SECURITIES AND EXCHANGE COMMISSION
                    Washington, D. C.  20549
                                
                           FORM 10-Q

[ x ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
       THE SECURITIES EXCHANGE ACT of 1934 for the quarterly
       period ended June 30, 1997, or 

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
       THE SECURITIES EXCHANGE ACT of 1934 for the
       transition period from           to          .

Commission file number 1-12259


                        TIME WARNER INC.
     (Exact name of registrant as specified in its charter)
                                
             Delaware                            13-3527249
(State or other jurisdiction of                (I.R.S. Employer
 incorporation or organization)             Identification Number)
                                
                      75 Rockefeller Plaza
                   New York, New York  10019
                         (212) 484-8000
                           
(Address, including zip code, and telephone number, including 
area code, of registrant's principal executive offices)
                                
                                
Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required 
to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.  Yes   x    No     

Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.

    Common Stock - $.01 par value                  515,726,899            
Series LMCN-V Common Stock - $.01 par value         57,061,942
       Description of Class                      Shares Outstanding
                                                 as of July 31, 1997
<PAGE>

<PAGE>

                      TIME WARNER INC. AND 
             TIME WARNER ENTERTAINMENT COMPANY, L.P. 

                        INDEX TO FORM 10-Q
                                 
                                                             Page       
   
                                                        Time  
                                                       Warner    TWE

PART I.  FINANCIAL INFORMATION

Management's discussion and analysis of results of
operations and financial condition                        1      32

Consolidated balance sheets at June 30, 1997 and 
December 31, 1996                                        16      38

Consolidated statements of operations for the three 
and six months ended June 30, 1997 and 1996              17      39

Consolidated statements of cash flows for the six 
months ended June 30, 1997 and 1996                      18      40

Notes to consolidated financial statements               19      41

Supplementary information                                30


PART II.  OTHER INFORMATION                              46

<PAGE>

<PAGE>

                   Part I.   Financial Information

                            TIME WARNER INC. 
                  MANAGEMENT'S DISCUSSION AND ANALYSIS 
            OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 

     On October 10, 1996, Time Warner Inc. ("Time Warner" or
the "Company"), acquired the remaining 80% interest in
Turner Broadcasting System, Inc. ("TBS") that it did not
already own (the "TBS Transaction"). As a result of this
transaction, a new parent company with the name "Time Warner
Inc." replaced the old parent company of the same name ("Old
Time Warner", now known as Time Warner Companies, Inc.), and
Old Time Warner and TBS became separate, wholly owned
subsidiaries of the new parent company ("New Time Warner").
References herein to "Time Warner" or the "Company" refer to
Old Time Warner prior to October 10, 1996 and New Time
Warner thereafter.

     Time Warner classifies its business interests into four
fundamental areas: Entertainment, consisting principally of
interests in recorded music and music publishing, filmed
entertainment, television production, television
broadcasting and theme parks; Cable Networks, consisting
principally of interests in cable television programming and
sports franchises; Publishing, consisting principally of
interests in magazine publishing, book publishing and direct
marketing; and Cable, consisting principally of interests in
cable television systems. 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"). Time Warner owns general and limited partnership
interests in TWE consisting of 74.49% of the pro rata
priority capital ("Series A Capital") and residual equity
capital ("Residual Capital"), and 100% of the senior
priority capital ("Senior Capital") and junior priority
capital ("Series B Capital"). The remaining 25.51% limited
partnership interests in the Series A Capital and Residual
Capital of TWE are held by a subsidiary of U S WEST, Inc.
("U S WEST"). Time Warner does not consolidate TWE and
certain related companies (the "Entertainment Group") for
financial reporting purposes because of certain limited
partnership approval rights related to TWE's interest in
certain cable television systems. Capitalized terms are as
defined and described in the accompanying consolidated
financial statements, or elsewhere herein.

Cable Strategy

     Currently, Time Warner is no longer actively pursuing a
restructuring of TWE with U S WEST. However, Time Warner is
continuing to explore alternatives to reduce selectively its
economic interest in the cable television business and
related ancillary businesses in order to reduce existing
debt and its share of future funding requirements related to
such operations. These alternatives include sales or
exchanges of non-strategic, unclustered cable television
systems and tax-efficient transfers of cable television
systems and related ancillary businesses to joint ventures
or other enterprises that would be responsible for financing
the operating and capital needs of such businesses. These
alternatives may be subject to third party, franchise and
regulatory approvals, including, in certain instances,
approval by U S WEST and/or the Advance/Newhouse Partnership
("Advance/Newhouse"). There can be no assurance that any of
these efforts will succeed.

     Consistent with this strategy of reducing existing debt
and its share of future funding requirements related to the
cable television business, TWE and Advance/Newhouse entered
into agreements in June 1997 to transfer the direct
broadcast satellite operations conducted by TWE and the
TWE-Advance/Newhouse Partnership (the "DBS Operations") and
the 31% partnership interest in Primestar Partners, L.P.
held by the TWE-Advance/Newhouse Partnership ("Primestar"
and collectively, the "Primestar Assets") to a new, publicly
traded holding company ("Newco") that will be the parent
entity of TCI Satellite Entertainment, Inc. ("TSAT"). Newco
will also own the DBS Operations and Primestar partnership
interests currently owned by TSAT and other existing partners of  

<PAGE>

Primestar. In exchange for contributing its interests in the
Primestar Assets, TWE will receive an approximate 24% equity
interest in Newco and realize approximately $200 million of
debt reduction, as well as eliminating its share of future
funding requirements for these operations that will be
separately financed by Newco. In partial consideration for
contributing its indirect interest in certain of the
Primestar Assets, Advance/Newhouse will receive an
approximate 6% equity interest in Newco. 

     In a related transaction, Primestar also entered into
an agreement in June 1997 with The News Corporation Limited,
MCI Telecommunications Corporation and American Sky
Broadcasting LLC ("ASkyB"), pursuant to which Primestar (or,
under certain circumstances, Newco) will acquire certain
assets relating to the high-power, direct broadcast
satellite business of ASkyB. In exchange for such assets,
ASkyB will receive non-voting securities of Newco that will
be convertible into non-voting common stock of Newco and,
accordingly, reduce TWE's equity interest in Newco to
approximately 16% on a fully diluted basis.

     The Primestar transactions are not conditioned on each
other and may close independently.  They are expected to
close in 1998, subject to customary closing conditions,
including all necessary governmental and regulatory
approvals, including the approval of the Federal
Communications Commission (the "FCC"). There can be no
assurance that such approvals will be obtained. 
 
Use of EBITDA

     The following comparative discussion of the results of
operations and financial condition of Time Warner and the
Entertainment Group includes, among other factors, an
analysis of changes in the operating income of the business
segments before depreciation and amortization ("EBITDA") in
order to eliminate the effect on the operating performance
of the music, filmed entertainment, cable network and cable
businesses of significant amounts of amortization of
intangible assets recognized in the $14 billion acquisition
of WCI in 1989, the $1.3 billion acquisition of the ATC
minority interest in 1992, the $2.3 billion of cable
acquisitions in 1995 and 1996, the $6.2 billion acquisition
of TBS in 1996 and other business combinations accounted for
by the purchase method. Financial analysts generally
consider EBITDA to be an important measure of comparative
operating performance for the businesses of Time Warner and
the Entertainment Group, and, when used in comparison to
debt levels or the coverage of interest expense, as a
measure of liquidity. However, EBITDA should be considered
in addition to, not as a substitute for, operating income,
net income, cash flow and other measures of financial
performance and liquidity reported in accordance with
generally accepted accounting principles.

RESULTS OF OPERATIONS

     As a result of the TBS Transaction, Time Warner has two
new business segments which parallel its previously existing
interests in filmed entertainment and cable television
programming held through TWE. Time Warner's Cable Networks
segment principally consists of TBS's cable television
networks and sports operations. These operations include
entertainment networks such as TNT, TBS Superstation,
Cartoon Network and Turner Classic Movies; news networks
such as CNN, CNN International and CNN Headline News; and
sports franchises consisting of the Atlanta Braves and the
Atlanta Hawks. Time Warner's Filmed Entertainment segment
principally consists of TBS's film and television production
and distribution operations, including New Line Cinema, Castle  

<PAGE>

Rock Entertainment, Hanna-Barbera Productions, Inc. and the
former film and television libraries of Metro-Goldwyn-Mayer,
Inc. and RKO Pictures, Inc. 

     In order to enhance comparability, the following
discussion of results of operations for Time Warner is
supplemented, where appropriate, by pro forma financial
information that gives effect to the TBS Transaction and
certain 1996 debt refinancings by Time Warner, including the
use of approximately $1.55 billion of net proceeds from the
issuance of Series M exchangeable preferred stock to reduce
debt ("Series M Preferred Stock" and collectively, the "Time
Warner Transactions"), as if such transactions had occurred
at the beginning of 1996. The pro forma results are
presented for informational purposes only and are not
necessarily indicative of the operating results that would
have occurred had the transactions actually occurred at the
beginning of 1996, nor are they necessarily indicative of
future operating results.

     EBITDA and operating income for Time Warner and the
Entertainment Group for the three and six months ended June
30, 1997 and 1996 are as follows:

                                 Three Months Ended June 30,
                             EBITDA                  Operating Income 
                              Pro                            Pro
                 Historical  Forma  Historical  Historical  Forma   Historical
                    1997      1996     1996       1997      1996       1996
                                         (millions)
Time Warner:                                                 
       
Publishing           $174     $156     $156         $149      $125     $125
Music                 125      165      165           32        70       70
Cable Networks-TBS    186      132        -          115        69        -
Filmed Entertainment
  -TBS                 31      (21)       -           10       (45)       -
Cable                 135      118      118           35        20       20
Intersegment 
  elimination           4        2        -            4         2        -

Total                $655     $552     $439         $345      $241     $215

Entertainment Group:
Filmed Entertainment
  -Warner Bros.      $155     $141    $141          $ 80      $ 79     $ 79
Broadcasting
  -The WB Network     (18)     (12)    (12)          (19)      (12)     (12)
Cable Networks-HBO    103       87      87            98        83       83
Cable                 419      376     376           168       147      147

Total                $659     $592    $592          $327      $297     $297

<PAGE>

<PAGE>
                                  Six Months Ended June 30,
                              EBITDA                Operating Income
                               Pro                           Pro
                  Historical  Forma  Historical  Historical  Forma  Historical
                    1997       1996      1996       1997      1996     1996
                                            (millions)
Time Warner:                                                 
       
Publishing          $  266    $  236    $  236        $216    $181    $181
Music                  265       311       311          82     125     125
Cable Networks-TBS     321       252         -         184     129       -
Filmed Entertainment
  -TBS                  38       (43)        -          (6)    (90)      -
Cable                  271       230       230          70      19      19
Intersegment 
  elimination           (7)      (21)        -          (7)    (21)      -

Total               $1,154    $  965    $  777        $539    $343    $325

Entertainment Group:
Filmed Entertainment
  -Warner Bros.     $  305    $  277    $  277        $154    $152    $152
Broadcasting
  -The WB Network      (38)      (36)      (36)        (39)    (36)    (36)
Cable Networks-HBO     199       168       168         189     159     159
Cable                  850       744       744         351     293     293

Total               $1,316    $1,153    $1,153        $655    $568    $568

Three Months Ended June 30, 1997 Compared to Three Months
Ended June 30, 1996

     Time Warner had revenues of $3.193 billion and net
income of $30 million ($.09 loss per common share after
preferred dividend requirements) for the three months ended
June 30, 1997, compared to revenues of $2.139 billion, a
loss of $31 million before an extraordinary loss on the
retirement of debt ($.26 loss per common share) and a net
loss of $40 million ($.28 loss per common share) for the
three months ended June 30, 1996. Time Warner's equity in
the pretax income of the Entertainment Group was $108
million for the three months ended June 30, 1997, compared
to $93 million for the three months ended June 30, 1996. 

     Time Warner's historical results of operations include
the operating results of TBS from October 10, 1996. On a pro
forma basis, giving effect to the Time Warner Transactions
as if each of such transactions had occurred at the
beginning of 1996, Time Warner would have reported for the
three months ended June 30, 1996, revenues of $3.033
billion, EBITDA of $552 million, operating income of $241
million, equity in the pretax income of the Entertainment
Group of $93 million, a loss before extraordinary item of
$61 million ($.24 loss per common share) and a net loss of
$70 million ($.26 loss per common share). No pro forma
financial information has been presented for Time Warner for
the three months ended June 30, 1997 because all of such
transactions are already reflected in the historical
financial statements of Time Warner.

     Time Warner's operating results improved from a pro
forma net loss of $70 million for the three months ended
June 30, 1996 to net income of $30 million for the three
months ended June 30, 1997. As discussed more fully below,
this improvement principally resulted from an overall
increase in Time Warner's operating income, increased income
from its equity in the pretax income of the Entertainment
Group and the absence of a $9 million extraordinary loss on
the retirement of debt recorded in 1996. On a historical
basis, such underlying operating trends were mitigated by an
overall increase in interest expense principally relating to
the assumption of approximately $2.8  

<PAGE>

billion of debt in the TBS Transaction, and an increase in
noncash amortization of intangible assets, also relating to
the TBS Transaction. On a historical basis, after preferred
dividend requirements, Time Warner's net loss applicable to
common shares improved to $49 million for the three months
ended June 30, 1997, compared to $110 million for the three
months ended June 30, 1996. This improvement, as well as the
dilutive effect from issuing 179.8 million shares of common
stock in connection with the TBS Transaction, resulted in a
net loss per common share of $.09 for the three months ended
June 30, 1997, compared to a $.28 net loss per common share
for the three months ended June 30, 1996.

     On a historical basis, the Entertainment Group had
revenues of $2.731 billion and net income of $89 million for
the three months ended June 30, 1997, compared to revenues
of $2.610 billion and net income of $72 million for the
three months ended June 30, 1996. As discussed more fully
below, the Entertainment Group's net income increased in
1997 as compared to 1996 principally due to an overall
increase in operating income generated by its business segments.

     The relationship between income before income taxes and
income tax expense of Time Warner is principally affected by
the amortization of goodwill and certain other financial
statement expenses that are not deductible for income tax
purposes. Income tax expense of Time Warner 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.
 
Time Warner

     Publishing. Revenues increased to $1.053 billion,
compared to $1.038 billion in the second quarter of 1996.
EBITDA increased to $174 million from $156 million.
Depreciation and amortization amounted to $25 million in
1997 and $31 million in 1996. Operating income increased to
$149 million from $125 million. Excluding the effect from
operations that were either recently sold or acquired,
revenues benefited from increases in advertising and
circulation revenues. Contributing to the revenue gains were
increases achieved by People, Sports Illustrated and
Entertainment Weekly. EBITDA and operating income increased
principally as a result of the revenue gains, as well as
savings attributable to lower paper costs.

     Music. Revenues decreased to $822 million, compared to
$876 million in the second quarter of 1996. EBITDA decreased
to $125 million from $165 million. Depreciation and
amortization, including noncash amortization of intangible
assets related to the purchase of WCI, amounted to $93
million in 1997 and $95 million in 1996. Operating income
decreased to $32 million from $70 million. Despite the Music
division maintaining its leading domestic market share for
the year (20%), the decline in revenues principally related
to continuing industry-wide softness in the overexpanded
U.S. retail marketplace and a decline in international
recorded music sales. EBITDA and operating income decreased
principally as a result of the decline in revenues and lower
results from direct marketing activities. Management expects
that these domestic and international trends will continue
to affect 1997 operating results.

     Cable Networks-TBS. Cable Networks results reflect the
acquisition of TBS effective in October 1996. Such operating
results are not comparable to the prior year and,
accordingly, are discussed on a pro forma basis. 

