Breaking Bad Case Study Current vs. Original Profit Estimates A typical cable show can provide attractive returns, however, there is tremendous opportunity

Breaking Bad Case StudyCurrent vs. Original Profit Estimates

• A typical cable show can provide attractive returns, however, there is tremendous opportunity for shows that prove to be a “hit” like Breaking Bad

– Breaking Bad has grown in the ratings every season with the final season to begin airing this August

– The series has won 7 Primetime Emmy Awards—including a record 3 consecutive wins for Best Actor for Bryan Cranston, two wins for Best Supporting Actor for Aaron Paul, and three nominations for Outstanding Drama Series

– The Home Entertainment market is expected to generate $138MM in profit contribution, outperforming original estimates of $3MM

– The International TV market is expected to generate $64MM in profit contribution, also outperforming original estimates of $19MM

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Current

Original

$128

2

SPT’s International TV Production Footprint

Start-up

Acquisition

Originally Wholly Owned

Miami Culver City

SPT Int. (HK) Ltd. – Hong Kong

SP Film und Fernseh Prod. - Cologne

SPT Prod. Russia - Moscow

2waytraffic 6/08 - LondonLeft Bank Pictures 8/12 – LondonSilver River Prod. 2/12 – London

Teleset 1/09 - Bogota

Waterland 4/11 - Brussels

2waytraffic 6/08 – AmsterdamTuvalu Media 12/07 - Amsterdam

Lean-M 12/06 - Moscow

Floresta 6/10 - Sao Paolo

Toro Prod. 10/09- Rome

Victory Television 5/11 - LondonGogglebox 2/08 – London

SPT Prod. Egypt 11/10 - Cairo

SPT Prod. Lebanon 11/10 - Beirut Huaso Film 9/04 - Beijing

SPT Arabia 11/10 - Dubai

SPT Prod. France - ParisStarling 5/04 – Paris

FORMAT OPTION #1

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SPT’s International TV Production Footprint

Miami Culver City

Hong Kong

Cologne

Moscow

Paris

London

Bogota

Brussels

Amsterdam

Sao Paolo

Rome

Cairo

BeirutBeijing

Dubai

Start-Up

Victory Television 5/11 – London

Gogglebox 2/08 – London

Toro Prod. 10/09- Rome

Floresta 6/10 - Sao Paolo

SPT Arabia 11/10 – Dubai

SPT Prod. Lebanon 11/10 – Beirut

SPT Prod. Egypt 11/10 – Cairo

Huaso Film 9/04 – Beijing

Acquisition

Teleset 1/09 – Bogota

2waytraffic 6/08 – London

Left Bank Pictures 8/12 – London

Silver River Prod. 2/12 – London

Tuvalu Media 12/07 – Amsterdam

Waterland 4/11 – Brussels

Starling 5/04 – Paris

Lean-M 12/06 – Moscow

Originally Wholly Owned

Culver City

Miami

SPT Prod. France - Paris

SPT Prod. Russia - Moscow

SP Film und Fernseh Prod. - Cologne

SPT Int. (HK) Ltd. – Hong Kong

FORMAT OPTION #2

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SPT’s Distribution and Production Strategies are Proving Fruitful both Domestically and Internationally

Dis

trib

uti

on

Distributes all of the studio’s feature films, television series (first run and off-net), library product (including more than 4,000 films and 50,000 episodes of television), formats, MOWs, miniseries and acquisitions across multiple windows and platforms

United States

• Closed an unprecedented output deal with Starz worth up to US$ 2 billion and securing the movie slate through 2021

• Made a record breaking sale for a comedy to a digital service with the sale of Community to Hulu

International

• SPT operates 20 sales offices outside the U.S., with staff covering 196 countries

• SPT Distribution generates about US$ 1.7 billion annually

Pro

du

cti

on

• In the U.S., SPT produces 32 series across all genres and dayparts: comedy, drama and reality and talk for 16 different broadcast and cable networks and syndication

• Produces record breaking, award-winning movies and miniseries for television

• Most successful development season in more than a decade and 15 new series debuting this season

• SPT International Production has 18 production companies in 14 countries which have produced more than 61,000 episodes of non-scripted programming and 12,000 episodes of scripted programming.

