SPT Business Overview

November 14, 2012

DRAFT – FOR DISCUSSION ONLY

1

Sony Pictures Television

Sony Pictures TelevisionSony Pictures Television

ProductionProduction NetworksNetworksDistributionDistribution

• Development, acquisition, and production of television programs for broadcast, basic cable, and premium cable networks

• Program genres include scripted comedies and dramas and non-scripted reality, talk, and game shows

• Sale of SPE’s film and television content to television and digital customers

• Customers include U.S. and international broadcast and cable networks, U.S. local television stations, and digital services, e.g., Netflix

• Management and distribution of branded networks and channels worldwide

• International brands include AXN, SET, and Animax

Business Overview

2

Television Business is Growing

Se-ries1

0

100

200

300

400

500

600

700

800

900

11

Monetization$MM

FY13Frcst

FY14Current

FY15 Current

FY16 Current

3

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 FY15

$564

$625

$765

$859

553

SPT EBIT continues to grow at a rate of 15% year-over-year

FYE13Gross

FYE13Net

FYE16Gross

FYE16Net

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$5,217

$3,648

$6,972

$5,389

Sony Pictures Television

Revenue and EBIT – Today and Tomorrow

Revenue EBIT($MM) ($MM)

4FYE13 FYE16 $-

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$553

$859

Gross Revenue Net revenue EBIT($MM) FYE13 FYE16 FYE13 FYE16 FYE13 FYE16

U.S. Distribution 778 632 48 40 34 25 Int'l Distribution 1,630 1,895 9 5 (45) (54) Int'l Production 233 513 294 573 6 34 U.S. Production & Ad Sales 1,058 1,450 1,761 2,191 290 351 Networks 1,518 2,482 1,536 2,580 268 503 Total 5,217$ 6,972$ 3,648$ 5,389$ 553$ 859$

SPT Organization Overview

5

Steve MoskoPresident, Sony

Pictures Television

David MumfordEVP, Planning & Research

Andy KaplanPresident, Worldwide

Networks

John WeiserPresident, Distribution

Michael DaviesPresident, Production

Corii BergSr. EVP, Production

Business Affairs

Harry FriedmanExecutive Producer

Zach Van AmburgPresident, Programming

Jamie ErlichtPresident, Programming

Jeff FrostEVP, Business

Affairs

Cheryl LynchSVP, Business

Affairs

Keith LeGoyPresident, Distribution

Amy CarneyPresident, Ad Sales

Chris ElwellEVP, Distribution Business

Operations

Andrea WongPresident, Int’l Production

Paula AskanasEVP, SPT Communications

Sheraton KalouriaEVP and Chief Marketing

Officer

Chris Van AmburgSVP, U.S. Marketing

Susan LawU.S. Ad Sales

Marketing

OpenSVP, Media & Talent

Relations

OpenSVP. International

Marketing

U.S. Production

6

U.S. Production: Forecast

Strong and Consistent Earnings Growth

• Growth is driven by a steady pipeline of programming sold to SVOD and Off-net syndication: Last Resort, Happy Endings, Justified

• Continue to grow international revenue through exploring co-production opportunities and maximizing tax credits

MRP AssumptionsU.S. Production Current Series, Pilots & Development Cost ($MM)

FY13 FY14 FY15 FY16 -

500

1,000

1,500

2,000

150

170

190

210

230

250

270

290

$1,579 $1,739 $1,839

$2,012 $224 $228

$275 $276

Revenue EBIT($MM) ($MM)

7

U.S. Production: Challenges and Opportunities

8

• Continued investment in A-list writers, directors and producers for future drama/comedy/unscripted development

• Develop series with broad international appeal with globally marketable talent to sell in the US and abroad

• International co-production partnerships

• Continue to be on the forefront of the burgeoning subscription VOD market (Netflix, DirecTV) to sell and develop series

• Production cost control and reduction efforts continue on all programs

• Expand our prime time broadcast and cable reality slate

Opportunities

• Continued network reliance on self produced shows

• Declines in Broadcast and Cable ratings

• Broadcast station groups produce own content to save costs and control ad inventory

Challenges

U.S. Production: Organization Overview

9

Steve MoskoPresident, Sony

Pictures Television

Jamie ErlichtPresident, U.S. Programming

Zack Van AmburgPresident, U.S. Programming

Holly JacobsEVP, U.S. Reality &

Syndication Programming

Suzanne Patmore GibbsEVP, U.S. Drama

Development

Glenn AdilmanEVP, U.S. Comedy &

Animation

Dawn SteinbergEVP, U.S. Talent & Casting

Helen VernoEVP, U.S. MOWs / Minis

Steve KentSr. EVP, U.S. Format

Production

Kim RozenfeldEVP, U.S. Current

Programming

Ed LammiEVP, U.S. Production

U.S. Production: Opportunities for Improvement

• TBD

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Ad Sales

11

Ad Sales: Forecast

• Drive additional revenue for first run through pricing increases and advertiser integrations