<PAGE>

     Revenues increased to $750 million, compared to $645
million on a pro forma basis in the second quarter of 1996.
EBITDA increased to $186 million from $132 million on a pro
forma basis. Depreciation and amortization, including
noncash amortization of intangible assets related to the
purchase of TBS, amounted to $71 million in 1997 and $63
million on a pro forma basis in 1996. Operating income
increased to $115 million from $69 million on a pro forma
basis. Revenues benefited from increases in advertising and
subscription revenues. Advertising revenues increased due to
a strong overall advertising market for the division's major
branded networks, including TNT, TBS Superstation, CNN and
Cartoon Network. Subscription revenues increased as a result
of higher rates and an increase in subscriptions, primarily
at TNT, CNN, Cartoon Network and Turner Classic Movies.
EBITDA and operating income increased principally as a
result of the revenue gains, offset in part by start-up
costs for new networks, including the sports news network
CNN/SI and the Spanish-language news network CNN en Espanol.

     Filmed Entertainment-TBS. Filmed Entertainment results
reflect the acquisition of TBS effective in October 1996.
Such operating results are not comparable to the prior year
and, accordingly, are discussed on a pro forma basis.

     Revenues increased to $337 million, compared to $264
million on a pro forma basis in the second quarter of 1996.
EBITDA increased to $31 million from a loss of $21 million
on a pro forma basis. Depreciation and amortization,
including noncash amortization of intangible assets related
to the purchase of TBS, amounted to $21 million in 1997 and
$24 million on a pro forma basis in 1996. Operating income
increased to $10 million in 1997 from an operating loss of
$45 million on a pro forma basis in 1996. Revenues benefited
from increases in world-wide theatrical, home video and
television distribution revenues. EBITDA and operating
income increased principally as a result of the revenue
gains and the absence of write-offs recorded in 1996 that
related to disappointing results for theatrical releases.

     Cable. Revenues increased to $250 million, compared to
$230 million in the second quarter of 1996. EBITDA increased
to $135 million from $118 million. Depreciation and
amortization, including noncash amortization of intangible
assets related to the 1995 and 1996 cable acquisitions,
amounted to $100 million in 1997 and $98 million in 1996.
Operating income increased to $35 million from $20 million.
Revenues benefited from an increase in basic cable
subscribers, increases in regulated cable rates as permitted
under Time Warner Cable's "social contract" with the FCC and
an increase in advertising and pay-per-view revenues. EBITDA
and operating income increased principally as a result of
the revenue gains.

     Interest and Other, Net. Interest and other, net,
increased to $303 million in the second quarter of 1997,
compared to $282 million in the second quarter of 1996.
Interest expense increased to $256 million, compared to $224
million, principally due to the assumption of approximately
$2.8 billion of debt in the TBS Transaction. Other expense,
net, decreased to $47 million in the second quarter of 1997
from $58 million in the second quarter of 1996, principally
because of an increase in investment-related income, offset
in part by costs associated with the Company's receivables
securitization program. The increase in investment-related
income principally related to gains on the sale of
investments and lower losses from reductions in the carrying
value of certain investments.

<PAGE>

Entertainment Group

     Filmed Entertainment-Warner Bros.  Revenues decreased
to $1.257 billion, compared to $1.272 billion in the second
quarter of 1996. EBITDA increased to $155 million from $141
million. Depreciation and amortization, including noncash
amortization of intangible assets related to the purchase of
WCI, amounted to $75 million in 1997 and $62 million in
1996. Operating income increased to $80 million from $79
million. Revenues decreased principally as a result of lower
worldwide theatrical and home video revenues, offset in part
by significant increases in worldwide television
distribution revenues. EBITDA and operating income increased
principally as a result of the strong performance of
worldwide television distribution operations. Operating
income was further affected by higher depreciation and
amortization principally related to the expansion of theme
parks and consumer products operations.

     Broadcasting - The WB Network. Revenues increased to
$29 million, compared to $18 million in the second quarter
of 1996. EBITDA decreased to a loss of $18 million from a
loss of $12 million. Depreciation and amortization amounted
to $1 million in 1997. Operating losses increased to $19
million from $12 million. The increase in revenues primarily
resulted from the expansion of programming in September 1996
to three nights of primetime scheduling and the expansion of
Kids' WB!, the network's animated programming lineup on
Saturday mornings and weekdays. The 1997 operating loss
principally resulted from the expanded programming schedule
and was mitigated by the exercise of an option by a limited
partner in the first quarter of 1997 to increase its
ownership in this network. Due to the start-up nature of
this national broadcast operation, losses are expected to continue.

     Cable Networks-HBO.  Revenues increased to $487
million, compared to $456 million in the second quarter of
1996. EBITDA increased to $103 million from $87 million.
Depreciation and amortization amounted to $5 million in 1997
and $4 million in 1996. Operating income increased to $98
million from $83 million. Revenues benefited primarily from
a significant increase in subscriptions. EBITDA and
operating income improved principally as a result of the
revenue gains.

     Cable. Revenues increased to $1.066 billion, compared
to $961 million in the second quarter of 1996. EBITDA
increased to $419 million from $376 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the purchase of WCI and the
acquisition of the ATC minority interest, amounted to $251
million in 1997 and $229 million in 1996. Operating income
increased to $168 million from $147 million. Revenues
benefited from an increase in basic cable and
Primestar-related, direct broadcast satellite subscribers,
increases in regulated cable rates as permitted under Time
Warner Cable's "social contract" with the FCC and an
increase in advertising and pay-per-view revenues. EBITDA
and operating income increased as a result of the revenue
gains. Operating income was further affected by higher
depreciation and amortization related to capital spending.

     Interest and Other, Net. Interest and other, net, was
$139 million in the second quarter of 1997, compared to $134
million in the second quarter of 1996. Interest expense was
$120 million in 1997 and $119 million in 1996. There was
other expense, net, of $19 million in the second quarter of
1997, compared to $15 million in the second quarter of 1996,
principally due to an increase in dividend requirements on
preferred stock of a subsidiary issued in February 1997 to
reduce TWE's bank debt. The preferred stock was issued by a
newly formed, substantially owned subsidiary of TWE (the
"REIT") intended to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended. 

<PAGE>

Six Months Ended June 30, 1997 Compared to Six Months Ended
June 30, 1996

     Time Warner had revenues of $6.227 billion, income of
$82 million before an extraordinary loss on the retirement
of debt ($.13 loss per common share after preferred dividend
requirements) and net income of $65 million ($.16 loss per
common share) for the six months ended June 30, 1997,
compared to revenues of $4.207 billion, a loss of $124
million before an extraordinary loss on the retirement of
debt ($.58 loss per common share) and a net loss of $159
million ($.67 loss per common share) for the six months
ended June 30, 1996. Time Warner's equity in the pretax
income of the Entertainment Group was $426 million for the
six months ended June 30, 1997, compared to $209 million for
the six months ended June 30, 1996. 

     Time Warner's historical results of operations include
the operating results of TBS from October 10, 1996. On a pro
forma basis, giving effect to the Time Warner Transactions
as if each of such transactions had occurred at the
beginning of 1996, Time Warner would have reported for the
six months ended June 30, 1996, revenues of $5.868 billion,
EBITDA of $965 million, operating income of $343 million,
equity in the pretax income of the Entertainment Group of
$209 million, a loss before extraordinary item of $182
million ($.59 loss per common share) and a net loss of $217
million ($.65 loss per common share). No pro forma financial
information has been presented for Time Warner for the six
months ended June 30, 1997 because all of such transactions
are already reflected in the historical financial statements
of Time Warner.

     Time Warner's operating results improved from a pro
forma net loss of $217 million for the six months ended June
30, 1996 to net income of $65 million for the six months
ended June 30, 1997. As discussed more fully below, this
improvement principally resulted from an overall increase in
Time Warner's operating income, a significant increase in
income from its equity in the pretax income of the
Entertainment Group and an $18 million decrease in
extraordinary losses on the retirement of debt recorded in
each period. On a historical basis, such underlying
operating trends were mitigated by an overall increase in
interest expense principally relating to the assumption of
approximately $2.8 billion of debt in the TBS Transaction,
and an increase in noncash amortization of intangible
assets, also relating to the TBS Transaction. On a
historical basis, after preferred dividend requirements that
increased by $53 million due to the April 1996 issuance of
Series M Preferred Stock, Time Warner's net loss applicable
to common shares improved to $92 million for the six months
ended June 30, 1997, compared to $263 million for the six
months ended June 30, 1996. This improvement, as well as the
dilutive effect from issuing 179.8 million shares of common 
stock in connection with the TBS Transaction, resulted in a
net loss per common share of $.16 for the six months ended
June 30, 1997, compared to a $.67 net loss per common share
for the six months ended June 30, 1996.

     On a historical basis, the Entertainment Group had
revenues of $5.333 billion and net income of $407 million
for the six months ended June 30, 1997, compared to revenues
of $5.097 billion and net income of $170 million for the six
months ended June 30, 1996. As discussed more fully below,
the Entertainment Group's net income increased significantly
in 1997 as compared to 1996 principally due to an overall
increase in operating income generated by its business
segments and the inclusion of an approximately $250 million
pretax gain on the first quarter of 1997 sale of TWE's 58%
interest in E! Entertainment Television, Inc., offset in
part by an increase in minority interest expense related to
the TWE-Advance/Newhouse Partnership.

     The relationship between income before income taxes and
income tax expense of Time Warner is principally affected by
the amortization of goodwill and certain other financial
statement expenses that are not deductible for  

<PAGE>

income tax purposes. Income tax expense of Time Warner
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.

Time Warner

     Publishing. Revenues increased to $1.977 billion,
compared to $1.917 billion in the first six months of 1996.
EBITDA increased to $266 million from $236 million.
Depreciation and amortization amounted to $50 million in
1997 and $55 million in 1996. Operating income increased to
$216 million from $181 million. Excluding the effect from
operations that were either recently sold or acquired,
revenues benefited from increases in advertising and
circulation revenues. All major magazine brands achieved
revenue gains, including People, Sports Illustrated, Time
and Entertainment Weekly. EBITDA and operating income
increased principally as a result of the revenue gains, as
well as savings attributable to lower paper costs.

     Music. Revenues decreased to $1.755 billion, compared
to $1.859 billion in the first six months of 1996. EBITDA
decreased to $265 million from $311 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the purchase of WCI, amounted
to $183 million in 1997 and $186 million in 1996. Operating
income decreased to $82 million from $125 million. Despite
the Music division maintaining its leading domestic market
share for the year (20%), the decline in revenues
principally related to continuing industry-wide softness in
the overexpanded U.S. retail marketplace and a decline in
international recorded music sales. EBITDA and operating
income decreased principally as a result of the decline in
revenues and lower results from direct marketing activities,
offset in part by certain one-time gains. Management expects
that these domestic and international trends will continue
to affect 1997 operating results.

     Cable Networks-TBS. Cable Networks results reflect the
acquisition of TBS effective in October 1996. Such operating
results are not comparable to the prior year and,
accordingly, are discussed on a pro forma basis.

     Revenues increased to $1.344 billion, compared to
$1.157 billion on a pro forma basis in the first six months
of 1996. EBITDA increased to $321 million from $252 million
on a pro forma basis. Depreciation and amortization,
including noncash amortization of intangible assets related
to the purchase of TBS, amounted to $137 million in 1997 and
$123 million on a pro forma basis in 1996. Operating income
increased to $184 million from $129 million on a pro forma
basis. Revenues benefited from increases in advertising and
subscription revenues. Advertising revenues increased due to
a strong overall advertising market for the division's major
branded networks, including TNT, TBS Superstation, CNN and
Cartoon Network. Subscription revenues increased as a result
of higher rates and an increase in subscriptions, primarily
at TNT, CNN, Cartoon Network and Turner Classic Movies.
EBITDA and operating income increased principally as a
result of the revenue gains, offset in part by start-up
costs for new networks, including the sports news network
CNN/SI and the Spanish-language news network CNN en Espanol.

     Filmed Entertainment-TBS. Filmed Entertainment results
reflect the acquisition of TBS effective in October 1996.
Such operating results are not comparable to the prior year
and, accordingly, are discussed on a pro forma basis.

     Revenues increased to $734 million, compared to $558
million on a pro forma basis in the first six months of
1996. EBITDA increased to $38 million from a loss of $43
million on a pro forma basis. Depreciation and  

<PAGE>

amortization, including noncash amortization of intangible
assets related to the purchase of TBS, amounted to $44
million in 1997 and $47 million on a pro forma basis in
1996. Operating losses decreased to $6 million in 1997 from
$90 million on a pro forma basis in 1996. Revenues benefited
from increases in worldwide theatrical, home video and
television distribution revenues. EBITDA and operating
income increased principally as a result of the revenue
gains and the absence of write-offs recorded in 1996 that
related to disappointing results for theatrical releases.

     Cable. Revenues increased to $492 million, compared to
$447 million in the first six months of 1996. EBITDA
increased to $271 million from $230 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the 1995 and 1996 cable
acquisitions, amounted to $201 million in 1997 and $211
million in 1996. Operating income increased to $70 million
from $19 million. Revenues benefited from an increase in
basic cable subscribers, increases in regulated cable rates
as permitted under Time Warner Cable's "social contract"
with the FCC and an increase in advertising and pay-per-view
revenues. EBITDA and operating income increased as a result
of the revenue gains, as well as gains of approximately $11
million recognized in the first quarter of 1997 in
connection with the sale of certain investments. Operating
income was further affected by lower depreciation and
amortization principally relating to changes in useful lives
of certain assets acquired in 1996.

     Interest and Other, Net. Interest and other, net,
increased to $595 million in the first six months of 1997,
compared to $578 million in the first six months of 1996.
Interest expense increased to $534 million, compared to $471
million, principally due to the assumption of approximately
$2.8 billion of debt in the TBS Transaction. Other expense,
net, decreased to $61 million in the first six months of
1997 from $107 million in the first six months of 1996,
principally because of an increase in investment-related
income and gains on foreign exchange contracts, offset in
part by costs associated with the Company's receivables
securitization program. The increase in investment-related
income principally related to gains on the sale of
investments and lower losses from reductions in the carrying
value of certain investments.

Entertainment Group

     Filmed Entertainment-Warner Bros.  Revenues decreased
to $2.431 billion, compared to $2.490 billion in the first
six months of 1996. EBITDA increased to $305 million from
$277 million. Depreciation and amortization, including
noncash amortization of intangible assets related to the
purchase of WCI, amounted to $151 million in 1997 and $125
million in 1996. Operating income increased to $154 million
from $152 million. Revenues decreased principally as a
result of lower worldwide theatrical and home video
revenues, offset in part by significant increases in
worldwide television distribution revenues. EBITDA and
operating income increased principally as a result of the
strong performance of worldwide television distribution
operations and a gain on the sale of an investment. 

     Broadcasting - The WB Network. Revenues increased to
$53 million, compared to $33 million in the first six months
of 1996. EBITDA decreased to a loss of $38 million from a
loss of $36 million. Depreciation and amortization amounted
to $1 million in 1997. Operating losses increased to $39
million from $36 million. The increase in revenues primarily
resulted from the expansion of programming in September 1996
to three nights of primetime scheduling and the expansion of
Kids' WB!, the network's animated programming lineup on
Saturday mornings and weekdays. The 1997 operating loss
principally resulted from the expanded programming schedule
and was mitigated by the exercise of an option by a limited
partner in the first quarter of 1997 to increase its ownership 
in this network. Due to the start-up nature of this national 
broadcast operation, losses are expected to continue.

<PAGE>

     Cable Networks-HBO.  Revenues increased to $970
million, compared to $875 million in the first six months of
1996. EBITDA increased to $199 million from $168 million.
Depreciation and amortization amounted to $10 million in
1997 and $9 million in 1996. Operating income increased to
$189 million from $159 million. Revenues benefited primarily
from a significant increase in subscriptions. EBITDA and operating 
income improved principally as a result of the revenue gains.

     Cable. Revenues increased to $2.086 billion, compared
to $1.908 billion in the first six months of 1996. EBITDA
increased to $850 million from $744 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the purchase of WCI and the
acquisition of the ATC minority interest, amounted to $499
million in 1997 and $451 million in 1996. Operating income
increased to $351 million from $293 million. Revenues
benefited from an increase in basic cable and
Primestar-related, direct broadcast satellite subscribers,
increases in regulated cable rates as permitted under Time
Warner Cable's "social contract" with the FCC and an
increase in advertising and pay-per-view revenues. EBITDA
and operating income increased as a result of the revenue
gains, as well as net gains of approximately $24 million
recognized in the first quarter of 1997 in connection with
the sale or exchange of certain cable systems.  Operating
income was further affected by higher depreciation and
amortization related to capital spending.

