Charge Hurts Cash Flow at Time Warner

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New York -- Time Warner Inc. beat analysts' estimates
for fourth-quarter and year-end losses for the period ended Dec. 31, but cash flow at its
cable operations was hit hard during the quarter as a result of one-time charges
associated with the sale or transfer of cable systems.

Time Warner posted earnings of $90 million for the quarter,
down from $216 million in 1997. However, the company posted a loss of 17 cents per share
during the most recent quarter -- besting analysts' forecasts by 2 cents per share --
after preferred-dividend requirements.

Cable operations posted fourth-quarter EBITDA (earnings
before interest, taxes, depreciation and amortization, or cash flow) of $448 million, down
19 percent from $536 million. Cash flow rebounded for the year, rising 14 percent to
$1.694 billion from $1.611 billion in 1997.

The company attributed the quarterly cash-flow downturn
mainly to the impact of sales and transfers of systems and to the consolidation of its
ownership in satellite-television provider PrimeStar Inc.

Without these charges, the company said, fourth-quarter
cash flow in the cable division increased by about 10 percent from the prior year.

Also on the cable side, Time Warner's cable networks
-- including Home Box Office and Cinemax and its half of Comedy Central -- were a bright
spot, with cash flow rising by 15 percent to $115 million. The company cited
"increased subscription revenues" from the core channels and gains at Comedy
Central.

Companywide, cash flow rose by 7 percent to $1.4 billion on
revenue of $7.5 billion for the fourth quarter, compared with cash flow of $1.3 billion
and revenue of $7 billion for the same period in 1997.

For the year, cash flow jumped to $4.5 billion, up 12
percent from $4 billion in 1997. Revenue for the year gained 9 percent to $26.8 billion,
compared with $24.6 billion in the prior year.

"We are exiting 1998 with strong operating momentum in
all of our businesses, and we expect 1999 to be another record-breaking year," said
Time Warner chairman and CEO Gerald Levin, in a prepared statement.

"We are committed to our financial plan, and we will
continue to be opportunistic in leveraging our assets into new growth opportunities,"
Levin added.

One of those new opportunities could be a joint venture
with an Internet company. Time Warner confirmed that it is in talks with Internet
companies regarding some kind of alliance. However, such a deal would not involve
acquisitions that would require the company to put up a substantial amount of cash or
equity.

According to a report in TheWall Street Journal,
the company would be more interested in using its assets -- like its Columbia House record
club, which could be merged with an Internet music retailer, or its CNN Interactive Web
site, which could provide content to an Internet portal -- as fodder for an Internet deal.

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