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MID RANGE PLANFISCAL YEARS 2013–2016
SEPTEMBER 7, 2012
DRAFT9.5.12 PM
Se-ries1
0
100
200
300
400
500
600
700
800
900
11
Monetization$MM
FY13Frcst
FY14Current
FY15 Current
FY16 Current
2
SPT Consolidated EBIT
15%
CAGR
• Networks – Networks has an EBIT CAGR of 23% across the plan, breaking earnings records in each and every year. The growth comes from all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins
• U.S. Production & Ad Sales – EBIT grows 21% over the plan from $290MM to $351MM driven by a steady pipeline of programming sold to SVOD and Off-net syndication: Last Resort, Happy Endings, Justified
• International Production – International Production has an EBIT CAGR of 78% across the plan. Moderate organic growth from existing operating companies is supplemented by EBIT contributions from recent acquisitions Left Bank and Silver River as well as the inclusion of a hit format starting in FY 15
SPT EBIT continues to grow at a rate of 15% year-over-year
The Television Business is Growing
$564
$625
$765
$859
Gross Revenue Generated by SPT For All Product
Revenue
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
3
FX Impact
Series10
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
5,258
$5,217
5,861
$5,905
6,307
$6,399
$6,972
90
278310
$MM
$5,348
$6,139$6,617
Gross Revenue Generated by SPT For All Product
4
($ MM) Generated RevenueFY13 FY14 FY15 FY16
Budget Q2 Fcst Variance PY MRP* MRP Variance PY MRP MRP Variance MRPUS Distribution 749 778 29 756 778 22 774 671 (103) 632Int'l Distribution 1,600 1,630 30 1,644 1,712 68 1,696 1,772 76 1,895Int'l Production 204 233 29 532 377 (155) 598 468 (130) 513US Production & Ad Sales 1,123 1,058 (65) 1,233 1,122 (111) 1,352 1,298 (54) 1,450Networks 1,672 1,518 (154) 1,974 1,916 (58) 2,197 2,190 (7) 2,482
TOTAL $5,348 $5,217 ($131) $6,139 $5,905 ($234) $6,617 $6,399 ($218) $6,972
* Prior Year MRP restated for Format Sales transfer between Int'l Production and Int'l Distribution.
Se-ries1
0
100
200
300
400
500
600
700
800
900
527 553631
717
26
84
98
11 11
Monetization
$MM
SPT Financial Summary
Note: EBIT excludes 3Net EBIT of ($6MM), ($5MM), ($4MM) and $(2MM) in FY13-FY16, respectively.
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
5
TV Consolidated EBITTV Product & Channel Revenue
FX Impact
$564
$564
$715
$625
$815 $76
5
$859
Se-ries1
0
1,000
2,000
3,000
4,000
5,000
6,000
3,741
$3,6484,298
$4,365
4,673
$4,850
$5,389
82
238268
$MM
$3,823
FX Impact
$4,536
$4,941
SPT Financial Summary
6
($ MM) RevenueFY13 FY14 FY15 FY16
Budget Q2 Fcst Variance PY MRP* MRP Variance PY MRP* MRP Variance MRPUS Distribution 48 48 - 49 50 1 42 43 1 40Int'l Distribution 5 9 4 6 10 4 4 8 4 5Int'l Production 266 294 28 587 433 (154) 658 530 (128) 573US Production & Ad Sales 1,814 1,761 (53) 1,887 1,911 24 1,993 2,011 18 2,191Networks 1,690 1,536 (154) 2,007 1,961 (46) 2,244 2,258 14 2,580
TOTAL $3,823 $3,648 ($175) $4,536 $4,365 ($171) $4,941 $4,850 ($91) $5,389
EBITFY13 FY14 FY15 FY16
Budget Q2 Fcst Variance PY MRP MRP Variance PY MRP MRP Variance MRPUS Distribution 34 34 - 36 36 - 28 28 - 25Int'l Distribution (45) (45) - (50) (50) - (52) (52) - (54)Int'l Production 9 6 (3) 67 13 (54) 87 28 (59) 34US Production & Ad Sales 248 290 42 274 298 24 278 351 73 351Networks 307 268 (39) 388 328 (60) 474 410 (64) 503
TOTAL $553 $553 - $715 $625 ($90) $815 $765 ($50) $859
Shine Monetization 11 11 - - - - - - - -
TOTAL Including Monetization $564 $564 - $715 $625 ($90) $815 $765 ($50) $859
3Net (8) (6) 2 (2) (5) (3) 2 (4) (6) (2)
* Prior Year MRP restated for Format Sales transfer between Int'l Production and Int'l Distribution.
Net Overhead
7
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/Frcst
Net Overhead (Excluding New Investments)
Series10
100
200
300
400
500
600
$463$451
$500$482
$532$503
$540
$MM
Net Overhead Summary
8
($ MM) Net OverheadFY13 FY14 FY15 FY16
Budget Q2 Fcst Variance PY MRP MRP Variance PY MRP MRP Variance MRPNetworks - Existing 314 302 12 335 323 12 362 337 25 373US & Int'l Distribution 63 68 (5) 67 71 (4) 68 73 (5) 72US Production & Ad Sales 38 39 (1) 38 42 (4) 39 44 (5) 45Int'l Production - Existing 48 42 6 60 46 14 63 49 14 50Sub-Total $463 $451 $12 $500 $482 $18 $532 $503 $29 $540
Networks - New Investment 7 2 5 20 23 (3) 31 31 - 43 Int'l Production - New Investment - 7 (7) 3 13 (10) 3 13 (10) 14
TOTAL $470 $460 $10 $523 $518 $5 $566 $547 $19 $597
1. Production
2. Distribution & Ad Sales
3. Networks
3 Areas of Discussion
9
International Production – Market Environment
Europe
Emerging Markets
Key Global Competitors
.