     Interest and Other, Net. Interest and other, net,
decreased to $11 million in the first six months of 1997,
compared to $222 million in the first six months of 1996.
Interest expense decreased to $236 million, compared to $240
million in 1996. There was other income, net, of $225
million in the first six months of 1997, compared to $18
million in the first six months of 1996, principally due to
higher gains on asset sales, including an approximately $250
million pretax gain on the sale of an interest in E!
Entertainment Television, Inc. recognized in the first
quarter of 1997. This income was offset in part by an
increase in dividend requirements on preferred stock of the
REIT issued in February 1997 to reduce TWE's bank debt.

FINANCIAL CONDITION AND LIQUIDITY 
June 30, 1997

Time Warner

Financial Condition

     At June 30, 1997, Time Warner had $12.7 billion of
debt, $470 million of cash and equivalents (net debt of
$12.2 billion), $402 million of borrowings against future
stock option proceeds, $949 million of mandatorily
redeemable preferred securities of subsidiaries, $1.8
billion of Series M Preferred Stock and $9.4 billion of
shareholders' equity, compared to $12.7 billion of debt,
$452 million of available cash and equivalents (net debt of
$12.2 billion), $488 million of borrowings against future
stock option proceeds, $949 million of mandatorily
redeemable preferred securities of subsidiaries, $1.7
billion of Series M Preferred Stock and $9.5 billion of
shareholders' equity at December 31, 1996. 

<PAGE>

Investment in TWE

     Time Warner's investment in TWE at June 30, 1997
consisted of interests in 74.49% of the Series A Capital and
Residual Capital of TWE, and 100% of the Senior Capital and
Series B Capital of TWE. Such priority capital interests
provide Time Warner (and with respect to the Series A
Capital only, U S WEST) with certain priority claims to the
net partnership income of TWE and distributions of TWE
partnership capital, including certain priority
distributions of partnership capital in the event of
liquidation or dissolution of TWE. Each level of priority
capital interest provides for an annual rate of return equal
to or exceeding 8%, including an above-market 13.25% annual
rate of return (11.25% to the extent concurrently
distributed) related to Time Warner's Series B Capital
interest, which, when taken together with Time Warner's
contributed capital, represented a cumulative priority
Series B Capital interest of $5.6 billion at June 30, 1997.
While the TWE partnership agreement contemplates the
reinvestment of significant partnership cash flows in the
form of capital expenditures and otherwise provides for
certain other restrictions that are expected to limit cash
distributions on partnership interests for the foreseeable
future, Time Warner's $1.6 billion Senior Capital interest
and, to the extent not previously distributed, partnership
income allocated thereto (based on an 8% annual rate of
return) is required to be distributed to Time Warner in
three annual installments beginning on July 1, 1997. In July
1997, Time Warner received a $535 million distribution
relating to its Senior Capital interest.

Debt Refinancings

     During the first quarter of 1997, Time Warner entered
into a number of financing transactions, which resulted in
the refinancing of approximately $600 million of debt and
the elimination of the potential dilution from the
conversion of TBS's zero coupon subordinated convertible
notes due 2007 (the "TBS Convertible Notes") into 5.6
million shares of Time Warner common stock. Time Warner
redeemed $300 million principal amount of 10.75% Senior
Notes due January 30, 2002 of TWI Cable and approximately
$283 million accreted amount of TBS Convertible Notes at an
aggregate redemption price of approximately $600 million,
including redemption premiums and accrued interest thereon.
In conjunction with the refinancing, Old Time Warner issued
$600 million principal amount of Floating Rate Reset Notes
due December 30, 2031 that are redeemable at the election of
the holders, in whole but not in part, on December 30, 2001
(the "Five-Year Floating Rate Notes"). The Five-Year
Floating Rate Notes bear interest at a floating rate equal
to LIBOR less 25 basis points until December 30, 2001, at
which time, if not redeemed, the interest rate will be reset
at a fixed rate equal to 6.59% plus a margin based upon Old
Time Warner's credit risk at such time. 

     In July 1997, Old Time Warner issued $600 million
principal amount of Floating Rate Reset Notes due July 29,
2009 that are redeemable at the election of the holders, in
whole but not in part, on July 29, 1999 (the "Two-Year
Floating Rate Notes"). The net proceeds therefrom will be
used by Old Time Warner in the third quarter of 1997 to
redeem or repay other indebtedness. The Two-Year Floating
Rate Notes bear interest at a floating rate equal to LIBOR
less 115 basis points until July 29, 1999, at which time, if
not redeemed, the interest rate will be reset at a fixed
rate equal to 6.16% plus a margin based upon Old Time
Warner's credit risk at such time. 

<PAGE>

Cash Flows 

     During the first six months of 1997, Time Warner's cash
provided by operations amounted to $433 million and
reflected $1.154 billion of EBITDA from its Publishing,
Music, Cable Networks-TBS, Filmed Entertainment-TBS and
Cable businesses and $203 million of distributions from TWE,
less $488 million of interest payments, $132 million of
income taxes, $43 million of corporate expenses and $261
million related to an increase in working capital
requirements, other balance sheet accounts and noncash
items. Cash provided by operations of $81 million for the
first six months of 1996 reflected $777 million of business
segment EBITDA and $132 million of distributions from TWE,
less $426 million of interest payments, $133 million of
income taxes, $36 million of corporate expenses and $233
million related to an increase in working capital
requirements, balance sheet accounts and noncash items.

     Cash used by investing activities decreased to $226
million in the first six months of 1997, compared to $303
million in 1996, principally as a result of lower investment
spending, offset in part by higher capital expenditures and
a decrease in investment proceeds. Capital expenditures
increased to $283 million in the first six months of 1997,
compared to $161 million in 1996, principally as a result of
capital spending by the TBS businesses acquired in October
1996 and higher capital spending by the cable division.

     Cash used by financing activities was $251 million in
the first six months of 1997, compared to $481 million in
the first six months of 1996. The use of cash in 1997
principally resulted from the repurchase of approximately
954 thousand shares of Time Warner common stock at an
aggregate cost of $36 million and the payment of $167
million of dividends. Time Warner also repaid $86 million of
borrowings under the stock option proceeds credit facility
in 1997 using proceeds received from the exercise of
employee stock options. The use of cash in 1996 principally
resulted from the use of $135 million of available cash and
equivalents to finance a portion of the Company's share
repurchase program, the use of $557 million of noncurrent
cash and equivalents raised in December 1995 to redeem debt
and the payment of $135 million of dividends, offset in part
by borrowings incurred to finance the cash portion of the
consideration paid to acquire CVI. In addition, Time Warner
raised approximately $1.55 billion of net proceeds in 1996
from the issuance of 1.6 billion shares of Series M Preferred 
Stock and used the net proceeds therefrom to reduce debt. 

     The assets and cash flows of certain consolidated and
unconsolidated subsidiaries of Time Warner are restricted by
certain borrowing and partnership agreements. The assets and
cash flows of TBS, TWE and TWI Cable are restricted by their
respective bank credit agreements, although each entity is
permitted to incur additional indebtedness to make loans,
advances, distributions and other cash payments to Time
Warner, subject to its individual compliance with the cash
flow coverage and leverage ratio covenants contained
therein. Further, under the TWE partnership agreement, the
assets and cash flows of TWE are unavailable to Time Warner
except through the payment of certain fees, reimbursements,
cash distributions and loans, which are subject to limitations.

     Management believes that Time Warner's operating cash
flow, cash and marketable securities and additional
borrowing capacity are sufficient to fund its capital and
liquidity needs for the foreseeable future without
distributions and loans from its restricted subsidiaries,
including TWE, above those permitted by existing agreements.

<PAGE>

Entertainment Group

Financial Condition

     The Entertainment Group had $5.8 billion of debt, $240
million of preferred stock of a subsidiary, $1.6 billion of
Time Warner General Partners' Senior Capital and $6.6
billion of partners' capital at June 30, 1997, compared to
$5.7 billion of debt, $1.5 billion of Time Warner General
Partners' Senior Capital and $6.7 billion of partners'
capital at December 31, 1996. Cash and equivalents were $293
million at June 30, 1997, compared to $216 million at
December 31, 1996, reducing the debt-net-of-cash amounts for
the Entertainment Group to $5.5 billion in both periods.

Cash Flows

     During the first six months of 1997, the Entertainment
Group's cash provided by operations amounted to $416 million
and reflected $1.316 billion of EBITDA from the Filmed
Entertainment-Warner Bros., Broadcasting-The WB Network,
Cable Networks-HBO and Cable businesses, less $243 million
of interest payments, $35 million of income taxes, $36
million of corporate expenses and $586 million related to an
increase in working capital requirements, other balance
sheet accounts and noncash items. Cash provided by
operations of $1.198 billion in the first six months of 1996
reflected $1.153 billion of business segment EBITDA and $359
million related to a reduction in working capital
requirements, other balance sheet accounts and noncash
items, less $247 million of interest payments, $32 million
of income taxes and $35 million of corporate expenses. 

     Cash used by investing activities was $425 million in
the first six months of 1997, compared to $651 million in
the first six months of 1996, principally as a result of a
$175 million increase in proceeds from the sale of
investments and lower capital expenditures. Capital
expenditures were $734 in 1997 and $781 million in 1996.

     Cash provided by financing activities was $86 million
in the first six months of 1997, compared to cash used by
financing activities of $538 million in the first six months
of 1996, principally as a result of a lower level of debt
reduction in the first six months of 1997, the issuance of
250,000 shares of preferred stock of a subsidiary for
aggregate net proceeds of $243 million and a $71 million
increase in distributions paid to Time Warner, offset in
part by the absence of $169 million of collections on the
note receivable from U S WEST that was fully paid in 1996.
The preferred stock was issued by a newly formed, substantially 
owned subsidiary intended to qualify as a real estate investment 
trust under the Internal Revenue Code of 1986, as amended.

     Management believes that TWE's operating cash flow, cash and 
equivalents and additional borrowing capacity are sufficient to 
fund its capital and liquidity needs for the foreseeable future.

Cable Capital Spending

     Since the beginning of 1994, Time Warner Cable has been
engaged in a plan to upgrade the technological capability
and reliability of its cable television systems and develop
new services, which it believes will position the business
for sustained, long-term growth. Capital spending by Time
Warner Cable, including the cable operations of both Time
Warner and TWE, amounted to $791 million in the six months
ended June 30, 1997, compared to $681  

<PAGE>

million in the six months ended June 30, 1996. For the full
year of 1997, cable capital spending is expected to be
relatively comparable to 1996 levels, with approximately
$900 million budgeted for the remainder of 1997. Capital
spending by Time Warner Cable is expected to be funded by
cable operating cash flow. In exchange for certain
flexibility in establishing cable rate pricing structures
for regulated services that went into effect on January 1,
1996 and consistent with Time Warner Cable's long-term
strategic plan, Time Warner Cable has agreed with the FCC to
invest a total of $4 billion in capital costs in connection
with the upgrade of its cable infrastructure, which is
expected to be substantially completed over a five-year
period ending December 31, 2000. The agreement with the FCC
covers all of the cable operations of Time Warner Cable,
including the owned or managed cable television systems of
Time Warner, TWE and the TWE-Advance/Newhouse Partnership.
Management expects to continue to finance such level of
investment through the growth in cable operating cash flow
derived from increases in subscribers and cable rates, bank
credit agreement borrowings and the development of new
revenue streams from expanded programming options, high
speed data transmission and other services.

Filmed Entertainment Backlog

     Backlog represents the amount of future revenue not yet
recorded from cash contracts for the licensing of theatrical
and television product for pay cable, basic cable, network
and syndicated television exhibition. Backlog of Warner
Bros. amounted to $1.839 billion at June 30, 1997 compared
to $1.502 billion at December 31, 1996 (including amounts
relating to the licensing of film product to Time Warner's
and TWE's cable television networks, collectively, of $715
million and $463 million, respectively). Backlog of the
recently-acquired film production companies of TBS amounted
to approximately $261 million at June 30, 1997 compared to
$290 million at December 31, 1996 (including amounts
relating to the licensing of film product to Time Warner's
cable television networks of approximately $100 million and
$90 million, respectively).

     Because backlog generally relates to contracts for the
licensing of theatrical and television product which have
already been produced, the recognition of revenue for such
completed product is principally only dependent upon the
commencement of the availability period for telecast under
the terms of the related licensing agreement. Cash licensing
fees are collected periodically over the term of the related
licensing agreements. Accordingly, the portion of backlog
for which cash advances have not already been received has
significant off-balance sheet asset value as a source of
future funding. The backlog excludes advertising barter
contracts, which are also expected to result in the future
realization of revenues and cash through the sale of
advertising spots received under such contracts.

<PAGE>

<PAGE>
                        TIME WARNER INC.
                   CONSOLIDATED BALANCE SHEET
                          (Unaudited)
                                                  June 30,    December 31,
                                                    1997         1996  
                                                    (millions, except
                                                    per share amounts)
      
ASSETS
Current assets
Cash and equivalents                               $   470    $   452
Receivables, less allowances of $839 
   and $976 million                                  2,180      2,421
Inventories                                            744        941
Prepaid expenses                                     1,050      1,007

Total current assets                                 4,444      4,821

Noncurrent cash and equivalents                          -         62
Noncurrent inventories                               1,757      1,698
Investments in and amounts due to and from 
   Entertainment Group                               6,050      5,814
Other investments                                    1,903      1,919
Property, plant and equipment, net                   2,032      1,986
Music catalogues, contracts and copyrights             980      1,035
Cable television and sports franchises               4,089      4,203
Goodwill                                            12,332     12,421
Other assets                                         1,068      1,105

Total assets                                       $34,655    $35,064

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable                                  $    649    $   715
Participations, royalties and programming 
   costs payable                                     1,026      1,196
Debt due within one year                                10         11
Other current liabilities                            2,024      2,090

Total current liabilities                            3,709      4,012

Long-term debt                                      12,711     12,713
Borrowings against future stock option proceeds        402        488
Deferred income taxes                                4,057      4,082
Unearned portion of paid subscriptions                 663        679
Other liabilities                                      978        967
Company-obligated mandatorily redeemable 
  preferred securities of subsidiaries holding 
  solely subordinated notes and debentures of 
  subsidiaries of the Company(a)                       949        949
Series M exchangeable preferred stock, $.10 
  par value, 1.81 million and 1.72 million shares 
  outstanding and $1.810 billion and $1.720 billion 
  liquidation preference                             1,763      1,672

Shareholders' equity
Preferred stock, $.10 par value, 35.6 million shares
  outstanding, $3.559 billion liquidation preference     4          4
Series LMCN-V Common Stock, $.01 par value, 57.1 
  million and 50.6 million shares outstanding            1          1
Common stock, $.01 par value, 511.5 million and 
  508.4 million shares outstanding (excluding 46.8 
  million and 50.0 million treasury shares)              5          5
Paid-in capital                                     12,447     12,250
Accumulated deficit                                 (3,034)    (2,758)

Total shareholders' equity                           9,423      9,502

Total liabilities and shareholders' equity         $34,655    $35,064
_______________
(a)  Includes $374 million of preferred securities 
     that are redeemable for cash or, at Time Warner's 
     option, approximately 18.1 million shares of
     Hasbro, Inc. common stock owned by Time Warner
     (Note 6).

See accompanying notes.

