted Stock Plan, the Unaffiliated Director votes the

Restricted Shares, receives and retains all regular cash dividends and exercises
all other rights as a holder of Common Stock, but may not dispose of the
Restricted Shares, and the Company retains custody of the stock certificates and
all distributions other than regular cash dividends.

The restriction period ends, and all Restricted Shares (including any
distributions retained by the Company) vest, upon the termination of the
Unaffiliated Director's service on the Board of Directors on account of (i)
mandatory retirement; (ii) failure to be reelected by stockholders; (iii) death
or disability; and (iv) the occurrence of certain transactions involving a
change in control of the Company; and, with the approval of the Board on a case
by case basis, under certain other designated circumstances. If an Unaffiliated
Director leaves the Board of Directors for any other reason, then all his or her
Restricted Shares are forfeited to the Company. In 1998, each Unaffiliated
Director received 760 Restricted Shares under the Directors' Restricted Stock
Plan.

The Company also has a deferred compensation plan for Unaffiliated
Directors. Under this plan, Unaffiliated Directors may elect each year to defer
payment of 25%, 50%, 75% or 100% of their cash compensation payable during the
next calendar year. Amounts deferred under the plan are increased based on an
interest factor or the hypothetical investment in shares of Common Stock and
dividends thereon, with the higher valuation used to determine the amount paid
upon distribution. Amounts deferred are payable in a lump-sum or in
installments, generally upon attainment of age 70 or cessation of service as a
director of the Company for certain enumerated reasons.

Each Unaffiliated Director currently receives an annual award of
nonqualified stock options ('Options') to purchase 3,000 shares of Common Stock
(and related limited stock appreciation rights ('Limited SARs') that may be
exercised only during a prescribed period following the occurrence of certain
transactions involving a change in control of the Company) pursuant to the
Directors' Option Plan. Under the Directors' Option Plan, which was approved by
the Company's stockholders, the Options and related Limited SARs are
automatically awarded on the tenth New York Stock Exchange trading day after
each annual meeting of the Company's stockholders. The purchase price of the
shares of Common Stock covered by each Option is equal to the fair market value
of the Common Stock on the date of grant. Each Option (and the related Limited
SAR) becomes exercisable (cumulatively to the extent not previously exercised)
at the rate of one-third of the aggregate number of shares covered thereby at
the end of each successive one-year period following the date of grant and
expires ten years after the date of grant.

The Directors' Option Plan also provides that awards become immediately
exercisable in full (i) when the director leaves the Board of Directors for any
reason, except that upon removal for cause all unexercised Options immediately
terminate, or (ii) if certain 'change-in-control' transactions occur. Options
remain exercisable for one year after the director dies and for five years after
the director leaves the Board of Directors for any reason other than death or
removal for cause (but not beyond the ten-year term of the Option).

The Directors' Option Plan replaced the Company's retirement plan (the
'Directors' Retirement Plan') for its Unaffiliated Directors and no benefits
accrue under the Directors' Retirement Plan after May 1996. Under the Directors'
Retirement Plan, each Unaffiliated Director who served as such for at least
three years will receive an annual retirement benefit commencing after the later
of stepping down from the Board of Directors or attaining age 60 (or earlier in
the event such Unaffiliated Director becomes disabled) equal to $30,000, which
benefit will be paid for the number of years of service as an Unaffiliated
Director through May 16, 1996. Service as an outside director of WCI prior to
July 24, 1989 is considered credited service under the Directors' Retirement
Plan. In the event an Unaffiliated Director dies prior to the commencement or
completion of payment of benefits under the Directors' Retirement Plan, a

lump-sum cash payment will be made in an amount equal to the total benefits or
remaining benefits the Unaffiliated Director would have been entitled to receive
had he or she not died. The Chief Executive Officer of the Company may
accelerate payment of the annual retirement benefit accrued to an Unaffiliated
Director under the Plan.

SECURITY OWNERSHIP

SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth as of February 1, 1999 for each current
director, each nominee for election as a director, each of the executive
officers named in the Summary Compensation Table below and for all current
directors and executive officers as a group, information concerning the
beneficial ownership of Common Stock.

As of February 1, 1999, the approximate aggregate market value of the
Common Stock held by certain persons as set forth in the table below (exclusive
of stock options) was as follows: ten current Unaffiliated Directors -- $99
million; and all current directors -- $7.1 billion. In addition, as of December
31, 1998, the trusts maintained pursuant to the Company's qualified employee
benefit plans, other than pension plans, held Common Stock valued at
approximately $2.2 billion in accounts for the benefit of employees of the
Company and its subsidiaries.

<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED(1)
---------------------------------------
NUMBER OF OPTION PERCENT OF
NAME SHARES SHARES(2) CLASS
- -------------------------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Merv Adelson........................................................ 1,402,376 3,000 *
J. Carter Bacot (3)................................................. 9,090 1,000 *
Stephen F. Bollenbach............................................... 2,090 1,000 *
Richard J. Bressler (10)............................................ 11,272 658,884 *
John C. Danforth (4)................................................ 7,010 *
Beverly Sills Greenough (5)......................................... 46,264 3,000 *
Gerald Greenwald (6)................................................ 18,890 1,000 *
Peter R. Haje (10).................................................. 20,004 1,430,000 *
Carla A. Hills...................................................... 9,664 3,000 *
Gerald M. Levin (7)(10)............................................. 876,329 5,876,704 *
Reuben Mark......................................................... 24,464 3,000 *
Michael A. Miles.................................................... 22,158 3,000 *
Richard D. Parsons (10)............................................. 22,623 1,400,000 *
R.E. Turner (8)(10)................................................. 112,077,517 2,133,336 10.1%
Francis T. Vincent, Jr. (9)......................................... 39,564 3,000 *
All current directors and executive officers (18 persons) as a group
(3)-(10).......................................................... 114,602,231 11,865,596 11.1%
</TABLE>
- ------------
* Represents beneficial ownership of less than one percent of issued and
outstanding stock on February 1, 1999.

(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 of the Securities and Exchange Commission
('SEC'). Unless otherwise indicated, beneficial ownership includes both
sole voting and sole investment power. This table does not include, unless
otherwise indicated, any shares of Common Stock or other equity securities
of the Company which may be held by pension and profit-sharing plans of
other corporations or endowment funds of educational and charitable
institutions for which various directors and officers serve as directors or
trustees. As of February 1, 1999, the only equity securities of the Company
beneficially owned by the named persons or group were shares of Common
Stock and options to purchase Common Stock.

(2) Reflects shares of Common Stock subject to options to purchase Common Stock
issued by the Company which, on February 1, 1999, were unexercised but were
exercisable within 60 days from that date. These shares are excluded

(footnotes continued on next page)

(footnotes continued from previous page)
from the column headed 'Number of Shares.' 196,000 of the stock options
shown for Mr. Bressler have been transferred to a family-owned limited
partnership.

(3) Includes 5,000 shares of Common Stock purchased by Mr. Bacot on February
11, 1999.

(4) Includes 500 shares of Common Stock purchased on February 4, 1999 by a
trust of which Mr. Danforth's wife is the trustee and sole beneficiary, as
to which Mr. Danforth disclaims any beneficial ownership, and 5,750 shares
of Common Stock held by two trusts of which Mr. Danforth is a beneficiary
and as to which he shares voting and investment control.

(5) Includes 20,480 shares of Common Stock held by a trust of which Mrs.
Greenough is the beneficiary but as to which she has no voting or
investment control.

(6) Includes 4,000 shares of Common Stock held by Mr. Greenwald's wife, as to
which Mr. Greenwald disclaims any beneficial ownership.

(7) Includes 30,000 shares of Common Stock held by Mr. Levin's wife, as to
which Mr. Levin disclaims any beneficial ownership.

(8) Includes (a) 579,884 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 2,600,998 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c)
6,028,896 shares of Common Stock held by a limited partnership of which
Mr. Turner is the sole general partner, (d) 4,000,000 shares of Common
Stock that, on May 12, 2000, Mr. Turner has the right to put to a broker at
$19.815 per share and the broker has a right to call from Mr. Turner at
$30.45 per share (which call Mr. Turner may settle in cash), (e) 770,000
shares of Common Stock owned by Mr. Turner's wife and (f) 5,000,000 shares
of Common Stock held by the Turner Foundation, Inc., of which Mr. Turner is
one of six trustees. Mr. Turner disclaims beneficial ownership of shares
held by his wife and the Turner Foundation, Inc.

(9) Includes 1,100 shares of Common Stock held by Mr. Vincent's wife, as to
which Mr. Vincent disclaims any beneficial ownership.

(10) Includes (a) an aggregate of approximately 51,383 shares of Common Stock
held by a trust under the Time Warner Savings Plan for the benefit of
current directors and executive officers of the Company (including 9,002
shares for Mr. Bressler, 7,028 shares for Mr. Haje, 22,037 shares for Mr.
Levin, 297 shares for Mr. Parsons and 203 shares for Mr. Turner) and (b) an
aggregate of 805,600 shares of Common Stock beneficially owned by certain
relatives of such persons.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Set forth below is the name, address, stock ownership and voting power of
each person or group of persons known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, Series LMCN-V Stock or any
series of Voting Preferred Stock, and, unless otherwise indicated, is based on
information provided to the Company as of February 1, 1999 by the beneficial
owner.

(table continued on next page)

<TABLE>
<CAPTION>
SHARES OF
STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY PERCENT OF VOTING
OF BENEFICIAL OWNER OWNED CLASS(1) POWER(2)
- ---------------------------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
SERIES D PREFERRED STOCK
Houston Industries Incorporated ...................................... 11,000,000 100.0 3.6
d/b/a Reliant Energy, Incorporated
1111 Louisiana
Houston, TX 77002
SERIES E AND F PREFERRED STOCK
Alan Gerry (8) ....................................................... SERIES E 99.3
Loomis Road 3,107,956
Liberty, NY 12754 2.3
SERIES F
2,503,580 84.4
FW Strategic Partners, L.P. .......................................... SERIES F
201 Main Street 442,000 14.9 *
Fort Worth, TX 76102
SERIES I PREFERRED STOCK
Toshiba Corporation (9) .............................................. 700,000 100.0 *
1-1, Shibaura 1-chome
Minato-Ku, Tokyo 105
Japan
SERIES J PREFERRED STOCK (10)
Trust for the benefit of Gordon Gray, Jr.............................. 461,426 25.5 *
Trust for the benefit of C. Boyden Gray............................... 284,381 15.7 *
Trust for the benefit of Burton C. Gray............................... 320,019 17.7 *
Trust for the benefit of Bernard Gray ................................ 305,221 16.9 *
c/o Wachovia Bank, N.A.
P.O. Box 3099
Winston-Salem, NC 27150
Nancy Maguire Gray, Trustee of the Nancy Maguire
Gray Trust u/a dated 12/16/94 ........................................ 113,002 6.2 *
P.O. Box 3199
Church Street Station
New York, NY 10008
Eaton Vance Management (11) .......................................... 136,002 7.5 *
24 Federal Street
Boston, MA 02110
Greene Street Exchange Fund L.P. (12) ................................ 125,981 7.0 *
c/o Goldman, Sachs & Co.
One New York Plaza
New York, NY 10004
</TABLE>
- ------------
* Less than 1%.

(1) Each share of Voting Preferred Stock is currently convertible into 4.16528
shares of Common Stock. Of the holders of Voting Preferred Stock identified
in this table, none could be deemed beneficially to own more than 5% of the
Common Stock pursuant to Rule 13d-3. Under certain circumstances, each
share of Series LMCN-V Stock is convertible into two shares of Common
Stock; such circumstances are not currently present.

(2) Each share of Voting Preferred Stock has four votes. Each share of Series
LMCN-V Stock currently has 1/50 of a vote on certain limited matters.

(3) Beneficial ownership is as of December 31, 1998. The Capital Research and
Management Company, an investment adviser, has filed with the SEC Amendment
No. 2, dated February 23, 1999, to its statement on Schedule 13G to the
effect that (a) it (directly or indirectly) has sole dispositive power over
all these shares, (b) it has voting power over none of these shares, (c)
the shares of Common Stock reported as beneficially owned include 4,760,064
shares of Common Stock reported as issuable upon the conversion of
2,880,000 shares of 7.00% automatic common exchange securities due 2000 of
Houston Industries Incorporated (the 'Houston ACEs') (these shares have
been excluded from the calculation of voting power), (d) all of the
reported shares are held for the benefit of its clients and (e) it and each
of its subsidiary investment management companies acts separately in
exercising investment discretion over its managed accounts.

