NON-LINEAR SCHEDULING

October 24, 2014

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Executive Summary – Business Problem

• The Networks group has experienced significant growth over the past 15 years with 125 channel feeds in 159 countries

• Carriage agreements increasingly depend on how much catch up content will be provided. Our brand is less valuable if we don’t compete with other channels that have catch up content. There is pressure to change

• Consumer behavior is shifting rapidly with increased access of content over broadband rather than purchasing content. OTT services compete for traditional Pay TV dollars

• VOD business is growing at a rapid rate. Crackle asset volume is projected to increase dramatically(~35%) for both Licensed and Original Content in U.S. & Canada

• The way to compete in the marketplace is to schedule content expeditiously and efficiently to digital platforms

• The complexity of non-linear scheduling has significantly increased with the changing marketplace

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Executive Summary – Business Problem

• Networks does not have a global non-linear scheduling system which leads to great inefficiency and lost opportunity– Increased time spent manually tracking elements (video, metadata,

art, etc.) via a variety of disparate tools (Excel, Word, email, Basecamp, Google Docs, CMS, etc.)

– Increased time spent double-checking and correcting human-generated errors at multiple touchpoints of schedule proliferation

– Increased staff to manage schedules and assets– Increased risk of errors with increased staff tracking disparate

documents and processes– Increased risk of breached Direct Delivery Partner contracts– Increased risk of not achieving business goals– No comprehensive view of schedule data across various platforms

• The implementation of a centralized non-linear scheduling system will support the growth in our Networks business and allow for us to scale for future growth

Scheduling on non-linear platforms can add up quickly…

AXN(Central Europe)

Czech Republichttp://www.axn.cz/

Hungaryhttp://hu.axn.com/

Slovakiahttp://www.axn.cz/

Romaniahttp://www.axn.ro/

Polandhttp://www.axn.pl/

Bulgariahttp://www.axn-bulgaria.com/

VODCatch up

Without a global system, business has had to figure this out on their own…

GPMS

External Sources

Linear Rights

VOD Rights

SchedulingProgramming Grid

(Contains product, rights and schedule data)

Material Order and Delivery

Metadata Packaging and

Delivery

Linear Schedule

RightsProduct

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Proposed Solution

• A global non-linear scheduling system will allow us to– Dynamically update schedules for diverse business needs: on-

net content, distributed content, events, promotional elements – Dynamically update workflow tracking for multiple teams to

traffic increased content volumes for multiple regions– Dynamically update, track and centralize metadata and art

asset management– Dynamically update schedule rights to reduce manual errors

generated by overlapping, yet disparate, documents and human error

• A global non-linear scheduling system will allow us to embrace new business models and windowing approaches– Support rising TV engagement with second screen apps– Innovate with new products and the way we deliver content– Enhance value for Cable Operators with TVE and OTT services

This project will implement non-linearvalue chain

Playout

Media

Pro

duce

rs

ExternalStudio

ProductionCompany

SPE Other

Contract(& Term sheet)

IngestReceiveVerify

ConformQCEdit

Transcode

LibraryTransmissio

nReady

Deliver

TranscodePackage

Finance

L NL

Business Intelligence

1

Ad Sales

Linear

Non-Linea

r

Promotions

Plan, Manage, Optimize

campaingns

B 2 B & Mobile

Affiliates, Ad Sales,

Partners

Affiliate Mgmt

Contract, Obligations,

& Sales

CRMManage

customer relationship

s

GPMS

IntegrationHUB2

3 4

9

7

6

8

5

10

Facilities Manageme

nt

Client Profiling

7 7

7

7

77

7

7

LinearNon-

Linear

Global TV InitaitiveGlobal Networks InitiativeDigital Networks and New VODGlobal Finance Initiative

3rd Party Data

VOD/OTT/Mobile

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Invoices U.S. SPT Order Sheet (Features)

Watchlist, LCI, etc. Schedules

Watchlist Creative Brief

Master Inventory Schedule

Manifest Materials Work Order

Quarterly Schedule

Channel Art Creative Brief:

New and Relights

Promo Schedules (Video, Lower

Thirds, Display)

Promo Creative Brief

Master Licensor Document

Slideshow & Merch Tool Promotion Schedule

Slide Art Request

Crackle EcosystemMo’ Spreadsheets = Mo’ ProblemsEvery asset is copied, pasted, and tracked through a proliferation of documents. One change necessitates many changes and re-issuing the documents to various stakeholders via email.

Below is an example of some Programming Team documents impacted by scheduling and merchandising one feature.

*NOTE: Does not include documents that might be generated by Creative, Video Operations, or Operations

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Invoices U.S. SPT Order Sheet (Features)

Watchlist, LCI, etc. Schedules

Watchlist Creative Brief

Master Inventory Schedule

Manifest Materials Work Order

Quarterly Schedule

Channel Art Creative Brief:

New and Relights

Promo Schedules (Video, Lower

Thirds, Display)

Promo Creative Brief

Master Licensor Document

Slideshow & Merch Tool Promotion Schedule

Slide Art Request Google Sheet

Crackle Ecosystem Less Spreadsheets = Less ProblemsDocuments That Can Be Consolidated by a Non-Linear Scheduling & Workflow System

*NOTE: Does not include documents that might be generated by Creative, Video Operations, or Operations

We wouldn’t launch a linear channel without a scheduling system. Why wouldn’t we do the same for a non-linear platform?– Rebecca Agbe

Financial Summary

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Year One Project Costs Five-Year Summary and Payback Software: $0 Five-Year Total Cost: $5,146,668Hardware: $0 Five-Year Total Benefit: $7,956,848Internal Labor: $71,820 Five-Year Net Benefit: $2,810,180External Labor $481,858 Internal Rate of Return: 28%Misc./Other: $65,000 Net Present Value at 10%: $1,188,579TOTAL $618,678 Payback in Months: 35.54