<PAGE>

<PAGE>

                        TIME WARNER INC.
              CONSOLIDATED STATEMENT OF OPERATIONS
                          (Unaudited)
                                

                                           Three Months       Six Months
                                           Ended June 30,    Ended June 30, 
                                          1997     1996      1997     1996  
                                        (millions, except per share amounts)

Revenues (a)                              $3,193   $2,139    $6,227   $4,207

Cost of revenues (a)(b)                    1,603    1,248     3,453    2,525
Selling, general and administrative(a)(b)  1,245      676     2,235    1,357

Operating expenses                         2,848    1,924     5,688    3,882

Business segment operating income            345      215       539      325
Equity in pretax income of Entertainment
   Group (a)                                 108       93       426      209
Interest and other, net (a)                 (303)    (282)     (595)    (578)
Corporate expenses (a)                       (22)     (18)      (43)     (36)

Income (loss) before income taxes            128        8       327      (80)
Income tax provision                         (98)     (39)     (245)     (44)

Income (loss) before extraordinary item       30      (31)       82     (124)
Extraordinary loss on retirement of debt, 
  net of income tax benefits of $ -, 
  $5 million, $11 million and $22 million      -       (9)      (17)     (35)

Net income (loss)                             30      (40)       65     (159)
Preferred dividend requirements              (79)     (70)     (157)    (104)

Net loss applicable to common shares      $  (49)  $ (110)   $  (92)  $ (263)

Loss per common share:
Loss before extraordinary item            $ (.09)  $ (.26)   $ (.13)  $ (.58)

Net loss                                  $ (.09)  $ (.28)   $ (.16)  $ (.67)

Average common shares                      561.0    389.5     559.9    390.6
_______________
(a)  Includes the following income (expenses) resulting from
     transactions with the Entertainment Group and other related
     companies for the three and six months ended June 30, 1997,
     respectively, and for the corresponding periods in the prior
     year: revenues-$73 million and $147 million in 1997, $62
     million and $103 million in 1996; cost of revenues-$(61)
     million and $(121) million in 1997, $(53) million and $(79)
     million in 1996; selling, general and administrative-$3
     million and $8 million in 1997, $5 million and $5 million in
     1996; equity in pretax income of Entertainment Group-$13
     million and $24 million in 1997, $4 million and $(4) million
     in 1996; interest and other, net-$(7) million and $(21)
     million in 1997, $(8) million and $(17) million in 1996; and
     corporate expenses-$18 million and $36 million in 1997,
     $18 million and $35 million in 1996.

(b)  Includes depreciation and amortization 
     expense of:                                 $310   $224     $615   $452

See accompanying notes. 

<PAGE>

<PAGE>

                        TIME WARNER INC.
              CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Unaudited)
                                                               Six Months
                                                             Ended June 30, 
                                                            1997       1996   
                                                              (millions)
OPERATIONS
Net income (loss)                                         $   65       $(159)
Adjustments for noncash and nonoperating items:
Extraordinary loss on retirement of debt                      17          35
Depreciation and amortization                                615         452
Noncash interest expense                                      51          46
Excess of equity in pretax income of Entertainment 
  Group over distributions                                  (223)        (77)
Changes in operating assets and liabilities                  (92)       (216)

Cash provided by operations                                  433          81

INVESTING ACTIVITIES
Investments and acquisitions                                 (56)       (307)
Capital expenditures                                        (283)       (161)
Investment proceeds                                          113         165

Cash used by investing activities                           (226)       (303)

FINANCING ACTIVITIES
Borrowings                                                 1,039       2,298
Debt repayments                                           (1,094)     (4,074)
Borrowings (repayments of borrowings) against future 
  stock option proceeds                                      (86)        225
Repurchases of Time Warner common stock                      (36)       (360)
Dividends paid                                              (167)       (135)
Issuance of Series M preferred stock                           -       1,550
Other                                                         93          15

Cash used by financing activities                           (251)       (481)

DECREASE IN CASH AND EQUIVALENTS                             (44)       (703)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD (a)              514       1,185

CASH AND EQUIVALENTS AT END OF PERIOD                      $ 470      $  482
_______________
(a)  Includes current and noncurrent cash and equivalents
     at December 31, 1996 and 1995.

See accompanying notes. 

<PAGE>

<PAGE>
                       TIME WARNER INC. 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          (Unaudited)
                                
1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

     On October 10, 1996, Time Warner Inc. ("Time Warner" or
the "Company") acquired the remaining 80% interest in Turner
Broadcasting System, Inc. ("TBS") that it did not already
own, as more fully described herein (Note 2). As a result of
this transaction, a new parent company with the name "Time
Warner Inc." replaced the old parent company of the same name 
("Old Time Warner", now known as Time Warner Companies, Inc.), 
and Old Time Warner and TBS became separate, wholly owned 
subsidiaries of the new parent company ("New Time Warner"). 
References herein to "Time Warner" or the "Company" refer to Old 
Time Warner prior to October 10, 1996 and New Time Warner thereafter.

     Time Warner is the world's leading media and
entertainment company, whose principal business objective is
to create and distribute branded information and
entertainment copyrights throughout the world. Time Warner
classifies its business interests into four fundamental
areas: Entertainment, consisting principally of interests in
recorded music and music publishing, filmed entertainment,
television production, television broadcasting and theme
parks; Cable Networks, consisting principally of interests
in cable television programming and sports franchises;
Publishing, consisting principally of interests in magazine
publishing, book publishing and direct marketing; and Cable,
consisting principally of interests in cable television
systems. 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").
Time Warner owns general and limited partnership interests
in TWE consisting of 74.49% of the pro rata priority capital
("Series A Capital") and residual equity capital ("Residual
Capital"), and 100% of the senior priority capital ("Senior
Capital") and junior priority capital ("Series B Capital").
The remaining 25.51% limited partnership interests in the
Series A Capital and Residual Capital of TWE are held by a
subsidiary of U S WEST, Inc. ("U S WEST"). Time Warner does
not consolidate TWE and certain related companies (the
"Entertainment Group") for financial reporting purposes
because of certain limited partnership approval rights
related to TWE's interest in certain cable television systems.

     Each of the business interests within Entertainment,
Cable Networks, Publishing and Cable is important to
management's objective of increasing shareholder value
through the creation, extension and distribution of
recognizable brands and copyrights throughout the world.
Such brands and copyrights include (1) copyrighted music
from many of the world's leading recording artists that is
produced and distributed by a family of established record
labels such as Warner Bros. Records, Atlantic Records,
Elektra Entertainment and Warner Music International, (2)
the unique and extensive film, television and animation
libraries of Warner Bros. and TBS, and trademarks such as
the Looney Tunes characters, Batman and The Flintstones, (3)
The WB Network, a national broadcasting network launched in
1995 as an extension of the Warner Bros. brand and as an
additional distribution outlet for the Company's collection 
of children's cartoons and television programming, (4) Six
Flags, the largest regional theme park operator in the
United States, in which TWE owns a 49% interest, (5) leading
cable television networks, such as HBO, Cinemax, CNN, TNT
and TBS Superstation, (6) sports franchises consisting of
the Atlanta Braves and Atlanta Hawks, (7) magazine
franchises such as Time, People and Sports Illustrated and
direct marketing brands such as Time Life Inc. and
Book-of-the-Month Club and (8) Time Warner Cable, the second
largest operator of cable television systems in the U.S.

<PAGE>

     The operating results of Time Warner's various business
interests are presented herein as an indication of financial
performance (Note 8). Except for start-up losses incurred in
connection with The WB Network, Time Warner's principal
business interests generate significant operating income and
cash flow from operations. The cash flow from operations
generated by such business interests is considerably greater
than their operating income due to significant amounts of
noncash amortization of intangible assets recognized in
various acquisitions accounted for by the purchase method of
accounting. Noncash amortization of intangible assets
recorded by Time Warner's business interests, including the
unconsolidated business interests of the Entertainment
Group, amounted to $325 million and $256 million for the
three months ended June 30, 1997 and 1996, respectively, and
$646 million and $523 million in the six months ended June
30, 1997 and 1996, respectively.

Basis of Presentation

     The accompanying financial statements are unaudited
but, in the opinion of management, contain all the
adjustments (consisting of those of a normal recurring
nature) considered necessary to present fairly the financial
position and the results of operations and cash flows for
the periods presented in conformity with generally accepted
accounting principles applicable to interim periods. The
accompanying financial statements should be read in
conjunction with the audited consolidated financial
statements of Time Warner for the year ended December 31, 1996.

     The consolidated financial statements of Time Warner
reflect the acquisition of Cablevision Industries
Corporation and related companies ("CVI") effective as of
January 4, 1996 and TBS effective as of October 10, 1996.
Certain reclassifications have been made to the prior years'
financial statements to conform to the 1997 presentation. 

     In February 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings per Share" ("FAS
128"), effective for fiscal years beginning after December
15, 1997. The new rules establish simplified standards for
computing and presenting earnings per share. Time Warner
does not expect that the adoption of FAS 128 will have a
material effect on its financial statements.

2.   MERGERS AND ACQUISITIONS

TBS Transaction

     On October 10, 1996, New Time Warner acquired the
remaining 80% interest in TBS that it did not already own
(the "TBS Transaction"). As part of the transaction, each of
Old Time Warner and TBS became a separate, wholly owned
subsidiary of New Time Warner which combines, for financial
reporting purposes, the consolidated net assets and
operating results of Old Time Warner and TBS. Each issued
and outstanding share of each class of capital stock of Old
Time Warner was converted into one share of a substantially
identical class of capital stock of New Time Warner.

     In connection with the TBS Transaction, New Time Warner issued 
(i) approximately 179.8 million shares of common stock (including 
57 million shares of a special class of non-redeemable common 
stock having 1/100th of a vote per share on certain limited matters 
("Series LMCN-V Common Stock") to affiliates of Liberty Media 
Corporation ("LMC"), a subsidiary of Tele-Communications, 
Inc.), in exchange for shares of TBS capital stock and  

<PAGE>

pursuant to a separate option agreement, as amended, with LMC 
and its affiliates (the "SSSI Option Agreement") and (ii) 
approximately 14 million stock options to replace all outstanding 
TBS stock options. New Time Warner has also fully and 
unconditionally guaranteed all of TBS's and Old Time Warner's 
outstanding publicly traded indebtedness, which amounted to
$747 million and $7.806 billion, respectively, at June 30, 1997.

     Of the aggregate consideration issued in the TBS Transaction, 
6.4 million shares of Series LMCN-V Common Stock were issued to
LMC and its affiliates in June 1997 pursuant to the SSSI Option
Agreement. The SSSI Option Agreement provides New Time Warner
with an option to acquire substantially all of the assets of 
Southern Satellite Systems, Inc. and its affiliates ("SSSI"), a 
subsidiary of LMC that currently provides uplink and 
distribution services for WTBS (the "TBS Superstation"), for
approximately $213 million of consideration payable, at the
election of New Time Warner, in cash or additional shares of
LMCN-V Common Stock. New Time Warner expects to exercise this
option when the TBS Superstation is converted to a copyright-paid,
cable television programming service, which is expected to 
occur on December 31, 1997.

     The TBS Transaction was accounted for by the purchase
method of accounting for business combinations; accordingly,
the cost to acquire TBS of approximately $6.2 billion was
preliminarily allocated to the net assets acquired in
proportion to estimates of their respective fair values, as
follows: goodwill-$6.746 billion; other current and
noncurrent assets-$3.806 billion; long-term debt-$2.765
billion; deferred income taxes-$189 million; and other
current and noncurrent liabilities-$1.416 billion.

CVI Acquisition

     On January 4, 1996, Time Warner acquired CVI which owned 
cable television systems serving approximately 1.3 million
subscribers, in exchange for the issuance of approximately 2.9 
million shares of common stock and approximately 6.3 million 
shares of convertible preferred stock and the assumption
or incurrence of approximately $2 billion of indebtedness. 
The acquisition was accounted for by the purchase method of 
accounting for business combinations; accordingly, the cost 
to acquire CVI of $904 million was allocated to the net assets 
acquired in proportion to their respective fair values, as 
follows: cable television franchises-$2.390 billion; goodwill-$688
million; other current and noncurrent assets-$481 million;
long-term debt-$1.766 billion; deferred income taxes-$731
million; and other current and noncurrent liabilities-$158 million.
 
Pro Forma Financial Information

     The accompanying consolidated statement of operations
includes the operating results of each acquired business
from the respective closing date of each transaction. On a
pro forma basis, giving effect to the TBS Transaction and
certain 1996 debt refinancings by Time Warner, including the
use of approximately $1.55 billion of net proceeds from the
issuance of Series M exchangeable preferred stock to reduce
debt, as if each of such transactions had occurred at the
beginning of 1996, Time Warner would have reported for the
three and six months ended June 30, 1996, revenues of $3.033
billion and $5.868 billion, depreciation and amortization of
$311 million and $622 million, operating income of $241
million and $343 million, equity in the pretax income of the
Entertainment Group of $93 million and $209 million, a loss
before extraordinary item of $61 million and $182 million
($.24 and $.59 per common share) and a net loss of $70
million and $217 million ($.26 and $.65 per common share). 

<PAGE>

3.   ENTERTAINMENT GROUP 

     Time Warner's investment in and amounts due to and from
the Entertainment Group, consisting substantially of TWE, at
June 30, 1997 and December 31, 1996 consists of the following:

                                                      June 30,   December 31,
                                                        1997        1996  
                                                           (millions)
Investment in TWE                                       $6,272      $6,254
Stock option related distributions due from TWE            259          93
Credit agreement debt due to TWE                          (400)       (400)
Other net liabilities due to TWE, principally related 
  to home video distribution                              (208)       (256)
Investment in and amounts due to and from TWE            5,923       5,691
Investment in other Entertainment Group companies          127         123

Total                                                   $6,050      $5,814

     TWE is a Delaware limited partnership that was capitalized 
on June 30, 1992 to own and operate substantially all of the 
Filmed Entertainment-Warner Bros., Cable Networks-HBO and Cable 
businesses previously owned by subsidiaries of Time Warner. 
Time Warner, through its wholly owned subsidiaries, collectively
owns general and limited partnership interests in TWE 
consisting of 74.49% of the Series A Capital and Residual
Capital and 100% of the Senior Capital and Series B Capital. 
The remaining 25.51% limited partnership interests in the
Series A Capital and Residual Capital of TWE are owned by 
U S WEST. Certain Time Warner subsidiaries are the general 
partners of TWE ("Time Warner General Partners").

     The TWE partnership agreement provides for special allocations
of income, loss and distributions of partnership capital, including 
priority distributions in the event of liquidation. TWE reported 
net income of $402 million and $168 million in the six months 
ended June 30, 1997 and 1996, respectively, no portion of which
was allocated to the limited partnership interests.

     Each Time Warner General Partner has guaranteed a pro rata portion 
of approximately $5.6 billion of TWE's debt and accrued interest at 
June 30, 1997, based on the relative fair value of the net assets each
Time Warner General Partner contributed to TWE.  Such indebtedness is 
recourse to each Time Warner General Partner only to the extent of 
its guarantee. 

<PAGE>

         Set forth below is summarized financial information
of the Entertainment Group:

TIME WARNER ENTERTAINMENT GROUP
                                            Three Months        Six Months
                                            Ended June 30,     Ended June 30,
                                            1997     1996      1997     1996 
                                                        (millions)
Operating Statement Information
Revenues                                   $2,731   $2,610    $5,333   $5,097
Depreciation and amortization                 332      295       661      585
Business segment operating income             327      297       655      568
Interest and other, net(1)                    139      134        11      222
Minority interest                              56       52       164      102
Income before income taxes                    114       93       444      209
Net income                                     89       72       407      170
__________________
(1)   Includes a pretax gain of approximately $250 million
      recognized in the first quarter of 1997 related to the sale
      of an interest in E! Entertainment Television, Inc.
                                                             
                                                               Six Months 
                                                              Ended June 30,
                                                              1997     1996
                                                                (millions)
Cash Flow Information
Cash provided by operations                                  $  416    $1,198
Capital expenditures                                           (734)     (781)
Investments and acquisitions                                    (62)      (66)
Investment proceeds                                             371       196
Borrowings                                                      428        63
Debt repayments                                                (323)     (670)
Issuance of preferred stock of subsidiary                       243         -
Capital distributions                                          (203)     (132)
Collections on note receivable from U S WEST                      -       169
Other financing activities, net                                 (59)       32
Increase in cash and equivalents                                 77         9

                                                      June 30,   December 31,
                                                        1997         1996
                                                           (millions)
Balance Sheet Information
Cash and equivalents                                   $   293     $   216
Total current assets                                     3,559       3,147
Total assets                                            20,257      20,027
Total current liabilities                                3,649       4,092
Long-term debt                                           5,781       5,676
Minority interests                                       1,137       1,020
Preferred stock of subsidiary                              240           -
Time Warner General Partners' Senior Capital             1,605       1,543
Partners' capital                                        6,642       6,681

     The assets and cash flows of TWE are restricted by the TWE 
partnership and credit agreements and are unavailable for use by
the partners except through the payment of certain fees, reimbursements, 
cash distributions and loans, which are subject to limitations.
At June 30, 1997 and December 31, 1996, the Time Warner General 

<PAGE>

Partners had recorded $259 million and $93 million, respectively,
of stock option related distributions due from TWE, based on 
closing prices of Time Warner common stock of $48.25 and $37.50, 
respectively. Time Warner is paid when the options are exercised.
The Time Warner General Partners also receive tax-related 
distributions from TWE on a current basis. During the six months ended 
June 30, 1997, the Time Warner General Partners received distributions
from TWE in the amount of $203 million, consisting of $192 million of
tax-related distributions and $11 million of stock option related 
distributions. During the six months ended June 30, 1996, the Time 
Warner General Partners received distributions from TWE in the 
amount of $132 million, consisting of $123 million of tax-related 
distributions and $9 million of stock option related distributions.
In July 1997, the Time Warner General Partners received a $535
million distribution from TWE relating to its Senior Capital interest.