(footnotes continued on next page)

(footnotes continued from previous page)

(4) Beneficial ownership is as of December 31, 1998. FMR Corp., a holding
company, has filed with the SEC Amendment No. 2, dated February 1, 1999, to
its statement on Schedule 13G to the effect that (a) it (directly or
indirectly) has sole dispositive power over all these shares, (b) it has
sole voting power over 5,120,422 of these shares and no shared voting
power, (c) these shares are held principally by Fidelity Management &
Research Company, a wholly-owned investment adviser, (d) the shares of
Common Stock reported as beneficially owned include 2,604,200 shares of
Common Stock reported as issuable upon the conversion of 1,302,100 shares
of Houston ACEs (these shares have been excluded from the calculation of
voting power), (e) these shares are, for the most part, held by investment
companies and institutional accounts managed by subsidiaries of FMR Corp.
and (f) the family of Edward C. Johnson 3d, including Mr. Johnson, the
Chairman of FMR Corp., and his daughter Abigail Johnson, a director, and
trusts for the family members' benefit may be deemed to form a controlling
group with respect to FMR Corp.

(5) Beneficial ownership is as of December 31, 1998. Janus Capital Corporation,
an investment adviser, has filed with the SEC a statement on Schedule 13G
dated February 5, 1999 to the effect that (a) because it acts as an
investment adviser to several investment companies and individual and
institutional clients, it may be deemed the beneficial owner of these
shares, which are held by its clients, (b) it may be deemed to share
dispositive and voting power over all these shares with Thomas H. Bailey,
Chairman of the Board, President and owner of approximately 12.2% of Janus
Capital Corporation, and (c) the shares of Common Stock reported as
beneficially owned include 3,619,995 shares of Common Stock reported as
issuable upon conversion of convertible securities (these shares have been
excluded from the calculation of voting power).

(6) Includes (a) 579,884 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 2,600,998 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c)
6,028,896 shares of Common Stock held by a limited partnership of which
Mr. Turner is the sole general partner, (d) 4,000,000 shares of Common
Stock that, on May 12, 2000, Mr. Turner has the right to put to a broker at
$19.815 per share and the broker has a right to call from Mr. Turner at
$30.45 per share (which call Mr. Turner may settle in cash), (e) 770,000
shares of Common Stock owned by Mr. Turner's wife and (f) 5,000,000 shares
of Common Stock held by the Turner Foundation, Inc., of which Mr. Turner is
one of six trustees; and excludes 2,133,336 shares of Common Stock subject
to options to purchase Common Stock issued by the Company which, on
February 1, 1999, were unexercised but were exercisable within 60 days from
that date (but such shares are included in the percent-of-class calculation
but not voting power). Mr. Turner disclaims beneficial ownership of shares
held by his wife and the Turner Foundation, Inc.

(7) Consists of shares beneficially owned by Liberty Media Corporation, through
its direct and indirect subsidiaries; excludes 559,066 shares of Common
Stock held by TCI TKR Cable II, Inc., an indirect wholly owned subsidiary
of Tele-Communications, Inc. In March 1999, AT&T Corp. acquired
Tele-Communications, Inc., and Liberty Media Corporation (its subsidiary),
but incumbent management of Liberty Media Corporation has voting and
investment control over the Series LMCN-V Stock.

(8) Includes (a) 1,174,460 shares of Series F Preferred held by four limited
partnerships of which Mr. Gerry is the general partner and (b) 440,000
shares of Series F Preferred held by the Gerry Foundation Inc., of which
Mr. Gerry is the President and one of five family members on the Board of
Directors. Voting power includes 5,468,784 shares of Common Stock
beneficially owned by Mr. Gerry (of which 486,000 shares are held by the
Gerry Foundation Inc. and 50,000 shares are held by the Beaverkill
Foundation, of which Mr. Gerry's wife is the President and one of four
family members on the Board of Directors). Mr. Gerry disclaims beneficial
ownership of shares held by the Gerry Foundation Inc. and the Beaverkill
Foundation.

(9) Includes 17,000 shares of Series I Preferred held by a wholly owned
subsidiary of Toshiba Corporation. See 'Additional Information.'

(10) The trusts for the benefit of each of Gordon Gray, Jr. and C. Boyden Gray
also hold 1,713,092 and 345,471 shares of Common Stock, respectively, and
those trusts and the trusts for the benefit of each of Burton C. Gray and
Bernard Gray each also holds 293,740 shares of Common Stock in an escrow
account subject to restrictions on disposition. The Nancy Maguire Gray
Trust also holds 94,552 shares of Common Stock. These shares of Common
Stock are included in the calculation of voting power of the beneficial
owners.

(11) Beneficial ownership is as of February 12, 1999. Eaton Vance Management
manages, directly and indirectly, investment companies, individual accounts
and trusts that also hold 626,348 shares of Common Stock, which are
included in the calculation of voting power.

(12) Voting and dispositive control is shared with Goldman Sachs Asset
Management, a separate operating division of Goldman, Sachs & Co.

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY

The Compensation Committee of the Board of Directors furnished the
following report on executive compensation.

In 1998, the Company once again achieved its main financial and strategic
goals and the Company's stockholders benefited from substantial appreciation in
the Company's stock price. In the Committee's view, the Company's continuing
emphasis on financial discipline and cash flow generation and continuing
implementation of initiatives begun in prior years contributed significantly to
the Company's 1998 results. The increases in 1998 compensation for the Company's
senior management are primarily attributable to these accomplishments, as
discussed in greater detail below, and are consistent with the Company's
established executive compensation philosophy.

Compensation Philosophy

The Company's executive compensation programs are principally designed to
give executives strong incentives to focus on and achieve the Company's business
objectives, the principal ones being to increase free cash flow and long-term
stockholder value. Key elements of the incentive compensation programs are an
annual performance-based incentive bonus, which seeks to recognize individual
performance each year, and stock options, which provide substantial long-term
financial reward to an executive only if the stockholders also gain long-term
stock price appreciation over the option period.

The Company's executive officers are employed under employment agreements
providing for their services for an extended period. The terms of the employment
agreements of the principal executive officers are outlined under 'Employment
Arrangements.' While a minimum salary is contractually specified, the largest
elements of executive compensation, the annual bonus and stock option awards,
are generally subject to the discretion of the Compensation Committee, which is
comprised entirely of Unaffiliated Directors.

The Compensation Committee, with the assistance of a leading outside
compensation consultant, reviewed total compensation for the Company's executive
officers in the context of total compensation packages awarded to executives
with similar responsibilities at selected public companies in the consumer
product, entertainment and media businesses. The Compensation Committee believes
that the Company's most direct competitors for executive talent are composed of
a broader range of companies than those with which the Company would ordinarily
be compared for stock performance purposes. Thus, the compensation comparison
group included companies that are not included in the peer group index in the
graph that appears below.

1998 Annual Bonus Determinations

Annual Bonus Plan. The Compensation Committee's determination of the annual
incentive bonus for Mr. Levin and each other executive officer of the Company
named in the Summary Compensation Table appearing below starts with the
calculation of his 1998 maximum bonus under the stockholder-approved Annual
Bonus Plan. This calculation is based on a percentage of the amount by which the
Company's 1998 earnings before interest, taxes, depreciation and amortization
('EBITDA'), as adjusted pursuant to the Annual Bonus Plan, exceeded the
Company's average EBITDA for the preceding three years. This calculation
resulted in maximum individual annual bonuses substantially in excess of the
actual bonuses paid as shown in the Summary Compensation Table below.

1998 Accomplishments. The Compensation Committee considered a variety of
factors in making its compensation decisions and no specific weighting was
assigned to any one of those factors. The accomplishments that the Committee
thinks contributed to a successful 1998 included:

The Company achieved its aggressive 1998 EBITDA and EBITA (earnings
before interest, taxes and amortization) targets on a Company-wide
basis and at almost all divisions and set record aggregate divisional
EBITDA, EBITA and cash flow levels.

The Company achieved those results while growing its operating
businesses and improving its credit profile.

The Company achieved improved investment grade credit ratings from
all the major corporate debt rating agencies as a result of the
Company's strong operating performance, financial discipline and
continued improvements in its leverage ratio (total net debt to
adjusted EBITDA) and coverage ratio (adjusted EBITDA to total
interest and preferred dividend expense).

During 1998, the Company's generated approximately $2.0 billion for
debt reduction which increased its financial flexibility and
permitted the redemption of its outstanding exchangeable preferred
stock with $2.1 billion of lower cost debt, while holding overall
debt levels steady. The financing activities during the year reduced
the estimated annual after-tax cost of interest and preferred
dividends by approximately $200 million. Included in the 1998
financing activities was the issuance of $1 billion of 30-year debt
at a rate that the Company's lead underwriter advised was the lowest
long-term interest rate for any similarly rated issuer over at least
the last 30 years.

The Company continued to implement, refine and expand the scope of
its cross-divisional, collaborative, long-term business plan that
focuses on (i) financial returns, cost controls, capital allocation
and generation of free cash flow for debt reduction and, in time,
stock repurchase and (ii) growing all of the operating businesses at
sustainable rates by, among other things, identifying and initiating
cross-divisional, coordinated strategies in such areas as consumer
research, marketing, international business development and new media
and technologies.

During 1998, the Company repurchased approximately 60 million shares
of Common Stock at an average price of approximately $38 per share.

The Company continued its Company-wide cost management program that
it started in 1997 and realized over $600 million in savings in 1998.

The Company formed a Values and Human Development Committee of the
Board of Directors, established a 14-member working group, including
two senior executives from each division, as well as divisional
working groups and began to develop and communicate a Company
statement of core values, commitments and social responsibilities,
which includes making the Company a workplace of choice for a diverse
population.

Mr. Levin's Annual Bonus. Mr. Levin's 1998 annual incentive bonus as
Chairman of the Board and Chief Executive Officer was determined by the
Compensation Committee and ratified by all of the Unaffiliated Directors. In
determining his bonus, the Committee reviewed the calculation of his maximum
bonus payable under the Annual Bonus Plan, the level of achievement of his 1998
financial performance goals (based on operational targets for divisional and
aggregate EBITDA, EBITA and cash flow) and the Company's other accomplishments
during 1998, as described above, all of which influenced the substantial
increase in the market value of the Company's Common Stock leading to the
two-for-one stock split in December 1998. Mr. Levin's 1998 bonus reflects the
Compensation Committee's belief that Mr. Levin's performance warranted placing
his total cash compensation for 1998 in the upper quartile of compensation paid
to the chief executives in the comparison group discussed above. This
determination was based on the Committee's overall evaluation of Mr. Levin's
stewardship of the Company during 1998, the leadership he was providing and his
positioning of the Company, its management, product lines and services for the
future.

Annual Bonuses for Executive Officers Other than the Chief Executive
Officer. The Chief Executive Officer reviewed with the Compensation Committee
the 1998 performance of each other executive officer, and recommended an annual
bonus for each such executive. These recommendations primarily reflected
individual qualitative executive contributions based upon the level of the
executive's responsibilities, the efficiency and effectiveness with which he
oversaw the matters under his supervision, and the degree to which he
contributed to the accomplishment of the Company's goals. As these officers have
overall corporate policy-making and administrative responsibilities, and, except
for Mr. Turner, do not directly oversee principal operating units of the
Company, the Compensation Committee's assessment of these executives relates
generally to the accomplishment of their personal goals and the Company's
achievements as a whole. However, the Company's financial performance was a key
factor that affected the overall bonus level for all executive officers.

Stock Option Awards

During 1998, each of the Company's executive officers was awarded stock
options. These awards were made after a review of the exercise prices, numbers
and dates of their previous option awards and the option awards made to other
executives at the Company and in the comparison group. Although there are no
precise targets with respect to the number of stock options for the executive
officers, the Compensation Committee believes that the higher the level of an
executive's responsibilities, the larger the stock-based component of his
compensation should be, and that compensation based on stock price performance
should be paid via stock-based compensation. Each of Messrs. Levin, Turner and
Parsons was awarded a regular annual grant of stock options, one quarter of
which have exercise prices 25% above the fair market value of the Common Stock
on the date of grant and one quarter of which have exercise prices 50% above
such fair market value. Mr. Turner's award of stock options in 1998 was made
pursuant to the terms of his employment agreement with the Company and approved
by the Compensation Committee. In addition, as reported in the Company's 1998
Proxy Statement, in March 1998, the Compensation Committee awarded Mr. Levin a
special grant of performance-based stock options covering 700,000 shares of
Common Stock which would vest and become exercisable only if the Common Stock
price reached $72.06 (double the price on the date of grant) within five years
of the award. These options vested and became exercisable on March 18, 1999.
The terms of these awards are shown in more detail below.

Section 162(m) Considerations

The Company expects that the compensation paid to executive officers under
the Annual Bonus Plan will qualify for income tax deductibility under Section
162(m) of the Internal Revenue Code. In addition, the Company has adopted a
general policy of awarding stock options to its executive officers only pursuant
to plans that the Company believes will satisfy the requirements of Section
162(m). In 1998, the Company did not pay its executive officers compensation
that would not be deductible as a result of the Section 162(m) deductibility
limit.

