Following encouraging quarterly earnings, Time Warner CEO Jeff Bewkes sent this internal memo out to his minions, instructing them how to innovate for future success, provided they're not laid off in the next couple months.

November 4, 2009

To: Time Warner Colleagues

From: Jeff Bewkes

Subject: Innovating for Future Success

We've had a lot of good news this past quarter, despite the tough economy. Our financial performance exceeded expectations and kept us on track to post solid results for the full year. So we have raised our business outlook for 2009. We also expect to spin off AOL by the end of the year and become a more content-focused media company. In addition, we're making strong progress on our key operating objectives. Our financial and strategic successes give me confidence that we'll be well positioned to drive steady and attractive returns to shareholders next year and into the future.

In the third quarter, our overall adjusted OIBDA was 9% lower than in the same period last year. But, importantly, our Content Group businesses that will soon make up the new Time Warner – Turner, HBO, Warner Bros. and Time Inc. (along with TWX corporate) – generated adjusted OIBDA that was about even with the year-ago quarter and up 2% for the first nine months of the year. In light of these relatively strong results, we increased our business outlook for 2009 adjusted earnings per share (adjusted EPS) to at least $2.05, up from our previous outlook of around $1.98. Also, for the first time, we provided a full-year adjusted EPS outlook for our Content Group – at least $1.75 in 2009, compared to $1.42 last year. (Please click here to read the press releases.)

As I've mentioned before, we have four operating objectives to drive the profitability of our core content businesses:
· Leveraging our scale and brands to deliver compelling content consistently;
· Continuing to improve the efficiency of our operations to maintain our competitive advantage;
· Expanding internationally; and
· Developing new business models to capitalize on shifting technologies in a way that both benefits consumers and builds on our successful business models.

Let me highlight that last objective here. Time Warner has a long tradition of building businesses on new technologies to provide consumers with the choice and convenience they want – from pay television at HBO and CNN's around-the-clock news to the leadership at Turner and HBO in video on demand (VOD) and Warner Bros.' launch of DVDs.

We're extending that record of innovation throughout Time Warner. For example, we're advancing TV Everywhere even faster than I expected. As you know, TV Everywhere is an industry initiative to allow those who subscribe to TV in their homes to watch their favorite programs at no extra charge on a wide range of other devices. Consumers get more for their money, and the industry benefits from expanding its current business model to the Internet. There are several trials underway with major distributors, with additional distributors and programmers planning to join. We're also developing the technological tools to ensure TV Everywhere is a seamless user experience.

Looking ahead, we'd like to develop a similar model for the publishing industry. As e-readers and other mobile technologies become more sophisticated and popular, consumers will want magazine content available conveniently on a range of these devices. So it's an exciting opportunity for Time Inc. and the rest of the industry to give consumers the content they want, when and how they want it – while growing both circulation and advertising revenue.

Among other innovations going on around the company, Turner last month launched the new It's been totally redesigned to make it more visually compelling and to integrate more video and such features as a new opinion section and partnerships with, PEOPLE and Entertainment Weekly. The press reviews have been very positive, and we look for to extend its leadership as the #1 destination for online and wireless news.

Another example is a recent VOD trial that Warner Bros. conducted with Comcast in Atlanta. In a first for a major studio, Warner Bros. released two films – Observe and Report and Ghosts of Girlfriends Past – on VOD for cable subscribers several days before they were put out on DVDs and Blu-ray Discs. This VOD trial not only offered consumers more options to see the movies, but it also helped promote the sale of their DVDs themselves.

These are challenging but exciting times for Time Warner. As a content-focused company, I believe that we'll be better able than ever to take full advantage of the opportunities offered by new technologies. At our core, of course, we're about great content. So I'll close by congratulating the winners of our 34 Primetime Emmys at Turner, Warner Bros. and HBO, which won the most of any network for the seventh straight year. As always, I appreciate your dedication and hard work.