4.   INVENTORIES

     Inventories consist of: 
                                          June 30, 1997    December 31, 1996 
                                      Current Noncurrent   Current Noncurrent
                                                    (millions)
Film costs:
 Released, less amortization            $  81     $  173      $209     $  142
 Completed and not released                13          4        54          -
 In process and other                       -        250        24        251
 Library, less amortization                 -      1,088         -      1,116
Programming costs, less amortization      256        242       213        189
Magazines, books and recorded music       394          -       441          -

Total                                   $ 744     $1,757      $941     $1,698

5.   LONG-TERM DEBT

     During the first quarter of 1997, Time Warner entered into a 
number of financing transactions, which resulted in the refinancing
of approximately $600 million of debt and the elimination of the
potential dilution from the conversion of TBS's zero coupon subordinated
convertible notes due 2007 (the "TBS Convertible Notes") into 5.6
million shares of Time Warner common stock. Time Warner redeemed $300 
million principal amount of 10.75% Senior Notes due January 30, 2002
of TWI Cable Inc. ("TWI Cable"), its wholly owned subsidiary, and
approximately $283 million accreted amount of the TBS Convertible Notes
at an aggregate redemption price of approximately $600 million, including
redemption premiums and accrued interest thereon (collectively, the
"First Quarter Debt Redemptions"). In conjunction with the refinancing,
Old Time Warner issued $600 million principal amount of Floating Rate
Reset Notes due December 30, 2031 that are redeemable at the election of
the holders, in whole but not in part, on December 30, 2001 (the "Five-Year
Floating Rate Notes"). The Five-Year Floating Rate Notes bear interest at
a floating rate equal to LIBOR less 25 basis points until December 30,
2001, at which time, if not redeemed, the interest rate will be reset
at a fixed rate equal to 6.59% plus a margin based upon Old Time Warner's
credit risk at such time. 

     In July 1997, Old Time Warner issued $600 million principal
amount of Floating Rate Reset Notes due July 29, 2009 that are
redeemable at the election of the holders, in whole but not in part,
on July 29, 1999 (the "Two-Year Floating Rate Notes"). The net proceeds
therefrom will be used by Old Time Warner in the third quarter of 1997
to redeem or repay other indebtedness. The Two-Year Floating Rate Notes
bear interest at a floating rate equal  

<PAGE>

to LIBOR less 115 basis points until July 29, 1999, at which time, if 
not redeemed, the interest rate will be reset at a fixed rate equal to
6.16% plus a margin based upon Old Time Warner's credit risk at such time. 

     An extraordinary loss of $17 million was recognized by Time Warner
in the first quarter of 1997 in connection with the First Quarter Debt
Redemptions. An extraordinary loss of $9 million was recognized in the 
second quarter of 1996 in connection with Time Warner's redemption of its
8.75% Debentures due 2017. An extraordinary loss of $26 million was 
recognized in the first quarter of 1996 in connection with Time Warner's
redemption of its 8.75% Convertible Subordinated Debentures due 2015. 

6.   MANDATORILY REDEEMABLE PREFERRED SECURITIES

     In August 1995, Time Warner issued approximately 12.1 million
Company-obligated mandatorily redeemable preferred securities of a 
wholly owned subsidiary ("PERCS") for aggregate gross proceeds of
$374 million. The sole assets of the subsidiary that is the obligor
on the PERCS are $385 million principal amount of 4% subordinated
notes of Old Time Warner due December 23, 1997. Cumulative cash
distributions are payable on the PERCS at an annual rate of 4%.
The PERCS are mandatorily redeemable on December 23, 1997, for an 
amount per PERCS equal to the lesser of $54.41 and the market value 
of 1.5 shares of common stock of Hasbro, Inc. ("Hasbro") on December
17, 1997, payable in cash or, at Time Warner's option, Hasbro common
stock. Time Warner has the right to redeem the PERCS at any time prior
to December 23, 1997, at an amount per PERCS equal to $54.41 (or in certain
limited circumstances the lesser of such amount and the market value of
1.5 shares of Hasbro common stock at the time of redemption) plus
accrued and unpaid distributions thereon and a declining premium, payable
in cash or, at Time Warner's option, Hasbro common stock. Time Warner
owns approximately 18.1 million shares of Hasbro common stock, which
can be used by Time Warner, at its election, to satisfy its obligations
under the PERCS or its obligations under its zero coupon exchangeable
notes due 2012. Such zero coupon notes are exchangeable and redeemable
into an aggregate 18.1 million shares of Hasbro common stock.

     In December 1995, Time Warner issued approximately 23 million 
Company-obligated mandatorily redeemable preferred securities of a 
wholly owned subsidiary ("Preferred Trust Securities") for aggregate 
gross proceeds of $575 million. The sole assets of the subsidiary
that is the obligor on the Preferred Trust Securities are $592 million 
principal amount of 8-7/8% subordinated debentures of Old Time Warner
due December 31, 2025. Cumulative cash distributions are payable
on the Preferred Trust Securities at an annual rate of 8-7/8%. The 
Preferred Trust Securities are mandatorily redeemable for cash on 
December 31, 2025, and Time Warner has the right to redeem the 
Preferred Trust Securities, in whole or in part, on or after
December 31, 2000, or in other certain circumstances, in each case
at an amount per Preferred Trust Security equal to $25 plus accrued and
unpaid distributions thereon.

     Time Warner has certain obligations relating to the PERCS and the 
Preferred Trust Securities which amount to a full and unconditional
guaranty (on a subordinated basis) of each subsidiary's obligations 
with respect thereto. 

<PAGE>

7.   SHAREHOLDERS' EQUITY

     Changes in shareholders' equity are as follows:
                                                             
                                                              Six Months
                                                             Ended June 30, 
                                                             1997     1996
                                                               (millions)
Balance at beginning of year                               $9,502     $3,667
Net income (loss)                                              65       (159)
Common dividends declared                                    (101)       (70)
Preferred dividends declared                                 (157)      (104)
Repurchases of Time Warner common stock                       (36)      (360)
Issuance of common stock in connection with the 
  TBS Transaction                                              67          -
Issuance of common stock and preferred stock in the CVI
  acquisition                                                   -        680
Unrealized gains (losses) on certain marketable equity
  investments                                                 (10)        61
Other, principally foreign currency translation and shares
  issued pursuant to stock option and dividend reinvestment
  plans                                                        93        128

Balance at June 30                                         $9,423     $3,843

     In April 1996, Time Warner's Board of Directors authorized a
program to repurchase, from time to time, up to 15 million shares of 
Time Warner common stock. The common stock repurchased under the 
program is expected to be used to satisfy future share issuances related
to the exercise of existing employee stock options. Actual repurchases
in any period will be subject to market conditions. As of June 30, 1997,
Time Warner had acquired approximately 12.4 million shares of its common
stock under this program for an aggregate cost of $492 million.

8.   SEGMENT INFORMATION

     Time Warner classifies its businesses into four fundamental
areas: Entertainment, consisting principally of interests in 
recorded music and music publishing, filmed entertainment, television
production, television broadcasting and theme parks; Cable Networks,
consisting principally of interests in cable television programming and
sports franchises; Publishing, consisting principally of interests in 
magazine publishing, book publishing and direct marketing; and Cable,
consisting principally of interests in cable television systems. A 
majority of Time Warner's interests in filmed entertainment, television
production, television broadcasting and theme parks, a portion of its
interests in cable television programming and a majority of its cable 
television systems are held by the Entertainment Group. The Entertainment 
Group is not consolidated for financial reporting purposes. 

     Information as to the operations of Time Warner and the Entertainment
Group in different business segments is set forth below. The operating
results of Time Warner reflect the acquisitions of CVI effective as
of January 4, 1996 and TBS effective as of October 10, 1996. 

<PAGE>

                                           Three Months        Six Months
                                          Ended June 30,      Ended June 30,
                                          1997     1996        1997     1996
                                                       (millions)
Revenues
Time Warner:
Publishing                               $1,053    $1,038    $1,977    $1,917
Music                                       822       876     1,755     1,859
Cable Networks-TBS                          750         -     1,344         -
Filmed Entertainment-TBS                    337         -       734         -
Cable                                       250       230       492       447
Intersegment elimination                    (19)       (5)      (75)      (16)

Total                                    $3,193    $2,139    $6,227    $4,207

Entertainment Group:
Filmed Entertainment-Warner Bros.        $1,257    $1,272    $2,431    $2,490
Broadcasting-The WB Network                  29        18        53        33
Cable Networks-HBO                          487       456       970       875
Cable                                     1,066       961     2,086     1,908
Intersegment elimination                   (108)      (97)     (207)     (209)

Total                                    $2,731    $2,610    $5,333    $5,097

                                            Three Months        Six Months
                                           Ended June 30,      Ended June 30,
                                           1997     1996       1997     1996
                                                       (millions)
Operating Income
Time Warner:
Publishing                               $  149    $  125    $  216    $  181
Music                                        32        70        82       125
Cable Networks-TBS                          115         -       184         -
Filmed Entertainment-TBS                     10         -        (6)        -
Cable                                        35        20        70        19
Intersegment elimination                      4         -        (7)        -

Total                                    $  345    $  215    $  539      $325

Entertainment Group:
Filmed Entertainment-Warner Bros.        $   80    $   79    $  154      $152
Broadcasting-The WB Network                 (19)      (12)      (39)      (36)
Cable Networks-HBO                           98        83       189       159
Cable                                       168       147       351       293

Total                                    $  327    $  297    $  655      $568

<PAGE>

                                              Three Months    Six Months
                                            Ended June 30,    Ended June 30, 
                                            1997     1996     1997     1996  
                                                      (millions)
Depreciation of Property, Plant and Equipment
Time Warner:
Publishing                                   $ 17     $ 17    $ 33     $ 32
Music                                          19       19      41       42
Cable Networks-TBS                             21        -      42        -
Filmed Entertainment-TBS                        2        -       3        -
Cable                                          31       33      62       66

Total                                        $ 90     $ 69    $181     $140

Entertainment Group:
Filmed Entertainment-Warner Bros.            $ 45     $ 33    $ 90     $ 65
Broadcasting-The WB Network                     1        -       1        -
Cable Networks-HBO                              5        4      10        9
Cable                                         176      157     348      300

Total                                        $227     $194    $449     $374

                                              Three Months       Six Months
                                            Ended June 30,     Ended June 30, 
                                            1997    1996       1997     1996
                                                        (millions)
Amortization of Intangible Assets(1)
Time Warner:
Publishing                                   $  8     $ 14    $ 17     $ 23
Music                                          74       76     142      144
Cable Networks-TBS                             50        -      95        -
Filmed Entertainment-TBS                       19        -      41        -
Cable                                          69       65     139      145

Total                                        $220     $155    $434     $312

Entertainment Group:
Filmed Entertainment-Warner Bros.           $  30     $ 29    $ 61    $  60
Broadcasting-The WB Network                     -        -       -        -
Cable Networks-HBO                              -        -       -        -
Cable                                          75       72     151      151

Total                                        $105     $101    $212     $211
                      
(1)  Amortization includes all amortization relating to the
     acquisition of Warner Communications Inc. ("WCI") in 1989,
     the acquisition of the minority interest in American
     Television and Communications Corporation ("ATC") in 1992,
     the acquisitions of KBLCOM Incorporated and Summit
     Communications Group, Inc. in 1995, the acquisitions of TBS
     and CVI in 1996 and other business combinations accounted
     for by the purchase method.

<PAGE>

9.   COMMITMENTS AND CONTINGENCIES 

     Pending legal proceedings are substantially limited to 
litigation incidental to the businesses of Time Warner and 
alleged damages in connection with class action lawsuits. 
In the opinion of management, the ultimate resolution of these 
matters will not have a material effect on the consolidated
financial statements of Time Warner. 

10.  ADDITIONAL FINANCIAL INFORMATION 

     Additional financial information with respect to cash
flows is as follows:
                                                             
                                                               Six Months
                                                             Ended June 30,
                                                             1997     1996
                                                              (millions)

Interest expense                                           $534        $471
Cash payments made for interest                             488         426
Cash payments made for income taxes                         166         169
Tax-related distributions received from TWE                 192         123
Income tax refunds received                                  34          36
Noncash dividends                                            91          36

<PAGE>

<PAGE>
                            TIME WARNER INC.
                       SUPPLEMENTARY INFORMATION
                   SUMMARIZED FINANCIAL INFORMATION OF
    TIME WARNER COMPANIES, INC. AND TURNER BROADCASTING SYSTEM, INC.
                            [Unaudited]

     On October 10, 1996, Time Warner Inc. acquired the
remaining 80% interest in Turner Broadcasting System, Inc.
("TBS") that it did not already own, as more fully described
in Note 2 to the Time Warner Inc. consolidated financial
statements. As a result of this transaction, a new parent
company with the name "Time Warner Inc." replaced the old
parent company of the same name ("Old Time Warner", now
known as Time Warner Companies, Inc.) and Old Time Warner
and TBS became separate, wholly owned subsidiaries of the
new parent company ("New Time Warner"). New Time Warner has
fully and unconditionally guaranteed all of the outstanding
publicly traded indebtedness of each of Old Time Warner and TBS.

     Set forth below is summarized financial information of
each of Old Time Warner and TBS presented for the
information of their respective debtholders. Summarized
financial information of Old Time Warner presented below
includes Old Time Warner's 20% interest in TBS under the
equity method of accounting. Summarized financial
information of TBS for all post-merger periods presented
below has been adjusted to reflect New Time Warner's basis
of accounting. Summarized financial information of TBS
presented below for all pre-merger periods is reflected at
TBS's historical cost basis of accounting. Certain
reclassifications have been made to TBS's summarized
financial information for all pre-merger periods to conform
to the post-merger presentation.

Old Time Warner
                                             Three Months     Six Months
                                            Ended June 30,   Ended June 30,
                                            1997     1996    1997     1996
                                                      (millions)
Operating Statement Information
Revenues                                   $2,108   $2,139   $4,194   $4,207
Depreciation and amortization                 218      224      434      452
Business segment operating income             216      215      368      325
Equity in pretax income of Entertainment 
   Group                                      114       93      444      209
Interest and other, net                       251      282      491      578
Income (loss) before extraordinary item        15      (31)     106     (124)
Net income (loss) (a)                          15      (40)     93      (159)

                                                       June 30,  December 31,
                                                         1997        1996
Balance Sheet Information                                   (millions)
Total current assets                                     $ 3,257    $ 3,529
Investments in and amounts due to and from 
   Entertainment Group                                     6,068      5,814
Total assets                                              26,076     25,595
Total current liabilities                                  2,645      2,831
Long-term debt                                            11,686     11,002
Total liabilities                                         18,977     18,532
Old Time Warner-obligated mandatorily redeemable 
  preferred securities of subsidiaries holding 
  solely subordinated notes and debentures of Old 
  Time Warner (b)                                            949        949
Series M exchangeable preferred stock                      1,763      1,672
Shareholders' equity                                       4,387      4,442
_______________
(a)  The net income for the six months ended June 30, 1997
     includes an extraordinary loss on the retirement of debt of
     $13 million. The net income for the three and six months
     ended June 30, 1996 includes extraordinary losses on the
     retirement of debt of $9 million and $35 million,
     respectively.

