SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
<PAGE>
 
   
   Public Market Analysis of Time Warner. Salomon Smith Barney reviewed and
compared various actual and forecasted financial, operating and stock market
information of the individual Time Warner businesses listed below, collectively
referred to as the "Time Warner businesses" and, together with the WB network
business, the "Time Warner consolidated businesses", with that of various
publicly traded companies in corresponding industries, which companies Salomon
Smith Barney believed are comparable in relevant respects to the applicable
Time Warner business:     
 
  .  cable systems;
 
  .  cable networks;
 
  .  filmed entertainment;
 
  .  publishing; and
 
  .  music.
 
   Salomon Smith Barney calculated various financial multiples for each of the
Time Warner businesses and for each of the applicable groups of comparable
companies including, in certain cases, firm value to historical EBITDA and to
estimated 2001 EBITDA. Salomon Smith Barney then calculated, among other
things, a range of estimated 2001 EBITDA multiples, as summarized in the table
below. Salomon Smith Barney utilized the multiples of the applicable comparable
companies for purposes of calculating the implied value of the Time Warner
businesses. The multiple ranges for the comparable companies that Salomon Smith
Barney deemed relevant to this analysis are summarized below.
 

<TABLE>
<CAPTION>
                                                                 Public Market
                                                                 2001E EBITDA
                                                                   Multiples
                                                                 ---------------
Business                                                          Low     High
--------                                                         ------  -------
<S>                                                              <C>     <C>
Cable systems...................................................   16.0x   19.0x
Cable networks..................................................   19.0    21.0
Filmed entertainment............................................   16.0    19.0
Publishing......................................................   14.0    16.0
Music...........................................................   12.0    14.0
</TABLE>

 
   None of the comparable companies used in the public market valuation
analyses summarized above is identical to the applicable Time Warner business.
Accordingly, an examination of the results of the comparable companies used in
this analysis necessarily involved complex considerations of the businesses and
judgments concerning differences in financial and operating characteristics and
other factors that could affect the public trading values or the acquisition
values of these companies. In addition, Salomon Smith Barney performed its
analyses using published analyst reports for forecasted financial and operating
information, including EBITDA estimates for the comparable companies. Actual
results may vary from such estimates and the variations may be material.
Salomon Smith Barney takes no responsibility for any of the published analyst
reports.
 
   Private Market Valuation Analysis of Time Warner. Salomon Smith Barney
reviewed and analyzed certain financial, operating and stock market information
relating to comparable selected transactions in the cable systems, cable
networks, diversified media, filmed entertainment, publishing and music
industries. To the extent that the relevant information was publicly available,
Salomon Smith Barney calculated the multiples of firm value to estimated 2001
EBITDA represented by the transaction prices of the subject companies in the
cable systems industry and the multiples of firm value to last twelve month
revenue and firm value to last twelve month EBITDA represented by the
transaction prices of the subject companies in the other industries described
below. Using this information and other factors relevant in the valuation of
the Time Warner businesses, Salomon Smith Barney determined an estimated 2001
EBITDA multiple range for each of the Time
 
                                       43