10
• UK and the Netherlands remain key territories for global IP creation– UK is most important market for IP creation. SPT has strengthened its UK
presence– Tuvalu remains competitive despite Talpa’s continued dominance of the Dutch
market, • Challenging economic climate in some key markets resulting in (a) reduced
opportunities for original programming, and (b) increased demand for producers to take greater financial risks (e.g., pilot funding, series deficit funding)
• Russia’s demand for original productions rebuilding from low point 2 years ago; SPT seeking to add to its sitcom formats library to feed local demand • Middle East - may provide greatest opportunity for growth though the region remains volatile. Scarcity of experienced local TV production personnel also presents a challenge
• Brazil – new cable quota laws favor Brazilian production companies; SPT must create a structure to capitalize on this demand
• Asia – limited market opportunities in short term. Emerging Asian markets have strategic value in long term
• As emerging markets attract more ad dollars, we expect to see new opportunities for local production
• Significant competition from ITV Studios, WB, NBCU, All3Media, Discovery & Shine to acquire new IP and content creators in key markets
• Endemol remains in a state of turmoil• Fremantle continues to be a strong competitor• Shine remains key competitor in territories where SPT has production presence (e.g.,
France)• Shine and All3media experiencing talent retention challenges
International Production – Strategic Priorities
11
Create and Launch IP
Build and strengthen
global production
network
• Continue investment into companies which create IP with focus on UK; review opportunities in Scandinavia, Israel, Australia and other content rich countries
• Strategically deploy central development fund
• Launch competitive incentive plan to foster creation of global IP and multi-territory format exploitation and to attract/retain talent
• Streamline daily administrative/operational processes allowing managing directors to focus on content creation
• Increase collaboration between operating companies
• Establish culture that fosters creativity centrally and across operating companies
• Strengthen and grow production presence in the UK and other key content creation territories
• Fortify global footprint and invest in production companies in high growth markets (e.g., Asia, Arabia, Australia)
• Fortify existing production network
• Included $50MM annual investment fund for FY14 - FY16
Se-ries1
0
100
200
300
400
500
600
700
$266$294
576 646
3
11
12
$MM
Se-ries1
0
20
40
60
80
100
$20$17
$67
$13
$87
$28$34
1111
Shine Monetization$MM
International Production – Financial Summary
25% CAGR
78% CAGR
12
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
9 6
Revenue EBIT
$587
$433
$658
$530
$573
263
FX Impact
International Production – Detailed EBIT
13
EBIT($MM) FY13 FY14 FY15 FY16
Budget Forecast Variance PY MRP MRP Variance PY MRP MRP Variance MRPTV Licensing - WWTBAM 16 16 - 16 16 - 17 17 - 17 TV Licensing - Other Formats 4 4 - 4 5 1 7 6 (1) 6 2waytraffic Mobile - - - 2 - (2) 2 - (2) -
France (SPT + Starling) 3 2 (1) 9 3 (6) 10 3 (7) 3 Russia (SPT + Lean-M) 10 9 (1) 10 9 (1) 10 9 (1) 9 Germany 2 1 (1) 4 1 (3) 4 2 (2) 2 UK (Gogglebox + Victory + Silver River) 1 2 1 5 2 (3) 8 4 (4) 5 Left Bank - 3 3 8 8 9 9 8 Tuvalu 2 1 (1) 5 2 (3) 6 2 (4) 3 Toro JV 3 (1) (4) 8 - (8) 6 1 (5) 1
Europe 21 17 (4) 41 25 (16) 44 30 (14) 31
Latin America 4 3 (1) 13 4 (9) 14 8 (6) 9
Asia/Middle East 1 1 - 5 1 (4) 7 2 (5) 3
Global Hit Format - - - 17 - (17) 22 3 (19) 7
Creative (Development & Overhead) (12) (12) - (9) (12) (3) (9) (12) (3) (13) Overhead including Allocations (8) (8) - (5) (9) (4) (5) (10) (5) (10) M&A & Other - - - - - - - - - - Reserves/Challenge (5) - 5 (5) - 5 - - - - Total Other (25) (20) 5 (19) (21) (2) (14) (22) (8) (23)
Profit Contribution before PPA $21 $21 $0 $79 $30 ($49) $99 $44 ($55) $50
Purchase Price Amortization (12) (15) (3) (12) (17) (5) (12) (16) (4) (16)
EBIT before Shine Monetization $9 $6 ($3) $67 $13 ($54) $87 $28 ($59) $34Shine Monetization 11 11 - - - - - - - -
EBIT after Shine Monetization $20 $17 ($3) $67 $13 ($54) $87 $28 ($59) $34
International Production – Detailed Revenue
14
REVENUE($MM) FY13 FY14 FY15 FY16
Budget Forecast Variance PY MRP MRP Variance PY MRP MRP Variance MRPTV Licensing - WWTBAM 17 18 1 18 18 - 18 19 1 19 TV Licensing - Other Formats 12 9 (3) 11 9 (2) 15 14 (1) 13 2waytraffic Mobile - - - 29 - (29) 30 - (30) -
France (SPT + Starling) 38 20 (18) 63 36 (27) 75 39 (36) 39 Russia (SPT + Lean-M) 70 63 (7) 81 53 (28) 89 91 2 92 Germany 31 28 (3) 49 32 (17) 55 35 (20) 38 UK (Gogglebox + Victory + Silver River) 36 45 9 57 47 (10) 62 56 (6) 62 Left Bank - 29 29 - 76 76 - 89 89 87 Tuvalu 22 16 (6) 34 20 (14) 39 22 (17) 27 Toro JV 29 14 (15) 49 15 (34) 54 17 (37) 17
Europe 226 215 (11) 333 279 (54) 374 349 (25) 362
Latin America 41 22 (19) 130 86 (44) 138 93 (45) 98
Asia/Middle East 24 30 6 40 41 1 42 44 2 51
Global Hit Format - - - 71 - (71) 90 11 (79) 30
M&A & Other - - - 5 - (5) 11 - (11) - Reserves/Challenge (54) - 54 (50) - 50 (60) - 60 - Total Other 11 52 41 196 127 (69) 221 148 (73) 179
Total Revenue $266 $294 $28 $587 $433 ($154) $658 $530 ($128) $573
• 3 fewer new broadcast dramas than last season (23 vs. 26), continuing on downward trend• More networks putting dramas in at 9:00 and 10:00 pm in “protected” slots with established lead-
ins, however, 10:00 pm continues to erode as DVR playback grows• Majority of orders in broadcast and cable are increasingly from “repeat” players• Cable networks are expanding original programming slates offering more opportunities for drama
• Landscape is broadening for comedies with increased cable development (i.e., TBS)• Largest output since 2003. 41 comedies for next season (vs. last year’s 38) as networks expand
comedy real estate on their schedules• Single-cams continue to dominate output, especially among the freshman class • Networks looking for new comedy opportunities through aggressive expansion and are now
programming comedy blocks on multiple nights, including Friday for NBC and ABC
• Broadcast Network decline in total output with 26 this season vs. 30 last year, as well as new series pick-ups (-3)
• Key talent floor competition shows remain some of the highest-rated network series and key elements in networks’ overall schedule success. Foreign formats dominate this field
• Cable expansion continues with USA adding unscripted programming. Docu-reality series, talent-based, and real-life competitions are the most successful on cable
• The most crowded talk landscape in over a decade with programmers positioning in the post-Oprah era this fall and next