(b) Includes $374 million of preferred securities that are
    redeemable for cash or, at Old Time Warner's option,
    approximately 18.1 million shares of Hasbro, Inc. common
    stock owned by Old Time Warner.

<PAGE>

TBS
                                                Three Months     Six Months
                                               Ended June 30,   Ended June 30,
                                               1997     1996    1997     1996
                                                 (millions)
Operating Statement Information
Revenues                                      $1,079   $894   $2,033   $1,661
Depreciation and amortization                     92     47      181       92
Business segment operating income                129     78      171      114
Interest and other, net                           40     50      102       97
Income (loss) before extraordinary item           34     11       (2)       1
Net income (loss) (a)                             34     11       (6)       1


                                                      June 30,   December 31,
                                                        1997        1996
                                                            (millions)
Balance Sheet Information
Total current assets                                   $ 1,177    $ 1,286
Total assets                                            11,057     11,092
Total current liabilities                                  948        934
Long-term debt                                           1,025      1,711
Debt due to New Time Warner                              1,556        985
Total liabilities                                        3,960      3,989
Shareholders' equity                                     7,097      7,103
_______________
(a) The net loss for the six months ended June 30, 1997
    includes an extraordinary loss on the retirement 
    of debt of $4 million.

<PAGE>

<PAGE>

                     TIME WARNER ENTERTAINMENT COMPANY, L.P.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     TWE classifies its business interests into three
fundamental areas: Entertainment, consisting principally of
interests in filmed entertainment, television production,
television broadcasting and theme parks; Cable Networks,
consisting principally of interests in cable television
programming; and Cable, consisting principally of interests
in cable television systems. TWE also manages the cable
properties owned by Time Warner and the combined cable television 
operations are conducted under the name of Time Warner Cable.
Capitalized terms are as defined and described in the accompanying
consolidated financial statements, or elsewhere herein.

Cable Strategy

     Currently, Time Warner is no longer actively pursuing a
restructuring of TWE with U S WEST. However, Time Warner is
continuing to explore alternatives to reduce selectively its
economic interest in the cable television business and related 
ancillary businesses in order to reduce existing debt and its
share of future funding requirements related to such operations. 
These alternatives include sales or exchanges of non-strategic,
unclustered cable television systems and tax-efficient transfers
of cable television systems and related ancillary businesses to
joint ventures or other enterprises that would be responsible 
for financing the operating and capital needs of such businesses. 
These alternatives may be subject to third party, franchise and
regulatory approvals, including, in certain instances, approval by
U S WEST and/or the Advance/Newhouse Partnership ("Advance/Newhouse"). 
There can be no assurance that any of these efforts will succeed.

     Consistent with this strategy of reducing existing debt
and its share of future funding requirements related to the
cable television business, TWE and Advance/Newhouse entered
into agreements in June 1997 to transfer the direct
broadcast satellite operations conducted by TWE and the
TWE-Advance/Newhouse Partnership (the "DBS Operations") and
the 31% partnership interest in Primestar Partners, L.P.
held by the TWE-Advance/Newhouse Partnership ("Primestar"
and collectively, the "Primestar Assets") to a new, publicly
traded holding company ("Newco") that will be the parent
entity of TCI Satellite Entertainment, Inc. ("TSAT").  Newco
will also own the DBS Operations and Primestar partnership
interests currently owned by TSAT and other existing
partners of Primestar. In exchange for contributing its
interests in the Primestar Assets, TWE will receive an
approximate 24% equity interest in Newco and realize
approximately $200 million of debt reduction, as well as
eliminating its share of future funding requirements for
these operations that will be separately financed by Newco.
In partial consideration for contributing its indirect
interest in certain of the Primestar Assets, Advance/Newhouse 
will receive an approximate 6% equity interest in Newco. 

     In a related transaction, Primestar also entered into
an agreement in June 1997 with The News Corporation Limited,
MCI Telecommunications Corporation and American Sky
Broadcasting LLC ("ASkyB"), pursuant to which Primestar (or,
under certain circumstances, Newco) will acquire certain
assets relating to the high-power, direct broadcast
satellite business of ASkyB. In exchange for such assets,
ASkyB will receive non-voting securities of Newco that will
be convertible into non-voting common stock of Newco and,
accordingly, reduce TWE's equity interest in Newco to
approximately 16% on a fully diluted basis.

     The Primestar transactions are not conditioned on each other
and may close independently.  They are expected to close in 1998,
subject to customary closing conditions, including all necessary
governmental and regulatory approvals, including the approval of
the Federal Communications Commission (the "FCC"). There can be no
assurance that such approvals will be obtained.  

<PAGE>

Use of EBITDA

     The following comparative discussion of the results of
operations and financial condition of TWE includes, among
other factors, an analysis of changes in the operating
income of the business segments before depreciation and
amortization ("EBITDA") in order to eliminate the effect on
the operating performance of the filmed entertainment and
cable businesses of significant amounts of amortization of
intangible assets recognized in Time Warner's $14 billion
acquisition of WCI in 1989, the $1.3 billion acquisition of
the ATC minority interest in 1992 and other business
combinations accounted for by the purchase method. Financial
analysts generally consider EBITDA to be an important measure 
of comparative operating performance for the businesses of 
TWE, and, when used in comparison to debt levels or the 
coverage of interest expense, as a measure of liquidity.
However, EBITDA should be considered in addition to, not as 
a substitute for, operating income, net income, cash flow and 
other measures of financial performance and liquidity reported
in accordance with generally accepted accounting principles.

RESULTS OF OPERATIONS

     EBITDA and operating income for TWE for the three and six months 
ended June 30, 1997 and 1996 are as follows:

                    Three Months Ended June 30,     Six Months Ended June 30,
                                      Operating                   Operating
                          EBITDA       Income         EBITDA       Income   
                        1997  1996   1997   1996    1997  1996   1997   1996 
                                               (millions)
Filmed Entertainment
  -Warner Bros.         $144  $140    $ 73  $ 79    $290    $271   $148  $149
Broadcasting-The 
  WB Network             (18)  (12)    (19)  (12)    (38)    (36)   (39)  (36)
Cable Networks-HBO       103    87      98    83     199     168    189   159
Cable                    419   376     168   147     850     744    351   293

Total                   $648  $591    $320  $297  $1,301  $1,147   $649  $565

Three Months Ended June 30, 1997 Compared to the Three Months Ended 
June 30, 1996

     TWE had revenues of $2.728 billion and net income of
$82 million for the three months ended June 30, 1997, compared 
to revenues of $2.608 billion and net income of $74 million 
for the three months ended June 30, 1996. As discussed more
fully below, TWE's net income increased in 1997 as compared 
to results in 1996 principally due to an overall increase 
in operating income generated by its business segments.

     As a U.S. partnership, TWE is not subject to U.S.
federal and state income taxation. Income and withholding
taxes of $25 million and $21 million for the three months
ended June 30, 1997 and 1996, respectively, have been
provided for the operations of TWE's domestic and foreign
subsidiary corporations.

     Filmed Entertainment-Warner Bros.  Revenues decreased
to $1.254 billion, compared to $1.270 billion in the second
quarter of 1996. EBITDA increased to $144 million from $140
million. Depreciation and amortization, including noncash
amortization of intangible assets related to the purchase of
WCI, amounted to $71 million in 1997 and $61 million in
1996. Operating income decreased to $73 million from $79
million. Revenues decreased principally as a result of lower
worldwide theatrical and home video revenues, offset in part
by significant increases in worldwide television
distribution revenues. EBITDA and operating income increased
principally as a result of the strong performance of
worldwide television distribution operations. Operating
income was further affected by higher depreciation and
amortization principally related to the expansion of theme
parks and consumer products operations.

<PAGE>

     Broadcasting - The WB Network.  Revenues increased to
$29 million, compared to $18 million in the second quarter
of 1996. EBITDA decreased to a loss of $18 million from a
loss of $12 million. Depreciation and amortization amounted
to $1 million in 1997. Operating losses increased to $19
million from $12 million. The increase in revenues primarily
resulted from the expansion of programming in September 1996
to three nights of primetime scheduling and the expansion of
Kids' WB!, the network's animated programming lineup on
Saturday mornings and weekdays. The 1997 operating loss
principally resulted from the expanded programming schedule
and was mitigated by the exercise of an option by a limited
partner in the first quarter of 1997 to increase its ownership 
in this network. Due to the start-up nature of this national 
broadcast operation, losses are expected to continue.

     Cable Networks-HBO. Revenues increased to $487 million,
compared to $456 million in the second quarter of 1996.
EBITDA increased to $103 million from $87 million.
Depreciation and amortization amounted to $5 million in 1997
and $4 million in 1996. Operating income increased to $98
million from $83 million. Revenues benefited primarily from
a significant increase in subscriptions. EBITDA and operating 
income improved principally as a result of the revenue gains.

     Cable.  Revenues increased to $1.066 billion, compared
to $961 million in the second quarter of 1996. EBITDA
increased to $419 million from $376 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the purchase of WCI and the
acquisition of the ATC minority interest, amounted to $251
million in 1997 and $229 million in 1996. Operating income
increased to $168 million from $147 million. Revenues
benefited from an increase in basic cable and
Primestar-related, direct broadcast satellite subscribers,
increases in regulated cable rates as permitted under Time
Warner Cable's "social contract" with the FCC and an
increase in advertising and pay-per-view revenues. EBITDA
and operating income increased as a result of the revenue
gains. Operating income was further affected by higher
depreciation and amortization related to capital spending.

     Interest and Other, Net. Interest and other, net, was
$139 million in the second quarter of 1997, compared to $132
million in the second quarter of 1996. Interest expense
increased to $120 million, compared to $117 million in 1996.
There was other expense, net, of $19 million in the second
quarter of 1997, compared to $15 million in the second
quarter of 1996, principally due to an increase in dividend
requirements on preferred stock of a subsidiary issued in
February 1997 to reduce bank debt. The preferred stock was
issued by a newly formed, substantially owned subsidiary
(the "REIT") intended to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended. 


Six Months Ended June 30, 1997 Compared to the Six Months
Ended June 30, 1996

     TWE had revenues of $5.328 billion and net income of
$402 million for the six months ended June 30, 1997,
compared to revenues of $5.093 billion and net income of
$168 million for the six months ended June 30, 1996. As
discussed more fully below, TWE's net income increased
significantly in 1997 as compared to results in 1996
principally due to an overall increase in operating income
generated by its business segments and the inclusion of an
approximately $250 million pretax gain on the first quarter
of 1997 sale of TWE's 58% interest in E! Entertainment
Television, Inc., offset in part by an increase in minority
interest expense related to the TWE-Advance/Newhouse Partnership.

     As a U.S. partnership, TWE is not subject to U.S. federal
and state income taxation. Income and withholding taxes of 
$37 million and $39 million for the six months ended June 30, 
1997 and 1996, respectively, have been provided for the
operations of TWE's domestic and foreign subsidiary corporations. 

<PAGE>

     Filmed Entertainment-Warner Bros.  Revenues decreased
to $2.426 billion, compared to $2.486 billion in the first
six months of 1996. EBITDA increased to $290 million from
$271 million. Depreciation and amortization, including
noncash amortization of intangible assets related to the
purchase of WCI, amounted to $142 million in 1997 and $122
million in 1996. Operating income decreased to $148 million
from $149 million. Revenues decreased principally as a
result of lower worldwide theatrical and home video
revenues, offset in part by significant increases in
worldwide television distribution revenues. EBITDA and
operating income increased principally as a result of the
strong performance of worldwide television distribution
operations and a gain on the sale of an investment. 

     Broadcasting - The WB Network.  Revenues increased to
$53 million, compared to $33 million in the first six months
of 1996. EBITDA decreased to a loss of $38 million from a
loss of $36 million. Depreciation and amortization amounted
to $1 million in 1997. Operating losses increased to $39
million from $36 million. The increase in revenues primarily
resulted from the expansion of programming in September 1996
to three nights of primetime scheduling and the expansion of
Kids' WB!, the network's animated programming lineup on
Saturday mornings and weekdays. The 1997 operating loss
principally resulted from the expanded programming schedule
and was mitigated by the exercise of an option by a limited
partner in the first quarter of 1997 to increase its ownership
in this network. Due to the start-up nature of this national 
broadcast operation, losses are expected to continue.

     Cable Networks-HBO. Revenues increased to $970 million,
compared to $875 million in the first six months of 1996.
EBITDA increased to $199 million from $168 million.
Depreciation and amortization amounted to $10 million in
1997 and $9 million in 1996. Operating income increased to
$189 million from $159 million. Revenues benefited primarily
from a significant increase in subscriptions. EBITDA and operating 
income improved principally as a result of the revenue gains.

     Cable.  Revenues increased to $2.086 billion, compared
to $1.908 billion in the first six months of 1996. EBITDA
increased to $850 million from $744 million. Depreciation
and amortization, including noncash amortization of
intangible assets related to the purchase of WCI and the
acquisition of the ATC minority interest, amounted to $499
million in 1997 and $451 million in 1996. Operating income
increased to $351 million from $293 million. Revenues
benefited from an increase in basic cable and
Primestar-related, direct broadcast satellite subscribers,
increases in regulated cable rates as permitted under Time
Warner Cable's "social contract" with the FCC and an
increase in advertising and pay-per-view revenues. EBITDA
and operating income increased as a result of the revenue
gains, as well as net gains of approximately $24 million
recognized in the first quarter of 1997 in connection with
the sale or exchange of certain cable systems. Operating
income was further affected by higher depreciation and
amortization related to capital spending.

     Interest and Other, Net. Interest and other, net, was
$10 million in the first six months of 1997, compared to
$221 million in the first six months of 1996. Interest
expense decreased to $235 million, compared to $239 million
in 1996. There was other income, net, of $225 million in the
first six months of 1997, compared to $18 million in the
first six months of 1996, principally due to higher gains on
asset sales, including an approximately $250 million pretax
gain on the sale of an interest in E! Entertainment
Television, Inc. recognized in the first quarter of 1997.
This income was offset in part by an increase in dividend
requirements on preferred stock of the REIT issued in
February 1997 to reduce bank debt.

<PAGE>

FINANCIAL CONDITION AND LIQUIDITY
June 30, 1997

Financial Condition

      TWE had $5.8 billion of debt, $240 million of preferred 
stock of a subsidiary, $1.6 billion of Time Warner General 
Partners' Senior Capital and $6.5 billion of partners' capital
at June 30, 1997, compared to $5.7 billion of debt, $1.5 billion
of Time Warner General Partners' Senior Capital and $6.6 billion
of partners' capital at December 31, 1996. Cash and equivalents 
were $293 million at June 30, 1997, compared to $216 million 
at December 31, 1996, reducing the debt-net-of-cash amounts for 
TWE to $5.5 billion in both periods.
 
Cash Flows

     During the first six months of 1997, TWE's cash
provided by operations amounted to $416 million and
reflected $1.301 billion of EBITDA from the Filmed
Entertainment-Warner Bros., Broadcasting-The WB Network,
Cable Networks-HBO and Cable businesses, less $243 million
of interest payments, $35 million of income taxes, $36
million of corporate expenses, and $571 million related to
an increase in working capital requirements, other balance
sheet accounts and noncash items. Cash provided by
operations of $1.197 billion in the first six months of 1996
reflected $1.147 billion of business segment EBITDA and $364
million related to a reduction in working capital
requirements, other balance sheet accounts and noncash
items, less $247 million of interest payments, $32 million
of income taxes and $35 million of corporate expenses. 

     Cash used by investing activities was $425 million in
the first six months of 1997, compared to $650 million in
the first six months of 1996, principally as a result of a
$175 million increase in proceeds from the sale of
investments and lower capital expenditures. Capital
expenditures were $734 million in 1997 and $781 million in 1996.