• Formats from our internationally known non-scripted format catalogue have been produced in 89 countries and 77 languages and include hits such as Who Wants to Be a Millionaire?, The Dr. Oz Show and Dragons Den.

• The recognized industry leader in the adaptation of scripted formats worldwide. (The Nanny produced in 9 countries, Married… with Children produced in 11 countries and Everybody Loves Raymond in 4 countries)

• Award-winning production companies and critically acclaimed original scripted programming in Russia, Latin America, Germany and the UK

SPE has Built a Strong and Meaningful Networks Presence in India

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• SPE launched its network presence in India 17 years ago with SET

– Between 2000-2007, SET faced multiple challenges

– In early 2009, new management revitalized SPE’s Indian network operations

– Performance has improved significantly in recent years and is now consistently profitable

• MSM India is critical to the overall network portfolio

– Delivered a 20% revenue CAGR from FYE09-13

– Delivered $138MM EBIT in FYE13; and is expected to show sustained growth through FYE17 reaching approximately $200MM

• SPE’s 2008 investment in IPL Cricket has yielded strong revenue and positive EBIT results and is expected to continue to do so (NOTE: IPL is expected to earn ~$427MM over 10 years)

• India is an important growth market to Sony Corporation and SPE

– India is critical to Sony Corporation due to its size, growing middle class, and the value ascribed to the Sony brand by its population

– Sony and SPE have a history of working together to capitalize on this market, including exposing 417MM viewers to the Sony brand via SPE’s Sony-branded channels

– The Sony brand on MSM’s channels has increased brand awareness and helped electronics sales

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SPT networks portfolio generates significant shareholder value for the Company

Current Estimated Valuation Range of

SPT Networks Portfolio

$3.8BN to $4.2BN

SPT Networks EBIT ($MM)

$270

$338

FY 2013 FY 2014

Note: An estimate only. SPE has not performed a complete or independent valuation of its networks business. The valuation range is based on market EBITDA multiples.

FORMAT OPTION #1

Hypothetical Value of SPT Networks Portfolio

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North America$540MM - $610MM

EMEA$330MM - $370MM

Asia Pac (excl. MSM and Japan)$90MM - $110MM

South America$450MM - $520MM

Note: An estimate only. SPE has not performed a complete or independent valuation of its networks business. The valuation range is based on market EBITDA multiples and accounts for non-controlling interests.(1) SPE purchased an additional 38% stake in MSM for $314MM at an implied valuation of $826MM.

Current Estimated Valuation of SPT Networks Portfolio

$3.8BN to $4.2BN

MSM (1)

$2.2BN - $2.4BN

Japan$180MM - $210MM

FORMAT OPTION #2


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$270

$338

FY 2013 FY 2014

Current Estimated Valuation of SPT

Networks Portfolio: $4BN

Estimated FYE16 Valuation of SPT

Networks Portfolio: $5BN (1)

FORMAT OPTION #3


Note: An estimate only. SPE has not performed a complete or independent valuation of its networks business. The valuation range is based on market EBITDA multiples.(1) Applied similar EBITDA market multiples against projected FYE16 EBITDA.

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Note: An estimate only. SPE has not performed a complete or independent valuation of its networks business. The valuation range is based on market EBITDA multiples.(1) Includes new launches and Home Office challenges and costs.

FORMAT OPTION #4a


Current Estimated Valuation Range of

SPT Networks Portfolio

$3.8BN to $4.2BN$138 $151

$65 $82$67

$105

FY 2013 FY 2014

MSM GSN Rest of Networks

$338

$270

(1)

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Note: An estimate only. SPE has not performed a complete or independent valuation of its networks business. The valuation range is based on market EBITDA multiples.(1) Includes new launches and Home Office challenges and costs.(2) Applied similar EBITDA market multiples against projected FYE16 EBITDA.