• Stations are looking for big names with familiar faces coming to the talk landscape this year and next: Katie Couric, Ricki Lake, Steve Harvey, and Jeff Probst
• Broadcast stations continue to experiment with in-house production to save costs and control ad inventory
• Station groups starting to produce own content
U.S. Production – Market Environment
Drama
Comedy
Non-Scripted
Syndication
15
• Continue to maintain a balanced portfolio across the cable and broadcast business to secure SPT’s position as a prime destination for premier talent in scripted and non-scripted programming
– Continue to invest in broadcast and cable series and support our current prime time slate
– Invest in A-list writers, directors and producers for future drama/comedy/unscripted development
– Build on our syndication success to expand into the daytime market with Queen Latifah in 2013
– Expand our prime time broadcast and cable reality slate
• Continue to grow international revenues through exploring co-production opportunities and maximizing tax credits
– Develop series with broad international appeal with globally marketable talent to sell in the U.S. and abroad
• Further identify and develop businesses around Shark Tank, Dr. Oz, and Queen Latifah
• Expand integration/collaboration with International Distribution for maximum global impact of U.S. product
U.S. Production – Strategic Priorities
Content
Business Opportunitie
s
16
17
Charlie’s AngelsPan Am
UnforgettableNecessary RoughnessRe-ModeledSubstituteBreaking In
Franklin & BashHappy Endings
The Big CNate BerkusCommunity
Rules of EngagementShark Tank
The Sing-OffThe BoondocksBreaking Bad
DamagesDrop Dead
DivaHawthorne
JustifiedRescue Me
Dr. OzNewlywed
Game
2011–2012
24 series
14
$(86)MM
• Rules sold in syndication in 97% of U.S.• 7 shows on 2011 primetime fall schedule (most since 2002)• SPT has broadcast programming on 6 of 7 nights of the 2011
fall schedule
• Rules sold in syndication in 97% of U.S.• 7 shows on 2011 primetime fall schedule (most since 2002)• SPT has broadcast programming on 6 of 7 nights of the 2011
fall schedule
• Only studio to get a new series on each of the 5 broadcast networks
• Rules of Engagement becomes primetime’s #2 comedy
• SPT becomes the #1 producer of scripted cable series
• SPT achieves 29 Emmy nominations
• The Shield becomes SPT’s first cable-to-cable series sale; $32MM
• SPT successfully launches Dr. Oz
• Rescue Me sells into U.S. syndication and has an ultimate profit of $55MM
• Highest volume year in SPT history with 13 stand-alone profitable series
• Three primetime broadcast reality series
• SPT has more new broadcast comedy series than any other studio
11 seriesBook of
DanielEmily’s Reasons
Love MonkeyBeautiful People
The Boondocks
King of Queens
HuffRescue Me
Strong Medicine
The ShieldJudge
Hatchett
16 series
SPT Timeline: 2005 – 2012(excluding Wheel of Fortune, Jeopardy!, Days of Our Lives, Young & The Restless)
Pilots
Inv. Pool
16
$(96)MM
2007–2008
17 series
Canterbury’s Law
Cashmere Mafia
Power of 10Spider-Man
Viva LaughlinBreaking Bad
DamagesJudge David
YoungRules of
EngagementTil Death
10 Items or Less
The BoondocksMy Boys
Rescue MeThe Shield
Judge HatchettJudge Maria
Lopez
15
$(78)MM
2008–2009
17 series
Sit Down, Shut Up
The UnusualsThe BeastNewlywed
GameJudge Karen
Rules of EngagementSpider-ManTil Death
10 Items or Less
The BoondocksBreaking Bad
DamagesMy Boys
Rescue MeThe Shield
Judge David Young
Judge Hatchett
8
$(63)MM
2009–2010
17 series
BrothersCommunityShark Tank
The Sing-OffDrop Dead
DivaHawthorne
JustifiedMake My Day
Dr. OzRules of
EngagementTil Death
The BoondocksBreaking Bad
DamagesMy Boys
Rescue MeNewlywed
Game
12
$(72)MM
Happy EndingsMad Love
Mr. SunshineBreaking InPlain JaneThe Big C
Franklin & BashNate BerkusCommunity
Rules of EngagementShark Tank
The Sing-OffThe BoondocksBreaking Bad
DamagesDrop Dead
DivaHawthorne
JustifiedMy Boys
Rescue MeNewlywed
GameDr. Oz
2010–2011
22 series
14
$(85)MM
16
$(81)MM
26 series
9
$(80)MM
• Community sold to SVOD and Cable
• SPT achieves 39 Emmy nominations
• 4 new series premiering on all 4 major broadcast networks
• Community sold to SVOD and Cable
• SPT achieves 39 Emmy nominations
• 4 new series premiering on all 4 major broadcast networks
Big DayHeist
KidnappedRules of
EngagementRunawayTil Death
10 Items or Less
My BoysJudge Maria
LopezGreg BehrendtThe Boondocks
HuffKing of Queens
Rescue MeThe Shield
Judge Hatchett
Untitled Michael J. FoxMob DoctorLast Resort
Made In JerseySave MeThe Job
Men At WorkMasters of Sex
Client ListPyramid
Franklin & BashHappy Endings
The Big CNecessary RoughnessCommunity
Rules of EngagementUnforgettable
Shark TankThe BoondocksBreaking Bad
DamagesDrop Dead Diva
JustifiedSubstitute
Dr. OzNewlywed
Game
2012–2013
2005–2006
2006–2007
U.S. Production Assumptions
18
12/13 13/14 14/15 15/16 Changes CABLE FY13 FY14 FY15 FY16 Changes since PY MRPNETWORK Season Season Season Season since PY MRP Big C 3rd 4th 4th season added
Community 4th 5th No 6th season Boondocks 5thRules Of Engagement 7th Breaking Bad 5th/6thHappy Endings 3rd 4th 5th 6th Early SVOD avail Drop Dead Diva 4th 5thUnforgettable 2nd 3rd 4th Franklin and Bash 3rd 4th 5thThe Mob Doctor 1st 2nd 3rd 4th Add'l Drama Series Justified 4th 5th 6th 6th season addedMade in Jersey 1st Necessary Roughness 2nd 3rd 4th 5thLast Resort 1st 2nd 3nd 4th Early SVOD avail Client List 2nd Add'l Drama SeriesSave Me 1st Men at Work 1st 2nd 3rd 4th Add'l Comedy SeriesCharlie's Angels Not Returning Masters of Sex 1st 2nd 3rd 4thPilots 9 9 9New Comedies 2 1 1 Pilots 1 3 3 3New Dramas 1 2 2 New Dramas 2 2 2Successful TBD Comedies 1 1 Successful TBD Dramas 2 4Successful TBD Dramas 1
The Young and the Restless 40th 41st 42nd 43rd 12/13 13/14 14/15 15/16 ChangesDays of Our Lives 48th 49th 50th 51st NON-SCRIPTED
Pyramid 1st 2nd 3rd 4thSYNDICATED SERIES Sing Off 4th Not Returning
Dr. Oz 4th 5th 6th 7th Shark Tank 4th 5th 6th 7thQueen Latifah 1st 2nd 3rd TBD Network Series 1st 2nd 3rd 4thWheel of Fortune 30th 31st 32nd 33rd Returning Cable Series 1 1Jeopardy! 29th 30th 31st 32nd Returning Network Series 1 1TBD Syndicated Series 1st FY16 vs FY15 Launch
Pilots 3 3 3 3MADE-FOR-TV MOVIES
Movie 9 9 9 9 New Cable Series 2 2 2Mini-Series 1 1 1 1 New Network Series 1 1 1
Projected Value of Shows in Syndication
19
Current(1)
Projected(2)
Dr. Oz 7-seasonsQueen Latifah 6-seasonsLast Resort 5-seasonsMob Doctor 5-seasonsHappy Endings 6-seasons
$117MM$115MM$113MM$102MM
$40MM
Attractive returns with upside potential for shows that prove to be a ‘hit’
Note: 1. Value on an ultimate basis after allocated overhead; based on FY13 ForecastNote: 2. Value on an ultimate basis after allocated overhead; based on current success model
