For Immediate Release

                  TIME WARNER BUSINESSES REPORT RECORD 1999 AND
                             FOURTH-QUARTER RESULTS

                        -Normalized 1999 EBITA Grew 15%-
           -1999 Normalized EPS Improves to $.39 Income vs. $.06 Loss-
            -Cable Networks, Publishing, Warner Bros. and Cable Post
                         All-Time Record Yearly Results-

NEW YORK,  February 2, 2000-Time  Warner Inc. (Time Warner,  NYSE: TWX) reported
record 1999 operating income before amortization of intangible assets (EBITA) of
$7.333 billion,  up 64%, on revenues of $27.333 billion versus $4.462 billion of
EBITA on revenues of $26.244  billion in 1998.  EBITA grew 15% for the year when
normalized  principally  for  certain  cable-related  and  filmed  entertainment
transactions  in 1999 and 1998 and digital  media  activities.  Cable  Networks,
Publishing, Warner Bros. and Cable all posted all-time records.

For the fourth  quarter of 1999,  Time Warner  reported  record  EBITA of $2.454
billion, up 79%, on revenues of $7.988 billion. This compares to EBITA of $1.368
billion on revenues of $7.267 billion for the same period in 1998. Revenues grew
11% and EBITA grew 12% when normalized principally for certain cable-related and
filmed entertainment transactions in 1999 and 1998 and digital media activities.
In the  quarter,  Cable  Networks,  Publishing,  and Cable all  posted  all-time
records.  Below are  EBITA  results  for the  fourth  quarter  and full year (in
millions):


                                        Fourth Quarter                      Year
                                   Historical  Pro Forma (1)       Historical   Pro Forma (1)
                                      1999        1998                 1999         1998
                                      ----        ----                 ----         ----
                                                                      
Cable Networks                      $  394      $  316             $  1,397      $ 1,160
Publishing                             260         234                  679          607
Music                                  173         205                  452          493
Filmed Entertainment (2)               191         198                  997          695
Broadcasting-The WB Network              3         (15)                 (92)         (93)
Cable (2)                            1,450         448                3,927        1,694
Intersegment Elimination                 -         (18)                 (10)         (94)
                                       ---         ---                  ---          ---
EBITA Excluding Digital Media        2,471       1,368                7,350        4,462
Digital Media                          (17)          -                  (17)           -
                                       ---         ---                  ---          ---
TOTAL EBITA                         $2,454      $1,368               $7,333       $4,462
                                    ======      ======               ======       ======


(1)  To enhance  comparability,  prior period information has been provided on a
     "pro forma"  consolidated basis that  retroactively  reflects Time Warner's
     consolidation of the Entertainment  Group, which substantially  consists of
     TWE. Pro forma 1998 operating  results,  as presented in the table,  do not
     adjust for the effects of other  significant  transactions and nonrecurring
     items discussed elsewhere herein.

(2)  Filmed   entertainment   and  cable   operating   results  include  certain
     significant  and  nonrecurring  net gains,  as described  more fully in the
     discussion of divisional results included elsewhere herein.


Commenting on the  company's  performance,  Time Warner's  Chairman and CEO
Gerald M. Levin said,  "I am pleased  with our record  results and strong  EBITA
growth  rate of 15%  for  1999,  which  met  the  top  end of the  range  of our
aggressive  targets for the year, and with the record  performance of the Turner
Cable Networks, HBO, Time Inc., Warner Bros. and Time Warner Cable. In addition,
our overall company  advertising revenue grew by 20% to over $5 billion in 1999.
Our strategic combination with AOL will accelerate the digital transformation of
Time Warner,  creating the world's first  Internet-age  media and communications
company.  Through our joint venture agreement with EMI, we will form the world's
premier  music  group,  one that will  define  and drive the growth of the music
industry. Going forward, as we proceed with these transforming transactions, the
underlying strengths of Time Warner's operating  performance will help provide a
dynamic base for the success of our new enterprise."






                                       1



For the full year, basic net income per common share, when normalized to exclude
the aggregate effect of certain significant  nonrecurring items (1), was $.39 in
1999,  compared  to a net loss of $.06 per common  share in 1998.  On a reported
basis,  Time Warner had basic income per common  share  before an  extraordinary
item of $1.51 in  1999,  and  $1.50  after,  compared  to a net loss of $.31 per
common share in 1998.

