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For just one quarter into the year, that provides a pretty good indication of the return we can achieve on our investments in programming and of the growth potential of our businesses. And as a result of our strong start to the year, this morning we raised our outlook for 2014 adjusted EPS to grow in the low-teens. That's not an unusual level of growth for us.

Over the past five years, we have grown adjusted EPS at least in the low-teens every year. Our growth in any given year maybe higher or lower, depending on factors like the timing of new affiliate agreements or investments in program, but on average, we think we can continue to grow adjusted EPS in the low to mid-teens, if not better, over at least the next three to four years.

We have an established track record of turning solid operating growth into even more attractive returns for our shareholders, and we're extremely confident, we can continue to do so for the foreseeable future.

Our confidence is underpinned by the strength of our brands, by industry-leading scale across our businesses and by the increasing value of our engaging and globally relevant content. All of those factors have been evident in our negotiations during Turner's current domestic affiliate renewal cycle.

In fact, based on the deals we've already completed, we anticipate double-digit growth in domestic subscription revenue at Turner will extend another two years beyond the 2013 through 2016 period that we previously discussed with you. That's double-digit growth on average over five years and it provides a lot of visibility into our earnings power over that time period.

Given our confidence in our growth prospects and strong cash generation year-to-date, we have decided to accelerate our share repurchases starting this quarter, and we now expect to reach our target net leverage of 2.75x by the end of this year.

Now, I'd like to spend a few minutes walking through some recent operational highlights. Nowhere was the growing popularity and improving economics of our content more evident this quarter than at Warner Bros.

In the first quarter of 2014, Warner has picked up right where it left off last year, finishing number one at the domestic box office, and collecting more Academy Awards than all the other major studios combined, led by seven for Gravity, including Best Director for Alfonso Cuarón. Not bad for a movie that also finished with over $700 million at the global box office.

Warner's performance at the box office in the first quarter was a result of its continued development of franchise films with global appeal, including The LEGO Movie, which was the quarter's number one release at the domestic box office, and 300: Rise of an Empire.

Warner is already working on another LEGO Movie for release in 2017. We think that LEGO has the ability to be an evergreen franchise that along with DC Comics and with J.K. Rowling's new series of films, will underpin the economics of our film business for many, many years.

As you may know, our relationship with LEGO also includes important video game and television properties, underscoring our ability to monetize high-quality intellectual property across the company.

So with a strong start to the year, our promising slate of movies for this summer and a great line up of television shows to be announced at the upfront in a couple of weeks, Warner is in position to have another great year in 2014.

HBO also got off to a red-hot start this year with True Detective garnering the largest ever viewership for a freshman series on the HBO network. The success of True Detective means that HBO's current line up includes four of its top five highest rated shows ever. Of course that includes Game of Thrones, which has become a global phenomenon.

Season 4 premiered to HBO's largest audiences since the Sopranos Finale, and Season 3's home video release had the highest first month sales of any HBO show ever in HBO's history. And if anything, Game of Thrones has taught us a vital lesson, decline any wedding invitation in Westeros.

The success of HBO's groundbreaking original storytelling has always been a testament to visionary creators such as the Game of Thrones' team David Benioff and D.B. Weiss, True Detective's Nick Pizzolatto and Silicon Valley's Mike Judge, and the fantastic actors that they attract as well as the strength of HBO's brand and best-in-class marketing.

But I think HBO's record audiences are also a result of its leadership in making its content available on-demand and across all major platforms. We firmly believe that if you have great content, giving consumers control over where, when and on what platform they watch it, will drive increased consumption and value. That's the promise of TV Everywhere, and there is no better example of that than HBO's success with HBO on-demand and HBO GO.

In keeping with the spirit of taking advantage of new platforms to connect with consumers and improve monetization, HBO announced last week that it would be making a selection of its catalog programming available to Amazon Prime Instant Video.