     Cash provided by financing activities was $86 million
in the first six months of 1997, compared to cash used by
financing activities of $538 million in the first six months
of 1996, principally as a result of a lower level of debt
reduction in the first six months of 1997 and the issuance
of 250,000 shares of preferred stock of a subsidiary for
aggregate net proceeds of $243 million, offset in part by
the absence of $169 million of collections on the note
receivable from U S WEST that was fully paid in 1996. The
preferred stock was issued by a newly formed, substantially
owned subsidiary intended to qualify as a real estate investment 
trust under the Internal Revenue Code of 1986, as amended. 

     Management believes that TWE's operating cash flow, cash and 
equivalents and additional borrowing capacity are sufficient to 
fund its capital and liquidity needs for the foreseeable future.

Cable Capital Spending

     Since the beginning of 1994, Time Warner Cable has been
engaged in a plan to upgrade the technological capability
and reliability of its cable television systems and develop
new services, which it believes will position the business
for sustained, long-term growth. Capital spending by TWE's
Cable division amounted to $662 million in the six months
ended June 30, 1997, compared to $610 million in the six
months ended June 30, 1996. For the full year of 1997, cable
capital spending is expected to be relatively comparable to
1996 levels, with approximately $750 million budgeted for
the remainder of 1997. Capital spending by TWE's Cable
division is expected to be funded by cable operating cash
flow. In exchange for certain flexibility in establishing
cable rate pricing structures for regulated 

<PAGE>

services that went into effect on January 1, 1996 and
consistent with Time Warner Cable's long-term strategic
plan, Time Warner Cable has agreed with the FCC to invest a
total of $4 billion in capital costs in connection with the
upgrade of its cable infrastructure, which is expected to be
substantially completed over a five-year period ending
December 31, 2000. The agreement with the FCC covers all of
the cable operations of Time Warner Cable, including the
owned or managed cable television systems of TWE, the
TWE-Advance/Newhouse Partnership and Time Warner. Management
expects to continue to finance such level of investment
through the growth in cable operating cash flow derived from
increases in subscribers and cable rates, bank credit
agreement borrowings and the development of new revenue
streams from expanded programming options, high speed data
transmission and other services.

Warner Bros. Backlog

     Warner Bros.' backlog, representing the amount of
future revenue not yet recorded from cash contracts for the
licensing of theatrical and television product for pay
cable, basic cable, network and syndicated television
exhibition, amounted to $1.839 billion at June 30, 1997,
compared to $1.502 billion at December 31, 1996 (including
amounts relating to TWE's cable television networks of $226
million and $189 million, respectively, and to Time Warner's
cable television networks of $489 million and $274 million,
respectively). Because backlog generally relates to
contracts for the licensing of theatrical and television
product which have already been produced, the recognition of
revenue for such completed product is principally only
dependent upon the commencement of the availability period
for telecast under the terms of the related licensing
agreement. Cash licensing fees are collected periodically
over the term of the related licensing agreements. Accordingly, 
the portion of backlog for which cash advances have not already 
been received has significant off-balance sheet asset value as
a source of future funding. The backlog excludes advertising 
barter contracts, which are also expected to result in the future
realization of revenues and cash through the sale of advertising
spots received under such contracts.

<PAGE>

<PAGE>
 
           TIME WARNER ENTERTAINMENT COMPANY, L.P.
                   CONSOLIDATED BALANCE SHEET
                          (Unaudited)

                                                       June 30,  December 31,
                                                         1997       1996  
                                                            (millions)
ASSETS
Current assets
Cash and equivalents                                    $   293    $   216
Receivables, including $341 and $383 million 
   due from Time Warner, less allowances of $378 
   and $373 million                                       1,717      1,637
Inventories                                               1,367      1,134
Prepaid expenses                                            182        159

Total current assets                                      3,559      3,146

Noncurrent inventories                                    2,126      2,263
Loan receivable from Time Warner                            400        400
Investments                                                 367        351
Property, plant and equipment, net                        6,266      5,999
Cable television franchises                               2,977      3,054
Goodwill                                                  3,936      3,996
Other assets                                                579        764

Total assets                                            $20,210    $19,973

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable                                        $   710    $   935
Participations and programming costs payable              1,346      1,393
Debt due within one year                                      7          7
Other current liabilities, including $85 million and
   $82 million due to Time Warner                         1,568      1,740

Total current liabilities                                 3,631      4,075

Long-term debt                                            5,781      5,676
Other long-term liabilities, including $307 and 
   $138 million due to Time Warner                        1,285      1,085
Minority interests                                        1,137      1,020
Preferred stock of subsidiary holding solely a 
   mortgage note of its parent                              240          -
Time Warner General Partners' Senior Capital              1,605      1,543

Partners' capital
Contributed capital                                       7,537      7,537
Undistributed partnership earnings (deficit)             (1,006)      (963)

Total partners' capital                                   6,531      6,574

Total liabilities and partners' capital                 $20,210    $19,973

See accompanying notes. 

<PAGE>

<PAGE>

            TIME WARNER ENTERTAINMENT COMPANY, L.P.
              CONSOLIDATED STATEMENT OF OPERATIONS
                          (Unaudited)
                                
                                             Three Months       Six Months
                                            Ended June 30,     Ended June 30,
                                            1997     1996      1997     1996 
                                                     (millions)

Revenues (a)                                $2,728   $2,608   $5,328   $5,093
 
Cost of revenues (a)(b)                      1,782    1,730    3,447    3,395
Selling, general and administrative (a)(b)     626      581    1,232    1,133
 
Operating expenses                           2,408    2,311    4,679    4,528
 
Business segment operating income              320      297      649      565
Interest and other, net (a)                   (139)    (132)     (10)    (221)
Minority interest                              (56)     (52)    (164)    (102)
Corporate services (a)                         (18)     (18)     (36)     (35)
 
Income before income taxes                     107       95      439      207
Income taxes                                   (25)     (21)     (37)     (39)
 
Net income                                  $   82   $   74   $  402   $  168

_______________
(a)  Includes the following income (expenses) resulting from
     transactions with the partners of TWE and other related
     companies for the three and six months ended June 30, 1997,
     respectively, and for the corresponding periods in the
     prior year: revenues-$55 million and $121 million in 1997,
     $76 million and $99 million in 1996; cost of revenues-$(26)
     million and $(36) million in 1997, $(14) million and $(38)
     million in 1996; selling, general and administrative-$21
     million and $40 million in 1997, $(7) million
     and $(9) million in 1996; interest and other, net-$5
     million and $17 million in 1997, $7 million and $16 million
     in 1996; and corporate services-$(18) million and $(36)
     million in 1997, $(18) million and $(35) million in 1996.
  
(b) Includes depreciation and amortization 
    expense of:                                   $328   $294    $652   $ 582

See accompanying notes. 

<PAGE>

<PAGE>

            TIME WARNER ENTERTAINMENT COMPANY, L.P.
              CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Unaudited)
                                                             
                                                                Six Months
                                                              Ended June 30,
                                                              1997     1996
                                                               (millions)
OPERATIONS
Net income                                                $  402      $  168
Adjustments for noncash and nonoperating items:
Depreciation and amortization                                652         582
Changes in operating assets and liabilities                 (638)        447

Cash provided by operations                                  416       1,197
 
INVESTING ACTIVITIES
Investments and acquisitions                                 (62)        (65)
Capital expenditures                                        (734)       (781)
Investment proceeds                                          371         196

Cash used by investing activities                           (425)       (650)
 
FINANCING ACTIVITIES
Borrowings                                                   428          63
Debt repayments                                             (323)       (670)
Issuance of preferred stock of subsidiary                    243           -
Capital distributions                                       (203)       (132)
Collections on note receivable from U S WEST                   -         169
Other                                                        (59)         32
 
Cash provided (used) by financing activities                  86        (538)
 
INCREASE IN CASH AND EQUIVALENTS                              77           9
 
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD                  216        209
 
CASH AND EQUIVALENTS AT END OF PERIOD                       $293       $218

See accompanying notes. 

<PAGE>

<PAGE>

                       TIME WARNER ENTERTAINMENT COMPANY, L.P.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

     Time Warner Entertainment Company, L.P., a Delaware
limited partnership ("TWE"), classifies its businesses into
three fundamental areas: Entertainment, consisting
principally of interests in filmed entertainment, television
production, television broadcasting and theme parks; Cable
Networks, consisting principally of interests in cable
television programming; and Cable, consisting principally of
interests in cable television systems.

     Each of the business interests within Entertainment,
Cable Networks and Cable is important to TWE's objective of
increasing partner value through the creation, extension and
distribution of recognizable brands and copyrights
throughout the world. Such brands and copyrights include (1)
the unique and extensive film, television and animation
libraries of Warner Bros. and trademarks such as the Looney
Tunes characters and Batman, (2) The WB Network, a national
broadcasting network launched in 1995 as an extension of the
Warner Bros. brand and as an additional distribution outlet
for Warner Bros.' collection of children's cartoons and
television programming, (3) Six Flags, the largest regional
theme park operator in the United States, in which TWE owns
a 49% interest, (4) HBO and Cinemax, the leading pay
television services and (5) Time Warner Cable, the second
largest operator of cable television systems in the U.S.

     The operating results of TWE's various business
interests are presented herein as an indication of financial
performance (Note 7). Except for start-up losses incurred in
connection with The WB Network, TWE's principal business
interests generate significant operating income and cash
flow from operations. The cash flow from operations
generated by such business interests is considerably greater
than their operating income due to significant amounts of
noncash amortization of intangible assets recognized
principally in Time Warner Companies, Inc.'s ("Time
Warner")* $14 billion acquisition of Warner Communications
Inc. ("WCI") in 1989 and $1.3 billion acquisition of the
minority interest in American Television and Communications
Corporation ("ATC") in 1992, a portion of which cost was
allocated to TWE upon the capitalization of the partnership.
Noncash amortization of intangible assets recorded by TWE's
businesses amounted to $105 million and $101 million in the
three months ended June 30, 1997 and 1996, respectively, and
$212 million and $211 million for the six months ended June
30, 1997 and 1996, respectively.

     Time Warner and certain of its wholly owned
subsidiaries collectively own general and limited
partnership interests in TWE consisting of 74.49% of the pro
rata priority capital ("Series A Capital") and residual
equity capital ("Residual Capital"), and 100% of the senior
priority capital ("Senior Capital") and junior priority
capital ("Series B Capital"). The remaining 25.51% limited
partnership interests in the Series A Capital and Residual
Capital of TWE are held by a subsidiary of U S WEST, Inc.
("U S WEST"). Certain of Time Warner's subsidiaries are the
general partners of TWE ("Time Warner General Partners"). 
 
(*) On October 10, 1996, Time Warner Inc. acquired the
    remaining 80% interest in Turner Broadcasting System, Inc.
    ("TBS") that it did not already  own.  As a result of this
    transaction, a new parent company with the name "Time Warner
    Inc." replaced the old parent company of the same name ("Old
    Time Warner", now known as Time Warner Companies, Inc.), and
    Old Time Warner and TBS became separate, wholly  owned 
    subsidiaries of the new parent company.  Unless the context
    indicates otherwise, references herein to "Time Warner"
    refer to Old Time Warner. 

<PAGE>

Basis of Presentation

     The accompanying financial statements are unaudited
but, in the opinion of management, contain all the
adjustments (consisting of those of a normal recurring
nature) considered necessary to present fairly the financial
position and the results of operations and cash flows for
the periods presented in conformity with generally accepted
accounting principles applicable to interim periods. The
accompanying financial statements should be read in
conjunction with the audited consolidated financial
statements of TWE for the year ended December 31, 1996.
Certain reclassifications have been made to the prior year's
financial statements to conform to the 1997 presentation.

2.   INVENTORIES 

     TWE's inventories consist of: 
                                       June 30, 1997       December 31, 1996  
                                    Current  Noncurrent    Current  Noncurrent
                                                 (millions)
Film costs:
 Released, less amortization        $  544   $  592        $ 544    $ 535
 Completed and not released            412       98          168       42
 In process and other                   54      489           21      704
 Library, less amortization              -      638            -      664
Programming costs, less amortization   276      309          319      318
Merchandise                             81        -           82        -
Total                               $1,367   $2,126       $1,134   $2,263

3.   INVESTMENTS

     In the first quarter of 1997, TWE sold its 58% interest
in E! Entertainment Television, Inc. A pretax gain of
approximately $250 million relating to this sale has been
included in the accompanying consolidated statement of operations.
 
4.   PRIMESTAR PARTNERS

     In June 1997, TWE and the Advance/Newhouse Partnership
("Advance/Newhouse") entered into agreements to transfer the
direct broadcast satellite operations conducted by TWE and
the TWE-Advance/Newhouse Partnership (the "DBS Operations")
and the 31% partnership interest in Primestar Partners, L.P.
held by the TWE-Advance/Newhouse Partnership ("Primestar"
and collectively, the "Primestar Assets") to a new, publicly
traded holding company ("Newco") that will be the parent
entity of TCI Satellite Entertainment, Inc. ("TSAT").  Newco
will also own the DBS Operations and Primestar partnership
interests currently owned by TSAT and other existing
partners of Primestar. In exchange for contributing its
interests in the Primestar Assets, TWE will receive an
approximate 24% equity interest in Newco and realize
approximately $200 million of debt reduction. In partial
consideration for contributing its indirect interest in
certain of the Primestar Assets, Advance/Newhouse will
receive an approximate 6% equity interest in Newco. 

     In June 1997, Primestar also entered into an agreement with
The News Corporation Limited, MCI Telecommunications Corporation
("MCI") and American Sky Broadcasting LLC ("ASkyB"), pursuant to
which Primestar (or, under certain circumstances, Newco) will 
acquire certain assets relating to the high-power, direct broadcast
satellite business of ASkyB. In exchange for such assets, ASkyB 
will receive non-voting securities of  

<PAGE>

Newco that will be convertible into non-voting common stock
of Newco and, accordingly, reduce TWE's equity interest in
Newco to approximately 16% on a fully diluted basis.

     These transactions are not conditioned on each other
and may close independently.  They are expected to close in
1998, subject to customary closing conditions, including all
necessary governmental and regulatory approvals, including
the approval of the Federal Communications Commission. There
can be no assurance that such approvals will be obtained. 

5.   PREFERRED STOCK OF SUBSIDIARY

     In February 1997, a newly formed, substantially owned
subsidiary of TWE (the "REIT") issued 250,000 shares of
step-down preferred stock ("Step-Down Preferred Stock"). The
REIT is intended to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended.
TWE used the aggregate net proceeds from the transaction of
$243 million to reduce its bank debt. The sole asset of the
REIT is a $432 million mortgage note payable of TWE, which has 
been secured by certain real estate owned by TWE or its affiliates.

     Each share of Step-Down Preferred Stock is entitled to
a liquidation preference of $1,000 and entitles the holder
thereof to receive cumulative cash dividends, payable
quarterly, at the rate of 14.253% per annum through December
30, 2006 and 1% per annum thereafter, which results in an
effective dividend yield of 8.48%. Shares of Step-Down
Preferred Stock are redeemable only in the event of certain
changes or proposed changes to the tax laws or regulations,
such that dividends paid by the REIT or interest paid under
the mortgage note would not be fully deductible for federal
income tax purposes. Time Warner has the right to liquidate
or dissolve the REIT at any time after December 30, 2006 or,
at any time prior thereto, upon the approval of the holders
of at least two-thirds of the outstanding shares of
Step-Down Preferred Stock.
 
