February 2014 - WikiLeaks FY15 Budget/FY15 Budget 02.26...2 FY14 Accomplishments Networks Distributio n/ Ad Sales SPT achieved several critical milestones in FY14 and will outperform

BUDGET PRESENTATION

Fiscal Year 2015

February 2014

2

FY14 Accomplishments

Networks

Distribution/ Ad Sales

SPT achieved several critical milestones in FY14 and will outperform budget despite a challenging economic environment

• US & International Distribution teams combined efforts to create the first global Netflix deal for Breaking Bad and Saul

• International Distribution generated another record breaking year of revenue at $1.74BN

• Generated over $40MM in revenue for Russian sitcoms including The Voronins (Everybody Loves Raymond) and Happy Together (Married with Children)

• Sold 5th cycle Seinfeld and 3rd cycle King of Queens

• Sold Young & the Restless to TVGN as Soapnet shutdown

• Struck significant long-term deals in major markets with key partners such as HBO Latam, TF1, Sogecable, Foxtel, Seven Network, Shaw, Televisa, Globo, Azteca

• Sold and launched The Blacklist around the world, generating record ratings and the highest revenue ever for an SPT one hour drama

• Added 11 new advertisers to the 2013-14 upfront with an overall increase of upfront dollars of $13.1MM

• The Queen Latifah Show garnered the highest CPMs of any new talk show

• Successfully sold integrations in The Queen Latifah Show to Cover Girl, Pantene, and SC Johnson

• Revenue for doctoroz.com continued to grow (calendar year): $3.6MM (2011); $5.1MM (2012); $6.3MM (2013)

• Secured ad representation of the Rural Media Group’s two TV networks, RFD-TV and FamilyNet, with a target of $15MM for CY14

• Negotiating 1st ever substantial guild residual changes, freeing up library product and cable-to-cable product to sell

• Grown revenue year over year and maintained total EBIT despite significant FX headwinds (in excess of $25MM)

– Simple margin maintained in high teens (17%)

– After adjusting for FX, all regions of the portfolio increased their prior year revenue (10%)

• Launched/acquired several new operations across the world

– Europe: SET Germany, Animax UK SVOD and UK Freeview expansion

– Asia: Dori Indonesia was acquired and GEM Vietnam launched

– Americas: Kalixta was launched in Latin America and Get TV in the US in February

• Rationalized operations where appropriate with the profitable sale of SPT interests in Dolphin Ad Sales (UK) and FEARnet (completion pending), as well as a profitable and strategic pending deal with SPT’s SPIN properties in Latin America and Brazil

• Global programming initiatives Hannibal and Crossing Lines earned critical and ratings successes on various SPT channels around the world with both properties recommissioned for 2nd season

• In spite of ad revenue shortfalls, Crackle is up 50% in terms of unique visitors, enjoyed over 35MM app downloads on mobile and TV and achieved more than 25MM views on its top-rated and Emmy nominated show, Comedians In Cars Getting Coffee

3

FY14 Accomplishments

US Productio

n

• Successfully launched Release the Hounds (ITV) followed by German (ProSieben) and pending US (FOX) orders• Drove Left Bank US co-pros (Outlander, Mad Dogs US, Craving) and supported development and sale of The Crown • Latin America: Hired new LatAm MD; acquired 100% of Teleset; launched Mexico production (El Mariachi); in conjunction

with SPT International Distribution, negotiating volume deals with Televisa, RCN and pan regional cable channels to fortify 5 year business plan for high quality Spanish language programming

• Held WWTBAM summit with key license holders and instigated quarterly review to optimize format• Identified territories for expansion: Scandinavia, Turkey, Netherlands, Australia, N. Ireland and launched Electric Ray in UK • Restructured Silver River, integrating Left Bank, and divested interest in Tuvalu • Collaborated across Sony divisions and companies to maximize business opportunities with SPT International Distribution,

SPT Networks, Sony Music, Sony ATV, and Sony Technology Networks• Produced and launched SPT’s first Arabic language telenovela, Betty La Fea, to pan-regional Arabic audience• Grew unscripted IP creation and ownership - The Patch, Tough Young Teachers, Five Minutes to a Fortune, Raid the Cage,

Odd Squad, You're Booked, Milky Way Mission, Jokers, among others• Built scripted reality business in Germany, Holland, Russia and the Middle East

Int’lProductio

n

• Breaking Bad $275MM ultimate profit, winning the first Emmy and Golden Globe awards for Best TV Series drama as well as, awards from the DGA, SAG, PGA and WGA