Members of the Compensation Committee

Stephen F. Bollenbach
Carla A. Hills
Reuben Mark (Chair)
Francis T. Vincent, Jr.

EXECUTIVE COMPENSATION SUMMARY TABLE

The following table sets forth information concerning total compensation
paid to the Chief Executive Officer and each of the four most highly compensated
executive officers of the Company who served in such capacities on December 31,
1998 (the 'named executive officers') for services rendered to the Company
during each of the last three fiscal years in their capacities as executive
officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION(4)
--------------------------------------- ---------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(3) OPTIONS AWARDED COMPENSATION(5)
- ------------------------------ ---- ---------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin............... 1998 $1,000,000 $7,800,000 $ 186,861 1,400,000 $ 597,885
Chairman of the Board and 1997 700,000 6,500,000 198,554 700,000 458,701
Chief Executive Officer 1996 700,000 4,000,000 209,624 700,000 459,773
R.E. Turner................... 1998 $ 700,000 $6,000,000 $ -- 600,000 $ 637,339
Vice Chairman(1) 1997 700,000 5,000,000 -- 600,000 438,085
1996 156,829 1,000,000 -- 2,600,000 96,636
Richard D. Parsons............ 1998 $ 600,000 $3,300,000 $ 122,907 300,000 $ 398,650
President 1997 600,000 2,750,000 117,593 300,000 406,299
1996 600,000 2,000,000 98,627 600,000 404,019
Richard J. Bressler........... 1998 $ 450,000 $1,500,000 $ 60,141 100,000 $ 310,428
Executive Vice President 1997 350,000 1,200,000 53,338 100,000 228,175
and Chief Financial 1996 350,000 900,000 50,500 200,000 219,421
Officer(2)
Peter R. Haje................. 1998 $ 550,000 $1,250,000 $ 69,294 90,000 $ 387,321
Executive Vice President 1997 550,000 1,200,000 64,939 90,000 395,816
and General Counsel 1996 550,000 1,000,000 56,500 90,000 394,105
</TABLE>
- ------------
(1) Mr. Turner became Vice Chairman on October 10, 1996, upon consummation of
the TBS Merger. Compensation paid by TBS to Mr. Turner for services rendered
to TBS prior to such date is not included in the table.

(2) Mr. Bressler became Executive Vice President and Chief Financial Officer on
January 15, 1998, having served as Senior Vice President and Chief Financial
Officer prior to that.

(3) In accordance with SEC rules, amounts totalling less than $50,000 have been
omitted. The amounts of personal benefits shown in this column for 1998 that
represent more than 25% of the applicable executive's total Other Annual
Compensation include financial services of $85,000 to Mr. Levin, $75,000 to
Mr. Parsons and $35,000 to each of Messrs. Bressler and Haje,
transportation-related benefits (including an automobile allowance) of
$94,085 to Mr. Levin and $45,285 to Mr. Parsons and automobile allowances of
$24,000 to each of Messrs. Bressler and Haje.

(4) The number of stock options has been adjusted to reflect the Stock Split.
None of the options indicated was awarded with tandem stock appreciation
rights. None of such executive officers was awarded restricted stock during
the relevant period and, as of December 31, 1998, only Mr. Parsons held any
such shares. Those shares were awarded in or prior to 1994 under the
Directors' Restricted Stock Plan in his capacity then as an Unaffiliated
Director. The value of Mr. Parsons' 8,426 restricted shares based on the
closing price of the Common Stock on the New York Stock Exchange Composite
Listing on December 31, 1998 was $522,939. Mr. Parsons receives the
dividends paid in cash on such shares. See 'Corporate Governance -- Director
Compensation.'

(5) The amounts shown in this column for 1998 include the following:

(a) In lieu of supplemental retirement plan benefits, the Company, as
required by individual employment agreements, credited to an account for
each named executive officer an amount equal to one-half of the total shown
under the 'salary' column for each of 1998, 1997 and 1996. See 'Non-Current
Compensation Accounts.'

(b) Pursuant to the Time Warner Savings Plan (the 'Savings Plan'), a
defined contribution plan available generally to employees of the Company,
for the 1998 plan year, each executive named above deferred a portion of his
annual compensation and the Company contributed $2,000 for the first $3,000
so deferred by the executive ('Matching Contribution'). These Matching
Contributions were invested under the Savings Plan in a Common Stock fund.
In addition, pursuant to a profit-sharing component of the Savings Plan, the
Company may make annual contributions for the benefit of eligible employees
of up to 12% of total eligible compensation; for 1998, the Company
contributed 11%, including $17,600 for the account of each executive named
above. Because the Internal Revenue Code of 1986, as amended (the 'Code'),
limits the amount of eligible compensation under the Savings Plan ($160,000
for 1998) for any employee, the Company maintained for 1998 an unfunded,
non-qualified, excess profit-sharing plan covering otherwise eligible
compensation between $160,000 and $303,877 for 1998. The Company's accrual
for this excess profit-sharing plan, $15,826 in 1998 for each named
executive officer, is deemed to earn interest at a long-term applicable
federal rate announced monthly by the Internal Revenue Service. The Company
has discontinued contributions to this excess plan for years after 1998.

(c) The Company maintains a program of life and disability insurance
generally available to all salaried employees on the same basis. Commencing
in 1997, group term life insurance coverage was reduced to $50,000 for each
of the named executive officers, who are given an annual cash payment equal
to the cost of replacing such reduced coverage under a voluntary group
program available to employees generally. Such payments are included in the
'Other Annual Compensation' column. In addition, during 1998, the Company
maintained for certain members of senior management, including the named
executive officers, certain supplemental life insurance benefits and paid
premiums for this supplemental coverage of approximately $250 each. The
Company also maintained split-dollar life insurance policies on the lives of
the named executive officers and paid the following amounts allocated to the
term portion of the split-dollar

(footnotes continued on next page)

(footnotes continued from previous page)
coverage for 1998: Mr. Levin, $16,149; Mr. Turner, $13,926 (commencing May
1998); Mr. Parsons, $4,288; Mr. Bressler, $2,058; and Mr. Haje, $8,817. The
actuarial equivalent of the value of the premiums paid by the Company for
1998 based on certain assumptions regarding interest rates and periods of
coverage are: Mr. Levin, $62,209; Mr. Turner, $219,263; Mr. Parsons,
$62,974; Mr. Bressler, $49,752; and Mr. Haje, $76,645. It is anticipated
that the Company will recover the net after-tax cost of the premiums on
these policies or the cash surrender value thereof. During 1998, the Company
imputed income of $32,400 to Mr. Turner in connection with the provision of
term life insurance coverage under its group policy. For a description of
life insurance coverage for certain executive officers provided pursuant to
the terms of their employment agreements, see 'Employment Arrangements.'

STOCK OPTION GRANTS DURING 1998

The following table sets forth certain information with respect to employee
options to purchase shares of Common Stock ('options') awarded during 1998 to
the named executive officers. All such options were nonqualified options. No
stock appreciation rights ('SARs'), alone or in tandem with such stock options,
were awarded in 1998.

STOCK OPTION GRANTS IN 1998

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED IN 1998 ($/SH) DATE PRESENT VALUE(2)
- ------------------------------------- ---------- ---------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Gerald M. Levin(3)................... 700,000 3.9% $36.03 3/17/08 $9,786,000
350,000 1.9 36.03 3/17/08 4,893,000
175,000 1.0 45.04 3/17/08 1,874,250
175,000 1.0 54.04 3/17/08 1,433,250
R.E. Turner.......................... 300,000 1.7% $36.03 3/17/08 $4,194,000
150,000 .8 45.04 3/17/08 1,606,500
150,000 .8 54.04 3/17/08 1,228,500
Richard D. Parsons................... 150,000 .8% $36.03 3/17/08 $2,097,000
75,000 .4 45.04 3/17/08 803,250
75,000 .4 54.04 3/17/08 614,250
Richard J. Bressler.................. 100,000 .6% $36.03 3/17/08 $1,398,000
Peter R. Haje........................ 90,000 .5% $36.03 3/17/08 $1,258,200
</TABLE>
- ------------
(1) Information about these stock options has been adjusted to reflect the Stock
Split. Options for executive officers are generally awarded pursuant to
plans approved by the Company's stockholders and the terms are governed by
the plans and the recipient's option agreement. The option exercise price is
the fair market value of the Common Stock on the date of grant except for
the awards to Messrs. Turner and Parsons and the regular award to Mr. Levin
of which one quarter of the total award has an exercise price 25% above the
fair market value of the Common Stock on the date of grant and one quarter
of which has an exercise price 50% above such fair market value. Except for
the special performance award to Mr. Levin (see note 3), the options shown
in the table become exercisable in installments of one-third on the first
three anniversaries of the date of grant, subject to acceleration upon the
occurrence of certain events. Payment of the exercise price of an option may
be made in cash or, in whole or in part, in full shares of Common Stock
already owned by the holder of the option. The payment of withholding taxes
due upon exercise of an option may generally be made with shares of Common
Stock.

(2) These amounts represent the estimated present value of stock options at the
date of grant calculated using the Black-Scholes option pricing model, based
upon the following assumptions used in developing the grant valuations: an
expected volatility of 21.5% based on a three-year period ending March 30,
1998; an expected term to exercise of eight years; a risk-free rate of
return based on the interest rate of a U.S. Government zero-coupon bond in
effect on the date of the award with an eight-year maturity (March 15,
1998 -- 5.65%); and a dividend yield of .5%. The actual value of the
options, if any, realized by an officer will depend on the extent to which
the market value of the Common Stock exceeds the exercise price of the
option on the date the option is exercised. Consequently, there is no
assurance that the value realized by an officer will be at or near the value
estimated above. These amounts should not be used to predict stock
performance.

(3) The vesting and exercisability of Mr. Levin's special grant of
performance-based options covering 700,000 shares of Common Stock were
subject to the Common Stock price reaching $72.06 within five years
of the award. This condition has been satisfied.

OPTION EXERCISES AND VALUES IN 1998

The following table sets forth as to each of the named executive officers
information on option exercises during 1998 and the status of his options on
December 31, 1998, as adjusted to reflect the Stock Split: (i) the number of
shares of Common Stock underlying options exercised during 1998; (ii) the
aggregate dollar value realized upon exercise of such options; (iii) the total
number of shares of Common Stock underlying exercisable and nonexercisable stock
options held on December 31, 1998; and (iv) the aggregate dollar value of
in-the-money exercisable and nonexercisable stock options on December 31, 1998.

AGGREGATE OPTION EXERCISES DURING 1998
AND
OPTION VALUES ON DECEMBER 31, 1998

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES DOLLAR VALUE OF
SHARES DOLLAR UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS ON 12/31/98 OPTIONS ON 12/31/98*
OPTIONS REALIZED ----------------------------- ------------------------------
NAME EXERCISED ON EXERCISE EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
------ ---------- ----------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin(1)............... 165,168 $5,560,080 5,410,038 2,099,994 $247,921,852 $56,181,794
R.E. Turner...................... -- -- 1,933,336 1,866,664 $ 71,935,267 $57,748,233
Richard D. Parsons............... -- -- 1,100,000 700,000 $ 44,658,250 $19,943,750
Richard J. Bressler(2)........... 36,056 $1,216,739 558,884 233,332 $ 24,383,575 $ 7,884,864
Peter R. Haje.................... 100,000 $3,942,720 1,370,000 180,000 $ 69,525,126 $ 5,873,850
</TABLE>
- ------------
* Calculated using the closing price of $62.0625 per share on December 31, 1998
minus the option exercise price.

(1) The options exercised by Mr. Levin were awarded in 1988 and 1989. Mr. Levin
is the only executive officer listed above who holds SARs awarded in tandem
with any of his stock options. 270,032 of Mr. Levin's options held on
December 31, 1998 were awarded with tandem SARs; they all were awarded on or
prior to September 22, 1989 and are currently exercisable; and at December
31, 1998, they had a value of $12,299,794, but no separate value has been
attributed to these SARs. These SARs are exercisable for Common Stock or
cash, subject to a $250,000 limit on the amount of cash that may be received
upon their exercise.

(2) Includes 196,000 exercisable options that Mr. Bressler has transferred to a
family-owned limited partnership. At December 31, 1998, these options had a
value of $8,133,541.

The option exercise price of all the options held by the named executive
officers is the fair market value of the Common Stock on the date of grant
except for half of the regular annual options awarded to Messrs. Levin, Turner
and Parsons in 1996, 1997 and 1998 (see 'Stock Option Grants in 1998') and
1,000,000 of Mr. Levin's options awarded in 1993, half of which have an exercise
price 25% above the fair market value of the Common Stock on the date of grant
and the other half of which have an exercise price 50% above such fair market
value. All options held by the named executive officers become immediately
exercisable in full upon the occurrence of certain events, including the death
or total disability of the option holder, certain change-of-control
transactions and, in most cases, a termination of employment as a result of
the Company's breach of the holder's employment agreement. All such
nonqualified options permit a portion of each award to be transferred by gift
directly or indirectly to members of the holder's immediate family.

