November 10, 2016Albert Fried & Company, LLCInstitutional Reductive ResearchTime Warner Inc., TWXOverweight, Target: 107.50TWX; Politics Make Strange Bedfellows: Reiterate Overweight and 107 TargetShare 5PriceShares Out (MM)52Wk RangeMCAP (USDx 1000)CashBalance Sheet Net DebtEnterprise ValueShort InterestThesis: We thought TWX shares were inexpensive on a relative and absolute basis. TWX had two divisions which arepoised to execute better than Wall Street expects, Turner and Warner Brothers. We also like HBO. Lastly, Warner’s MovieCatalogue is a hidden asset on the Time Warner Balance sheet in our view; the T deal unlocks that value.Risks to Thesis: Cord Cutting, competition, affiliate fee disputes, and A La Cart is not the opportunity we expect An economic downturn weights on spending, Interest rates rise dramatically, FX deteriorates more than expected.Risks: 119312515064862/d862821d10k.htm#toc862821 3*Target 12 to 18 MonthsaKey Levers:Rich TulloDirector of Research(212) 422 7282 [email protected] per 203Q1.111.261.86A-Denotes ActualE-Denotes Estimatea4Q0.851.061.04 We think President Elect Trump does not need a dust up with Time Warner and Time Warner does not need aPresident Elect with an ax to grind. Thus Trump’s comments at Gettysburg made during the heat of the electionand while Wikileaks was posting information on CNN contributors should be viewed as Political and not investmentactionable. The Atlantic wrote “The Media takes Trump literally and not seriously and Trumpers Take Trump seriously and notliterally.” No truer words have been written about this election in our view. We think the Trump’s push back on theATT Time Warner Deal should be taken seriously not literally and investors that do just that will benefit. Looking at the situation seriously the merger is good for competition. ATT can nationally compete with the localmonopolies engineered by Comcast (NC) and Charter (NC) on a local level. New ATT will compete with MSNBCwhich is also was a topic of the Wikileaks. So from a certain standpoint, CNN is not alone and cannot be targetedin some kind of fraud purge. However ATT must be looking at TWX as an International Asset and we argue after this election the Y/Ycomparisons will be tough so why not sell or spin off CNN which is predominately a domestic outlet like ESPN. IfATT views TWX’s content globally, we argue CNN is a nice to have asset but not a must have asset. Thus ATTcan spinout or sell and not cross own CNN. If CNN is worth 5 billion or more on a standalone basis, we thinkspinning CNN out eases some of leverage risk in the deal. . From The President’s elects perspective his argument may not be with Superman but rather Donna Brazille theWikileaks Target. If we take Mr. Trump Seriously and not literally we suspect the administration would appreciate amore independent CNN not conflicted by its ownership structure. A spinout makes sense to us. If a spinout ispursued the President has a success that makes voters, investors and business happy and sends a messageAmerica is open for business.Target: We value TWX by applying a 7X EV/AOCF (EBITDA) multiple to our 2016 AOCF estimate of 16 billion. (Our AOCFestimate does not compare with company provided EBITDA metrics and is defined as operating income, excluding D&A expenseand non-cash operating expenses. Our AOCF measure is the same for all companies we cover) our multiple approaches the peermedia multiple, 10x, and S&P 500 and reflects AT&T’s bid to acquire TWX. Thus with a premium bid outstanding and the marginalpossibility for a second bidder to be interested in TWX we reiterate our Overweight rating.Key ing Income (loss)GAAP 3x5.0x11.7xMultiplesEV/SalesEV AOCFPEzSee important notes, disclosures and disclaimers on page 2-4 before making investment decisions.1

.Analyst CertificationI, Richard R Tullo, hereby certify (1) that the views expressed in this report accurately reflect my personal views about any orall of the subject securities or issuers referred to in this report and (2) no part of my compensation was, is or will be directly orindirectly related to the specific recommendations or views expressed in this report.About Ratings TransparencyRatings for OVERWEIGHT AND UNDER WEIGHT rated securities are typically reviewed for a potential ratings and or pricetarget change when the market closing price is within 5% of the price target on initiation. The review process generally takes1 to 20 days to complete however: market conditions, geopolitical events, industry regulations as well as other contingenciesmay influence the timeliness of the review process. We have no obligation to tell you when opinions or information in AlbertFried &Company LLC, research change apart from when we discontinue research on a subject company.About Adjusted Operating Cash Flow (AOCF)AOCF is a NON-GAAP measure of income similar to EBITDA (Earning before interest, taxes, depreciation and amortizationexpense). We define AOCF as; operating income less depreciation, amortization and non-cash executive compensation. Welike AOCF as it provides a standard measure of earnings and value across a large spectrum of the Technology, Media andTelecommunications universe we cover. As we cover securities which have significant non-cash costs and or significantdifferences in capital structures, even within industry peers, we use Enterprise Value-to-AOCF (EBITDA) as a primaryvaluation method in most of our coverage universe. We define Enterprise-Value (EV) as Market Capitalization less Cash,plus Debt and we exclude minority interest as minority interest income and or expense is typically excluded from our AOCFcalculations. Moreover, in several Companies we follow options exist to PUT (Buy) Minority interest to the parent onfavorable terms which may or may not add value in an acquisition scenario. Companies we follow may, in Company reports,use there own definitions of AOCF or similar measures such as AOI, EBITDA or Company share of EBITDA which may differmaterially from our AOCF measure. We maintain no obligation to either reconcile our measure to company metrics orreconcile to GAAP Measures.See important notes, disclosures and disclaimers on page 2-4 before making investment decisions.2

Price and Ratings TableDateTargetPriceRatingTypeDirection1/21/2016 90 67.93Overweight10/24/2016 107 90.00OverweightReportInitiationReportNoteSee important notes, disclosures and disclaimers on page 2-4 before making investment decisions.3

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EV/Sales Thesis: We thought TWX shares were inexpensive on a relative and absolute basis. TWX had two divisions which are poised to execute better than Wall Street expects, Turner and Warner Brothers. We also like HBO. Lastly, Warner’s Movie Catalogue is a hidden asset on the Time Warner