Time Warner Inc. Updates 2008 Full-Year Business Outlook

Time Warner Inc. (NYSE:TWX) today updated its 2008 full-year business outlook.

As part of its efforts to enhance the Company’s operating efficiency, competitive position and long-term performance, Time Warner expects to incur certain restructuring charges this year. For the nine months ended September 30, 2008, the Company has incurred approximately $182 million in charges, most of which are associated with the previously announced operational reorganization of New Line Cinema Corporation. The Company now anticipates that it will take an additional restructuring charge of approximately $100 million to $125 million in the fourth quarter, related principally to restructurings at Time Inc.

In light of these restructurings, which are now expected to total $280 million to $310 million for the year, as well as the challenging economic environment facing certain of the Company’s businesses, Time Warner now anticipates that:

• Its 2008 full-year growth rate in Adjusted Operating Income before Depreciation and Amortization will be around 5%, off a base of $12.9 billion in 2007. This compares to the outlook provided on February 6, 2008 of a range of 7% to 9%, which did not include any potential restructuring charges. The $280 million to $310 million of aggregate restructuring charges have the net effect of decreasing the expected 2008 full-year growth rate in Adjusted Operating Income before Depreciation and Amortization by more than 2 percentage points.
• Its 2008 full-year Free Cash Flow will total around $5.5 billion. This compares to the prior outlook for Free Cash Flow of at or above $4.5 billion, as updated on April 30, 2008.
• Its 2008 full-year Earnings per Diluted Share from Continuing Operations will be in the range of $1.04 to $1.07. This compares to the prior outlook of $1.07 to $1.11, first provided on February 6, 2008. In addition to the restructuring charges, this outlook for Earnings per Diluted Share from Continuing Operations includes certain items affecting comparability, which were also not expected when Time Warner first provided its 2008 full-year outlook, such as gains and losses on asset sales, asset impairments and costs expected to be incurred in conjunction with the Time Warner Cable separation. These items, in the aggregate, have the effect of reducing the current year outlook for Earnings per Diluted Share from Continuing Operations by $0.04 per diluted common share.

Other than those referred to above, the outlook above does not include the impact of any future merger or restructuring charges, sales and acquisitions of operating assets and investments or the related impact of taxes that may occur from time to time due to management decisions and changing business circumstances. The outlook above also does not include the impact of any future noncash impairments of goodwill, intangible and fixed assets, amounts related to securities litigation and government investigations or the related impact of taxes. The Company is currently unable to forecast precisely the timing and/or magnitude of any such amounts or events.

Use of Operating Income before Depreciation and Amortization, Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow

The Company utilizes Operating Income before Depreciation and Amortization, among other measures, to evaluate the performance of its businesses. The Company also evaluates the performance of its businesses using Operating Income before Depreciation and Amortization excluding the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales, and amounts related to securities litigation and government investigations (referred to herein as Adjusted Operating Income before Depreciation and Amortization). Both Operating Income before Depreciation and Amortization and Adjusted Operating Income before Depreciation and Amortization are considered important indicators of the operational strength of the Company’s businesses. Operating Income before Depreciation and Amortization eliminates the uneven effect across all business segments of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were primarily recognized in business combinations. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s businesses. Moreover, Adjusted Operating Income before Depreciation and Amortization does not reflect gains and losses on asset sales or amounts related to securities litigation and government investigations or any impairment charge related to goodwill, intangible assets and fixed assets. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets, investment spending levels and return on capital.

Free Cash Flow is Cash Provided by Operations (as defined by U.S. generally accepted accounting principles) plus payments related to securities litigation and government investigations (net of any insurance recoveries) and excess tax benefits from the exercise of stock options, less cash flow attributable to discontinued operations, capital expenditures and product development costs, principal payments on capital leases and partnership distributions, if any. The Company uses Free Cash Flow to evaluate its businesses and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, pay dividends to common shareholders and repurchase stock. A limitation of this measure, however, is that it does not reflect payments made in connection with the securities litigation and government investigations, which reduce liquidity.

Operating Income before Depreciation and Amortization, Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, the Company’s Operating Income, Net Income and various cash flow measures (e.g., Cash Provided by Operations), as well as other measures of financial performance and liquidity reported in accordance with U.S. generally accepted accounting principles.

About Time Warner Inc.

Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing.

Information on Earnings Release and Conference Call

In a separate release issued today, Time Warner Inc. reported the financial results for its third quarter ended September 30, 2008.

The Company’s conference call can be heard live at 10:30 am ET on Wednesday, November 5, 2008. To listen to the call, visit www.timewarner.com/investors or AOL Keyword: IR.

Information on Time Warner Cable’s Press Releases and Conference Call

Time Warner Cable Inc. issued separate releases today regarding its financial results for the third quarter ended September 30, 2008, as well as its updated 2008 full-year business outlook.

Time Warner Cable’s conference call can be heard live at 8:30 am ET on Wednesday, November 5, 2008. To listen to the call, visit www.timewarnercable.com/investors or AOL Keyword: TWC IR.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors, sales of business assets, the planned separation of Time Warner Cable Inc. from the Company, and the potential impact of future decisions by management that may result in merger and restructuring charges, as well as the potential impact of any future impairment charges to goodwill or other intangible assets. More detailed information about these factors may be found in filings by Time Warner Inc. with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Time Warner is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.