For the fourth  quarter,  basic net income per common share,  when normalized to
exclude the aggregate  effect of the  nonrecurring  items (1), was $.20 in 1999,
compared to $.11 per common share in 1998. On a reported basis,  Time Warner had
fourth-quarter  basic net income per common share of $.65 in 1999, compared to a
net loss of $.17 per common share in 1998.

CABLE  NETWORKS
Fourth-quarter EBITA for the Cable Networks division was an all-time record $394
million,  up 25%, versus $316 million a year earlier.  Full-year EBITA for Cable
Networks was an all-time record $1.397 billion,  up 20%, versus $1.160 billion a
year earlier.  The Turner Cable Networks' 23% EBITA growth for the year resulted
from double-digit increases in both subscription and advertising revenues. Total
revenues  in 1999 for the  Turner  Cable  Networks  were up 19% from a year ago.
HBO's 16% EBITA growth for 1999 reflects increased subscription revenues for HBO
and Cinemax. Turner South, TBS's first regional entertainment network,  launched
in the quarter with nearly  one-million  subscribers.  In 1999, the Turner Cable
Networks delivered their largest annual audiences ever. TBS Superstation and TNT
aired all 10 of the top 10 theatrical film presentations on basic cable, and all
five of the top five original  movies.  HBO and Cinemax  subscriptions  grew 1.1
million to 35.7 million at year end. In January 2000, HBO won eight Golden Globe
Awards,  the most of any television  network,  including four awards for the hit
series  The  Sopranos,  two for Sex and the City,  and one each for  Introducing
Dorothy Dandridge and RKO 281.

PUBLISHING
Fourth-quarter EBITA for Time Inc., the company's  publishing  division,  was an
all-time  record  $260  million,  up  11%,  compared  to  $234  million  for the
year-earlier period. The fourth quarter was Time Inc.'s 25th straight quarter of
EBITA  growth.  For 1999,  EBITA was up 12%, to an all-time  record $679 million
from $607 million in 1998.  Contributing  to the year's  results were strong 16%
advertising revenue improvements. Across-the-board advertising gains were led by
In Style,  People,  Fortune and Time.  These gains were somewhat offset by lower
direct marketing results. Circulation growth continued, with Teen People raising
its rate base to 1.5 million and In Style increasing its to 1.3 million. At year
end, Time Inc.  magazines reached a gross audience of approximately 200 million.
During the quarter,  Time Inc.'s  Book-of-the-Month  Club and Bertelsmann A.G.'s
Doubleday  Direct  announced an agreement in principle to form a new partnership
that will  offer a far  greater  choice of book  titles to their  combined  club
members.

MUSIC
Warner Music Group posted fourth-quarter EBITA of $173 million, compared to $205
million in the fourth  quarter of 1998. For 1999,  EBITA was $452 million,  down
8%, compared to $493 million a year ago. The year's results reflect  declines in
both  domestic and  international  revenue and lower  results from its 50%-owned
Columbia House partnership. Top worldwide sellers for the year include Cher, Red
Hot Chili Peppers, Kid Rock, Eric Clapton, The Corrs,  Madonna, Tim McGraw, Luis
Miguel, Sugar Ray, the Pokemon soundtrack,  Faith Hill, Phil Collins, Metallica,
Goo Goo Dolls,  Austin Powers:  The Spy Who Shagged Me Vol. 1 soundtrack,  Leann
Rimes and Mana. Warner Music artists earned 73 Grammy nominations in January, in
such key categories as Record of the Year, Best New Artist, Best Pop Album, Best
Rock Album,  Best Rap Album and Best Country Album. In January,  Time Warner and
EMI Group plc announced an agreement to form the world's  premier music group by
combining  their recorded music and music  publishing  businesses  into a global
joint venture, which will be consolidated by Time Warner.