We are hopeful that availability on Prime Instant Video will introduce additional consumers to the great content that HBO produces and will potentially drive sub-additions over time to the HBO network service. And we plan to use additional revenue from the deal to invest even more in HBO's groundbreaking original programming and to further accelerate the development of next generation of HBO GO.

It's that combination of unrivaled content, including the strongest slate of Hollywood movie hits and the use of the latest technology that has helped HBO to become the world's leading premium TV and subscription video-on-demand service. Given the positive subscriber trends, we've seen both in recent years and so far in 2014, we feel great about HBO's ability to drive continued growth for many years to come.

Turner also had a landmark start to the year, bringing the Elite Eight and the Final Four to cable for the first time ever. The NCAA Tournament continues to be a runaway success and its strong linear TV performance was accentuated by more than 40% growth in digital video streams for March Madness Live.

Like HBO GO, March Madness Live is a great example of how TV Everywhere can enhance the consumer experience and the value of our networks through distributors. And the success of the NCAA Tournament helped TBS maintain its number one position in ad supported cable among adults 18 to 49.

Similarly, Adult Swim continues to lead the industry of attracting younger viewers. Once again finishing the first quarter as the number one ad supported cable network in total day for adults 18 to 34. To better take advantage of the growing demand for its distinctive content, we recently expanded Adult Swim to the 8.00 PM hour.

We also have momentum at CNN, which grew delivery in its key demo over 50% in March, again demonstrating that it's the authoritative voice, viewers turn to when news breaks. Just as important, CNN generated nearly 4 billion page views and 275 million video starts in March. That's its biggest month ever for both metrics.

In a world where consumers increasingly look to digital products for their news, CNN has a substantial lead on its cable news peers in cross platform unique users, and actually has the largest number of monthly unique mobile users of any news service domestically, and we're just getting started.

At its upfront, earlier this month, CNN introduced CNNx, which represents a leap forward in interactive merits, and it's a product that CNN is unique positioned to provide. It's available today on your tablet and you'll start seeing it on set top boxes later this year. We think it will be another real point of differentiation for CNN.

Despite these successes and having three of the top 10 cable networks in adults 18 to 49 in the first quarter, we are not satisfied with the recent ratings and advertising performance at some of the Turner network. At truTV for example, we followed a couple of strong years with a significant drop off in performance.

But we have new leadership in place, who just announced the slate of innovative unscripted programs that will start in May with The Carbonaro Effect, and continue through this fall with shows like MOTOR CITY MASTERS, Way Out West and Hair Jacked. We think it's some of the best and most creative programming the network has ever done, and that give us great confidence in truTV and in our ability to materially improve its monetization over time.

We've also had some challenges at TNT. It was the top five cable network in prime time last year and it had some of the most popular originals on basic cable, but it can and will do better. Over the past few years, we didn't take enough creative risk with its programming, and as a result, TNT has lost ground with younger viewers.

We've already started to address that with the new programming that you'll see this summer, including The Last Ship, Murder in the First and Legends. These shows should also help TNT expand its audience with key male demos.

To be clear, these types of changes take time and we won't get to where we want to be in the quarter or two. But we've all seen that network performance tends to move in cycles. And by virtue of its scale and our position as the world's leading producer of high quality television product, TNT has accessed all the resources it needs.

We're confident and we're determined that we will see improvement as the year progresses and that we can drive growth in its audience and its economics over time. At Time Inc., the new management team has made great progress in preparing for success as an independent public company. We are on track to complete the spin in the next month or so, and you'll hear more about their plans as that date approaches.

So in closing, I am really pleased with how we've started 2014. We're making progress on our strategic initiatives across the company. And at the same time, our investments in great storytelling and journalism are paying off, allowing us to produce very attractive financial results. And with the global growth in demand for our content continuing unabated, we think we're in a great position to grow at these kinds of attractive levels for a very long time.

And with that, I'll turn it over to Howard.

Howard Averill

Thanks, Jeff, and good morning. I'll begin by referring to the first slide of our presentation, which is now available on our website. Given that we expect to complete the spin-off of Time Inc. this quarter and our full year outlook excludes Time Inc., I will focus my remarks on our company results prepared on the same basis.

