The latest annual 10-K report of Time Warner Inc. (Filed 02/17/12 for the Period Ending 12/31/11) is rived into two main parts. The first half of the report is more introductory in which there are three sub-parts simply named PART1, 2&3. Under PART1, Time Warner Inc. mainly talks about the backgrounds of their business, which includes Video services, High-Speed Data Service, Advertising, and Cable Television etc. They also engages Risk Factors which will raise concern for investors and those that have potential possibility to adversely influence their financial situation. PARTII is the main body of the first partial, which provides information about “Selected Financial Data” and description of “Management’s Discussion and Analysis”. The last part bestows the signatures of administrators. On the contrary, the second partial offers more detailed data, namely, Management’s Discussion and Analysis, Consolidated Financial Statement (comprises Balance Sheet, Statement of Operations, Statement of Cash Flows, Statement of Equity), and Reports of Independent Registered Public Accounting Firm (ERNST&YOUNG LLP). From all the information mentioned above, we get the conclusion that this annual 10-K offers undamaged and entire information needed in annual report.
From our own perspective, some of the risk factors discussed in the MD&A and the introduction part are worthwhile noticing. Investors should concern about these elements for the reason that they can substantially influence the expenses, market power and financial performances.
Firstly of all, as stated in the risk part, “A continued downturn in the housing market, may negatively impact TWC’s ability to attract new subscribers” (Time Warner Inc. annual 10-K report, p18). It is noticeable that a large number of subscribers are switching their cable television with Internet-based content or so-called intelligent system like “Apple TV” thanks to the speedy advance of technology and revolutionary inventions. Meanwhile, more and more companies are offering content without charging a fee, which is the best “bait” to attract customers and get considerable market share. Under this circumstance, due to the high payment amount of subscribing and the restriction of content, TWC, which conduct this “penetrated” and “recessional” industry, may confront some unimaginable struggle.
Secondly, according to the newly changed regulation, TWC is forced to carry so-called “must-carry” cable signals on some of its operation system that otherwise they will not carry. The content of cable television, due to the constraint of mandatory commission, will be less competitive and less alluring, which are followed by lower market share and higher operating expenses.
Last but not least, it is vitally crucial...