    (1) The  comparability of Time Warner's income (loss) per common share on a
quarterly and annual basis is affected by certain  significant and  nonrecurring
items recognized in each period. For the quarter,  these items include a gain in
1999 from the sale of an interest in  CanalSatellite,  a non-cash charge in 1999
in  connection  with Warner  Bros.'  retail  stores,  net gains in 1999 and 1998
relating to the sale or exchange of cable television systems and investments,  a
charge in 1998 to reduce the carrying  value of an interest in Primestar and the
effect  of a  one-time  increase  in  preferred  dividend  requirements  in 1998
relating  to the  redemption  of Time  Warner's  Series M  preferred  stock.  In
addition to those items, significant and nonrecurring items for the year include
a gain in 1999 from the early  termination  of a  long-term  video  distribution
agreement,  a gain in 1999  relating  to the  initial  public  offering of a 20%
interest  in  Time  Warner  Telecom  and an  extraordinary  loss  in 1999 on the
retirement of debt.





                                       2



FILMED ENTERTAINMENT
Fourth-quarter  EBITA for Filmed  Entertainment  was $191  million,  versus $198
million for the comparable  1998 period.  Full-year EBITA was an all-time record
$997 million,  versus $695 million for the year-earlier  period. On a normalized
basis, EBITA grew 14% for the year. The 1999 reported results include net pretax
gains  of  approximately  $215  million  recognized  in  the  first  quarter  in
connection  with the early  termination  and  settlement  of a  long-term  video
distribution  agreement  and $97  million  recognized  in the fourth  quarter in
connection  with  the  sale  of  an  interest  in  CanalSatellite,  a  satellite
television  platform servicing France and Monaco,  offset in part by a one-time,
fourth-quarter  non-cash charge of $106 million relating to Warner Bros.' retail
stores.  EBITA for 1999  benefited  from increases in revenue from Warner Bros.'
worldwide  theatrical and home video  businesses,  as well as improvements  from
TBS's film library  operations,  partially  offset by lower  results from Warner
Bros.' consumer products  operations.  In 1999, Warner Bros. achieved $1 billion
at the  domestic  box office for the first time and also  exceeded $1 billion at
the  international box office.  Theatrical  revenues for 1999 benefited from the
box-office  success of Warner  Bros.' The  Matrix,  which  earned more than $450
million  worldwide  and  became  Warner  Bros.'   highest-grossing   film  ever.
Theatrical  revenues in 1999 also benefited from the domestic box-office success
of Warner Bros.' The Green Mile ($116 million to date) and Any Given Sunday ($73
million  to date) and New Line's  Austin  Powers:  The Spy Who  Shagged Me ($205
million to date).

BROADCASTING-THE  WB NETWORK
The WB Television Network posted EBITA of $3 million in the quarter, compared to
a loss of $15 million a year ago.  The  quarterly  profit was the first ever for
the  network.  For 1999,  the loss was $92  million,  compared  to a loss of $93
million for 1998.  The 1999  results  reflect  improved  broadcasting  revenues,
offset by higher  programming  costs  associated  with an  expanded  programming
schedule and increased  start-up costs for The WB Network 100+ Station Group. In
1999, The WB successfully added new ratings winners such as Popular and Angel to
established  hits such as Buffy the Vampire  Slayer,  Dawson's  Creek,  Charmed,
Felicity and 7th Heaven.  Kids' WB!, anchored by Pokemon, has become the leading
broadcast and cable children's network on Saturday mornings.

CABLE
In the fourth quarter,  Time Warner Cable posted all-time record EBITA of $1.450
billion, up from $448 million a year ago. For 1999, EBITA was an all-time record
$3.927 billion versus $1.694 billion in 1998. On a normalized basis,  EBITA grew
11% for the year. The reported  results  include net pretax gains for the fourth
quarter of $999 million in 1999 and $18 million in 1998  relating to the sale or
exchange of cable  television  systems and  investments.  For the full year, net
pretax gains  amounted to $2.247  billion in 1999 and $108 million in 1998.  The
cable division's  continuing solid  double-digit  growth reflects an increase in
basic cable,  pay-per-view and Road Runner revenues and in advertising revenues,
which grew 26% in 1999. At the end of the fourth quarter,  Time Warner Cable had
an internal  subscriber growth rate of 1.9%, served  approximately  12.6 million
subscribers,  and passed  20.6  million  homes,  which is over 20% of total U.S.
television households. At the end of the quarter, Time Warner Cable was offering
digital video services to 430,000 subscribers.  Road Runner, Time Warner Cable's
jointly-owned  high-speed online service, had approximately  550,000 subscribers
at year end, having added 130,000 new subscribers in the quarter.