Breaking BadDr. OzRescue MeRules of EngagementCommunity
$78MM$60MM$55MM$37MM$31MM
SHOWS IN SYNDICATION / EXPECTED TO SYNDICATE
ANTICIPATED VALUE TO SPE
U.S. Production – Current Series, Pilots & Development Cost
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
20
FY13Budget/
Frcst
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/
Frcst
Revenue EBIT
Se-ries1
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1,612
$1,579
1,698
$1,739
1,818
$1,839
$2,012
211
12
$MM
$1,614$1,709
$1,830
Se-ries1
0
50
100
150
200
250
300
166
$224
195
$228
211
$275 $276
33
$MM
$198
$214
FX Impact
FX Impact
U.S. Production – Current Series, Pilots & Development Cost
21
EBIT
($ MM)
FY13 FY14 FY15 FY16Budget Q2 Fcst Variance PY MRP MRP Variance PY MRP MRP Variance MRP
Broadcast Network: Scripted Pilots and Series 6 17 11 41 56 15 59 76 17 56 Cable Network: Scripted Pilots and Series 34 68 34 28 37 9 8 34 26 35 First-Run Syndication 16 18 2 18 21 3 23 39 16 40 Non-Scripted 1 1 - 2 2 - 2 2 - 5Development Expense (32) (36) (4) (34) (38) (4) (34) (38) (4) (35)Total Before Embassy Row 25 68 43 55 78 23 58 113 55 101
Embassy Row 4 5 1 5 6 1 7 7 - 8Subtotal 29 73 44 60 84 24 65 120 55 109
Days of Our Lives, Young & The Restless 31 32 1 29 32 3 28 31 3 31 Wheel of Fortune, Jeopardy! 106 119 13 109 112 3 121 124 3 136Total Daytime & Games 137 151 14 138 144 6 149 155 6 167
TOTAL $166 $224 $58 $198 $228 $30 $214 $275 $61 $276
U.S. Production – New Series Investment & Development
Budget/Prior MRP (86)
Variance 6
(74)
(9)
(74)
(10)
Represents ONLY development expense and deficit pilots/series and EXCLUDES profitable series
22
FY13 Frcst FY14 Current FY15 Current FY16 Current
(100)
(90)
(80)
(70)
(60)
(50)
(40)
(30)
(20)
(10)
0
(27)(36) (39) (35)
(36)
(38)(38)
(35)
(17)
(9) (7)(10)
Scripted Pilot/Series Scripted Development Allocated Overhead$MM
($80)
($83) ($84)($80)
U.S. Production – Library and Net Overhead
23
EBIT
($ MM) FY13 FY14 FY15 FY16Budget Q2 Fcst Variance PY MRP MRP Variance PY MRP MRP Variance MRP
U.S. TV Library 106 102 (4) 87 104 17 86 103 17 104All Other Products (3) (5) (2) (3) (4) (1) (5) (3) 2 (4)
Net G&A (20) (19) 1 (18) (22) (4) (19) (23) (4) (23)Group Challenge/(Reserve) 10 (2) (12) 18 - (18) 6 4 (2) -
TOTAL $93 $76 ($17) $84 $78 ($6) $68 $81 $13 $77
0
20
40
60
80
100
120
140
160
180
71 68 74 74 74 74 78
12 14 4 14
2 14 13
30 26
9
15
8
14 15
1 1
3
1
3
1 1
40 40
36
35
36
35 35
28 26
26
24
22
22 21
Int'l TV U.S. TV SPHE Merch/Other U.S. Dist Ad Sales
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/
Frcst
Se-ries1
0
20
40
60
80
100
120
$106$102
$87
$104
$86
$103 $104
24
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/
Frcst
U.S. TV Product Library
$182$175
$152
$163
$145
$160$163
58%59%
57%
64%
59%
64% 64%
Revenue EBIT
$MM $MM
1. Production
2. Distribution & Ad Sales
3. Networks
3 Areas of Discussion
25
• Ongoing competition among premium subscription services (Netflix, Hulu, Amazon) continues to provide outlet for new library film and television product
– Netflix, Hulu and Amazon entering original production space – if successful, may depress demand for off-net/library TV and library features
– Interest in library television by Netflix may be softening in favor of newer product; whether other services will fill the void is undetermined
– MVPDs (Comcast, Verizon) attempting to enter the OTT SVOD space
– Provides competition for Starz, potentially providing leverage in output negotiations
• Top cable networks continue to emphasize original programming and top-level film/TV series acquisitions
– Premium new release movies continue to be the gold standard and the demand for exclusive rights is growing to protect against competition; buyers are mostly interested in series from the 1990s and forward
– Cable-to-cable off-net syndication is a challenge for many shows due to programming concerns (not wanting to take programs associated with competitor) and residuals
– Emerging cable channels provide an outlet for library feature product, although lower pricing reflects narrower reach of these channels compared to larger ones
U.S. Distribution – Market Environment
26
SubscriptionOn-Demand
CableNetworks
• In syndication, stations continue to pay aggressively for top-quality talk shows and comedies
– Strong opportunities for new talk shows, as “the Oprah replacement” has not emerged, with many competitors vying for the spot (Queen Latifah, Katie Couric, Steve Harvey, Ricki Lake, Jeff Probst); trend is expected to continue
– Opportunities continue to introduce new shows and for Dr. Oz ratings to grow; However, ageing demographic is a potential risk for Dr. Oz
– Digital network space continues to develop and offers increased licensing opportunity (e.g., Antenna TV, Bounce TV, Me TV). However, Sony’s product is constrained by legacy residuals structures. SPT seeking guild waivers to allow more product to come to market
U.S. Distribution – Market Environment
27
First-RunSyndication
U.S. Distribution – Strategic Priorities
Pay TV Subscription
Cable TV
• Pursue a pay output extension (2017-19), considering a split slate among buyers if this optimizes pricing
– Maximize fees for feature product in first pay window– Preserve premium quality of pay offering, which preserves features value downstream– Retain control in emerging Internet exploitation or secure enough compensation that SPE
can be indifferent to wider exploitation– Retain flexibility for SPE to pursue key corporate initiatives: SET, UltraViolet, SEN and
Crackle
• Leverage SPT Distribution relationships to find new homes for broken SPT series
• Develop emerging cable channels (e.g., G4, Reelz, NuvoTV) as buyers
– Aggressively pursue small cable buyers as targets for SPE product as larger players move increasingly towards an ‘originals’ strategy and away from off-net/library buys
– Use demographic/niche-targeted sales pitch and creative deal structures
• Push cable networks in the direction of TV Everywhere, which supports the lucrative pay cable model, and away from open Internet dot-coms
– Limit parameters for ancillary on-demand exploitation to maintain the proven, primary value of linear television
28
Syndication
• Develop consistent flow of first-run product with top talent: Queen Latifah (avail FY14)
• Sell all off-net syndication series: Rules of Engagement (avail FY13), Community (linear avail FY14), Happy Endings (avail FY16)
• Increase feature library sales despite the ‘flat’ market– Strategic use of driver inventory to leverage broad package sales
– Bulk buys to drive low rated product
– Hyper-targeted offerings with premium pricing to take advantage of fragmented market and multiple buyers
– Aggressive stacking of nonexclusive buyers in the SVOD, syndication/Dot.2 and emerging cable channel spaces
