Time Warner to Change Accounting for Certain 2000 and 2001 Transactions

August 17, 2006 - NEW YORK – Time Warner Inc. (NYSE: TWX) today announced that it will restate its financial statements to reflect changes in the accounting for certain 2000 and 2001 transactions, following the completion of a review by an independent examiner as part of the Company’s prior settlement with the Securities and Exchange Commission (SEC).

As announced in March 2005, the SEC settlement required Time Warner to appoint an independent examiner who was to review the historical accounting for certain transactions (as well as any subsequent amendments) with 17 other companies, identified by the SEC and principally involving online advertising, including three cable programming affiliation agreements with related online advertising elements. The transactions that were to be reviewed were entered into (or amended) between June 1, 2000 and December 31, 2001. Under the terms of its SEC settlement, the Company is required to restate any transactions that the independent examiner determined were accounted for improperly.

The independent examiner, who began his review in June 2005, concluded that certain transactions under review with 15 of the companies, including the three cable programming affiliation agreements with advertising elements, had been accounted for improperly because the historical accounting did not reflect the substance of the arrangements. As a result, Time Warner will restate its consolidated financial results for each of the years ended December 31, 2000 through December 31, 2005 and for the six months ended June 30, 2006.

The total advertising revenue recognized by the Company under these transactions was approximately $584 million (approximately $24 million in 2000, approximately $378 million in 2001, approximately $107 million in 2002, approximately $67 million in 2003 and approximately $8 million in 2004). Included in the $584 million is approximately $37 million related to operations that have been subsequently classified as discontinued operations and approximately $12 million of amounts that will be reclassified to another revenue category (content or other) in connection with the restatement. In addition to reversing the recognition of revenue, based on the independent examiner’s conclusions, the Company is required to record corresponding reductions in the cost of the products or services that were acquired or investments that were made contemporaneously with the execution of the advertising agreements. The independent examiner also concluded that certain marketing expenses were not recognized in the appropriate accounting period. The net effect of restating these transactions is that the Company’s net income will be reduced by approximately $1 million in 2000 and approximately $161 million in 2001 and will be increased by approximately $62 million in 2002, approximately $18 million in 2003, approximately $30 million in 2004, approximately $16 million in 2005, and approximately $15 million for the first six months of 2006 (the impact for the year ended December 31, 2006 is estimated to be an increase to the Company’s net income of approximately $20 million). Included in the 2002 incremental net income of approximately $62 million is a $42 million decrease in the aggregate goodwill impairment charge recognized by the Company during 2002. While the restatement will result in changes in the classification of cash flows, it will not impact total cash flows during the periods.

Pending the restatement, the Company said investors should not rely on its consolidated financial statements for those periods.

For more details, including financial information reflecting the impact of the adjustments that will be made in the restatement, please refer to the Company’s Current Report on Form 8-K filed with the SEC today.

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.

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 and/or regulatory factors, and other factors affecting the operation of the businesses of Time Warner Inc. More detailed information about these factors may be found in filings by Time Warner with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its 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.

Contact Information

Edward Adler

Time Warner Corporate Communications

Time Warner Inc.

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