|TIME WARNER INC. filed this Form 10-Q on 10/26/2017|
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
customers. In addition, this guidance requires new or expanded disclosures related to the judgments made by companies when following this framework. Based on the current guidance, the new framework will become effective on either a full or modified retrospective basis for the Company on January 1, 2018.
Subsequent to the issuance of the May 2014 guidance, several clarifications and updates have been issued by the FASB on this topic, the most recent of which was issued in December 2016. Many of these clarifications and updates to the guidance, as well as a number of interpretive issues, apply to companies in the media and entertainment industry.
The Companys assessment of the impact of adopting this new guidance is essentially complete, and the Company is executing its implementation plan. The Company currently expects that the adoption of the new guidance will not have a material impact on the Companys financial statements, principally because the Company does not expect significant changes in the way it will record subscription revenue, advertising revenue, and a significant portion of its content revenue. However, it is possible that the Companys evaluation of the expected impact of the new guidance on certain transactions could change if there are additional interpretations of the new revenue guidance that are different from the Companys conclusions. Although the Company currently does not expect the impact of adopting the new guidance to be material, there are several areas where the Companys revenue recognition is expected to change as compared with historical GAAP. The more significant of these areas are as follows:
The evaluation of the impact of the new guidance on certain other transactions is still in process; however, the Company does not expect the completion of that evaluation to impact the Companys conclusion that the adoption will not have a material impact on the Companys financial statements.
The Company currently expects to adopt the standard in 2018 using the modified retrospective method of adoption. However, the transition method ultimately selected could be affected by the Companys pending merger with AT&T Inc. (AT&T) if the merger closes prior to the adoption of the new guidance. For more information regarding the AT&T merger, see Note 2.
On October 22, 2016, Time Warner entered into an Agreement and Plan of Merger (the Merger Agreement) with AT&T. The Merger Agreement provides for the merger of a newly formed wholly owned subsidiary of AT&T with and into Time Warner, with