U.S. Distribution – Strategic Priorities
29
Library
• Leverage SVOD licensing and strategic product planning for U.S. channel carriage– Deploy leverage of direct-to-MSO SVOD licensing towards carriage of SPT
Channels, both in deal timing and in avoiding a duplicative product mix
– Integrated sales planning strategy with US Distribution
– Pursue rights carve-outs in pay negotiations
U.S. Channels
U.S. Distribution – Financial Summary
Revenue Profit Contribution EBIT
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
• Revenue and corresponding profit contribution volatility is largely driven by release timing, size of theatrical slate and timing of off-net syndication avails (e.g., Rules of Engagement, Community, Happy Endings)
30
PayDBO $1.20B $1.29B $1.32B $1.19B $1.89B $1.13B $1.5B
Se-ries
1
0
5
10
15
20
25
30
35
40
$34 $34$36$36
$28 $28$25
$MM
Se-ries
1
0
100
200
300
400
500
600
700
800 $749 $778
$756 $778 $774
$671 $632
$MM
Se-ries
1
0
50
100
150
200
250
300
350
400
450
$332 $352
$331 $323
$344
$298 $281
$MM
U.S. Distribution – Financial Summary by Division
31
GROSS REVENUE($MM) FY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRP2011 to 2015 Major Releases (Pay) 173 191 18 188 142 (46) 202 117 (85) 154 2010 to 2014 Major Releases (Free) 131 126 (5) 111 86 (25) 129 110 (19) 76 Other Current 70 72 2 51 70 19 78 68 (10) 44 Library 61 64 3 67 67 0 73 73 - 73 Total MPG 435 453 18 417 365 (52) 482 368 (114) 347 - - - Total WW Acquisitions 34 40 5 32 46 14 30 33 3 29 - - - Starz Bonus 48 48 - 47 45 (2) 42 40 (2) 40 First Run and off-net Syndication 190 195 6 221 283 62 182 191 9 178 Library 42 42 - 38 38 - 38 38 - 38 Total TV 279 285 6 307 367 60 262 270 8 256 Total $749 $778 $29 $756 $778 $22 $774 $671 ($103) $632
PROFIT CONTRIBUTION / EBIT($MM) FY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRPMPG 218 229 11 213 189 (24) 244 187 (57) 179 WW Acquisitions 14 16 2 13 19 6 12 13 1 11 TV 66 73 7 71 84 13 60 73 13 66 Starz Bonus 48 48 - 47 45 (2) 42 40 (2) 40 Total 345 366 21 344 337 (7) 358 313 (45) 296 G&A (14) (14) - (14) (14) (1) (14) (15) (1) (15)
Profit Contribution $332 $352 $21 $331 $323 ($7) $344 $298 ($46) $281- - Transfer to Product Owners (298) (318) (21) (295) (287) 8 (316) (270) 46 (256) - - EBIT $34 $34 $0 $36 $36 $0 $28 $28 $0 $25
* Prior year restated for Amazon/SVOD transfer
U.S. Distribution – Library Gross Revenue by Division
REVENUE
32
Series10
20
40
60
80
100
120
42 42 38 38 38 38 38
61 64 67 6773 73 73
TV MPG($MM)
Series10
20
40
60
80
100
120
42 42 38 38 38 38 38
61 64 67 6773 73 73
TV MPG($MM)
$103 $106 $105 $105$111 $111 $111
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
International Distribution – Market Environment
• Traditional TV business is still struggling to emerge from the global financial crisis. However, continued demand for strong network TV product creates opportunities
– Allows us to sell the individual product for more (e.g., Last Resort and Mob Doctor each expected to generate $2.3MM per episode in Season 1)
– Enables us to make better deals in big markets (e.g., Germany/RTL, France/TF1, Canada/Shaw) across our television and feature portfolio
• New SVOD services create opportunities– Drive incremental product value across key markets:
o Netflix – Canada, Latin America, UK, Scandinavia, France, Italy, Germany, Australia
o Amazon/LOVEFiLM – UK, France, Italy, Spain, Germany, Scandinavia, China, Australia, Japan, Canada, India
o Hulu – select markets in Asia and EMEA
– SVOD is creating a stronger global platform for serialized cable dramas (e.g., Breaking Bad and Damages on Netflix)
• Local productions are poised for growth– A fully integrated format sales business enables us to better capture
opportunities across local and U.S. production
Multiplying our options to lessen our dependence on the traditional marketplace
33
Strong TVSeries Demand
SVOD
InternationalFormats
• Sustained delivery of network dramas will enable revenues for TV product to grow to $541MM by FYE15 and amplify feature film revenue
– Continue to work closely with SPT U.S. Production to secure and sustain strategically important network dramas
– Broaden scope of broadcaster relationships to explore English language, European content, co-production opportunities
– Look for key series acquisition opportunities (e.g. House of Cards)
International Distribution – Strategic Priorities
Exploit market trends and broadcaster relationships to maximize content value
Leverage slate of network
dramas
Capitalize on new market
entrants to help build future
revenue pipeline
• Take full advantage of opportunities with emerging SVOD players• Work with a wide range of partners to develop deal structure options to help them maximize
value of their offerings and compete with traditional businesses
• Invest in International Distribution and support group resources (e.g. marketing, research, etc.)
• Fully integrate format sales business
• Consolidate sales administration functions
• Continue to enhance sales and negotiation strengths by further building product-focused expertise
Develop organization
• Close long-term deals in key markets over the plan
• Ensure we keep rights to key revenue-driving feature film franchises
34
Build stronger relationships in
key markets
• Focus on select markets to expand SPT’s presence and better capitalize on opportunities (Scandinavia, South Africa)
• Deepen relationship with clients to ensure success through partnering on launches, promotions
• Leverage portfolio strength (e.g. hit movies, hit TV, formats)
International Distribution – Building a Secure Deal Pipeline
Closing key deals in top markets will help secure new revenue over the plan
35
Yellow = key deals expected to seek approval for within the next 12 months
CLIENT(DEAL EXPIRY)
LAST U.S. SLATEINCLUDES
CLIENT(DEAL EXPIRY)
LAST U.S. SLATEINCLUDES
CLIENT(DEAL EXPIRY)
LAST U.S. SLATEINCLUDES
UKBSKYB*(Jun-15)
Mid 2014LOVEFILM(May-15)
Mid 2013NETFLIX(Jan-15)
Mid 2011
FRANCECANAL Plus
(Mar-13)Mid 2012
TPS(Mar-13)
Mid 2011TF1
(Dec-14)2012
GERMANYSKY DEUTSCHLAND
(Sep-16)Mid 2015
RTL (Dec-2016)
2016
ITALYSKY ITALIA
(Dec-16)2015
SKY ITALIA(Dec-15)
2012
SPAINSOGECABLE
(Dec-13)2012
CINEMANIA(Dec-13)
2011
A3(Feb-14)FORTA
(Dec-13)TVE
(Dec-13)
2011
CANADA
TMN / SUPER ECRAN(Mar-13)
MOVIE CENTRAL(Mar-16)
Mid 2012
Mid 2015
NETFLIX(Sep-12)SHAW(2012)
2012
AUSTRALIAPMP SHOWTIME
(Dec-13)2012
NINE(Jun-13)
Mid 2010
JAPAN
WOWOW(Mar-15)
STAR CHANNEL(Jun-15)
Mid 2014
KOREAOCN
(Feb-15)Mid 2014
CJ MEDIA (Sep-16)
2014
BRAZILHBO OLE(Mar-18)
Mid 2017NETFLIX (Aug-15)
2013GLOBO(Jul-13)
Mid 2010
MEXICOHBO OLE(Mar-18)
Mid 2017NETFLIX (Aug-15)
2013TELEVISA(Mar-13)
2011
* Deal subject to contract
None
None
None
None
