Time Warner 7 December

Time Warner 7 December (UBS) Underperform from Market Perform

Time Warner: We change to Underperform from Market Perform

The following is a summary of a UBS report on this topic, dated December 7, 2005.

* Icahn hires Lazard Ltd. to analyze TWX:
Icahn has made further efforts to change strategy at TWX. He has hired Lazard Ltd. to do a
strategic analysis of the company and to make recommendations concerning possible new board members.

* Icahn is proposing a split-up:
Icahn has proposed that TWX spin off its cable subsidiary and repurchase $20 billion in stock.
It is not clear whether Icahn might modify his strategy to split up the company into cable,
AOL, publishing, and content/television stations.

* Increasing risk of shareholder-friendly strategy:
While we don't think it likely that TWX would completely spin off Time Warner Cable, we see
the risk of additional share buybacks, asset sales, or split-ups that could lead to
deteriorating credit quality.

* We change to Underperform from Market Perform:
We believe that increased event risk and headline risk is likely to make TWX bonds volatile,
with the risk of further spread widening. As a result, we change our opinion on TWX to
Underperform from Market Perform. In light of the likelihood of increasing leverage and event
risk, we downgrade TWX to BBB from BBB+. We change the Credit Trend to "Deteriorating" from "Stable".

Time Warner 7 December (UBS) Underperform from Market Perform

Time Warner: We change to Underperform from Market Perform

The following is a summary of a UBS report on this topic, dated December 7, 2005.

* Icahn hires Lazard Ltd. to analyze TWX:
Icahn has made further efforts to change strategy at TWX. He has hired Lazard Ltd. to do a
strategic analysis of the company and to make recommendations concerning possible new board members.

* Icahn is proposing a split-up:
Icahn has proposed that TWX spin off its cable subsidiary and repurchase $20 billion in stock.
It is not clear whether Icahn might modify his strategy to split up the company into cable,
AOL, publishing, and content/television stations.

* Increasing risk of shareholder-friendly strategy:
While we don't think it likely that TWX would completely spin off Time Warner Cable, we see
the risk of additional share buybacks, asset sales, or split-ups that could lead to
deteriorating credit quality.

* We change to Underperform from Market Perform:
We believe that increased event risk and headline risk is likely to make TWX bonds volatile,
with the risk of further spread widening. As a result, we change our opinion on TWX to
Underperform from Market Perform. In light of the likelihood of increasing leverage and event
risk, we downgrade TWX to BBB from BBB+. We change the Credit Trend to "Deteriorating" from "Stable".