DIGITAL MEDIA
Time  Warner  Digital  Media  posted a loss of $17 million  during the  quarter,
reflecting  start-up  activities  associated  with the  company's  digital media
businesses,   including  Entertaindom   (www.entertaindom.com),   the  company's
entertainment Web destination launched in November.

Time Warner Inc. (NYSE:  TWX,  www.timewarner.com)  is the world's leading media
company.  Its  businesses  include cable  networks,  publishing,  music,  filmed
entertainment, cable and digital media.


####









                                       3



                 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  and  are  naturally  subject  to
uncertainty  and changes in  circumstances.  Actual results may vary  materially
from the expectations  contained herein. The forward-looking  statements in this
document include  statements about future financial and operating  results,  the
proposed Time Warner/America Online transaction and Time Warner's proposed joint
venture with EMI Group. The following factors,  among others, could cause actual
results to differ materially from those described herein:  inability  to obtain,
or meet conditions imposed for, governmental  approvals for the merger with
America  Online  and/or the joint  venture  with EMI Group;  failure of the Time
Warner  or  America  Online  stockholders  to  approve  the  merger  and/or  the
shareholders  of EMI Group to approve the joint venture;  the risk that the Time
Warner and America Online  businesses will not be integrated  successfully;  the
costs  related to the merger;  the inability of Warner Music Group and EMI Group
to realize  synergies or other  anticipated  benefits of the joint venture;  and
other economic,  business,  competitive and/or regulatory factors affecting Time
Warner's business  generally.  More detailed  information about those factors is
set forth in Time Warner's filings with the Securities and Exchange  Commission,
including its most recent  quarterly report on Form 10-Q and its Current Reports
on Form 8-K dated  January  10,  2000 and  January  23,  2000  relating to these
transactions. 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.


                         * * * * * * * * * * * * * * * * * * * * * *


Investors   and   security   holders   are  urged  to  read  the   joint   proxy
statement/prospectus  regarding the business combination  transaction referenced
in the foregoing information, when it becomes available, because it will contain
important information.  The joint proxy  statement/prospectus will be filed with
the Securities  and Exchange  Commission by Time Warner Inc. and AOL Time Warner
Inc.  Investors  and security  holders may obtain a free copy of the joint proxy
statement/prospectus  (when it is available) and other  documents  filed by Time
Warner Inc. and AOL Time Warner Inc. with the Commission at the Commission's web
site at  www.sec.gov.  The joint  proxy  statement/prospectus  and  these  other
documents  may also be obtained  for free from Time  Warner Inc. by  directing a
request to Time Warner Inc., 75  Rockefeller  Plaza,  New York,  New York 10019,
Attention:   Shareholder   Relations,   telephone:   (212)   484-6971,   e-mail:
investrequest@twi.com.


To  receive a copy of this press  release  through  the  Internet,  access  Time
Warner's corporate website located at http://www.timewarner.com


Attachments:
(1) Consolidated Statement of Operations
(2) Notes to Statement of Operations

Contact:
Edward Adler
(212) 484-6630


                                       4

                                                  TIME WARNER INC.
                                        CONSOLIDATED STATEMENT OF OPERATIONS
                                                 BY BUSINESS SEGMENT
                                        (In millions, except per share amounts)
                                                       (Unaudited)

                                                  Three Months Ended                    Years Ended
                                                     December 31,                      December 31,
                                                     ------------                      ------------
                                           1999        1998        1998          1999       1998        1998
                                        Historical  Pro Forma   Historical    Historical Pro Forma   Historical
                                        ----------  ---------   ----------    ---------- ---------   ----------
                                                                                   
Revenues:
Cable Networks                           $1,686     $1,392      $   866      $ 6,111      $5,377      $3,325
Publishing                                1,426      1,336        1,336        4,663       4,496       4,496
Music                                     1,218      1,294        1,294        3,834       4,025       4,025
Filmed Entertainment                      2,387      2,188          498        8,075       7,978       1,917
Broadcasting - The WB Network               138         90            -          384         260           -
Cable                                     1,406      1,327          238        5,374       5,342         964
Digital Media                                 1          -            -            1           -           -
Intersegment elimination                   (274)      (360)         (37)      (1,109)     (1,234)       (145)
                                           ----       ----          ---       ------      ------        ----