The options held by executive officers remain exercisable for the full term
of their employment agreements in the event their employment terminates as a
result of the Company's breach. For some executive officers, some or all of
their options remain exercisable for the full term of the options if their
employment is terminated for any reason other than for cause, including death.
Otherwise, options may generally be exercised for one year after death or total
disability and five years after retirement. All options terminate immediately if
the holder's employment is terminated for cause. The terms of the options shown
in the chart are generally ten years, although 640,000 options held by Mr. Levin
have a term of 15 years from the date of their award in 1989.

EMPLOYMENT ARRANGEMENTS

The Company is, and during 1998 was, a party to employment agreements with
the executive officers of the Company. These agreements have been filed with the
SEC as exhibits to the Company's periodic filings.

Among other things, the agreements with the Company's executive officers
typically provide for: a fixed term of employment in a specified executive post;
annual salary; contributions to a non-current compensation account, generally
equal to 50% of annual salary, which is invested and paid out as described below
under 'Non-Current Compensation Accounts'; an annual bonus in the discretion of
the Compensation Committee, all or a portion of which may be deferred at the
election of the executive officer (Mr. Levin may also defer a portion of his
salary); and life insurance benefits to be provided by split dollar policies,
generally for the life of the executive and pursuant to which the Company
recovers an amount equal to the net after-tax cost to the Company of the
premiums on such policy or the cash surrender value thereof, as well as $50,000
of group term life insurance under an insurance program generally provided by
the Company to its employees and a cash payment equal to the premium for the
coverage that would have otherwise been provided under the general terms of such
program.

Generally, such agreements include a narrow definition of the 'cause' for
which an executive's employment may be terminated and in that event, the
executive will only receive earned and unpaid base salary and contributions to
the non-current compensation account accrued through such date of termination.

These agreements typically provide that in the event of the Company's
material breach or termination of the executive's employment during the term of
employment without cause, the executive will be entitled to elect either (a) to
receive a lump-sum payment equal to the present value of the compensation
otherwise payable during the remaining portion of the executive's term of
employment or (b) to remain an employee of the Company through the end of the
term of employment and, without having to perform any services, receive such
compensation as if there had been no breach or termination. Mr. Bressler is
also entitled to a minimum of one year of severance. Executives are not
generally required to mitigate damages after such a termination, other than as
necessary to prevent the Company from losing any tax deductions to which it
otherwise would have been entitled for any payments deemed to be 'contingent on
a change' under the Code. In addition, except for Mr. Turner's agreement, these
agreements typically provide that if an executive thereafter obtains other
employment, the total cash salary and bonus received therefrom for services
prior to the expiration of the executive's employment term (up to the amount of
compensation paid to the executive by the Company for such period) must be paid
over to the Company as received except that the executive officer may retain and
not pay over to the Company an amount equal to the severance he would have
received in accordance with the Company's personnel policies if he had been job
eliminated.

If an executive becomes disabled during the term of his employment
agreement, the executive typically will receive full salary, bonus and
non-current compensation contribution for six months and 75% thereof through the
end of the employment term or, in some cases, for three years, if longer.
Non-current compensation contributions will be maintained and paid after giving
effect to

the executive's base salary after disability. Any such payments will be reduced
by amounts received from Worker's Compensation, Social Security and disability
insurance policies maintained by the Company.

If an executive dies during the term of an employment agreement, generally
the executive's beneficiaries will receive the executive's earned and unpaid
salary and non-current compensation contribution to the last day of the month in
which the death occurs and a pro rata portion of the executive's bonus for the
year of his death.

The minimum annual salaries and non-current compensation contributions
under these agreements for the named executive officers are as shown for
1998 in the Summary Compensation Table, except that the current annual
salary for Mr. Parsons is $750,000 and for Mr. Bressler is $600,000 with a
non-current compensation contribution equal to one-half of the annual salary.
The expiration dates of these agreements and the amounts of the individual
life insurance coverage for the lifetime of such persons are: Mr. Levin --
December 31, 2003 and $6 million; Mr. Turner -- December 31, 2001 and
$6 million; Mr. Parsons -- December 31, 2004 and $4 million; Mr. Bressler --
December 31, 2004 and $4 million; and Mr. Haje -- December 31, 1999 (not
including a two-year advisory period) and $4 million. Mr. Levin's agreement
allows him, effective no earlier than June 30, 2002 and with not less than six
months' prior notice to the Company, to give up his executive positions and
become an advisor to the Company for the remainder of the agreement term.
In that case, his advisory compensation would be equal to his annual salary
and non-current compensation contribution. Mr. Parsons' agreement will
terminate on December 31, 2001 if Mr. Parsons has not been designated
Chief Operating Officer by June 30, 2001 with an effective date no later
than January 1, 2002. Pursuant to the terms of their employment agreements,
so long as each of Messrs. Levin, Turner and Parsons, respectively, is employed
by the Company, the Company has agreed to include him in management's slate
for election as a director and to use its best efforts to cause his election.

In addition, under his employment agreement, in 1998 Mr. Turner was awarded
stock options to purchase 600,000 shares of Common Stock half of which have
exercise prices above the fair market value on the date of grant. See 'Stock
Option Grants in 1998.' Mr. Turner is also entitled to two further annual awards
of stock options each covering an additional 300,000 shares of Common Stock.

NON-CURRENT COMPENSATION ACCOUNTS

The Company deposited non-current compensation contributions for each
executive officer in 1998 into separate accounts maintained by the Company in a
grantor trust established by the Company. The Company appoints an investment
advisor for each such account subject to approval by the relevant executive.
Funds are invested in securities as directed by the investment advisor, with the
assumed after-tax effect upon the Company of gains, losses and income, and
distributions thereof, and of interest expenses and brokerage commissions and
other direct expenses attributed thereto, being credited or charged to the
account. Payments are generally made to the officer from the account in
installments to liquidate the account over a period of ten years, or such
shorter period as the officer elects, commencing on the date employment
terminates under the employment agreement. Such payments include an amount equal
to the assumed tax benefit to the Company of the compensation deduction
available for tax purposes for the portion of the account represented by the net
appreciation in such account, even though the Company might not actually receive
such tax benefit. Commencing in 1999, the Company's executive officers may elect
to have half or all of these non-current compensation contributions credited to
the Company's Deferred Compensation Plan. This Plan is an unfunded, nonqualified
plan that permits higher-paid employees to make tax-deferred savings of certain
compensation that exceeds the federal law limits for tax qualified benefit
plans. Participants select among several crediting rates for their amounts
credited to the Plan. These rates are based on the actual returns of certain
investments offered under the Savings Plan.

Amounts paid by the Company to the non-current compensation accounts of the
named executive officers for 1998 and the portion, if any, of the 1998 annual
bonus elected to be deferred

by any such officer are included in the amounts shown in the Summary
Compensation Table above.

TIME WARNER EMPLOYEES' PENSION PLAN

The Time Warner Employees' Pension Plan, as amended (the 'Pension Plan'),
provides benefits to eligible employees, including officers, of the Company and
certain of its subsidiaries. Directors who are not also employees of the Company
are not eligible to participate in the Pension Plan.

A participant accrues benefits under the Pension Plan on the basis of
1 2/3% of the average annual compensation (defined as the highest average annual
compensation for any five consecutive full and partial calendar years of
employment, which includes regular salary, overtime and shift differential
payments, and non-deferred bonuses paid according to a regular program) for each
year of service up to 30 years and 1/2% for each year of service over 30.
Compensation for purposes of calculating average annual compensation under the
Pension Plan is limited to $200,000 per year for 1988 through 1993 and $150,000
per year for 1994 and thereafter (each subject to adjustments provided in the
Code). Eligible employees become vested in all benefits under the Pension Plan
on the earlier of five years of service or certain other events.

Annual pension benefits are reduced by a Social Security offset determined
by a formula that takes into account credited service up to 35 years, covered
compensation up to the average Social Security wage base and a disparity factor
based on the age at which Social Security benefits are payable (the 'Social
Security Offset'). The pension benefit of participants on December 31, 1977 in
the former Time Employees' Profit-Sharing Savings Plan (the 'Profit Sharing
Plan') is further reduced by a fixed amount attributable to a portion of the
employer contributions and investment earnings credited to such employees'
account balances in the Profit Sharing Plan as of such date (the 'Profit Sharing
Plan Offset').

Under the Pension Plan, employees who are at least 60 years old and have
completed at least ten years of service may elect early retirement and receive
the full amount of their annual pension ('early retirement'). An early
retirement supplement is payable to an employee terminating employment at age 55
and before age 60, after 20 years of service, equal to the actuarial equivalent
of such person's accrued benefit, or, if greater, an annual amount equal to the
lesser of 35% of such person's average compensation determined under the Pension
Plan or such person's accrued benefit at age 60 plus Social Security benefits at
age 65. The supplement ceases when the regular pension commences at age 60 or
upon the death of the retiree.

Federal law limits both the amount of compensation that is eligible for the
calculation of benefits and the amount of benefits derived from employer
contributions that may be paid to participants under the Pension Plan. However,
as permitted by the Employee Retirement Income Security Act of 1974, as amended
('ERISA'), the Company has adopted the Time Warner Excess Benefit Pension Plan
(the 'Excess Plan'), which provides for payments by the Company of certain
amounts which employees of the Company would have received under the Pension
Plan if eligible compensation were limited to $250,000 in 1994 (increased 5% per
year thereafter, to a maximum of $350,000) and there were no payment
restrictions. For purposes of the Excess Plan, the $200,000 limit (as indexed
for years after 1989) on eligible compensation will only apply to compensation
received in 1988 through 1993; the $250,000 limit (as adjusted) will apply to
compensation received in 1994 and thereafter.

The following table shows the estimated annual pension payable upon
retirement to employees in specified remuneration and years-of-service
classifications. The amounts shown in the table do not reflect the effect of the
previously-described (1) Social Security Offset, (2) Profit Sharing Plan Offset
or (3) early retirement supplements. The amount of the estimated annual pension
is based upon a pension formula which applies to all participants in both the
Pension Plan

and the Excess Plan. The estimated amounts are based on the assumption that
payments under the Pension Plan will commence upon normal retirement (generally
age 65) or early retirement, that the Pension Plan will continue in force in its
present form and that no joint and survivor annuity will be payable (which would
on an actuarial basis reduce benefits to the employee but provide benefits to a
surviving beneficiary). Amounts calculated under the pension formula which
exceed ERISA limits will be paid under the Excess Plan from the Company's assets
and are included in the amounts shown in the following table.

<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION FOR
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE --------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ---------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000.......................... $ 16,667 $ 25,000 $ 33,334 $ 41,668 $ 50,000 $ 52,500
200,000.......................... 33,334 50,000 66,668 83,335 100,000 105,000
400,000.......................... 66,668 100,000 133,336 166,670 200,000 210,000
600,000.......................... 100,000 150,000 200,000 250,000 300,000 315,000
800,000.......................... 133,336 200,000 266,672 333,340 400,000 420,000
</TABLE>

The amount of covered compensation that would be considered in the
determination of the highest five consecutive full or partial years of
compensation under the Pension Plan and the Excess Plan for each of Messrs.
Levin, Turner, Parsons, Bressler and Haje is limited as a result of the
imposition of the limitations on eligible compensation. However, because
combined payments under the Pension Plan and the Excess Plan are based on the
highest average annual compensation for any five consecutive full or partial
calendar years of employment (taking into account the compensation limits only
for 1988 and thereafter), the compensation used for determining benefits under
such Plans for Mr. Levin (and employees who participated in the Pension Plan
prior to 1988) will include eligible compensation in years prior to 1988 which
exceeded these limits. The estimated annual benefits payable under the Pension
Plan and the Excess Plan, as of February 1, 1999, would be based on average
compensation of $729,248 for Mr. Levin; $296,641 for Mr. Turner; $282,850 for
Mr. Parsons; $276,281 for Mr. Bressler; and $276,281 for Mr. Haje, with 26.8,
2.4, 4.0, 10.2 and 8.4 years of credited service, respectively. In addition,
pursuant to his employment agreement, Mr. Parsons will be entitled to receive
supplemental payments from the Company that will achieve a total retirement
benefit equal to what he would have received if he had five additional years of
credited service under the Pension Plan.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS

The chart below compares the Company's Common Stock performance with the
performance of the Standard & Poor's 500 Composite Stock Price Index ('S&P 500
Index') and a Peer Group Index by measuring the changes in common stock prices
from December 31, 1993 plus reinvested dividends and distributions. Pursuant to
the SEC's rules, the Company has created a peer group index with which to
compare its own stock performance since a published industry or line-of-business
index does not exist. The Company has attempted to select a grouping of
companies that includes companies in lines of business similar to its own.
Because of the Company's involvement in a broad mix of several major media and
entertainment businesses and the fact that no other public companies are engaged
in all of these businesses, no grouping could closely mirror the Company's
businesses or weight those businesses to match the relative contributions of
each of the Company's business units to the Company's performance. All of the
companies included in the Company's Peer Group Index are engaged in only some of
the businesses in which the Company is engaged and some are also engaged in
businesses in which the Company does not participate. The common stocks of the
following companies have been included in the Peer Group Index: Cablevision
Systems Corporation, Comcast Corporation, McGraw-Hill Inc., Meredith
Corporation, The News Corporation Limited, Tele-Communications, Inc., Viacom
Inc. and The Walt Disney Company. The chart assumes $100 was invested on
December 31, 1993 in each of the Company's

Common Stock, the S&P 500 Index and the Peer Group Index and reflects
reinvestment of dividends and distributions on a monthly basis and annual market
capitalization weighting.

[PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
VALUE AT TIME WARNER PEER GROUP S&P 500
DECEMBER 31 COMMON STOCK INDEX INDEX
- ------------ ------------ ---------- ---------
<S> <C> <C> <C>
1993.... $100 $100 $ 100
1994.... 80 91 101
1995.... 87 114 139
1996.... 87 110 171
1997.... 145 162 229
1998.... 292 209 294
</TABLE>

ADDITIONAL INFORMATION

During 1998, the Company and its subsidiaries engaged in transactions in
the ordinary course of business, on normal commercial terms, with ITOCHU
Corporation and Toshiba Corporation, the beneficial owners during 1998 of more
than five percent of the voting power of separate series of the Voting Preferred
Stock. In addition, the Company maintains arrangements with subsidiaries of FMR
Corp., a beneficial owner of more than five percent of the voting power of the
Company's outstanding Common Stock, in connection with certain of the Company's
employee benefit plans. The amounts involved in such transactions were not
material to the Company or any of such companies.

During 1998 and early 1999, as part of its stock repurchase program, the
Company, directly and indirectly, purchased from each of ITOCHU and Toshiba
shares of Common Stock that they held as a result of conversions or exchanges of
shares of the Company's convertible preferred stock held by each of them. The
Company purchased 11,079,644 of Toshiba's shares of Common Stock at a total cost
of $406,845,484 and 12,400,504 of ITOCHU's shares of Common Stock at a total
cost of $458,929,926. As of February 1, 1999, ITOCHU no longer owned any of the
Company's convertible preferred stock.

A company wholly owned by Mr. Turner is reimbursed by TBS for Mr. Turner's
business use of a plane owned and operated by such company. During 1998, TBS
reimbursed such company for an aggregate of $792,524 relating to Mr. Turner's
business use of such plane during 1997 and 1998.

Mr. Danforth, a director, is a partner at Bryan Cave LLP, a law firm that
historically provided legal services to the Company and its subsidiaries prior
to Mr. Danforth's service as a director. In 1998, the firm continued to render
legal services to the Company and is expected to do so in the future. During
1998, Gerald Greenwald, a director, entered into a contract with Warner Books,
Inc., one of the Company's subsidiaries, for the publication of a book to be
written by Mr. Greenwald. Consistent with Warner Books' customary practices, Mr.
Greenwald was paid an advance of $100,000 upon signing, and will be paid
additional advances of $100,000 upon acceptance of the manuscript and $50,000
upon publication, with royalty payments dependent on book sales, all of which
Mr. Greenwald has committed to donate to charity. Warner Books has also agreed,
as part of Mr. Greenwald's advance, to pay up to $65,000 to Mr. Greenwald's
collaborator.

PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED SHARES

In December 1998, the Company effected a two-for-one Common Stock split,
which followed an increase in the market price of the Common Stock of 100%
during 1998. The stock split exhausted most of the Company's authority to issue
Common Stock under its Restated Certificate of Incorporation (the 'Charter').
Accordingly, to preserve future flexibility, stockholders are being asked to
approve an increase in the Company's authorized share capital.

Specifically, stockholders are being asked to consider and approve an
amendment to Section 1 of Article IV of the Company's Charter to increase the
number of shares of Common Stock that the Company will have authority to issue
to five billion shares and the number of shares of Series Common Stock, par
value $.01 per share ('Series Common Stock'), to 600 million shares. The number
of authorized shares of preferred stock, par value $.10 per share, will remain
unchanged at 250 million shares. As a result, if the proposed amendment to the
Charter is approved, the total number of shares of all classes of stock that the
Company will have authority to issue will be 5.85 billion shares. The Board of
Directors has unanimously declared the amendment advisable and recommends to
stockholders that they approve the amendment.

COMMON STOCK AUTHORIZATION

The Company currently is authorized to issue 2.0 billion shares of Common
Stock. As of March 1, 1999, there were approximately 1.13 billion shares of
Common Stock outstanding (excluding treasury shares) and approximately 572
million shares of Common Stock reserved for issuance under stock plans, for
conversion of the Company's convertible securities and for other purposes. As a
result, only approximately 300 million shares of Common Stock remain unissued
and not reserved for issuance, which is not sufficient to permit the Company to
effect additional Common Stock splits.

SERIES COMMON STOCK AUTHORIZATION

The proposed amendment to the Charter would also increase from 200 million
to 600 million the number of shares of Series Common Stock that the Company
could issue. Currently, approximately 57 million shares of Series LMCN-V Stock
are outstanding, all of which are beneficially owned by Liberty Media
Corporation (see 'Security Ownership -- Security Ownership of Certain Beneficial
Owners'). As a result of the recent Common Stock Split, each share of Series
LMCN-V Stock is now, under certain circumstances, convertible into two shares of
Common Stock. The Company would prefer that shares of Series LMCN-V Stock be
convertible into one share of Common Stock. The proposed increase in the number
of authorized shares of Series Common Stock would (1) accommodate a two-for-one
split of the Series LMCN-V Stock and restore a one-to-one conversion rate with
the Common Stock, (2) meet the requirement that the Company also keep available
for issuance sufficient shares of another series of Series Common Stock into
which

the Series LMCN-V Stock is, under certain circumstances, convertible and (3)
leave sufficient authorized shares of Series Common Stock available to maintain
a one-for-one conversion ratio for the Series LMCN-V Stock in the event of
future Common Stock splits. The Company and the holders of the Series LMCN-V
Stock have agreed, subject to the approval of this proposed amendment to the
Charter, to effect such a two-for-one split of the outstanding Series LMCN-V
Stock to restore such one-to-one conversion rate. If this agreement is
implemented, approximately 114 million shares of Series LMCN-V Stock
would be outstanding and approximately 114 million shares of another series
of Series Common Stock would be reserved for issuance.

GENERAL

The additional shares of Common Stock and Series Common Stock to be
authorized would be available for possible future stock dividends or splits,
financing and acquisition transactions and other corporate purposes. Having the
additional shares available for issuance in the future would also give the
Company greater flexibility and allow shares of Common Stock and Series Common
Stock to be issued without the expense and delay of a special stockholders'
meeting. The additional shares would be available for issuance without further
action by the stockholders unless such action is required by applicable law or
the rules of any stock exchange on which the Company's securities are then
listed. The New York Stock Exchange, Inc., on which the issued shares of Common
Stock are listed, currently requires stockholder approval as a prerequisite to
listing shares in certain instances, including in acquisition transactions which
could result in the issuance of shares of Common Stock representing 20% or more
of the outstanding Common Stock or voting power. In addition, the Board of
Directors has the authority to establish additional series of Series Common
Stock, and to fix the special rights and other terms of those series without
having to obtain specific stockholder approval.

The proposed increases in the number of authorized shares of Common Stock
and Series Common Stock are not designed to deter or to prevent a change in
control and the ability of the Board of Directors to issue additional shares
could enhance the Board's ability to negotiate on behalf of the stockholders in
a takeover situation. However, under certain circumstances, the Company could
use the additional shares to create impediments for persons seeking to acquire
control of the Company or to satisfy the voting requirements imposed by Delaware
law with respect to a merger or other business combination involving the
Company. For example, although there is currently no intention of doing so, the
Company could (within the limits imposed by applicable law and stock exchange
rules) issue shares of Common Stock or Series Common Stock in a private
placement to a holder that would, depending on such holder's other holdings of
the Company's securities, thereby have sufficient voting power to prevent the
approval of a 'Business Combination' (which is defined in Article V of the
Charter to mean, generally, mergers, consolidations and other extraordinary
corporate transactions) or any alteration, amendment or repeal of the provisions
of Article V. Accordingly, the power to issue Common Stock or Series Common
Stock could enable the Board of Directors to make it difficult to accomplish
certain 'Business Combinations.' The Company also has other defenses available
to use against a third party trying to effect a change in control of the
Company. In addition, the Company's issuance of the additional shares authorized
by this proposal could have a dilutive effect on earnings or cash flow per share
and the equity ownership of the Company's stockholders. The stockholders of the
Company do not have preemptive rights under the Company's Charter to subscribe
to additional securities which may be issued by the Company. The Company
currently knows of no attempts to obtain control of the Company.

At the present time, there are no plans to issue any shares of Common Stock
or Series Common Stock for which authorization is being sought other than (1)
Common Stock to be issued under the Company's benefit and stock plans or upon
conversion of the Company's convertible preferred stock and (2) Series LMCN-V
Stock to be issued in the split of the Series LMCN-V Stock discussed above.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority in voting power of the outstanding
shares of Common Stock and Voting Preferred Stock, voting together as a single
class, is required to approve and adopt the amendment to the Charter to increase
the number of authorized shares of Common Stock and Series Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE CHARTER.

APPROVAL OF THE TIME WARNER INC. 1999 RESTRICTED STOCK PLAN

The Company is seeking stockholder approval of a new Restricted Stock Plan
(the 'Plan') under which not more than .08% of the outstanding shares of Common
Stock would be available annually for employee recruiting and retention purposes
as determined and overseen by the Compensation Committee of the Board of
Directors. The Board of Directors unanimously approved the Plan, subject to
stockholder approval, in March 1999. The following summary of the Plan does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the text of the proposed Plan, which is set forth in Annex A to
this Proxy Statement.

PURPOSE AND ELIGIBILITY

Through the award of shares ('Restricted Shares') of the Company's Common
Stock which will not generally vest for a number of years, the Plan is intended
to attract and retain talented employees and prospective employees of the
Company and its subsidiaries while providing them with a motivating stake in the
Company's future that is aligned with that of the Company's stockholders.
Although the Company has not generally awarded restricted stock to its employees
since the consummation of the acquisition of WCI in 1990, management believes
that its efforts in recent years to recruit certain executives to join the
Company have been negatively affected by its inability to offer restricted stock
as one of the elements of the Company's executive compensation package. If
approved by stockholders, the Company intends to use the limited number of
shares available under the Plan for grants to (1) talented prospective
executives at its corporate and operating divisions as an additional incentive
for such executives to join the Company and its subsidiaries and (2) a limited
number of executives identified as showing superior talent and potential as an
additional incentive for them to remain with the Company and its subsidiaries.
The Company does not intend generally to grant restricted stock to individuals
then employed as executive officers of the Company or the most senior executives
at its operating divisions. Management may, however, also consider and recommend
to the Board of Directors the use of Restricted Shares for other retention
programs, such as including them as an element of the Company's deferred
compensation programs, in which the Company's executive officers could
participate.

Restricted Shares may be awarded to eligible employees whether or not they
participate or are entitled to participate in any other incentive, bonus or
other compensation plan of the Company. Directors of the Company who are not
also employees will not be eligible to receive Restricted Shares under the Plan.

ADMINISTRATION

The Board has initially delegated authority to administer the Plan to the
Compensation Committee of the Board, which is comprised solely of Unaffiliated
Directors. At the time of any award of Restricted Shares, the Compensation
Committee will designate a period of time which must elapse (the 'Vesting
Period') and any other restrictions, terms and conditions that must be fulfilled
before the Restricted Shares will become vested. The Plan provides that
Restricted Shares awarded under the Plan will vest only if the holder of
the Restricted Shares (the

'Holder') is still employed by the Company or one of its subsidiaries at the end
of the Voting Period, which must be at least three years for 95% of the awards
made under the Plan, but may partially or fully vest earlier under certain
circumstances. It is currently intended that most awards of Restricted Shares
will have five-year Vesting Periods, however, the terms of awards to be made
under the Plan (which need not be identical) have not yet been determined but
will be set forth in an agreement (a 'Restricted Shares Agreement') in a form
approved by the Compensation Committee.