• Agreed principal terms with IGT for an extension of rights with a nominal guarantee of $225MM• Shark Tank rose to record ratings ranking as #1 Friday night program two seasons in a row, and successfully launched into

syndication with highest rating for CNBC in 6 years• Sold Better Call Saul to AMC which will be profitable from year one• SPT has orders for six direct-to-series shows; Helix, Outlander, Better Call Saul, Unt. KZK, Battle Creek, Before Crack• The Blacklist is the highest rated new series this season and has received an early second season order from the network,

where it is their highest rated series among total viewers in a decade and broke US DVR records; The Blacklist is also a worldwide phenomenon, scoring the highest rating telecast in the history of the Sky Living channel in the UK, and was the highest rated new US series launch in Germany in the past 5 years

• The Goldbergs emerges as self starter breakout hit series for ABC ranking as #1 Tuesday comedy and beating New Girl• Capitalizing on the global market by creating original programming for new global platforms like Netflix where SPT has

sold Unt. KZK Series project and Before Crack. Both series are expected to be profitable year one and projected to generate over $100MM in profit each in success

• Young and the Restless and Days of Our Lives have been renewed through the 16/17, and 15/16 broadcast seasons, respectively

• Masters of Sex 2nd season order

Gross Revenue by Product

Gross Revenue Generated by SPT For All Product

4

Gross Revenue Summary

SPT Financial Summary

5

TV Product & Channel Revenue TV Consolidated EBIT

SPT Financial Summary

6

Variance to Budget / Prior MRP EBIT

7

Net Overhead Summary

8

1. Networks

10

Networks – FY15 Outlook

• Major new financial milestones will be achieved by SPT Networks FY15 budget

– Revenue will surpass $2BN

– EBIT will exceed $330MM

– This represents year over year revenue and EBIT growth of 25% and 37%, respectively

• Despite the year over year progress, Networks EBIT is projected to be ($60MM) behind the MRP target for FY15 due to variances from two businesses

– MSM is ($48MM) behind MRP following a ($30MM) EBIT miss in FY14 as a result of a very difficult ad market and lower ratings on the flagship channel and the inclusion of launching MAX2 (movie channel) in FY15 ($4MM)

– GSN is ($11MM) behind plan due largely to a lower outlook for the Digital business based upon lower performance levels than anticipated in FY14

– Branded channels are in line with MRP

• The year over year earnings growth will be achieved while also continuing to invest in the business to help sustain the strong growth profile into the future. Specific growth opportunities factored into the Budget include:

– A GEC channel in India

– An Indian movie channel

– CineSony France

– Dori Israel

• Included within the Budget are several significant assumptions that add an element of risk to the outlook

– The MSM Budget assumes that there will be significant ratings growth on the flagship channel

– The UK operation has an inflection point year as it seeks to fully monetize the new investment in Freeview distribution

– Latin America has an aggressive outlook with EBIT growth underpinned by channel ratings increases across the region

– Crackle US is projected to become profitable based largely upon a 30%+ increase in base business ad revenues year over year

In FY15, Networks will cross the $300MM EBIT threshold, over a 35% CAGRacross eight consecutive years of record earnings

Networks – Financial Summary vs. Budget/PY MRP

11

Revenue EBIT

Note: Revenue unfavorable FX variance is ($93MM) in FY14, ($52MM) in FY15; EBIT unfavorable FX variance is ($38MM) in FY14, ($17MM) in FY15.Note: EBIT excludes 3Net EBIT of ($4MM) in FY14 forecast.

• Revenue and EBIT targets missed across the portfolio in FY14 with material EBIT downside in MSM (-$25MM incl. Challenge),Crackle (-$8.5MM), and GSN (-$11MM)

• FY15 downside versus MRP largely from MSM (-$48MM) and GSN (-$11MM)

25% 28%

0%

20%

40%

60%

Viacom Disney

22% 25%20%

0%

20%

40%

60%

Sony Int'lNetworks

Fox Int'l Channels(ex Nat Geo)

Chellomedia

41% 40% 44%

0%

20%

40%

60%

Discovery Scripps NatGeo (Fox)

12

Average 22%

Source: Company filings and CapIQ.(1) Excludes US Networks, GSN, Crackle GSN Purchase Price Amort. and Home Office Overhead Allocation. Includes MSM.(2) FIC estimated margin range of 25%-30%; NatGeo and FIC margins for FY12 as per FIC Investor Presentation(3) Per Citi, 33%-34% pro forma for SBS and Euro Sport acquisitions(4) Includes MTV/VH1, Nickelodeon, Comedy Central International Networks margin estimate per Citibank, reported Media Networks margin of 41%(5) Per Citibank guidance, mid/high 20%.