Total revenues                           $7,988     $7,267       $4,195      $27,333     $26,244     $14,582
                                         ======     ======       ======      =======     =======     =======

Business segment operating income before
   amortization of intangible assets:
Cable Networks                              394        316          201        1,397      1,160          706
Publishing                                  260        234          234          679        607          607
Music                                       173        205          205          452        493          493
Filmed Entertainment                        191        198           98          997        695          192
Broadcasting - The WB Network                 3        (15)           -          (92)       (93)           -
Cable                                     1,450        448           96        3,927      1,694          325
Digital Media                               (17)         -            -          (17)         -            -
Intersegment elimination                      -        (18)          (6)         (10)       (94)         (27)
                                            ---        ---          ---          ---        ---          ---
                                          2,454      1,368          828        7,333      4,462        2,296

Amortization of intangible assets          (350)      (329)        (201)      (1,298)    (1,330)        (800)
                                           ----       ----         ----       ------     ------         ----

Business segment operating income         2,104      1,039          627        6,035      3,132        1,496

Equity in pretax income of Entertainment
 Group, substantially all TWE                 -          -          (81)           -          -          356
Interest and other, net                    (567)      (712)        (303)      (1,954)    (2,122)      (1,180)
Minority interest                           (60)       (66)           -         (418)      (266)           -
Corporate expenses                          (43)       (46)         (28)        (163)      (158)         (86)
                                            ---        ---          ---         ----       ----          ---

Income before income taxes                1,434        215          215        3,500        586          586
Income tax provision                       (586)      (125)        (125)      (1,540)      (418)        (418)
                                           ----       ----         ----       ------       ----         ----

Income before extraordinary item            848         90           90        1,960        168          168
Extraordinary loss on retirement of
 debt, net of $9 million income tax           -         -             -         (12)         -            -
 benefit in 1999                            ---        ---          ---         ---         ---          ---

Net income                                  848         90           90        1,948        168          168
Preferred dividend requirements              (7)      (304)        (304)         (52)      (540)        (540)
                                            ---       ----         ----          ---       ----         ----

Net income (loss) applicable to
 common shares                           $  841    $  (214)       $(214)     $ 1,896     $ (372)      $ (372)
                                         ======    =======        =====      =======     ======       ======

Income (loss) per common share
 before extraordinary item:
   Basic                                  $ .65     $ (.17)      $ (.17)      $ 1.51     $ (.31)      $ (.31)
                                          =====     ======       ======       ======     ======       ======
   Diluted                                $ .62     $ (.17)      $ (.17)      $ 1.43     $ (.31)      $ (.31)
                                          =====     ======       ======       ======     ======       ======

Net income (loss) per common share:
   Basic                                  $ .65     $ (.17)      $ (.17)      $ 1.50     $ (.31)      $ (.31)
                                          =====     ======       ======       ======     ======       ======
   Diluted                                $ .62     $ (.17)      $ (.17)      $ 1.42     $ (.31)      $ (.31)
                                          =====     ======       ======       ======     ======       ======

Average common shares:
   Basic                                1,286.5    1,227.2      1,227.2      1,267.0    1,194.7      1,194.7
                                        =======    =======      =======      =======    =======      =======
   Diluted                              1,391.8    1,227.2      1,227.2      1,398.3    1,194.7      1,194.7
                                        =======    =======      =======      =======    =======      =======

                                                       5





                                TIME WARNER INC.
                        NOTES TO STATEMENT OF OPERATIONS

Note 1: Basis of Presentation

Time Warner classifies its business  interests into six fundamental areas: Cable
Networks,  consisting principally of interests in cable television  programming;
Publishing,  consisting  principally of interests in magazine  publishing,  book
publishing and direct marketing;  Music,  consisting principally of interests in
recorded  music  and  music   publishing;   Filmed   Entertainment,   consisting
principally  of interests in filmed  entertainment,  television  production  and
television  broadcasting;  Cable,  consisting  principally of interests in cable
television systems;  and Digital Media,  consisting  principally of interests in
Internet-related and digital media businesses.