• Increase share in TV market upfront

• Digital ad sales growth (Crackle, PlayStation)

• Expanded list of advertisers for 30s/10s

• Sell out levels of 70% or higher in upfront and sell remaining inventory at premium CPMs

MRP AssumptionsU.S. Production & Ad Sales Revenue and Profit Contribution ($MM)

FY13 FY14 FY15 FY16 -

50

100

150

200

250

300

350

400

450

-

20

40

60

80

100

120

140

$184 $260

$330 $392

$34

$61

$103

$128

Revenue EBIT($MM) ($MM)

12

U.S. Ad Sales: Challenges and Opportunities

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• Diffuse volatility in TV ad revenue market by growing a strong digital base

• Continue to drive additional revenue for first run through advertiser integrations

• Expand current base of advertisers for :30s and :10 to off-nets

• Develop emerging Cable Networks business

• Find new 3rd party representation opportunities

• Continue to support cable/network properties through Branded Entertainment

Opportunities

• Year-over-year growth in TV ad revenue is limited by available shows

• Opportunities for 3rd party ad sales representation in TV are declining

Challenges

U.S. Ad Sales: Organization Overview

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Steve MoskoPresident, Sony

Pictures Television

Stuart ZimmermanEVP, Ad Sales

Richard BurrisEVP, Strategic Planning &

Analysis

Chris KiriakatisSVP, Digital Ad Sales

David MumfordEVP, Planning & Research

Amy CarneyPresident, U.S. Ad

Sales

Travis HoweSVP, Digital Ad Sales

U.S. Ad Sales: Opportunities for Improvement

• TBD

15

International Production

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International Production: Forecast

• Moderate organic growth from existing operating companies is supplemented by EBIT contributions from recent acquisitions Left Bank and Silver River

• Inclusion of a hit format starting in FY15

• Included $50MM annual investment fund for FY14-FY16

MRP Assumptions

Int’l Production Revenue and EBIT ($MM)

FY13 FY14 FY15 FY16 -

100

200

300

400

500

600

700

-

5

10

15

20

25

30

35

40

$294

$433 $530 $573

$6

$13

$28

$34

Revenue EBIT($MM) ($MM)

• EBIT excludes FY13 monetization of $11MM

17

International Production: Challenges and Opportunities

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• Continue to exploit Millionaire and develop a stable base of other successful formats

• Make more focused and sustained investment in development executives, producers, production companies, and new content especially in the UK

• Foster a more creative culture to develop intellectual property by: − Realigning the organization, including a

new President and a creative head

− Combining the print sales and format sales teams to better serve our buyers

− Creating a strategically centralized development fund

− Implementing a competitive incentive plan

• Simplify admin and operational processes

• Opportunities for local production in emerging markets

Opportunities

• Competitive marketplace

• Challenging economic climate in key markets

Challenges

International Production: Organization Overview

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Steve MoskoPresident, Sony

Pictures Television

Wayne GarvieChief Creative Officer

Donna CunninghamEVP Operations

Mary ChanVP Production – Asia

Nathalie CivraisSVP Production – France

Andrea WongPresident, Int’l

Production

Astrid QuentillSVP & MD – Germany

OpenSVP & GM – Latin America

/ U.S. Hispanic

Maria SmirnovaMD Production – Russia

and Lean M

Ziad KebbiPresident, SPT Arabia

Jeff LernerSVP, Scripted Dev &

Production

International Production : Opportunities for Improvement

• TBD

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U.S. Distribution

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U.S. Distribution: Forecast

• Increase feature library sales driven by

I. Strategic use of driver inventory to leverage broad package sales

II. Hyper-targeted offerings with premium pricing

III. Multiple nonexclusive buyers and bulk buys to drive low-rated product

• Leverage SVOD licensing and strategic product planning for U.S. channel carriage

• 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)

MRP AssumptionsU.S. Distribution Revenue and EBIT

($MM)

FY13 FY14 FY15 FY16 -

100

200

300

400

500

600

700

800

900

-

5

10

15

20

25

30

35

40

$778 $778 $671 $632

$34 $36

$28

$25

Revenue EBIT($MM) ($MM)

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U.S. Distribution: Challenges and Opportunities

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• Opportunity to renegotiate Starz output deal

• Sell library film and TV series into non-exclusive subscription deals

• Split library windows, license multiple rights, structure non-exclusive deals

• Aggressively sell slate carve-out windows utilizing more aggressive inventory tracking and planning

• Develop consistent flow of first-run product with top talent

Opportunities

• Starz spin-off and uncertainty regarding original programming strategy

• Less reliance on library product

Challenges

U.S. Distribution: Organization Overview

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Steve MoskoPresident, Sony

Pictures Television

John WeiserPresident, U.S.