U.S. FEATURE SLATE CURRENT COMMITMENTS FOR MAJOR TERRITORIES
FIRST PAY WINDOW SECOND PAY WINDOW FIRST FREE TV WINDOW
Amazon/Mediaset/Sky
None
Amazon/Lovefilm
Se-ries
1
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1,592
$1,630
1,602
$ 1,712
1,653
$1,772
$1,895
842.1
43.4000000000001
$MM
Se-ries
1
0
100
200
300
400
500
600
700
800
600
$634
598
$653
612
$662 $685
3 18 18
$MM
Se-ries
1
(60)
(50)
(40)
(30)
(20)
(10)
0 ($45)($45)
(49)
($50)
(51)
($52) ($54)
-1 -1
$MM
International Distribution – Financial Summary
Revenue Profit Contribution EBIT
Driving strong growth over the plan – revenue reaches $1.9B in FY16; Profit contribution approaches $700MM
36
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
FX ImpactFX Impact FX Impact
• Unfavorable currency movement impacts revenue growth, with continued volatility posing additional risk (esp. Euro)
$1,600
$1,644
$1,696
$603
$616 $630
($50)($52
)
International Distribution – Financial Summary by Division
Revenues from TV product to exceed $700MM over the plan
37
($MM) GROSS REVENUEFY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRPMPG Current 580 590 10 585 598 13 580 577 (3) 605 MPG Flow 180 185 5 175 187 12 182 191 9 203 MPG Library 180 185 5 180 190 10 180 195 15 200 Total MPG 940 960 20 940 975 35 942 963 21 1,008
WW Acquisitions 135 160 25 170 170 - 175 175 - 180
TV Current 386 364 (22) 396 420 24 438 480 42 545 TV Library 70 70 - 75 75 - 75 75 - 80 TV Int'l Production 60 62 2 55 59 4 60 68 8 73 TV Int'l Acquired/Other 9 14 5 9 14 5 6 11 5 9 Total TV 525 510 (15) 534 567 33 579 634 55 707 Total $1,600 $1,630 $30 $1,644 $1,712 $68 $1,696 $1,772 $76 $1,895
Total Excl Digital Trans. $1,500 $1,539 $39 $1,538 $1,612 $73 $1,579 $1,658 $78 $1,766
PROFIT CONTRIBUTION / EBITFY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRPMPG 502 511 9 499 517 18 501 510 9 531 WW Acquisitions 59 71 12 76 76 (0) 79 78 (1) 80 TV 91 106 15 93 117 24 104 132 28 131 TOTAL 652 688 36 669 710 41 684 720 36 742 G&A (49) (54) (5) (53) (57) (4) (54) (58) (4) (57) Profit Contribution $603 $634 $31 $616 $653 $37 $630 $662 $32 $685
Transfer to Product Owners (647) (679) (32) (665) (703) (37) (681) (714) (32) (739)
EBIT ($45) ($45) $0 ($50) ($50) $0 ($52) ($52) $0 ($54)
* Prior year restated for Format Sales
70 70 75 75 75 75 80
180 185 180 190 180 195 200
0
50
100
150
200
250
300TV MPG
($MM)
International Distribution – Library Gross Revenue
38
$250
FY13Bdgt/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
$255 $255$265
$255$270
$280
Revenue
Distribution Sales – FY14 Slate
39
The FY14 slate will generate over $560MM in global TV sales
Based on film slate as of 9/4
(000)Title Pay Free IntlAFTER EARTH 15,440 20,740 69,500 END OF THE WORLD 9,270 11,000 10,920 GROWN UPS 2 15,440 19,850 41,530 CAPTAIN PHILLIPS 13,570 8,950 43,020 WHITE HOUSE DOWN 15,440 18,370 69,340 AMERICAN BS 9,060 3,640 NRTOTAL $78,220 $82,550 $234,310
US
(000)Title Pay Free IntlMORTAL INSTRUMENTS 10,970 5,480 NRNO GOOD DEED 7,730 3,620 9,900 ABOUT LAST NIGHT 9,120 3,640 8,200 TOTAL $27,820 $12,740 $18,100
US
(000)Title Pay Free IntlTBD#1-2014 600 380 3,550 LOVE IS ALL YOU NEED 420 130 NRTBD#3-2014 304 100 600 TBD#4-2014 1,000 230 400 TBD#5-2014 304 100 600 TBD#6-2014 600 380 3,550 TBD#7-2014 NR 450 600 TBD#8-2014 100 100 NRTBD#9-2014 600 190 600 TBD#10-2014 2,120 300 NRTBD#11-2014 380 150 70 TBD#12-2014 190 100 NRTBD#13-2014 1,900 200 2,100 TBD#14-2014 190 100 NRTBD#15-2014 1,000 230 NRTBD#16-2014 800 230 400 TBD#17-2014 380 130 NRTBD#18-2014 190 100 NRTBD#19-2014 380 150 70 TOTAL $11,458 $3,750 $12,540
US
(000)Title Pay Free IntlSMURFS 2 15,440 6,380 58,090 TOTAL $15,440 $6,380 $58,090
US
U.S. Ad Sales – Market Environment
40
• Spending remains consistent with last year’s strong upfront • Broadcast Prime up +1.6% to $9.2B; Cable up +4.3% to $9.7B (stronger than broadcast for 2nd
year in a row); Syndication flat at $2.5B• Pricing in upfront still on the rise (all in the 6-9% range for broadcast nets, CBS recorded top pricing
gains)• Sell-out levels were higher in upfront this year (~80% vs. mid-70s last year) which could lead to
strong scatter market, but uncertain economy could have negative effect. Outlook still unclear• Higher sell-out in Network Prime may result in strong demand for syndication’s prime replacement• Auto / Telecom / QSR / Insurance strong upfront spenders; studio spending down• Syndication market un-even - strong performers had strong demand, but excess inventory in off-
nets has deflated pricing for some.• New talk shows sold well, with Katie commanding CPMs in line with other highly-rated daytime
programs (good sign for Queen Latifah)
• Video streams and dollars spent continue to grow year-over-year• Projected spending for online video advertising $3B, a +55% increase over last year• As digital and traditional media converge, TV buyers play an increased role in placement and
buying of digital video - internet companies not taking huge chunk of TV money, but will take some• Market still dominated by portals, YouTube, Hulu, Yahoo….
– But video streams far exceed ad impressions-deflating pricing: YouTube 44% of video streams, 13% of ad inventory
• Strong growth in mobile/OTT inventory – agencies starting to shy away from ad networks, doing more publisher-direct deals
• Men watching 2.5x more online video then women• Cross platform measurement is creating new revenue opportunities but favors big broadcaster • Heightened demand for demographic measurement & targeting to help advertisers make sense of
the digital market
Television
Digital
DAWN—TAKE SOME WORDS OUT?
Strategic Priorities
• Continue to look for third party sales opportunities either through representation or acquisition (in the past opportunities have been few and tied to distribution) - another 52 movies from Screenscape
• Drive additional revenue for first run through pricing increases and advertiser integrations
– Renew incumbent integration clients such as Walgreens, Pedigree, Weight Watchers and P&G for Dr. Oz Show
– Aggressively pursue limited amount of integration partners including Cover Girl, Target, Frito-Lay and possibly an automotive for Queen Latifah Show in launch season
• Go for share in TV market upfront
– Expand current list advertisers for 30s/10s
– Sell Queen Latifah Show as the next first-run must have show in television
– Establish sell out levels of 70% or higher in upfront and sell remaining inventory at premium CPMs
• Expand FEARnet advertisers with Digital Ad Insertion (DAI) on the VOD platform. Have already secured 8 test partners
• Maintain demand for Seinfeld by using 360 approach (TV, Crackle) - keeping the brand fresh
• Strategize with distribution to pursue incremental opportunities for Dot Two Networks/ Court Block etc.