A  majority  of Time  Warner's  interests  in filmed  entertainment,  television
production,  television broadcasting and cable television systems, and a portion
of its interests in cable  television  programming  are held through Time Warner
Entertainment  Company,  L.P.  ("TWE").  Since  1993,  Time  Warner has not been
consolidating TWE and certain related companies (the "Entertainment  Group") for
financial  reporting  purposes  because a  subsidiary  of MediaOne  Group,  Inc.
("MediaOne"),  which is a limited  partner of TWE, had rights that allowed it to
participate  in the  management of TWE's  businesses.  However,  in August 1999,
MediaOne's  management  rights  over  TWE were  terminated.  As a  result,  Time
Warner's 1999 operating  results reflect the  consolidation of the Entertainment
Group,  which  substantially  consists of TWE,  retroactive  to the beginning of
1999. Time Warner's historical operating results for 1998 have not been changed;
however, in order to enhance comparability, pro forma operating results for 1998
retroactively reflecting the consolidation of TWE are presented supplementally.

Note 2: Cable-Related Transactions

Gains on the Sale or Exchange of Cable Television Systems and Investments

In 1999 and 1998, largely in an effort to enhance their geographic clustering of
cable television properties, Time Warner and TWE sold or exchanged various cable
television  systems  and  investments.  As a result of these  transactions,  the
operating  results of Time Warner's Cable division  include net pretax gains for
the  fourth  quarter of $999  million  in 1999 and $18  million in 1998 on a pro
forma basis.  Net pretax gains for the year  amounted to $2.247  billion in 1999
and $108 million in 1998 on a pro forma basis.  On a historical  basis for 1998,
all $18 million of the net pretax gains recognized in the fourth quarter of 1998
are included in the operating  results of Time Warner's  Cable  division and the
remaining $90 million of gains  recognized  during the year are included in Time
Warner's equity in the pretax income of the Entertainment Group.

1999 Gain on Time Warner Telecom's Initial Public Offering

In May 1999,  Time Warner  Telecom,  a competitive  local exchange  carrier that
provides telephony services to businesses,  completed an initial public offering
of 20% of its common stock (the "Time Warner Telecom IPO").  Time Warner Telecom
raised net proceeds of approximately $270 million. Approximately $180 million of
these  proceeds  were used to pay  obligations  owed to Time  Warner and TWE. In
turn,  Time Warner and TWE used those proceeds  principally to reduce bank debt.
In connection with the Time Warner Telecom IPO and certain related transactions,
Time Warner's  ownership interest in Time Warner Telecom was diluted from 61.98%
to 48.21%.  As a result,  Time Warner  recognized a pretax gain of approximately
$115 million.  This gain has been  included in interest and other,  net, in Time
Warner's 1999 consolidated statement of operations.

1998 Primestar Write-Down

In the fourth  quarter of 1998,  TWE  recorded  a charge of  approximately  $210
million  principally  to  reduce  the  carrying  value  of its 24%  interest  in
Primestar, Inc. ("Primestar"), a direct broadcast satellite company. This charge
reflected  a  significant  decline in the fair value of  Primestar  during  that
quarter.  The  decline in  Primestar's  value was  confirmed  by the sale of its
assets and  operations  to  DirecTV,  a  competing  direct  broadcast  satellite
business owned by Hughes Electronics Corp., which occurred during the first half
of 1999.  This  charge has been  included in  interest  and other,  net, in Time
Warner's  1998  pro  forma  consolidated  statement  of  operations  and,  on  a
historical  basis for 1998, in Time Warner's  equity in the pretax income of the
Entertainment Group.






                                       6



1998 Cable Transactions

A number of significant transactions occurred in 1998 that further affected
the comparability of the Cable division's results.  These transactions consist
of (i)  the  transfer  of Time  Warner  Cable's  direct  broadcast satellite
operations to Primestar,  effective as of April 1, 1998, (ii) the formation  of
the Road  Runner  joint  venture to operate  and expand  Time Warner  Cable's
and  MediaOne's  existing  high-speed  online  businesses, effective  as of
June 30,  1998,  (iii) the  reorganization  of Time Warner Cable's business
telephony operations into a separate entity now named Time Warner Telecom Inc.,
effective as of July 1, 1998 and (iv) the formation of a joint  venture  in
Texas  that  owns  cable  television  systems  serving approximately 1.1
million  subscribers,  effective as of December 31, 1998. These   transactions
are  all  more  fully  described  in  Time  Warner's consolidated  financial
statements  included in its Annual  Report on Form 10-K for the year ended
December 31, 1998, as amended.