The Board of Directors of the Company may terminate or amend the Plan at
any time. Any such amendment must comply with all applicable laws, regulations
and stock exchange listing requirements. Termination or amendment of the Plan
may not adversely affect the rights of any Holder without his or her consent.

SHARES COVERED BY THE PLAN

The Plan provides that the maximum aggregate number of Restricted Shares of
Common Stock that may be awarded under the Plan in each calendar year will equal
.08% of the shares of Common Stock outstanding on December 31 of the preceding
calendar year.

PRINCIPAL FEATURES OF THE PLAN

The Restricted Shares will be registered in the name of the Holder and will
constitute issued and outstanding shares of Common Stock for all corporate
purposes. Before the Restricted Shares have vested, the Holder will have the
right to vote the Restricted Shares, to receive and retain all regular cash
dividends (and any other distributions designated by the Board or the
Compensation Committee) which are paid or distributed on the Restricted Shares,
and to exercise all other rights as a holder of Common Stock with respect to
such Restricted Shares, except that (1) the Company will retain custody of any
stock certificates representing the Restricted Shares until the Vesting Period
has expired and all other vesting requirements have been fulfilled; (2) other
than regular cash dividends and such other distributions as the Board or
Committee may designate, the Company will retain custody of all distributions
which are paid or distributed on the Restricted Shares until the related
Restricted Shares become vested; (3) the Holder may not transfer, encumber or
otherwise dispose of the Restricted Shares during the Vesting Period; and (4) a
breach of any restrictions, terms or conditions established by the Board or
Committee with respect to any Restricted Shares will cause a forfeiture of such
Restricted Shares.

Upon expiration of the applicable Vesting Period and the satisfaction of
any other applicable restrictions, terms and conditions, the Restricted Shares
and any distributions on such Restricted Shares that were retained by the
Company will become vested. Any Restricted Shares and any related retained
distributions which do not vest will be forfeited to the Company. Unless the
applicable Restricted Shares Agreement provides otherwise, the Restricted Shares
will become fully vested upon the occurrence of certain 'change-in-control'
transactions (as defined in the Plan).

If a Holder's employment with the Company or a subsidiary terminates before
the expiration of the Vesting Period, the vesting and forfeiture of the
Restricted Shares will be governed by the terms of the applicable Restricted
Shares Agreement. It is currently expected that Restricted Shares will be
forfeited upon the Holder voluntarily terminating employment with the Company or
one of its subsidiaries. If a Holder's employment is terminated for cause (as
defined in the Plan) prior to the expiration of the Vesting Period, all
Restricted Shares and any related retained distributions will be forfeited,
unless the Holder is a party to an employment agreement that was approved by the
Board of Directors and provides otherwise.

The provisions of Section 162(m) of the Code generally disallow a tax
deduction to a publicly held company for annual compensation in excess of $1
million paid to its chief executive officer or any of its other four most highly
compensated executive officers unless the plan and awards

pursuant to which the compensation is paid meet certain requirements. The Board
has determined that designing the Plan and the awards thereunder as needed to
satisfy those requirements would not be in the best interests of the Company,
especially because the Company does not currently intend to grant Restricted
Shares to such executive officers. If, however, a Holder were one of such
executive officers at the time his or her award vested, the Company might not be
entitled to deduct some or all of the compensation income attributable to such
Restricted Shares.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority of the votes cast on the proposal,
either in person or by proxy, by the holders of Common Stock and Voting
Preferred Stock entitled to vote and voting as a single class is required to
approve the Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999
RESTRICTED STOCK PLAN.

APPROVAL OF AMENDMENTS TO THE 1988 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE
DIRECTORS

The Company is seeking stockholder approval of certain amendments to the
Directors' Restricted Stock Plan that were approved by the Board of Directors in
January 1999. The proposed amendments are intended to keep the compensation of
the Company's directors competitive and to revise the Plan in light of changes
to SEC rules.

Each Unaffiliated Director currently receives part of his or her annual
retainer in the form of an annual grant of shares of Common Stock ('Restricted
Shares') having a market value of $30,000, subject to forfeiture and certain
restrictions. That annual grant value has remained unchanged since 1990. The
remainder of the annual retainer is payable in cash. Each Unaffiliated Director
also receives an annual award of options to purchase Common Stock. See 'Director
Compensation' above.

After a review of director compensation policies at other large
capitalization, blue chip companies, the Company's management concluded that the
Company's director compensation had fallen behind. Management recommended
amendments to the Directors' Restricted Stock Plan that would increase the
Unaffiliated Directors' annual compensation and give the Board more flexibility
in determining appropriate compensation in the future. This greater flexibility
has been made practicable by changes to SEC rules since the Directors'
Restricted Stock Plan was originally adopted in 1988. The Board accepted that
recommendation.

The proposed amendments to the Directors' Restricted Stock Plan would:

permit the Board of Directors to determine the dollar value of the
Restricted Shares to be awarded each year.

change the maximum number of shares of Common Stock available for award
under the plan to an amount in any calendar year not greater than .003% of
the shares of Common Stock outstanding on December 31 of the prior
calendar year.

change the provisions regarding amendments to the Plan to provide that
future amendments will comply with all applicable laws, regulations and
stock exchange listing requirements.

If the stockholders approve the proposed amendments to the Directors'
Restricted Stock Plan, the value of the Restricted Shares granted to an
Unaffiliated Director will be increased to $40,000 for 1999, and for each year
thereafter until changed by the Board. The specific number of shares to be
issued to each Unaffiliated Director in any particular year will depend on the
per share market price of Common Stock at the time of issuance.

The text of the amendments to the Directors' Restricted Stock Plan is
attached as Annex B to this Proxy Statement. The foregoing description of these
amendments does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the text of these amendments.

VOTE REQUIRED FOR APPROVAL

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENTS TO
THE DIRECTORS' RESTRICTED STOCK PLAN.

APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company to audit its consolidated financial statements for 1999
and has determined that it would be desirable to request that the stockholders
approve such appointment.

Ernst & Young LLP has served the Company and its subsidiaries as
independent auditors for many years. Representatives of Ernst & Young LLP will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to respond to appropriate questions from stockholders.

VOTE REQUIRED FOR APPROVAL

Stockholder approval is not required for the appointment of Ernst & Young
LLP, since the Board of Directors has the responsibility for selecting auditors.
However, the appointment is being submitted for approval at the Annual Meeting.
No determination has been made as to what action the Board of Directors would
take if stockholders do not approve the appointment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act') requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the SEC
and the New York Stock Exchange. Officers, directors and greater than
ten-percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of such forms furnished to the Company, or written representations
that no Forms 5 were required, the Company believes that during 1998, its
officers, directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements, except for Mr. Greenwald who
reported an acquisition of Common Stock seven days late.

EXPENSES OF SOLICITATION

All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies and voting instructions may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. The
Company has retained D.F. King & Co., Inc. at an estimated cost of $15,000, plus
reimbursement of expenses, to assist in its solicitation of proxies from
brokers, nominees, institutions and individuals. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding proxy solicitation
materials to beneficial owners of shares held of record by such custodians,
nominees and fiduciaries, and the Company will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.

PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS

Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. In order to be so included for the
2000 Annual Meeting, stockholder proposals must be received by the Company no
later than December 2, 1999, and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 70 days nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting and must contain
specified information concerning the matters to be brought before such meeting
and concerning the stockholder proposing such matters. Therefore, to be
presented at the Company's 2000 Annual Meeting, such a proposal must be received
by the Company after January 31, 2000 but no later than March 11, 2000. If the
date of the annual meeting is more than 30 days earlier or more than 60 days
later than such anniversary date, notice must be received not earlier than the
120th day prior to such annual meeting and not later than the close of business
on the later of the 70th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made. If a stockholder who has notified the Company of his intention to
present a proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need not
present the proposal for a vote at such meeting.

All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 75 Rockefeller Plaza, New York, New York 10019.

GENERAL

The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on such matters.

BY ORDER OF THE BOARD OF DIRECTORS,

GERALD M. LEVIN
Chairman of the Board and
Chief Executive Officer

March 31, 1999

ANNEX A

TIME WARNER INC.
1999 RESTRICTED STOCK PLAN

1. PURPOSE. The purpose of the Plan is to attract, retain and motivate key
employees and prospective employees (including officers) of the Company and its
Subsidiaries and to further the identity of interests of such key employees and
the Company's stockholders through additional opportunities for increased stock
ownership by such key employees.

2. CERTAIN DEFINITIONS. The following terms (whether used in the singular
or plural) shall have the meanings indicated when used in the Plan.

2.1 'Approved Transaction' means any transaction in which the Board
(or, if approval of the Board is not required as a matter of law, the
stockholders of the Company) shall approve (i) any consolidation or merger
of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company,
or (iii) the adoption of any plan or proposal for the liquidation or
dissolution of the Company.

2.2 'Board' means the Board of Directors of the Company.

2.3 'Board Change' means, during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire
Board ceased for any reason to constitute a majority thereof unless the
election, or the nomination for election by Time Warner's stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.

2.4 'Code' means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section.

2.5 'Committee' means the Committee of the Board appointed pursuant to
Section 3.3 hereof.

2.6 'Common Stock' means the Common Stock, par value $.01 per share,
of the Company.

2.7 'Company' means Time Warner Inc., a Delaware corporation.

2.8 'Control Purchase' means any transaction in which any person (as
such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act), corporation or other entity (other than the Company or any employee
benefit plan sponsored by the Company or any of its Subsidiaries) (i) shall
purchase any Common Stock (or securities convertible into Common Stock) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Board, or (ii) shall
become the 'beneficial owner' (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the
election of directors (calculated as provided in Rule 13d-3(d) in the case
of rights to acquire securities of the Company).

2.9 'Holder' means an individual to whom Restricted Shares have been
awarded pursuant to Section 3 hereof.

2.10 'Plan' means this 1999 Restricted Stock Plan of the Company.

2.11 'Retained Distributions' means distributions which are retained
by the Company pursuant to Section 6.3 hereof.

A-1

2.12 'Restricted Shares' means shares of Common Stock awarded to a
Holder pursuant to Section 3 hereof.

2.13 'Restricted Shares Agreement' means the agreement specified in
Section 13 hereof.

2.14 'Restriction Period' means a period of time beginning on the date
of each award of Restricted Shares and ending on the Vesting Date with
respect to each such award.

2.15 'Subsidiary' of a person means any present or future subsidiary
of such person as such term is defined in section 424 of the Code and any
present or future trade or business, whether or not incorporated,
controlled by or under common control with such person. An entity shall be
deemed a Subsidiary of a person only for such periods as the requisite
ownership or control relationship is maintained.

2.16 'Vesting Date' with respect to any Restricted Shares awarded
hereunder means the date when such Restricted Shares shall become
unconditionally vested as designated by the Board at the time Restricted
Shares are awarded pursuant to Section 3 hereof.

3. ADMINISTRATION AND AWARD OF RESTRICTED SHARES.

3.1 Powers. The Plan shall be administered by the Board. Subject to
the express provisions of the Plan, the Board shall have plenary authority,
in its discretion, to award Restricted Shares under the Plan and to
determine the terms and conditions (which need not be identical) upon which
Restricted Shares shall be awarded, including, without limitation, (a) the
individuals to whom, and the time or times at which, Restricted Shares
shall be awarded hereunder, (b) the number of Restricted Shares covered by
each award, (c) the Vesting Date(s) applicable to each award and the
conditions, if any, subject to which Restricted Shares shall become vested
on the Vesting Date and (d) the form, terms and provisions of the
Restricted Shares Agreement evidencing each award of Restricted Shares
hereunder.

3.2 Interpretation. Subject to the express provisions of the Plan, the
Board shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind the rules and regulations relating to it and to make all
other determinations deemed necessary or advisable for the administration
of the Plan. The determinations of the Board on the matters referred to in
this Section 3 shall be conclusive.

3.3 Delegation to Committee. Notwithstanding anything to the contrary
contained herein, the Board may at any time, or from time to time, appoint
a Committee and delegate to such Committee the authority of the Board to
administer the Plan, including to the extent provided by the Board, the
power to further delegate such authority. Upon such appointment and
delegation, the Committee shall have all the powers, privileges and duties
of the Board in the administration of the Plan to the extent provided in
such delegation, except the power to appoint members of the Committee and
to terminate, modify or amend the Plan. The Board may from time to time
appoint members of any such Committee in substitution for or in addition to
members previously appointed, may fill vacancies in the Committee and may
discharge the Committee. Any such Committee shall have as chairman one of
its members as determined by the Board or by the Committee members and
shall hold its meetings at such times and places as it shall deem
advisable. A majority of its members shall constitute a quorum and all
determinations shall be made by a majority of its members. Any
determination reduced to writing and signed by a majority of the members
shall be fully as effective as if it had been made by a majority vote at a
meeting duly called and held.

4. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 11
hereof, the maximum aggregate number of Restricted Shares which may be awarded
under the Plan in any calendar year, commencing with calendar year 1999, shall
be an amount determined by the Board not in excess of .08% of the shares of
Common Stock outstanding on December 31st of the preceding calendar year;
provided, however, that any Restricted Shares awarded under the Plan in any
calendar year which are forfeited by the terms of the Plan or any Restricted
Shares Agreement in the same calendar year shall be deemed not to have been
awarded for the purpose of this Section 4 and shall again become available for
awards during such calendar year. Any Restricted Shares

A-2

available for grant in any calendar year which are not granted in that calendar
year shall not be available for grant in any subsequent calendar year and any
Restricted Shares awarded in any calendar year which are forfeited by the terms
of the Plan or any Restricted Shares Agreement in any subsequent calendar year
shall not again be available for awards. No fractional shares of Common Stock
shall be awarded or issued under the Plan.

The Restricted Shares may be in whole or in part, as the Board shall from
time to time determine, authorized but unissued shares of Common Stock or shares
of Common Stock previously issued and outstanding and reacquired by the Company,
or both.

5. ELIGIBILITY AND CRITERIA FOR AWARDS. Awards may be made only to
employees, including officers and directors who are also employees, of the
Company or any of its Subsidiaries and prospective employees of the Company or
any of its Subsidiaries. The vesting of Restricted Shares granted to a
prospective employee shall be conditioned upon such person becoming an employee
of the Company or any of its Subsidiaries. For purposes of the Plan, the term
'prospective employee' shall mean any person who holds an outstanding offer of
employment on specific terms from the Company or any of its Subsidiaries. Awards
may be made to employees who hold or have held awards under this Plan or any
similar or other awards under any other plan of the Company or its Subsidiaries.

6. RESTRICTIONS APPLICABLE TO RESTRICTED SHARES; CERTIFICATES REPRESENTING
RESTRICTED SHARES.

6.1 Vesting Date. The Board shall designate a Vesting Date with
respect to each award of Restricted Shares and may prescribe restrictions,
terms and conditions applicable to the vesting of such Restricted Shares in
addition to those provided in the Plan; provided, however, that the Vesting
Date with respect to not less than 95% of the Restricted Shares awarded
under the Plan shall be not less than three years after the date of such
award, subject to earlier vesting in whole or in part upon the occurrence
of an Approved Transaction, Board Change or Control Purchase or the death,
disability, retirement or other termination of the Holder's employment.

6.2 Restrictions. Restricted Shares, when issued, will be registered
in the name of the Holder to whom such Restricted Shares shall have been
awarded. During the Restriction Period, any certificates representing the
Restricted Shares and any securities constituting Retained Distributions
shall bear a restrictive legend to the effect that ownership of the
Restricted Shares (and such Retained Distributions), and the enjoyment of
all rights appurtenant thereto, are subject to the restrictions, terms and
conditions provided in the Plan and the applicable Restricted Shares
Agreement. Any such certificates shall be deposited by such Holder with the
Company, together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or
any portion of the Restricted Shares and any securities constituting
Retained Distributions that shall be forfeited or that shall not become
vested in accordance with the Plan and the applicable Restricted Shares
Agreement.

6.3 Rights of Holder. Restricted Shares shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Holder
will have the right to vote such Restricted Shares, to receive and retain
all regular cash dividends, and such other distributions as the Board may
in its sole discretion designate, paid or distributed on such Restricted
Shares and to exercise all other rights, powers and privileges of a holder
of Common Stock with respect to such Restricted Shares, with the exception
that (i) the Holder will not be entitled to delivery of the stock
certificate or certificates representing such Restricted Shares until the
Restriction Period shall have expired and unless all other vesting
requirements with respect thereto shall have been fulfilled; (ii) the
Company will retain custody of the stock certificate or certificates
representing the Restricted Shares during the Restriction Period; (iii)
other than regular cash dividends and such other distributions as the Board
may in its sole discretion designate, the Company will retain custody of
all distributions ('Retained Distributions') made or declared with respect
to the Restricted

A-3

Shares (and such Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to the Restricted
Shares) until such time, if ever, as the Restricted Shares with respect to
which such Retained Distributions shall have been made, paid or declared
shall have become vested, and such Retained Distributions shall not bear
interest or be segregated in separate accounts; (iv) the Holder may not
sell, assign, transfer, pledge, exchange, encumber or dispose of the
Restricted Shares or any Retained Distributions during the Restriction
Period; and (v) a breach of any restrictions, terms or conditions provided
in the Plan or established by the Board with respect to any Restricted
Shares or Retained Distributions will cause a forfeiture of such Restricted
Shares and any Retained Distributions with respect thereto.

7. COMPLETION OF RESTRICTION PERIOD. On the Vesting Date with respect to
each award of Restricted Shares, and the satisfaction of any other applicable
restrictions, terms and conditions (a) Restricted Shares covered by that award
shall become vested and (b) any Retained Distributions with respect to such
Restricted Shares shall become vested to the extent that the Restricted Shares
related thereto shall have become vested, all in accordance with the terms of
the applicable Restricted Shares Agreement. Any such Restricted Shares and
Retained Distributions that shall not have become vested shall be forfeited to
the Company and the Holder shall not thereafter have any rights (including
dividend and voting rights) with respect to such Restricted Shares and Retained
Distributions that shall have been so forfeited.

8. ACCELERATION OF VESTING DATE. Unless the applicable Restricted Shares
Agreement provides otherwise, all outstanding awards of Restricted Shares shall
unconditionally vest in full upon the occurrence of any Approved Transaction,
Board Change or Control Purchase, and the date of the occurrence of any such
Approved Transaction, Board Change or Control Purchase shall be deemed to be the
Vesting Date for such Restricted Shares.

9. TERMINATION OF EMPLOYMENT PRIOR TO EXPIRATION OF RESTRICTION PERIOD.

9.1 General. If a Holder's employment shall terminate prior to the
expiration of the Restriction Period applicable to any award of Restricted
Shares, then such Restricted Shares shall be forfeited or shall vest, in
whole or in part, as provided in the applicable Restricted Shares
Agreement; provided, however, that any termination of a Holder's employment
for cause will be treated in accordance with the provisions of Section 9.2.

9.2 Termination for Cause. If a Holder's employment with the Company
or any of its Subsidiaries shall be terminated for cause by the Company or
such Subsidiary prior to the expiration of the Restriction Period
applicable to any award of Restricted Shares, then the Holder shall forfeit
all of such Restricted Shares and Retained Distributions with respect to
such Restricted Shares. For the purpose of this Section 9.2, cause shall
have the meaning ascribed thereto in any employment agreement to which such
Holder is a party. In the absence of an employment agreement, cause shall
include but not be limited to, insubordination, dishonesty, incompetence,
moral turpitude, other misconduct of any kind and the refusal to perform
the Holder's duties and responsibilities for any reason other than illness
or incapacity; provided, however, that if such termination occurs within 12
months after an Approved Transaction, Control Purchase or Board Change,
termination for cause in the absence of an employment agreement shall mean
only a felony conviction for fraud, misappropriation or embezzlement.

9.3 Special Rule. Notwithstanding any other provision of the Plan, the
Board may provide in the applicable Restricted Shares Agreement that the
award of Restricted Shares shall vest in a manner that differs from the
provisions otherwise herein set forth; provided, however, that the
provisions of any such Restricted Shares Agreement that differ from the
provisions otherwise set forth herein shall be effective only if reflected
in the terms of an employment agreement approved or ratified by the Board.

9.4 Miscellaneous. The Board may determine whether any given leave of
absence constitutes a termination of employment. Awards made under the Plan
shall not be affected

A-4

by any change of employment so long as the Holder continues to be an
employee of the Company or one of its Subsidiaries.

10. RIGHT OF COMPANY TO TERMINATE EMPLOYMENT. Nothing contained in the Plan
or in any award of Restricted Shares pursuant to the Plan shall confer on any
Holder any right to continue in the employ of the Company or any of its
Subsidiaries or interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of the Holder at any time, with or
without cause, notwithstanding the possibility that one or more awards of
Restricted Shares may thereby be forfeited entirely.

11. CHANGES IN STOCK. In the event of any stock split, dividend,
distribution, combination, reclassification or recapitalization that changes the
character or amount of the Common Stock prior to the expiration of the
Restriction Period with respect to any award of Restricted Shares, the Board
shall make such adjustments in the character and number of shares subject to
such award, as shall be equitable and appropriate in order to make such award,
immediately after any such change, as nearly as may be practicable, equivalent
to such award, immediately prior to any such change. If any merger,
consolidation or similar transaction affects the Common Stock subject to any
unvested award of Restricted Shares, the Board or any surviving or acquiring
corporation shall take such action as is equitable and appropriate to substitute
a new award for such award or to assume such award in order to make such new or
assumed award, as nearly as may be practicable, equivalent to the old award. If
any such change or transaction shall occur, the number and kind of shares for
which awards may thereafter be granted under the Plan shall be adjusted to give
effect thereto.

12. NONALIENATION OF BENEFITS. Except as specifically provided in Section
21, no right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, hypothecation, pledge, exchange, transfer,
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void. No right or benefit hereunder shall in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the person entitled to such
benefit.

13. RESTRICTED SHARES AGREEMENT. Each award of Restricted Shares hereunder
shall be evidenced by an agreement in such form and containing such terms and
provisions not inconsistent with the provisions of the Plan as the Board from
time to time shall approve. Such agreement shall be entered into between the
Company and the Holder at the time of any award of Restricted Shares hereunder.
Such agreement may contain (but shall not be required to contain) such
provisions as the Board deems appropriate to ensure that the penalty provisions
of Section 4999 of the Code will not apply to any stock or cash received by the
Holder from the Company or any of its Subsidiaries.

14. TERMINATION AND AMENDMENT OF PLAN. The Board may terminate or amend the
Plan at any time in such respects as it shall deem advisable; provided, however,
that any such amendment shall comply with all applicable laws and regulations
and stock exchange listing requirements. No termination or amendment of the Plan
may, without the consent of the Holder to whom any award of Restricted Shares
shall theretofore have been granted, adversely affect the rights of such Holder
with respect to such award. With the consent of the Holder and subject to the
terms and conditions of the Plan, the Board may amend outstanding Restricted
Shares Agreements with any Holder, including, without limitation, any amendment
which would accelerate the Vesting Date with respect to any award of Restricted
Shares. Without limiting the generality of the foregoing, the Board may but
solely with the Holder's consent, agree to cancel any award of Restricted Shares
under the Plan and issue a new award in substitution therefor, provided that the
award so substituted shall satisfy all of the requirements of the Plan as of the
date such new award is made.

15. GOVERNMENT AND OTHER REGULATIONS. Notwithstanding any other provisions
of the Plan, the obligations of the Company with respect to awards of Restricted
Shares shall be subject

A-5

to all applicable laws, rules and regulations, and such approvals by any
governmental agencies as may be required. The Company reserves the right to
restrict, in whole or in part, the delivery of Common Stock pursuant to any
award of Restricted Shares under the Plan until such time as (a) any legal
requirements or regulations shall have been met relating to the issuance of such
Restricted Shares or to their registration, qualification or exemption from
registration or qualification under the Securities Act of 1933 or any applicable
state securities laws; and (b) satisfactory assurances shall have been received
that such Restricted Shares when issued will be duly listed on any securities
exchange on which the Common Stock may be listed.

16. NONEXCLUSIVITY OF PLAN. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including
without limitation, the awarding of stock and cash awards otherwise than under
the Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.

17. WITHHOLDING TAXES. The Company's obligation to deliver stock to the
Holder upon the vesting of Restricted Shares shall be subject to applicable
federal, state and local tax withholding requirements. Federal, state and local
withholding taxes paid by a Holder upon the vesting of Restricted Shares may be
paid in shares of Common Stock upon such terms and conditions as the Board shall
determine; provided, however, that the Board in its sole discretion may
disapprove such payment and require that such taxes be paid in cash.

18. EXCLUSION FROM PENSION AND OTHER BENEFIT PLANS. By acceptance of an
award under the Plan, each Holder shall be deemed to have agreed that the award
of Restricted Shares is special incentive compensation and that it will not be
taken into account as 'salary' or 'compensation' or 'bonus' in determining the
amount of any payment under any pension, retirement or other employee benefit
plan of the Company or any Subsidiary. In addition, each beneficiary of a
deceased Holder shall be deemed to have agreed that such award will not affect
the amount of any life insurance coverage, if any, provided by the Company on
the life of the Holder which is payable to such beneficiary under any life
insurance plan covering employees of the Company.

19. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of New York.

20. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on the date
of its approval by the stockholders of the Company entitled to vote thereon.
Prior to such approval, the Board may, in its discretion, award or authorize the
awarding of Restricted Shares under the Plan which shall be expressly subject to
the condition that the Plan shall have been so approved. Unless the Plan shall
be so approved, the Plan and all Restricted Shares theretofore awarded hereunder
shall be and become null and void.

21. BENEFICIARIES. Each Holder may designate any person(s) or legal
entity(ies), including his or her estate, as his or her beneficiary under the
Plan. Such designation shall be made in writing on a form filed with the
Secretary of the Company or his or her designee and may be revoked or changed by
such Holder at any time by filing written notice of such revocation or change
with the Secretary of the Company or his or her designee. If no person shall be
designated by a Holder as his or her beneficiary or if no person designated as a
beneficiary survives such Holder, the Holder's beneficiary shall be his or her
estate.

A-6

ANNEX B

STATEMENT OF AMENDMENTS TO
TIME WARNER INC.
1988 RESTRICTED STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS

1. Section 3 of the Time Warner Inc. 1988 Restricted Stock Plan for
Non-Employee Directors (the 'Plan') is hereby amended to read in its entirety as
follows:

'3. SHARES SUBJECT TO THE PLAN. Subject to the provisions of paragraph
9 hereof, the maximum aggregate number of Restricted Shares which may be
issued under the Plan in any calendar year, commencing with calendar year
1999, shall be equal to .003% of the shares of Common Stock outstanding on
December 31st of the preceding calendar year. Any Restricted Shares
available for grant in any calendar year which are not granted in that
calendar year shall not be available for grant in any subsequent calendar
year and any Restricted Shares awarded in any calendar year that are
forfeited by the terms of the Plan in any subsequent calendar year shall
not again be available for awards. No fractional shares of Common Stock
shall be granted or issued under the Plan.

The Restricted Shares may be, in whole or in part, authorized but
unissued shares of Common Stock or shares of Common Stock previously issued
and outstanding and reacquired by the Company.'

2. Section 5 of the Plan is hereby amended to read in its entirety as
follows:

'5. ANNUAL GRANTS. Each Outside Director shall automatically be
granted under the Plan, as of the conclusion of each annual meeting of
stockholders of the Company (the 'Grant Date'), that number of Restricted
Shares equal to (a) for Grant Dates occurring during calendar years 1990
through 1998, $30,000 divided by the Average Market Price of the Common
Stock on the Grant Date, and (b) for Grant Dates occurring during calendar
year 1999 and thereafter, that number of Restricted Shares equal to a
dollar amount determined by the Board of Directors on or before the Grant
Date divided by the Average Market Price of the Common Stock on the Grant
Date, and except as hereinafter provided, the Company shall promptly
thereafter issue such shares, in each case without any further action
required to be taken by the Board or any committee thereof. The Company
shall not be required to issue fractions of Restricted Shares and in lieu
thereof any fractional Restricted Share shall be rounded to the next whole
number. Notwithstanding the foregoing, in the case of an Outside Director
who, as of any Grant Date, has not continuously served as a member of the
Board for a period of at least six consecutive months (a 'new Outside
Director'), the Restricted Shares granted to such new Outside Director on
such Grant Date shall not be issued in such new Outside Director's name
until six months after such new Outside Director shall have first become a
new Outside Director. An individual who shall become an Outside Director
subsequent to the date of the annual meeting of stockholders of the Company
for any year shall first become eligible to participate in the Plan
commencing on the date of the next annual meeting of stockholders of the
Company.'

3. Section 15 of the Plan is hereby amended to read in its entirety as
follows:

'15. AMENDMENT AND TERMINATION OF PLAN. The Board may at any time
terminate the Plan or make such amendments to the Plan as it shall deem
advisable; provided, however, that no termination or amendment of the Plan
shall adversely affect the right of any Outside Director (without his or
her consent) under any grant previously made and any amendment shall comply
with all applicable laws and regulations and stock exchange listing
requirements.'

4. Section 16(b) of the Plan is amended by deleting the words 'the New York
Stock Exchange and the Pacific Stock Exchange' and by inserting in lieu thereof
the words 'any applicable stock exchange.'

5. The foregoing amendments to the Plan shall become effective upon
approval by the stockholders of the Company.

B-1

[MAP INDICATING DIRECTIONS TO ANNUAL MEETING LOCATION]

APPENDIX I
PROXY CARD

TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 20, 1999

The undersigned hereby constitutes and appoints Richard J. Bressler, Peter
P R. Haje and Andrew J. Kaslow, and each of them, its true and lawful agents
R and proxies, with full power of substitution in each, to attend the Annual
O Meeting of Stockholders of TIME WARNER INC. on Thursday, May 20, 1999, and
X any adjournment thereof, and to vote on the matters indicated all the
Y shares of Common Stock which the undersigned would be entitled to vote if
personally present.

<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 2000 -- Merv Adelson, PLEASE MARK, SIGN AND DATE THIS PROXY
J. Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly CARD ON THE REVERSE SIDE AND RETURN IT
Sills Greenough, Gerald Greenwald, Carla A. Hills, Gerald M. Levin, PROMPTLY USING THE ENCLOSED REPLY
Reuben Mark, Michael A. Miles, Richard D. Parsons, R.E. Turner and ENVELOPE.
Francis T. Vincent, Jr., nominees.
</TABLE>

(CONTINUED ON REVERSE SIDE)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

[MAP INDICATING DIRECTIONS TO ANNUAL MEETING LOCATION]

<TABLE>
<S> <C>
This proxy when properly executed will be voted in the manner directed herein. Please mark
If no direction is made, this proxy will be voted FOR all nominees listed and your votes X
FOR proposals 2 through 5. this way
</TABLE>

The Board of Directors recommends a vote FOR all nominees in Item 1 and FOR
proposals 2 through 5.

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors [ ] [ ] 3. Approval of 1999 [ ] [ ] [ ]
(see reverse). Restricted Stock Plan.

For, except vote withheld from the FOR AGAINST ABSTAIN
following nominee(s): 4. Approval of amendments [ ] [ ] [ ]
______________________________________ to Restricted Stock
Plan for Non-Employee
Directors.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Approval of charter [ ] [ ] [ ] 5. Approval of Auditors. [ ] [ ] [ ]
amendment to increase
authorized shares.

6. In their discretion, upon such other matters as may properly
come before the Meeting.
</TABLE>

MEETING ATTENDANCE [ ]

Please mark this box if you plan
to attend the Meeting.

ADDRESS CHANGE [ ]

Please mark this box if you have
indicated an address change.

Receipt is hereby acknowledged of the Time Warner Inc.
Notice of Meeting and Proxy Statement.

Signature(s) ___________________________________________ Date __________________

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

FOLD AND DETACH CARD HERE
RETURN CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING

[LOGO]

ADMISSION TICKET

1999 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 20, 1999
10:00 AM

WARNER BROS. STUDIO
4000 WARNER BOULEVARD
BURBANK, CA

THIS TICKET MUST BE PRESENTED TO ENTER THE MEETING

ADMITS TWO PERSONS

APPENDIX II PREFERRED PROXY CARD

======================================
PLEASE MARK, SIGN AND DATE THIS PROXY
AND RETURN IT PROMPTLY USING
THE ENCLOSED REPLY ENVELOPE.
======================================

PROXY

TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 20, 1999

The undersigned hereby constitutes and appoints Richard J. Bressler, Peter
R. Haje and Andrew J. Kaslow, and each of them, its true and lawful agents and
proxies, with full power of substitution in each, to attend the Annual Meeting
of Stockholders of TIME WARNER INC. on Thursday, May 20, 1999, and any
adjournment thereof, and to vote on the matters indicated all the shares of
Preferred Stock which the undersigned would be entitled to vote if personally
present.

This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1 and FOR proposals 2 through 5.

- ------------------ ------------------------- ------------------
Name of Holder Series of Preferred Stock Number of Shares

THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1 AND FOR PROPOSALS 2 THROUGH 5.

1. Election of Directors for terms expiring in 2000 -- Merv Adelson, J. Carter
Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills Greenough,
Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben Mark, Michael A.
Miles, Richard D. Parsons, R.E. Turner and Francis T. Vincent, Jr.,
nominees.
FOR [ ] WITHHELD [ ]

[ ] FOR, except vote withheld from the following nominee(s): ______________
__________________________________

2. Approval of charter amendment to increase authorized shares.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. Approval of 1999 Restricted Stock Plan.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. Approval of Amendments to Restricted Stock Plan for Non-Employee Directors.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

5. Approval of Auditors.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

6. In their discretion, upon such other matters as may properly come before
the meeting.

Please check this box if you plan to attend the meeting. [ ]

Signature(s)
---------------------------------

--------------------------------- --------
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, administrator
or trustee, please give full title
as such.

APPENDIX III LMCN-V PROXY CARD

======================================
PLEASE MARK, SIGN AND DATE THIS PROXY
AND RETURN IT PROMPTLY USING THE
ENCLOSED REPLY ENVELOPE.
======================================

PROXY

TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 20, 1999

The undersigned hereby constitutes and appoints Richard J. Bressler, Peter
R. Haje and Andrew J. Kaslow, and each of them, its true and lawful agents and
proxies, with full power of substitution in each, to attend the Annual Meeting
of Stockholders of TIME WARNER INC. on Thursday, May 20, 1999, and any
adjournment thereof, and to vote on the matters indicated all the shares of
SERIES LMCN-V COMMON STOCK which the undersigned would be entitled to vote if
personally present.

This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1.

- ------------------------ ------------
Name of Holder Number of Shares

THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1.

1. Election of Directors for terms expiring in 2000 - Merv Adelson, J. Carter
Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills Greenough,
Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben Mark, Michael A.
Miles, Richard D. Parsons, R. E. Turner and Francis T. Vincent, Jr.,
nominees.
FOR [ ] WITHHELD [ ]

[ ] FOR, except vote withheld from the following nominee(s):_______________
__________________________________________________

2. In their discretion, upon such other matters as may properly come before
the meeting.

Please check this box if you plan to attend the meeting. [ ]

Signature(s)
---------------------------------

--------------------------------- -------
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, administrator
or trustee, please give full title
as such.

APPENDIX IV VOTING INSTRUCTIONS

CONFIDENTIAL VOTING INSTRUCTIONS

TIME WARNER SAVINGS PLAN
TIME WARNER THRIFT PLAN
TWC SAVINGS PLAN
SOUTHERN PROGRESS EMPLOYEES' SAVINGS PLAN

Instructions solicited by Fidelity Management Trust Company on behalf of the
Board of Directors for the Time Warner Inc. Annual Meeting on May 20, 1999.

Under the provisions of the Trusts relating to these Plans, Fidelity Management
Trust Company ("Fidelity"), as Trustee, is required to request your confidential
instructions as to how your proportionate interest in the shares of Time Warner
Common Stock held in the respective Time Warner Common Stock fund under each of
those Plans (an "interest") is to be voted at the Annual Meeting of Stockholders
scheduled to be held on May 20, 1999. Your instructions to Fidelity will not be
divulged or revealed to anyone at Time Warner Inc. If Fidelity does not receive
your instructions on or prior to May 17, 1999, your interest, if any,
attributable to (a) accounts transferred from the Time Incorporated
Payroll-Based Employee Stock Ownership Plan ("PAYSOP") and the WCI Employee
Stock Ownership Plan ("WCI ESOP") will not be voted and (b) the remainder of
your Plan accounts, if any, will be voted at the Annual Meeting in the same
proportion as other participants' interests in each such respective Plan for
which Fidelity has received voting instructions (excluding PAYSOP and WCI ESOP
accounts).

This instruction card must be
signed exactly as name appears
hereon.

--------------------------------------------

--------------------------------------------
Signature(s) Date

(CONTINUED ON REVERSE SIDE)

The undersigned hereby instructs Fidelity, as Trustee, to vote as follows by
proxy at the Annual Meeting of Stockholders of Time Warner Inc. to be held on
May 20, 1999 and at any adjournment thereof, the undersigned's proportionate
interest in the shares of Time Warner Common Stock held in the Time Warner
Common Stock fund under each of the Plans.

The Time Warner Inc. Board of Directors recommends a vote FOR all nominees
in item 1 and FOR proposals 2 through 5.

FOR [ ] WITHHELD [ ]

[ ] FOR, except vote withheld from the following nominee(s): _____________
_____________________________

2. Approval of charter amendment to increase authorized shares.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. Approval of 1999 Restricted Stock Plan.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. Approval of Amendments to Restricted Stock Plan for Non-Employee Directors.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

5. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

6. To grant discretionary voting authority to management persons regarding
such other matters as may properly come before the meeting.

Please check this box if you plan to attend the meeting. [ ]

PLEASE SIGN AND DATE ON REVERSE SIDE

<PAGE>