6.   PARTNERS' CAPITAL

     Changes in partners' capital were as follows:
                                                             
                                                               Six Months
                                                             Ended June 30,  
                                                            1997      1996 
                                                              (millions)
Balance at beginning of year                               $6,574      $6,478
Net income                                                    402         168
Distributions                                                (369)       (147)
Allocation of income to Time Warner General Partners' 
   Senior Capital                                             (62)        (57)
Collections on note receivable from U S WEST                    -         169
Capital contributions                                           -          15
Other                                                         (14)         10

Balance at June 30                                         $6,531      $6,636

     TWE is required to make distributions to reimburse the
partners for income taxes at statutory rates based on their
allocable share of taxable income, and to reimburse Time
Warner for its stock options granted to employees of TWE
based on the amount by which the market price of Time Warner
common stock exceeds the option exercise price on the
exercise date or, with respect to options granted prior to
the TWE capitalization on September 30, 1992, the greater of
the exercise price and the $27.75 market price of Time
Warner common stock at the time of the TWE capitalization.
TWE accrues a stock option distribution and a corresponding
liability with respect to unexercised options when the
market price of Time Warner common stock increases during
the accounting period, and reverses  

<PAGE>

previously-accrued stock option distributions and the
corresponding liability when the market price of Time Warner
common stock declines. 
                                                            
     During the six months ended June 30, 1997, TWE accrued
$192 million of tax-related distributions and $177 million
of stock option distributions, based on closing prices of
Time Warner common stock of $48.25 at June 30, 1997 and
$37.50 at December 31, 1996. During the six months ended
June 30, 1996, TWE accrued $123 million of tax-related
distributions and $24 million of stock option distributions
as a result of an increase at that time in the market price
of Time Warner common stock. In the six months ended June
30, 1997, TWE paid distributions to the Time Warner General
Partners in the amount of $203 million, consisting of $192
million of tax-related distributions and $11 million of
stock option related distributions. In the six months ended
June 30, 1996, TWE paid the Time Warner General Partners
distributions in the amount of $132 million, consisting of
$123 million of tax-related distributions and $9 million of
stock option related distributions. In July 1997, TWE made a
$535 million distribution to the Time Warner General
Partners relating to their Senior Capital interests.
 
7.   SEGMENT INFORMATION

     TWE classifies its businesses into three fundamental
areas: Entertainment, consisting principally of interests in
filmed entertainment, television production, television
broadcasting and theme parks; Cable Networks, consisting
principally of interests in cable television programming;
and Cable, consisting principally of interests in cable
television systems.

     Information as to the operations of TWE in different
business segments is set forth below. 

                                             Three Months       Six Months
                                            Ended June 30,     Ended June 30,
                                            1997     1996      1997     1996
                                                        (millions)
Revenues
Filmed Entertainment-Warner Bros.          $1,254   $1,270    $2,426   $2,486
Broadcasting-The WB Network                    29       18        53       33
Cable Networks-HBO                            487      456       970      875
Cable                                       1,066      961     2,086    1,908
Intersegment elimination                     (108)     (97)     (207)    (209)

Total                                      $2,728   $2,608    $5,328   $5,093

                                             Three Months       Six Months
                                            Ended June 30,     Ended June 30,
                                            1997     1996      1997     1996
                                                        (millions)
Operating Income
Filmed Entertainment-Warner Bros.          $   73    $  79    $  148   $  149
Broadcasting-The WB Network                   (19)     (12)      (39)     (36)
Cable Networks-HBO                             98       83       189      159
Cable                                         168      147       351      293
 
Total                                      $  320   $  297    $  649   $  565

<PAGE>

                                              Three Months      Six Months
                                              Ended June 30,    Ended June 30,
                                              1997     1996     1997    1996
                                                         (millions)
Depreciation of Property, Plant and Equipment
Filmed Entertainment-Warner Bros.            $ 41     $ 32      $ 81     $ 62
Broadcasting-The WB Network                     1        -         1        -
Cable Networks-HBO                              5        4        10        9
Cable                                         176      157       348      300
 
Total                                        $223     $193      $440     $371

                                               Three Months     Six Months
                                             Ended June 30,    Ended June 30,
                                             1997     1996     1997     1996
                                                        (millions)
Amortization of Intangible Assets (1)
Filmed Entertainment-Warner Bros.            $ 30     $ 29      $ 61     $ 60
Broadcasting-The WB Network                     -        -         -        -
Cable Networks-HBO                              -        -         -        -
Cable                                          75       72       151      151

Total                                        $105     $101      $212     $211
                            
(1)  Amortization includes amortization relating to the
     acquisitions of WCI in 1989 and the ATC minority 
     interest in 1992 and to other business combinations 
     accounted for by the purchase method.

8.   COMMITMENTS AND CONTINGENCIES 

     Pending legal proceedings are substantially limited to
litigation incidental to the businesses of TWE. In the opinion of
management, the ultimate resolution of these matters will not have
a material effect on the consolidated financial statements of TWE. 

9.   ADDITIONAL FINANCIAL INFORMATION

     Additional financial information with respect to cash
flows is as follows:

                                                                 Six Months
                                                               Ended June 30,
                                                               1997     1996
                                                                 (millions)
Interest expense                                                $235    $239
Cash payments made for interest                                  243     247
Cash payments made for income taxes, net                          35      32
Noncash capital distributions                                    177      24

<PAGE>

<PAGE>

                   Part II.  Other Information

Item 1.   Legal Proceedings.

     Reference is made to the litigation entitled Fox News Network,
L.L.C. v. Time Warner Inc. et al. described on pages I-39 and I-40
of Time Warner's Annual Report on Form 10-K for the year ended
December 31, 1996 (the "1996 Form 10-K").  On May 15, 1997, defendants'
motion for summary judgment as to plaintiff's fraud and promissory 
estoppel claims was granted, and the remaining antitrust claims were
transferred on the court's own motion to the Southern District of New 
York.  On July 22, 1997, the parties executed a settlement agreement
resolving all claims against defendants not previously dismissed.

     Reference is made to the action commenced by the holders of 
Time Warner's New York City cable franchises against the City of New
York described on page I-40 of the 1996 Form 10-K.  On July 3, 1997,
the United States Court of Appeals for the Second Circuit affirmed the
lower court's grant of a preliminary injunction to the Time Warner
plaintiffs.  On July 22, 1997, the parties executed a settlement
agreement that resolved Time Warner's claims for injunctive relief. 

     Reference is made to the consolidated actions filed in Superior
Court, Fulton County, Georgia, against TBS, Time Warner, certain
officers and directors of TBS or TWE, and other defendants, in
connection with the TBS Transaction, described on pages I-38 and
I-39 of the 1996 Form 10-K.  On July 14, 1997 defendants' motion
for summary judgment on plaintiffs' fourth amended complaint and
defendants' motion for final judgment on plaintiffs'  third amended
complaint were both granted.

     Reference is made to the litigation entitled Digital Distribution
Inc. d/b/a Compact Disc Warehouse v. CEMA Distribution, Sony Music
Entertainment, Inc., Warner Elektra Atlantic Corporation, UNI 
Distribution Corporation, Bertelsmann Music Group, Inc. and PolyGram 
Group Distribution, Inc. described on pages I-37 and I-38 of the
1996 Form 10-K.  On July 3, 1997, the United States Court of Appeals 
for the Ninth Circuit reversed the dismissal of the Amended Complaint
and remanded the case to the District Court, holding that the Amended 
Complaint was sufficient to meet the pleading requirements of the 
Federal Rules and that the action should proceed.

     Reference is made to the litigation entitled Robinson & Silvey 
v. EMI Music Distribution, Inc., Sony Music Entertainment, Inc., 
Warner Elektra Atlantic Corporation, UNI Distribution Corporation, 
Bertelsmann Music Group, Inc. and PolyGram Group Distribution, Inc. 
described on page I-39 of the 1996 Form 10-K.  On August 1, 1997,
the Circuit Court issued an Order vacating and setting aside the 
conditional class certification, granting the plaintiffs' motion to
dismiss, and dismissing the  entire action, without prejudice.

 
Item 2.  Changes in Securities.

     (a)  On May 19, 1997, Time Warner's Restated Certificate of
Incorporation was amended to provide for the annual election of the 
entire Board of Directors thereby eliminating, effective at the next
annual meeting of stockholders, the division of the Board of Directors
into three classes with one class elected each year for a three-year term.

     (b)  Not applicable.

<PAGE>

     (c)  Not applicable.


Item 4.    Submission of Matters to a Vote of Security Holders.

     (a)  The Annual Meeting of Stockholders of Time Warner was held
on May 15, 1997 (the "1997 Annual Meeting").

     (b)  (i)  The following were elected directors of Time Warner at
the 1997 Annual Meeting:

                           J. Carter Bacot
                           Stephen F. Bollenbach
                           Gerald Greenwald
                           Gerald M. Levin
                           Richard D. Parsons

          (ii)  The following continue as directors of Time Warner:

                           Merv Adelson
                           Beverly Sills Greenough
                           Carla A. Hills
                           Reuben Mark
                           Michael A. Miles
                           Donald S. Perkins
                           Raymond S. Troubh
                           R. E. Turner
                           Francis T. Vincent, Jr.

     (c)   The following matters were voted upon at the 1997
Annual Meeting:

          (i)   Election of directors for terms expiring in 1998:

                                                              Broker
                                   For         Withheld       Non-Votes
J. Carter Bacot                 509,667,981    5,159,246         0
Stephen F. Bollenbach           507,109,522    7,717,705         0
Gerald Greenwald                507,214,675    7,612,552         0
Gerald M. Levin                 509,062,337    5,764,890         0
Richard D. Parsons              509,349,911    5,477,316         0

          (ii)   Approval of an amendment to Time Warner's Restated 
Certificate of Incorporation to provide for the annual election of directors:
                                                      
                                                             Broker
                Votes For     Votes Against    Abstentions   Non-Votes

                466,853,385     3,907,235      1,433,098     42,903,508

<PAGE>

          (iii)   Approval of the Time Warner 1997 Stock Option Plan:

                                                             Broker
                Votes For    Votes Against     Abstentions   Non-Votes

                475,952,439   36,403,986       1,964,381        0

          (iv)   Approval of the appointment of Ernst & Young LLP as 
independent auditors of Time Warner for 1997:

                                                             Broker
                Votes For     Votes Against    Abstentions   Non-Votes
                512,119,374    1,181,949       1,019,483        0

          (v)   Stockholder resolution relating to the use of 
chlorine-free paper:

                                                             Broker
                Votes For    Votes Against     Abstentions   Non-Votes
                20,287,077    428,567,271      22,562,950    42,903,508

     (d)   Not applicable.


Item 6.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

     The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as a part of this report and such Exhibit
 Index is incorporated herein by reference.

     (b)  Reports on Form 8-K.

     No Current Report on Form 8-K was filed by Time Warner during the 
quarter ended June 30, 1997.

<PAGE>

<PAGE>
                       TIME WARNER INC.
                                
                           SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, 
the registrant has duly caused this report to be signed on its behalf 
by the undersigned thereunto duly authorized.

                                      Time Warner Inc.
                                      (Registrant)

                                      By:    /s/  Richard J. Bressler      
                                      Name:     Richard J. Bressler
                                      Title:    Senior Vice President and
                                                Chief Financial Officer

Dated:  August 8, 1997

<PAGE>

<PAGE>

                          EXHIBIT INDEX
             Pursuant to Item 601 of Regulations S-K

Exhibit No.             Description of Exhibit

3.(i)(a)     Restated Certificate of Incorporation of the
             Registrant as filed with the Secretary of State of the State
             of Delaware on October 10, 1996 (which is incorporated
             herein by reference to Exhibit 4.3 to the Registrant's
             Post-Effective Amendment No. 1 on Form S-8 to the
             Registrant's Registration Statement on Form S-4
             (Registration No. 333-11471) (the "S-8 Registration
             Statement")).

3.(i)(b)     Certificate of Amendment of Restated Certificate of
             Incorporation of the Registrant as filed with the
             Secretary of State of the State of Delaware on October
             10, 1996 (which is incorporated herein by reference to
             Exhibit 4.4 to the Registrant's S-8 Registration Statement).
 
3.(i)(c)     Certificate of Amendment of Restated Certificate of
             Incorporation of the Registrant as filed with the Secretary 
             of State of the State of Delaware on May 19, 1997.

3.(i)(d)     Certificate of the Voting Powers, Designations,
             Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series LMC Common
             Stock of the Registrant as filed with the Secretary of State
             of the State of Delaware on October 10, 1996 (which is
             incorporated herein by reference to Exhibit 4.5 to the
             Registrant's S-8 Registration Statement).

3.(i)(e)     Certificate of the Voting Powers,  
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series LMCN-V Common
             Stock of the Registrant as filed with the Secretary of State
             of the State of Delaware on October 10, 1996 (which is
             incorporated herein by reference to Exhibit 4.6 to the
             Registrant's S-8 Registration Statement).

3.(i)(f)     Certificate of the Voting Powers,
             Designations, Preferences and Relative, Participating, 
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series A
             Participating Cumulative Preferred Stock of the Registrant
             as filed with the Secretary of State of the State of
             Delaware on October 10, 1996 (which is incorporated herein 
  
<PAGE>

             by reference to Exhibit 4.7 to the Registrant's S-8
             Registration Statement).

3.(i)(g)     Certificate of the Voting Powers, 
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series D Convertible
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October 10,
             1996 (which is incorporated herein by reference to Exhibit
             4.8 to the Registrant's S-8 Registration Statement).

3.(i)(h)     Certificate of the Voting Powers, Designations, Preferences 
             and Relative, Participating, Optional or
             Other Special Rights, and Qualifications, Limitations or
             Restrictions Thereof, of Series E Convertible Preferred 
             Stock of the Registrant as filed with the Secretary
             of State of the State of Delaware on October 10, 1996 (which
             is incorporated herein by reference to Exhibit 4.9 to the 
             Registrant's S-8 Registration Statement).

3.(i)(i)     Certificate of Correction of the Certificate of the Voting
             Powers, Designations, Preferences and Relative, Participating, 
             Optional or Other Special Rights, and Qualifications, 
             Limitations or Restrictions Thereof, of Series E Convertible
             Preferred Stock of the Registrant as filed with the Secretary
             of State of the State of Delaware on November 13, 1996 
             (which is incorporated by reference to Exhibit 3.(i)(h) to 
             the Registrant's 1996 Form 10-K).

3.(i)(j)     Certificate of the Voting Powers, Designations, 
             Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series F Convertible
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October 10,
             1996 (which is incorporated herein by reference to Exhibit
             4.10 to the Registrant's S-8 Registration Statement).

3.(i)(k)     Certificate of Correction of the Certificate of the
             Voting Powers, Designations, Preferences and Relative,
             Participating, Optional or Other Special Rights, and
             Qualifications, Limitations or Restrictions Thererof,
             of Series F Convertible Preferred Stock of the 
             Registrant as filed with the Secretary of State of the State
             of Delaware on November 13, 1996 (which is incorporated
             herein by reference to Exhibit 3.(i)(j) to the Registrant's
             1996 Form 10-K).

3.(i)(l)     Certificate of the Voting Powers,
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of 

<PAGE>

             Series G Convertible Preferred Stock of the Registrant as
             filed with the Secretary of State of the State of Delaware
             on October 10, 1996 (which is incorporated herein by
             reference to Exhibit 4.11 to the Registrant's S-8
             Registration Statement).

3.(i)(m)     Certificate of the Voting Powers,
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series H Convertible
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October 10,
             1996 (which is incorporated herein by reference to Exhibit
             4.12 to the Registrant's S-8 Registration Statement).

3.(i)(n)     Certificate of the Voting Powers,
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series I Convertible
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October 10,
             1996 (which is incorporated herein by reference to Exhibit
             4.13 to the Registrant's S-8 Registration Statement).

3.(i)(o)     Certificate of the Voting Powers,
             Designations, Preferences and Relative, Participating,
             Optional or Other Special Rights, and Qualifications,
             Limitations or Restrictions Thereof, of Series J Convertible
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October 10,
             1996 (which is incorporated herein by reference to Exhibit
             4.14 to the Registrant's S-8 Registration Statement).

3.(i)(p)     Certificate of the Voting Powers, Designations,
             Preferences and Relative, Participating, Optional or
             Other Special Rights, and Qualifications, Limitations
             or Restrictions Thereof, of 10-1/4% Series M Exchangeable
             Preferred Stock of the Registrant as filed with the
             Secretary of State of the State of Delaware on October
             10, 1996 (which is incorporated herein by reference to
             Exhibit 4.15 to the Registrant's S-8 Registration
             Statement).

3.(ii)       By-laws of the Registrant as of May 22, 1997.

10.1         Employment Agreement effective as of May 1,
             1997 between the Registrant and John A. LaBarca.

10.2         Time Warner 1997 Stock Option Plan (which
             is incorporated by reference to Annex A to the Registrant's
             definitive Proxy Statement dated March 28, 1997 used in
             connection with the Registrant's 1997 Annual Meeting 
             of Stockholders). 

27           Financial Data Schedule.

<PAGE>