41
Television
Strategic Priorities
42
• Dedicated Crackle team driving revenue from $45MM in FY14 to $98MM in FY16
– Transform ad sales organization to a single focus structure
– Scale to drive and deliver revenue on par with major competitors
• Establish Crackle as a new entry and strong member at the Digital New Front
• Focus on closing more publisher-direct deals – less reliance on ad networks; higher CPMs
• Dynamic ad integration for PlayStation Network and devices (more video options to yield higher revenue; $25MM in FY14 to $60MM in FY16)
– Lead RFP process (FreeWheel/ Double click); work with CSX out of Tokyo
– Establish one standardized technology solution to support all properties
• Develop and pioneer high-value rich media placements on connected devices (PlayStation and Crackle)
• Dedicated research initiatives exploring avenues including cross-platform measurement (comScore or Nielsen) and demo targeting
• Expand international operations shared services opportunities in Latam (PlayStation, SPTI)
Digital
Focus on digital as significant growth area. Position Crackle, PlayStation in the market with the scale and opportunity of marketplace leaders like Hulu and Xbox
Se-ries1
(12)
(10)
(8)
(6)
(4)
(2)
0
($11)
($10)
($8) ($8)
($4)
($5)
($2)
Se-ries
1
0
20
40
60
80
100
120
140
$32 $34
$54$61
$67
$103
$128
$MM
Se-ries1
0
50
100
150
200
250
300
350
400
$192$184
$280$260
$339$330
$392
U.S. Ad Sales – Financial Summary
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
43
FY13Budget/Frcst
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/Frcst
FY14Prior/MRP
FY15Prior/MRP
FY16MRP
FY13Budget/Frcst
Revenue Profit Contribution EBIT
$MM $MM
U.S. Ad Sales – Financial Summary
44
($ MM) FY13 FY14 FY15 FY16Budget Q2 Fcst Var vs Q1 PY MRP MRP Variance PY MRP MRP Variance MRP
Gross RevenueKING OF QUEENS 17 17 - 16 15 (1) 14 15 1 14 TIL DEATH 5 4 (1) 5 5 - 5 2 (3) - RULES OF ENGAGEMENT 13 13 - 32 25 (7) 27 22 (5) 19 COMMUNITY - - - 13 7 (6) 24 14 (10) 12 HAPPY ENDINGS - - - - - - - - - 13 SEINFELD 37 31 (6) 34 31 (3) 30 28 (2) 26 DR OZ 60 53 (7) 62 55 (7) 67 56 (11) 55 NATE BERKUS 7 6 (1) - - - - - - - QUEEN LATIFAH - - - 20 24 4 43 54 11 60 TBD SYNDICATED SERIES - - - - - - 8 - (8) 8 WHEEL OF FORTUNE, JEOPARDY! 13 14 1 14 14 - 15 15 - 15 RIGHT THIS MINUTE - - - 13 - (13) - - - - All Other (1) 2 3 - 3 3 - - - 1 Subtotal 151 140 (11) 209 179 (30) 233 206 (27) 223
Playstation 12 15 3 25 25 - 45 45 - 60 Fearnet 3 3 - 3 5 2 3 5 2 6 Other Third Party Distribution 8 8 - 11 6 (5) 13 7 (6) 5
Crackle 18 18 - 32 45 13 45 67 22 98
Total Gross Revenue $192 $184 ($8) $280 $260 ($20) $339 $330 ($9) $392
Costs Related to Revenue (145) (135) 10 (209) (183) 26 (255) (210) 45 (246) Ad Sales Overhead (15) (15) - (17) (16) 1 (17) (17) - (18)
Profit Contribution $32 $34 $2 $54 $61 $7 $67 $103 $36 $128
Transfer to Product Owner (43) (44) (1) (62) (69) (7) (71) (108) (37) (130)
SPTAS EBIT ($11) ($10) $1 ($8) ($8) $0 ($4) ($5) ($1) ($2)
1. Production
2. Distribution & Ad Sales
3. Networks
3 Areas of Discussion
45
Networks – Market Environment
46
• FX movements have caused significant negative plan-to-plan variances, an increasingly material impact on Networks projections
– $80-90MM negative EBIT variances across each of FY14 and FY15
• Macro economy is worse than anticipated in prior MRP– Subscriber revenue continues to be stable but ad revenues are much softer
than anticipated– India’s core business is strong; IPL is resetting its level– Latam has pockets of strength and weakness; Europe is relatively flat– Asia/Japan - Cable/satellite markets show slow growth– U.S. - carriage continues to be challenging but cross-divisional teamwork
creates opportunities
• Cable/Satellite operators are looking to reduce programming costs; need to utilize OTT and digital opportunities to diversify revenue streams
• Securing programming continues to be a challenge due to rising cost considerations though our competitors are facing similar challenges
• Numerous expansion opportunities remain to acquire or launch new networks with significant returns
FX
GlobalEconomies
Content
Growth
Networks – A Continuation of Strong Sustainable Growth
47
• Networks strong year-on-year earnings and revenue growth is forecast to continue– Breaking through the $300MM, $400MM and $500MM EBIT milestones in FY’14, ‘15 and ’16,
respectively
– EBIT CAGR of 23% across the plan
– Revenue CAGR growth of 19%, breaking the $1.5B, $2B and $2.5B barriers within the plan
• Margin pressure continues but expected to rise from 17% to 19% across the plan– FX movements have depressed the total portfolio margins in FY13 as the portfolio has a much
larger proportion of Costs denominated in USD compared to the USD proportion of total Revenue
– MSM India is forecast to have margin growth from 21% to 25% across the plan
– Rising content costs, increased broadcasting costs from HD roll outs and the investment in ad sales and affiliate infrastructure keeps margins in check
• Continue disciplined annual investment in new operations to underpin future earnings growth
– Nineteen investments from prior years are expected to become profitable in the next 3 years
Networks – Strategic Priorities
48
• Increase investment in Crackle U.S. advertising and technical
infrastructure
• Focus next 18 months on maximizing efficiencies in existing
operations
• Continue to secure programming supply through investment in
original programming (Hannibal).
• Expand SPTL Asia facility to service EMEA channels
• Rationalize GSN’s linear and digital businesses
• Complete & execute an Indian regional opportunity (Maa TV)
• Continue to diversify portfolio to reduce dependency on MSM and
GSN EBIT
• Selectively continue to launch channels in new and existing
territories
ExistingOperations
NewOperations
Networks – Growth Opportunities
49
• Italy Movie Channel• True Movies UK acquisition• AXN Movies Central Europe• SET Germany
• India Regional channels acquisition (Maa TV)• Korea movie channel• Asia Dramatic Channel• Australia channel
• Crackle Latin America Women’s channels
• TV Asia – U.S. Hindi general entertainment channel
Europe
Asia/Australia
Latin America
U.S.
FY13Frcst
FY14 Current
FY15 Current
FY16 Current
-
500
1,000
1,500
2,000
2,500
3,000
$MM
FY13Frcst
FY14 Current
FY15 Current
FY16 Current
-
100
200
300
400
500
600 $MM
Networks – Financial Summary – Year-over-Year
19% CAGR
23%
CAGR
$1,536
$1,961
$2,258
$2,580
$268
$328
$410
$503
Note: EBIT excludes 3Net EBIT of ($6MM), ($5MM), ($4MM) and ($2MM) in FY13-FY16, respectively.