Distribution

Thanda BelkerEVP, U.S. Pay & TV Sales

Flory BramnickEVP, U.S. Cable

Alan DanielsSVP, Distribution Planning

Phil MartzolfEVP, U.S. Syndication

Sales

U.S. Distribution: Opportunities for Improvement

• TBD

25

International Distribution

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International Distribution: Forecast

Strong and consistent growth

• Sustained delivery of network dramas drives TV product revenue growth

• Broaden scope of broadcaster relationships to explore English language, European content, co-production opportunities

• Investments in International Distribution

• New market entrants help drive revenue pipeline

• Stronger relationships in key markets

MRP AssumptionsInt’l Distribution Revenue and Profit

Contribution ($MM)

FY13 FY14 FY15 FY16 1,400

1,500

1,600

1,700

1,800

1,900

2,000

600

620

640

660

680

700

$1,630 $1,712

$1,772

$1,895 $634

$653

$662

$685

Revenue EBIT($MM) ($MM)

27

International Distribution: Challenges and Opportunities

28

• Broaden scope of broadcaster relationships to explore English language, European content, co-production opportunities

• Take full advantage of opportunities with emerging SVOD players

• Close long-term deals in key markets over the plan

• Focus on select emerging markets to expand SPT’s presence and better capitalize on opportunities (Netherlands, Scandinavia, Poland, Hungary, South Africa)

Opportunities

• Shift in MPG film slate• Lack of a breakout/hit Drama• Ensure we keep rights to key revenue-

driving feature film franchises

Challenges

International Distribution: Organization Overview

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Steve MoskoPresident, Sony

Pictures Television

Keith LeGoyPresident, Int’l

Distribution

Ed LouwerseSVP, Product Management

Paul LittmanSVP, Global Sales

Mike WaldEVP, Distribution EMEA

Alex MarinSVP, Distribution, Latin

America

Angel OrengoEVP, Distribution,

Asia/Pacific

Kevin BylesSVP, Distribution, Canada

International Distribution: Opportunities for Improvement

• TBD

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Networks

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Networks: Forecast

Strong and Consistent Earnings Growth

FYE13 FYE14 FYE15 FYE160

500

1,000

1,500

2,000

2,500

3,000

0

100

200

300

400

500

600

$1,536 $1,961

$2,258

$2,580

$268

$328

$410

$503

Revenue EBIT

• Growth comes from all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins

• Focus next 18 months on maximizing efficiencies in existing operations

• Continue to selectively launch channels in new and existing territories

• Increase investment in Crackle U.S. advertising and technical infrastructure

EBIT reaches over $500 million in FYE16, growing

at a 23% CAGR over the MRP periodMRP Assumptions

EBIT Margin:

17.4% 16.7% 18.2% 19.5%

Networks Revenue and EBIT ($ in Millions)

32

North

America23%

Europe13%Latin America

16%India36%

Rest of Asia / Australia12%

EBIT FYE16

North America

17% Europe7%

Latin America21%

India39%

Rest of Asia / Australia

17%

EBIT FYE13

As a result of recent investments, North America and Europe grow as a percentage of Networks’ EBIT from 24% in FYE13 to 36% in FYE16

NetworksEBIT by Region

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Networks: Brands

SET GENERAL ENTERTAINMENT

AXN GENERAL ENTERTAINMENT

ANIME/YOUTH LIFESTYLE/MUSI

CDIGITAL MOVIES

PARTNER NETWORKS

Highly successful network brands benefiting from global infrastructure

34

Networks: Challenges and Opportunities

35

• Buy out Indian partners and realize an Indian regional opportunity

• Focus next 18 months on maximizing efficiencies in existing operations

• Continue to selectively launch channels in new and existing territories

• Increase investment in Crackle U.S. advertising and technical infrastructure

• Continue to secure programming supply through studio output deals and investment in original programming (The Firm). Increase 3rd party acquisitions for US businesses

• Maximize value in Crackle US and expand internationally (Latam, Brazil, Canada)

• Expand SPTL Asia facility to service EMEA channels

Opportunities

• Global pressure on ad sales and subscriber fees

• Volatility of foreign currencies has had a particularly harsh impact on Networks earnings

• Rising content costs, increased broadcasting costs from HD roll outs and the investment in ad sales and affiliate infrastructure keeps margins in check

• Lack of a sports channel in India

Challenges

Networks: Organization Overview

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Andy KaplanPresident,

Worldwide Networks

Eric BergerEVP, Digital Networks

Marie JacobsonEVP, Programming &

Production

James SmithSVP, Global & Digital Ad

Sales

George ChienSVP, Networks, Asia

Superna KalleSVP, GM, Sony Movie Channel & Cine Sony

Bob BilleciEVP, Technical Operations

T.C. SchultzEVP & MD, Latin America

Ricky OwEVP, Singapore

Steve MoskoPresident, Sony

Pictures Television

Masao TakiyamaSVP, Japan

Kate MarchSVP, Western Europe

Lyle StewartSVP, Central EMEA

Networks: Opportunities for Improvement

• TBD

37

Closing

38

Television: Big Ideas for Change

• TBD

39