Factual-Based Programming

• Business model based on factual and reality

programming which is cheaper than US scripted

content

Programming Allocated from US Parent

• US parent supplies own programming at an

“allocated” cost, which may not always be at true

market rates

Branded International Channels

• Business model based primarily on acquiring US

scripted content

Average 42%

Average 27%

(1) (2)

(2)(3)

(4) (5)

Networks – Competitor EBIT Margins (LTM 3/31/13)

US-Owned Branded International Channels

25%

51%

27% 25%

0%

20%

40%

60%

80%

100%

Sony MSM Sun Star Zee

33% 34%

0%

20%

40%

60%

80%

100%

Sony GSN AMC

13

Average (ex-Sun)

25%

Source: Company filings and CapIQ.(1) Sun’s business model allows them to realize higher margins through its library with rights in perpetuity and revenue sharing arrangements with content

providers(2) Star margin estimates per MSM India and include Hindi GEC + Movies business; overall EBIT margin including Sports and regional channels is 7%. (3) GSN excludes purchase price amortization.

Average34%

(3)

(1) (2)

Networks – Competitor EBIT Margins (LTM 3/31/13)

India Networks

US Basic Cable Networks

Networks – Financial Summary

14

2. Distribution & Ad Sales

• Broadcast:

– Renewed Queen Latifah

– Create new development/syndication model with Hearst or Tribune

– Increase licensing of library product in diginet space (Antenna, Cozi, Bounce, MeTV, GetTV)

– Maximize and secure top offnet value for The Blacklist

– Further progress guild waiver negotiations to free up residually-locked current and library TV product for monetization in broadcast, cable and diginet space

• Cable:

– Working with FX to close feature slate output deal

– Split rights with Turner to sell an additional Seinfeld window

– License English language product to US Spanish networks

– Sell second window of Days of Our Lives; sold cable-to-cable shows based on residual waivers

• SVOD:

– Close SPA output deal

– Negotiate AVOD/SVOD Amazon deal

– Negotiate OTT Comcast library deal

– Maximize offnet value for The Blacklist and Helix

– Concentrate efforts on building sales team

16

US Distribution – FY15 Outlook

Maximize value of key properties

US Distribution – Financial Summary

17

18

US Distribution – Motion Picture Revenue

Library/Flow Motion Picture Revenue

$0.97 $0.91 $0.92 $0.86Pay DBO ($B)

Note: Based on film slate as of 1/22/14.

Current Motion Picture Revenue

19

US Distribution – TV Revenue

20

US Ad Sales – FY15 Outlook

Upfront volume key to growth in pricing

• Marketplace

– Low upfront volume created challenging scatter market

– Q4 was extremely slow with reduced pricing

– Direct response was critical to Q4, 30% of inventory vs. 15% of inventory a year ago

– Lining up new upfront prospects for 14/15 to improve volume

• Broadcast

– Only new entry to syndication daytime will be Meredith Vieira. Cancellation of Katie should boost revenue for Queen Latifah and Dr. Oz

– Sell advertisers across slate of comedy (Seinfeld, King of Queens, Community, and Rules of Engagement). Increase variety of clients in Rules of Engagement and Community

– :10’s challenge of $2MM with new 20 second unit

– Integrations critical to delivering budget goals

• Cable

– Representing RFD Channel for CY 2014 – Rural Entertainment in 50MM homes

– Deliver $15MM budget (RFD) with a combination of direct response and general rate

US Ad Sales – Financial Summary

21 (1) Effective FY15, PlayStation is reflected within Crackle.

22

International Distribution – FY15 Outlook

Outperforming historical high revenue in FY14, reaching a new record in FY15

• Revenue of $1.85BN projected in FY15 - $115MM up from FY14, $89MM up on MRP

– US and International scripted TV product sales are the main drivers of growth

– Delivering higher value through better exploitation of flow/library content

• Maximize growth opportunities across SVOD and Emerging Markets:

– Netflix and Amazon are rolling out services to more countries, plus more local SVOD players (e.g., DLA, Avex, Rogers)

– Buying patterns are evolving away from bulk to more targeted buying (e.g., Netflix Breaking Bad/Saul deal)

– Partner with new SVOD and AVOD platforms and grow in emerging markets (e.g., China, Indonesia, Russia, India and Africa)

• Work within SPT to find new ways to create shows

– EMEA co-productions with US Production

– Look for local content creation opportunities (e.g., UK, Russia, LatAm)

– Partnering with Crackle to create original content

• Collaborate across Sony divisions to maximize opportunities

– Negotiate carve-outs (SEN)

– Develop “Millionaire” Project in India, Middle East

– Tie in with Playstation in Japan and France

– The Blacklist opportunity with Sony Mobile

• Supplement/reallocate resources in key markets to support continued growth

Key Deal Road MapCountry/Deal Estimated Completion Estimated Term Value ($MM)