Revenue EBIT
50
Se-ries1
0
100
200
300
400
500
600
281 308
380
26
80
94
$MM
Networks – Financial Summary versus Budget/PY MRP
Revenue EBIT
19% CAGR
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
Note: EBIT excludes 3Net EBIT of ($6MM), ($5MM), ($4MM) and ($2MM) in FY13-FY16, respectively. 51
$307
$268
23%
CAGR
FY13Budget/Frcst
FY14Prior/Current
FY15Prior/Current
FY16Current
$388
$328
$474
$410
$503
Se-ries1
0
500
1,000
1,500
2,000
2,500
3,000
1,6111,782
1,989
79
225
255
$MMFX Impact FX Impact
$2,580
$2,258
$1,961
$1,536
$1,690
$2,007
$2,244
Networks – Financial Summary
52
Revenue($MM) FY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRPInternational
EMEA 229 209 (20) 285 238 (47) 311 265 (46) 291 Latin America 216 197 (19) 285 236 (49) 329 276 (53) 316 Asia (excl. MSM & Ch 8) 236 214 (22) 261 231 (30) 280 248 (32) 258 India 611 526 (85) 691 657 (34) 774 750 (24) 844
New Business Fund (FY13/beyond) 9 14 5 35 144 109 54 198 144 265
Total International 1,301 1,160 (141) 1,557 1,506 (51) 1,748 1,737 (11) 1,974
U.S.GSN 339 334 (5) 368 372 4 393 407 14 453 Crackle 31 28 (3) 46 56 10 60 79 19 113 Sony Movie Channel, CineSony 14 8 (6) 29 20 (9) 34 25 (9) 28 Games 5 5 - 7 7 - 9 10 1 12
Total U.S. 389 375 (14) 450 455 5 496 521 25 606
Home Offi ce/Other - 1 1 - - - - - - -
Total $1,690 $1,536 ($154) $2,007 $1,961 ($46) $2,244 $2,258 $14 $2,580
EBITFY13 FY14 FY15 FY16
Budget Q2 FCST Variance PY MRP MRP Variance PY MRP MRP Variance MRPInternational
EMEA 29 21 (8) 67 38 (29) 83 56 (27) 71 Latin America 69 58 (11) 103 60 (43) 126 80 (46) 101 Asia (excl. MSM & Ch 8) 49 46 (3) 61 51 (10) 74 64 (10) 70 India 120 109 (11) 120 146 26 141 172 31 205
New Business Fund (FY13/beyond) (11) (4) 7 (51) (24) 27 (66) (46) 20 (51)
Total International 256 230 (26) 300 271 (29) 358 326 (32) 396
U.S. GSN 65 62 (3) 114 82 (32) 135 112 (23) 127 Crackle (2) (4) (2) 4 (1) (5) 9 3 (6) 10 SMC, CineSony, FEARnet, Games, Hollywood Suite (9) (11) (2) 2 (2) (4) 7 4 (3) 8
Total U.S. 54 47 (7) 120 79 (41) 151 119 (32) 145
Home Offi ce (31) (29) 2 (32) (32) - (35) (35) - (38)
General Challenge 18 20 2 - 10 10 - - - MSM India Challenge 10 - (10) - - - - - -
Total $307 $268 ($39) $388 $328 ($60) $474 $410 ($64) $503
3NET (8) (6) 2 (2) (5) (3) 2 (4) (6) (2)
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Year vs. Year EBIT
($ MM) FY13 to FY14
FY14 to FY15
FY15 to FY16
Prior Year EBIT before Monetization $553 $625 $765
Breaking Bad and Damages final season (37) (5) - Last Resort SVOD avail 23 - - Franklin and Bash off-net avail - 13 (11) Mob Doctor 20 6 - Unforgettable off-net ultimate increase - 15 2 Queen Latifah 7 18 4 Growth in Networks (excl. MSM & GSN) 36 61 52 Growth in MSM networks 37 26 33 Growth in GSN (incl. reduction in PPA) 20 29 16 Reduction in general Networks challenge (included in channels EBIT) (10) (10) - Increase in Networks new business fund (20) (22) (5) Int'l Production - increased commissions 7 15 10 Other (11) (6) (7)
Total Change 72 140 94
MRP EBIT $625 $765 $859
54
Variance to Budget / Prior MRP EBIT
($ MM) FY13 FY14 FY15
Budget / Prior MRP EBIT before Monetization $553 $715 $815
Increased Int'l TV and SPHE sales of current U.S. series 37 19 31 Networks FX (26) (80) (94) Challenged Int'l ad market (variance excludes MSM) (10) (32) (23) MSM India 3 55 66 GSN (3) (32) (24) Reduce Networks new business fund - 27 20 Fewer episodes of Unforgettable and revised economics - (12) (7) Mob Doctor early U.S. off-net avail 23 29 Timing of Community off-net profit with FY12 and revised economics (25) (12) Assumed early U.S. off-net avail & better int'l TV sales for Last Resort /HE - 32 19 Less commissions at Toro Productions JV (3) - - Less commissions in Int'l Production business- (global crisis and aggressive prior MRP assumptions) - (53) (59) All Other 2 (12) 4
Total - (90) (50)
FY13 Forecast/MRP $553 $625 $765
Summary of EBIT Challenges
55
($ MM) FY13 FY14 FY15 FY16
US Distribution - 5 3 - Int'l Distribution - 4 4 - US Production & Ad Sales (2) - 4 - Networks 20 10 - -
Total $18 $19 $11 $0
SPT Net Cash Flow
56
($ MM) Cash FlowFY13 FY14 FY15 FY16
Budget Q2 Fcst Variance PY MRP MRP Variance PY MRP MRP Variance MRPDistribution* 2,020 2,021 1 2,145 2,147 2 2,173 2,111 (62) 2,319 Production & Ad Sales (396) (435) (39) (409) (484) (75) (396) (428) (32) (464) Networks 171 140 (31) 227 168 (59) 307 245 (62) 303
Sub-Total 1,795 $1,726 ($69) $1,963 $1,831 ($132) $2,084 $1,928 ($156) $2,158
Networks - Uncommitted Investment Funds (50) (5) 45 (83) (87) (4) (100) (90) 10 (98) Int'l Production - Uncommitted Investment Funds (16) (16) - (30) (50) (20) (30) (50) (20) (50) Total Before Monetization and Special Items 1,729 $1,705 ($24) $1,850 $1,694 ($156) $1,954 $1,788 ($166) $2,010
Shine Monetization 11 11 - IPL Installment (delayed until April 2013) (58) - 58 - (58) (58) Accelerated A/R collections in FY13/FY14 - 75 75 38 - (38) (37) Maa - Operational/Purchase Price - (108) (108) - 2 2 - 2 2 7 MSM Buy Up (144) (145) (1) - (56) (56) - (56) (56) (56) GSN Put Option Payment Incl. Minority Dividend - (300) (300)
Total 1,538 1,538 - 1,850 1,282 (568) 1,992 1,734 (258) 1,924
3 Net (8) (3) 5 (2) (5) (3) - (3) (3) (3)
* For comparative & presentation purposes, Budget has been restated by $11m to include AMAZON
57
FY13 Risks & Opportunities
($MMs) EBIT Cash
NBC participation in Community Hulu deal (5) - Venezuela currency restrictions (5) (5) Weaker than expected ad sales market (10) (10) Challenge (-20 Networks, +2 reserve U.S. Production) (18) - Int'l Distribution increased revenue ($30MM-$55MM revenue) 15 5 Potential writedown of Teleset investment, assuming FY13 close (4) - DTV put of 18% GSN equity - -TBDFX Network dispute with Dish Network -TBD -TBDTBD
Total TBD TBD