Excluding Time Inc., revenues were up 10% and we had leverage all the way down the income statement with adjusted operating income increasing 12% and adjusted EPS growing 26%. Turner, HBO and Warner Bros. all posted record first quarter adjusted operating income.

So to reiterate, what Jeff said, we're off to a great start in 2014. Adjusted operating income margins expanded 60 basis points, despite a 9% increase in expenses and net expense growth was largely related to content investments at Warner Bros. and Turner, and the consolidation of HBO Asia and HBO Nordic.

SG&A was flat in the quarter and it would have been down, excluding the consolidations, as we continue to focus on funding aggressive investments in programming by limiting growth in other expenses.

We were able to grow adjusted EPS even faster than adjusted operating income, due mostly to our ongoing share repurchase program and improved results at our equity investments, including HBO Latin America. We also had a benefit of almost $40 million from recognition of interest income on a long-standing note receivable that was collected.

During the quarter, we repurchased close to $1 billion in shares, and combined with our dividend we've returned almost $1.6 billion to shareholders year-to-date. We also had a very strong quarter for free cash flow, generating $1.7 billion, nearly 80% increase from last year's first quarter.

And as Jeff mentioned, in light of our strong first quarter and our confidence in the remainder of the year, we've raised our 2014 outlook for adjusted EPS excluding Time Inc. We now expect growth to be in the low-teens. I'll tough more on the details of our outlook throughout the presentation.

Now, turning to the segment highlights. I'll begin at Turner. The revenues and adjusted operating income continued to grow despite rating and FX headwinds.

Subscription revenues grew 7% in the quarter, which included more than 100 basis point drag from FX. Domestic subscription revenue growth was solidly in the high single-digits, a significant acceleration relative to the past couple of years. And that acceleration was the result of rate increases related to Turner's domestic affiliate renewals.

Excluding the impact of FX, international subscription revenue was also up in the high single-digits with largest gains coming from Latin America, which remains our strongest region and where we continue to see healthy subscriber trends. Looking forward, we'll continue to benefits from Turner's domestic affiliate renewals for the remainder of the year.

And as Jeff noted, we anticipate this will be a sustained lift in our subscription revenue growth rate. Based on deals we already have in place, we expect to grow our domestic subscription revenue at low double-digit rate on average through 2018.

Turning to advertising. Revenues increased 5% in the quarter, which was at the lower end of the range we originally expected, and that included the impact of both soft ratings and moderate demand in the scatter market. Of that growth, about 300 basis points was due to the NCAA Tournament, including the benefit from airing two NCAA Elite Eight games.

Domestic advertising increased similarly to the overall result, and that included mid single-digit increase at domestic entertainment, including kids and young adults and a low single-digit growth at our news networks.

Excluding a drag of approximately 400 basis points from FX, international advertising would have been up high single-digits. That reflected solid underlying growth in Latin America and international news.

Looking ahead to the second quarter, scatter pricing is up high single to low double-digits over the upfront, with volume still relatively modest and we expect ratings to remain a drag on our performance.

Also keep in mind that as a result of airing two Final Four games, the NCAA should provide around a 300 basis point benefit in the quarter. Taking all of that into account, we anticipate total advertising to grow in the low single-digits in the second quarter.

Moving on, adjusted operating income grew 3% in the quarter and that included a 9% increase in programming cost, primarily due to the NCAA Tournament and continued investments in original programming across our networks. Consistent with our focus on costs discipline, we limited non-programming expense growth to just 2% in the quarter.

As we look to the remainder of 2014, we anticipate Turner's adjusted operating income growth to accelerate, starting in the second quarter. And despite ongoing investments in sports and original programming, we expect solid margin expansion for the year. So Turner is on pace for another good year in 2014.

Moving onto HBO, where we saw strong growth in both revenues and adjusted operating income. Subscription revenues were up 8% in the quarter with consolidation of HBO Asia and HBO Nordic, contributing around 400 basis points to that growth.