Note 3:  Filmed Entertainment Transactions

1999 Gain on Termination of MGM Video Distribution Agreement

In  March  1999,  Warner  Bros.  and   Metro-Goldwyn-Mayer,   Inc.  ("MGM")
terminated a long-term  distribution  agreement  under which  Warner  Bros.  had
exclusive  worldwide  distribution  rights  for  MGM/United  Artists  home video
product.  In  connection  with the  early  termination  and  settlement  of this
distribution   agreement,   Warner  Bros.   recognized  a  net  pretax  gain  of
approximately  $215  million,  which  has been  included  in the 1999  operating
results of Time Warner's Filmed Entertainment division.

1999 Gain on Sale of CanalSatellite

In December 1999, Warner Bros. sold its 10% interest in  CanalSatellite,  a
satellite television distribution service in France and Monaco, to Canal Plus, a
large French media  entertainment  company.  In connection with the sale, Warner
Bros.  recognized a pretax gain of $97 million,  which has been  included in the
1999 operating results of Time Warner's Filmed Entertainment division.

1999 Warner Bros. Retail Stores Write-Down

In the fourth  quarter of 1999,  Warner  Bros.  recorded a noncash,  pretax
charge of $106 million to reduce the carrying  value of certain fixed assets and
leasehold  improvements  used in its retail  stores.  The charge  represents the
excess of the carrying  value of the assets used in Warner  Bros.' retail stores
over the  discounted  future  cash flows from such  operations,  based on a plan
adopted in December  1999 that is designed  to improve  the  performance  of its
stores.  The  charge has been  included  in the 1999  operating  results of Time
Warner's Filmed Entertainment division.

Note 4:  1998 Redemption of Series M Exchangeable Preferred Stock

In December 1998, Time Warner redeemed all of its outstanding  shares of
10 1/4% Series M exchangeable preferred stock at an aggregate cost of
approximately $2.1  billion.  The  redemption  was funded with  proceeds
from the issuance of lower-cost debt. As a result of this redemption, preferred
dividend requirements in Time Warner's 1998  consolidated  statement of
operations  include a one-time effect of $234  million  relating to the premium
paid in  connection  with such redemption.

Note 5:  Income Taxes

The relationship  between income before income taxes and income tax expense
of Time Warner is affected by the  amortization  of goodwill  and certain  other
financial  statement  expenses that are not  deductible for income tax purposes.
Historical  income tax expense of Time Warner for 1998 includes all income taxes
related  to its  allocable  share of  partnership  income  and its equity in the
income tax expense of corporate subsidiaries of the Entertainment Group.

Note 6:  Income (Loss) per Common Share

Basic income  (loss) per common  share is based upon the net income  (loss)
applicable to common shares after preferred  dividend  requirements and upon the
weighted average of common shares outstanding during the period.  Diluted income
(loss) per common share adjusts for the effect of convertible securities,  stock
options and other potentially dilutive financial instruments only in the periods
in which such effect would have been dilutive.






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Note 7:  Comparability of Income (Loss) per Common Share

As  described  more fully  above,  income  (loss) per common share has been
affected by certain significant, nonrecurring items recognized in 1999 and 1998.
Those items consist of net gains relating to (i) the sale or exchange of various
cable television systems and investments in both periods,  (ii) the 1999 gain on
the Time Warner Telecom IPO, (iii) the 1998 Primestar  write-down,  (iv) the net
gains  relating  to the 1999  Filmed  Entertainment  transactions,  (v) the 1998
redemption  of  the  Series  M   exchangeable   preferred   stock  and  (vi)  an
extraordinary loss in 1999 relating to the retirement of debt. The aggregate net
effect of these  items was to  increase  (decrease)  basic net income per common
share for the fourth  quarter by $.45 in 1999 and $(.28) in 1998.  For the year,
the aggregate net effect was to increase  (decrease) basic net income per common
share by $1.11 in 1999 and $(.25) in 1998. On a diluted basis, the aggregate net
effect for the  fourth  quarter  was an  increase  (decrease)  in net income per
common  share of $.42 in 1999 and  $(.28) in 1998.  For the  year,  on a diluted
basis,  the  aggregate  net effect was an increase  (decrease) in net income per
common share of $1.03 in 1999 and $(.25) in 1998.






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