Blended Onshore/Offshore Labor Rate: $70

Project Benefits (Yearly) Funding by Fiscal YearHard $ Benefits ( Revenue Enhancement) $282,400 FY1 $618,678

Soft $ Benefits (Cost Avoidance) $267,840 FY2 $1,275,990

Soft $ Benefits (Effi ciencies ) $767,782 FY3 $0

TOTAL $1,318,022 TOTAL $1,894,668

Depreciation: FY16 FY17 FY18 FY19 FY20 FY21

$80,523 $322,094 $322,094 $322,094 $322,094 $214,729

Ongoing Costs: $650,400

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BenefitsCategory Benefit Timing 5-Year Benefit Description

RevenueEnhancement

$220,000 Yearly $1,302,421 Currently around 200 – 300K revenue lost in direct distribution deals for Crackle. Assumes that we are leaving about 10% more deals every year.

$62,400 Yearly $512,883 About $8000/month in lost revenue for Crackle as there are no centralized reports that show rights that can be exploited to be scheduled.

Cost Avoidance

$61,200 Yearly $1,096,687 Crackle Device parting - Only 20 hours of contractor time would be required instead of 40 with system in place to curate content on devices. With increased volume of 25% every year, need to hire an extra contractor each year.

$12,000 Yearly $219,337 Crackle Day Parting initiative requires an extra 8 hours per week without system. With system it is reduced by half. Volume increase of 25% year over year would require an additional 4 hours per week.

$45,900 Yearly $406,858 Crackle Direct delivery expansion of platforms –This accounts for increased volumes that must be packaged and worked through Operations team. Without the system an entire head would be needed, with the system half a head used.

$35,900 Yearly $237,304 Crackle Direct delivery worklow - Ordering art, handling workflow of packaging without the system takes an entire person. With system, half the workload is reduced, so the cost avoidance is the remaining half.

Operational Efficiencies

$499,305 Yearly $2,995,830 Crackle US – Efficiencies achieved by a) eliminating spreadsheets, documents, emails. b) reducing manual errors while editing spreadsheet c) centralizing workflow information in a dashboard reducing emails.

$149,496 Yearly $896,976 Crackle LATAM - Efficiencies achieved by a) eliminating spreadsheets, documents, emails. b) reducing manual errors while editing spreadsheet c) centralizing workflow information in a dashboard reducing emails.

$64,500 Yearly $387,000 Germany - Efficiencies achieved by a) eliminating spreadsheets, documents, emails. b) reducing manual errors while editing spreadsheet c) centralizing workflow information in a dashboard reducing emails.

$54,480 Yearly $326,880 Central Europe - Efficiencies achieved by a) eliminating spreadsheets, documents, emails. b) reducing manual errors while editing spreadsheet c) centralizing workflow information in a dashboard reducing emails.

Grand Total $1,318,021 $7,956,848

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Intangible BenefitsCategory DescriptionBusiness Benefits

Revenue

Improved ratings for linear programming resulting from increased non-linear exposure.

Ensure that our subscriber fees in carriage deals are not impacted by providing the ability to efficiently and quickly schedule content for digital platforms

Operational EfficienciesLess effort and more accuracy when scheduling content for non-linear platforms

Risk Mitigation

Ensuring that we meet our obligations with direct distribution platforms by providing reports on scheduled content on 3 rd party platforms

Strategic Benefits

Provide better negotiation leverage in Operator deals by allowing us the ability to scale content to more non-linear platforms that are tethered to linear channels.

Enhance the value for our customers by getting content to the non-linear platforms within 1-7 days

IT Benefits

Strategic BenefitsEstablishes a centralized global scheduling system that can be utilized by other LOB’s.

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Competitive Analysis

• Other studios have implemented non-linear scheduling systems to compete in the digital landscape– ABC Television, AMC Networks (US), Vubiquity (US), BT

Vision (UK), Channel 5 (UK), Orange (France) and Telefónica (Spain) have chosen BeBanjo

• Nine non-linear vendor solutions were analyzed to identify a non-linear scheduling system that would work for Television Networks– The proposed solution is with vendor BeBanjo who are a

major leader in the non-linear scheduling space– BeBanjo is a cloud based solution and has an existing

relationship with Mediamorph that we already leverage. – We will build Product, Rights and Schedule integrations with

BeBanjo through a centralized operational data store (ODS)

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Timeline

• November 2014: Project start• March 2015 – Phase 1 Go live• August 2015 – Crackle, Western Europe and Central Europe Live

APPENDIX

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Crackle volume projection

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Asset volume is projected to increase dramatically for both Licensed and Original Content in U.S. & Canada

U.S. (Based on MRP 2014)Fiscal Year Budget # of Assets Annual Increase of # of Assets (%)

FY15 $8MM 18,455 FY16 (estimated) $11.5MM 26,529 44%FY17 (estimated) $13.5MM 31,143 17%FY18 (estimated) $20MM 46,138 48%

Canada (Based on MRP 2014)Fiscal Year Budget # of Assets Annual Increase of # of Assets (%)

FY15 $800k 25,429 FY16 (estimated) $2MM 63,573 x2.5FY17 (estimated) $2.6MM 82,644 30%FY18 (estimated) $3.5MM 111,252 35%

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Crackle Revenue Projection

FY12(Actuals) FY13(Actuals) FY14(Actuals) FY15 (Fore-cast)

FY16 (MRP) FY17 (MRP) FY18 (MRP)

Total revenue($ in thou-sands)

17609 19768 34505 60200 80050 123000 162950

Crackle (US) Total revenue($ in thousands)