Building on a strong 2013, our domestic subscriber trends remain positive, and similar to the past few quarters, the majority of recent subscriber additions have been non-revenue generating. So while that's a good barometer of consumer demand for HBO, subscriber growth did not have a material impact on our revenue.

Turning to content revenues, which were up 13% in the quarter, and that was primarily due to very strong home video sales of Season 3 of Game of Thrones, which more than offset softness in library product. Looking ahead, we anticipate a significant bump in content revenues in the second quarter due to the Amazon deal announced last week.

As Jeffery noted, HBO intends to invest the majority of proceeds from the transaction back into programming, marketing and technology. So we don't expect to commensurate increase in profits this year.

Adjusted operating income was up 11% in the quarter and margins expanded almost 100 basis points, and that was despite the drag on margins from the international consolidations. Programming expenses increased 8% with 600 basis points of that growth due to the consolidations.

Underneath that, acquired theatrical expenses increased, while programming write-offs decreased. Absent to programming write-offs, original programming expenses would have increased in the mid single-digits.

Across HBO's international properties, first quarter results were equally impressive. Total international revenue, including unconsolidated JVs, was up double-digits and subscriber trends remain strong, especially in Latin America.

Like the rest of the company, HBO remains focused on containing overheads in order to help fund investments in programming and technology. And adjusting for the international consolidations, SG&A was down in the quarter and total non-programming expenses were up just 2%. So HBO started the year with a lot of momentum from both an operating and a financial perspective and it's on track for another year of solid growth.

Turning now to Warner's, which had a record first quarter, growing revenue by 14% and adjusted operating income by more than 40%. Strong theatrical performance was the biggest driver of growth in the quarter led by the box office success of The LEGO Movie and 300: Rise of an Empire, as well as carryover revenue from the latest Hobbit installment and Gravity.

On the TV side, revenue and associated profits grew due to higher initial telecast revenue related to increased production as well as continued growth from international syndication. We also benefited from double-digit gains and SVOD revenue, mainly due to international growth. We continue to see healthy demand for our product from SVOD services and expect contributions from the SVOD distribution channel to increase this year.

Across theatrical and TV, home entertainment revenue was down in the quarter, largely due to the timing of the release of the latest Hobbit installment on home video, which is in the second quarter this year versus the first quarter of last year. Despite that, digital trends remain positive with Warner electronic sell-through up over 20% in the first quarter.

Consumer spending across the broader home video market was also down in the first quarter due to a softer theatrical slate and the timing of Easter. But digital growth was even stronger for the industry with electronic sell-through up 45%.

So on the whole, we remain very encouraged by the ongoing transition to digital. To help drive that transition, Warner continues to champion industry-wide digital ownership initiative like UltraViolet, which now has over 17 million accounts.

Looking ahead, Warner has very difficult theatrical comparison for the rest of the year. Even so, given a strong start theatrically and positive trends in the TV business, Warner is on pace for another record year in 2014.

Now, onto Time Inc. With the new management team is driving significant changes critical to its success, as an independent public company. Revenues increased 1% in the quarter and benefited from the acquisition of American Express Publishing Corporation.

Excluding this, revenues would have decreased 5% with advertising down 7% and subscription flat. Revenues also benefited from one additional issue each of people and time compared to last year. Adjusted operating loss was $94 million and that was primarily a result of $115 million in restructuring charges in the quarter.

To offset challenging revenue trends, the management team has been extremely focused on cost discipline and changing the way Time Inc. operates, with a goal of stabilizing the business and freeing up resources to invest in growth initiatives. And excluding the acquisition and restructuring charges, expenses fell 3% in the quarter.

Looking forward, Time Inc. remains on track with the outlook we provided in February. Excluding restructuring and severance charges, we expect modest declines in full year adjusted operating income in 2014. And that's largely a function of continuing revenue pressure and incremental public company and stock compensation expenses that Time Inc. will incur this year.