Russia/FTV Q3FY15 3 Years $100 - $120S. Korea/BC/Pay Q4FY15 3 Years $75 - $100Italy/Pay Extension (Sky) Q3FY15 3 Years $100 - $120Italy/FTV Q4FY15 3 Years $50 - $80

Total $325 - $420

International Distribution – Financial Summary

23

24

International Distribution – Motion Picture Revenue Library/Flow Motion Picture Revenue

Current Motion Picture Revenue

25

International Distribution – TV Revenue

Key Feature and TV Drivers – FY15

26

3. Production

28

International Production – FY15 Outlook

Strong growth from Production across UK and Europe

• Create IP that travels

– Support creation, launch and sales of formats that travel: The Patch, Fan Band, Popheads, Beat Shazaam among others

– Maximize prelaunch of The Crown through integrated sales, marketing and publicity campaign

– Rebuild SPT Russia’s capacity to produce enduring sitcoms and dramas that travel

• Explore expansion opportunities for network of production companies in key strategic markets

– Scandinavia, Turkey, Netherlands, Australia, N. Ireland

• Support and strengthen existing production companies

– Support SPT Latin America/Teleset to execute 5 year plan to build high quality, sustainable library of Spanish language programming for the region

– Monitor progress of Toro Italy, Floresta (Brazil), SPT Arabia

– Seek extension of HUASO (China) license and restructure operation

– Support startup and integration of Electric Ray into SPT

• Continue internal collaboration to drive business across Sony companies

– SPT International Distribution: Continue close collaboration to maximize profits from new and library programming

– SPT Networks: Expand original production opportunities with SPT’s network group

– Sony Music: Continue to work on individual projects and build wider strategic partnership

International Production – Financial Summary

29

Revenue EBIT

International Production – Detailed Revenue

30

International Production – Detailed EBIT

31

Further strengthen portfolio by creating and selling content in all genres

• Drama – Maximize value of worldwide appetite for quality drama across all outlets with continued emphasis on broadcast and cable and additional focus on new platform opportunities

• Comedy – Maintain and support a strong comedy strategy as part of our overall portfolio business as comedy continues to maintain strong value in the syndicated marketplace

• First Run Syndication – Stabilize and grow the Queen Latifah daytime series for the 14/15 broadcast season and look to expanding the business into new lower cost opportunities

• Long Form – Continue to be the industry leader in MOW and limited series production, expanding our partners to include networks like FX, SyFy, Starz and Cinemax

• Non – Scripted – Capitalize on growth opportunities in cable (USA, TBS, AMC, WE) and continue to strengthen our foothold in broadcast

Content will continue to be created and sold across all platforms

• Digital / Online – Capitalize on growth opportunities in emerging platforms (Amazon, Netflix, Hulu)

• Cable – Consistently profitable with some of the most critically acclaimed and respected series in the industry

• Broadcast

– Leverage the strength of our international partners to increase global demand and extend life of series on air in the US

– Continue to invest in top tier creative talent

32

US Production – FY15 Outlook

Global market creates increased demand for content

US Production Assumptions

33

Projected Value of Shows in Syndication

34(1) Values are on an ultimate basis; current and projected values are as of January 2014.

Show in Syndication /Expected to Syndicate

AnticipatedValue to SPE(1)

CurrentExamples

ProjectedExamples

Breaking Bad

Dr. Oz

Justified

Drop Dead Diva

Rescue Me

Damages

Rules of Engagement

Community

$275MM

$90MM

$53MM

$49MM

$45MM

$33MM

$30MM

$21MM

Before Crack (6 Seasons)

Family Murder Mystery (KZK)(6 Seasons)

Dr. Oz (8 Seasons)

Better Call Saul (5 Seasons)

Unforgettable (5 Seasons)

New Network series such as:

The Goldbergs (5 Seasons) or The Blacklist (6 Seasons)

$140MM

$109MM

$105MM

$100MM

$65MM

$75MM – $145MM

Attractive returns with upside potential for shows that prove to be a ‘hit’

US Production – Current Series, Pilots & Development Cost

35

Revenue EBIT

US Production – Current Series, Pilots & Development Cost

36

US Production – New Series Investment & Development

37

Represents ONLY development expense and deficit pilots/series and EXCLUDES profitable series

US Production – FY14 Q4 New Series Investment & Development

38Note: Includes allocation of departmental overhead.

US Production – FY15 Budget New Series Investment & Development

39Note: Includes allocation of departmental overhead.

US Production – Library and Net Overhead

40

US Production – Product Library

41

Revenue EBIT

Year Over Year EBIT

42