FORMAT OPTION #4b


Current Estimated Valuation of SPT

Networks Portfolio: $4BN

Estimated FYE16 Valuation of SPT

Networks Portfolio: $5BN (2)

$138 $151

$65 $82$67

$105

FY 2013 FY 2014

MSM GSN Rest of Networks

$338

$270

(1)

GSN Overview

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• GSN is a multiplatform U.S. cable network focusing on game show content and a digital business that includes skill-based games, casual games and an online ad network

– GSN is our most distributed U.S. network – with ~78MM publicly reported U.S. TV subscribers

– Revenues driven by a mix of affiliate fees and television/online advertising

• Programming strategy includes licensed SPT library product and new shows developed based on classic game show formats

– The American Bible Challenge, launched in 2012, was the most viewed program in GSN’s history and brought in a significant new audience of approximately 13MM viewers

• GSN’s digital gaming business revenue has experienced rapid growth through mobile, virtual goods and success of skill-based games

– Online skill-based cash competitions include 35+ games attracting 2MM monthly players

– Over 100+ casual games on Facebook, mobile and web utilizing a virtual goods currency model with over 12MM monthly players

• SPE currently owns 58% of GSN with management control and DIRECTV owns the remaining 42% (NOTE: Recent transaction implied a 100% valuation of GSN at $1.3BN)

• GSN is a growing and important asset and generates considerable profits for SPE with $112MM in estimated consolidated EBIT for FYE14, before amortization of intangible assets associated with the purchase

GSN Shows and Properties

12(1) Sony Pictures Television property.

GSN.com Home Page Skill-based Cash Competitions

GSN Casino Mobile AppCasual Social Games

Original Programming

Acquired Programming

(1) (1)

(1)

Selected TV ShowsSelected TV Shows Selected Digital PropertiesSelected Digital Properties

Crackle Overview

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• In July 2007, SPE purchased the online user generated video site, Grouper, for $52.5MM. Grouper was re-branded as Crackle, which would become a premium multi-platform video-entertainment network and studio featuring full-length movies and television shows

• Crackle launched in the United States in 2009 and Latin America in 2012, as SPT Networks’ premier OTT service, offering a high-quality selection of free, ad supported movies and television programs

– Crackle targets adults aged 18-44 with a male skew

– Through its free app, Crackle is distributed through computers, mobile devices (e.g., iPhone, Android), gaming consoles (e.g., PlayStation, Xbox), internet connected TVs (e.g., Sony Bravia, Samsung, LG, Vizio), blu-ray players and set-top boxes

– Premium content on the curated network include high-profile movies and TV shows such as Step Brothers, District 9, Seinfeld and The Shield

– Jerry Seinfeld committed to 3 seasons of Comedians in Cars Getting Coffee foregoing opportunities with other premium U.S. video services

• Crackle was widely recognized in 2012

– “The 20 Best iOS and Android Apps Of 2012” – TechCrunch

– “Amazon’s Best of 2012: Apps and Games” - Amazon Editors

– “Best of TV on the Web in 2012” – USA Today

– Top 5 Application on PlayStation and Xbox

• Currently, Crackle is available in 23 countries with approximately 15 million monthly unique visitors across the globe

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Crackle Success

Source: Crackle.com = comScore VideoMetrix June 2012, Devices include all distribution outside Crackle.com (Omniture June 2012).(1) Based on visitors in the United States.

Premium Video Network

15MILLION VISITORS PER MONTH

78MILLION STREAMS OF CONTENT PER MONTH

90MINUTES SPENT PER USER PER VISIT(1)

23COUNTRIES

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SPE has made a Number of Meaningful Acquisitions Over the Last Decade that Support Strategic Growth

AcquisitionAcquisition Purchase PricePurchase Price

MSM India TV Networks

$360MM for 100% (1)

$52.5MM for 100%

$234MM for an additional 18%

stake (2)

$314MM for an additional 38%

stake (3) (1) Total consideration based on $242MM in cash and $118MM in assumed debt for 100% ownership.(2) DIRECTV exercised its put right to sell an 18% interest in GSN for $234MM (before interest costs) to SPE; increasing SPE’s ownership interest from

40% to 58%. (3) Based on increasing SPT’s stake in MSM holdings from 62% to 100%.

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Breaking Bad Case Study Current vs. Original Profit Estimates A typical cable show can provide attractive returns, however, there is tremendous opportunity