As Jeff noted, we remain on track to complete the spin-off of Time Inc. this quarter. And as part of that process, Time Inc. recently issued senior notes and senior commitments for $1.4 billion in debt and a $500 million revolver. That's consistent with our plan for an initial capital structure that includes approximately $1.3 billion in net debt.

We think this will allow sufficient flexibility to both invest in the business and provide direct returns to shareholders, while also optimizing its cost of capital and delivering attractive levered equity returns to investors. So, Time Inc. has made a lot of progress and is well on its way to executing against its goals for the year and successfully making the transition to a standalone public company.

Moving to free cash flow and including Time Inc., which was very strong in the quarter, the big year-over-year improvement is primarily due to the strong growth in adjusted operating income and a favorable swing in working capital.

The improvement in working capital reflects lower participations and production spend due to title mix at Warner Bros. and the timing of sports programming payments at Turner. Cash interest improved due to the receipt of interest income I noted earlier, but given the additional debt we took on late last year, we expect cash interest to increase for the remainder of the year.

The decline in cash taxes was primarily the result of the timing of audit settlements. As with interest expense, our cash taxes are likely to be higher for the full year due to the expiration of certain favorable tax legislation.

Putting that all together, we do not expect free cash flow to grow at this level for the year. Nonetheless, we're off to a great start from a cash perspective and we fully expect to deliver another year of strong free cash flow in 2014.

Now, onto net debt. We ended the first quarter with $16.7 billion of net debt, down versus the end of 2013 due to the very strong free cash flow generation I just noted, and $1.3 billion in proceeds from the sale of our office space in Time Warner Center. Out net leverage ratio was 2.2x as of March 31.

We returned about $1.3 billion to shareholders in the form of dividends and share repurchases during the quarter, and that's consistent with our continued commitment to provide direct returns to shareholders.

As Jeff mentioned, we intend to move to a target net leverage ratio of 2.75x by the end of 2014, which is faster than our initial plan. Our decision to move more quickly to our target leverage is a reflection of both our confidence in the company's outlook and our view that our stock is very attractive at current level.

In light of that, we'll be accelerating our share repurchase program in the coming quarters. By moving more quickly to our target leverage, we will also move back toward a more efficient cash position following significant inflows from the sale of our office space and the Time Inc. spent.

At the same time, we continue to invest aggressively in our businesses. We've already discussed the investments we are making in great contents across our divisions. We're also investing in strategic M&A to improve our competitive position, add new capabilities and accelerate growth, especially outside the U.S.

While we don't need to do M&A, we're always open to opportunities that complement our existing assets and provide risk-adjusted returns that are more attractive than our alternative uses of capital. And already this year we've committed over $700 million to acquire Eyeworks' international television production operations and to fund an additional round of investment in CME.

This combination of investing in our businesses, opportunistic M&A and significant direct return to shareholders is the same balanced approach to capital allocation we've been employing for a number of years now, and we still believe it's the right approach today.

Now, onto the final slide, which shows our outlook for 2014. We had a great first quarter and feel really good about how we are positioned for the rest of this year. That's given us the confidence to raise our full year 2014 outlook to low-teens adjusted EPS growth.

And keep in mind, that despite our expectation of a negative swing in inter-company eliminations and a higher effective tax rate, between the two, we still anticipate a negative year-over-year impact of approximately $0.15 to $0.20 to adjusted EPS for the year.

Looking more closely at the second quarter, we have somewhat more challenging comparison against what was a very strong quarter a year ago. Even so we anticipate solid growth in both adjusted operating income and adjusted EPS. We're doing all this while investing aggressively for future growth. And as Jeff mentioned, we think we can continue to grow adjusted EPS at attractive levels for the foreseeable future.

With that, I'll turn it back to Mike to start the Q&A.

Michael Kopelman

Thanks, Howard. Joe, can you please open up the lines for Q&A.

Earnings Call Part 2:

• Q&A with Time Warner Inc. CEO