MORGAN STANLEY RESEARCH NORTH AMERICA

Morgan Stanley & Co. LLC Benjamin Swinburne, CFA Morgan Stanley appreciates your support in the [email protected] Institutional Investor 2013 All-America Equity +1 212 761 7527 Research Team Survey. Ryan Fiftal [email protected] Request your ballot. +1 212 761 3005 Hersh Khadilkar, CPA, CFA May 20, 2013 [email protected] +1 212 761 5120 Thomas Robb Industry View Media [email protected] Attractive +1 212 761 4907 Inside the Upfront: Studios Media: TV Production & Syndication as % of Winning as Landscape Shifts 2013E Segment EBITDA

30%

TV Production & Syndication as % of 2013E Segment EBITDA

When shows hit, better to own than rent: Long-term 25% earnings potential from successful primetime network TV shows is primarily driven by the creation of lasting 20% hits which drive the multi-billion dollar domestic and 15% foreign syndication business and increasingly online

video distribution (now at $1.5-$2bn annually). This note 10% examines the major TV studios’ and networks’ position within the context of the recently announced fall 5% primetime broadcast scripted TV schedule and potential 0% syndication revenues over the next several years. CMCSA DIS TWX FOX CBS Source: Company Data, Morgan Stanley Research

More to win given growing demand for content… Media: Number of Scripted Shows On Broadcast nets are set to air ~100 scripted PT shows in Broadcast TV By Studio – 2013 / 2014 Season the ‘13/‘14, up vs. last year. Growing demand for US

content internationally and a robust market for serialized Number of Shows in Primetime Production content from S-VOD players have networks taking more 0 5 10 15 20 25 30 at-bats. More hours of summer programming appears NBC Universal to be a common theme (i.e., FOX’s four event-series, Studio (CMCSA) CBS’ Under the Dome this June). ABC Studios (DIS) …but falling live viewing, particularly repeats, and surging cable fare are also factors. With C3 PT 18-49 CBS Studios ratings at broadcast networks down ~8% STD and 20th Television continued share gains from cable (Exhibit 1, page 2), (NWS) Warner Bros. broadcasters appear focused on replacing re-runs with (TWX) original content. This suggests cost creep in primetime '13/'14 Season '12/'13 Season budgets, although below what we have seen for cable Source: Company Data, Morgan Stanley Research nets (Exhibit 2, page 2) recently. Nevertheless, this Note: Co-produced shows are counted in each studio’s total in the above chart, Exhibit 1, and in the text – but are counted as ½ show for each studio in Exhibits 4 increased investment highlights the importance of and 5. growing retransmission fees to drive margins.

Perhaps never a better time to be in TV production, especially at TWX’s WBTV: This Fall the Networks will Morgan Stanley does and seeks to do business with air more hours of programming having picked up more companies covered in Morgan Stanley Research. As pilots than typical due to more shows not returning from a result, investors should be aware that the firm may have a conflict of interest that could affect the last year. WB owns all or a piece of 28 shows after objectivity of Morgan Stanley Research. Investors having 12 of 18 pilots picked up and 70% of its shows should consider Morgan Stanley Research as only a from last season return. The emergence of scaled single factor in making their investment decision. S-VOD players has created earnings power for For analyst certification and other important serialized content that did not exist before. WB’s NFLX disclosures, refer to the Disclosure Section, deal is the primary manifestation of that new opportunity. located at the end of this report.

MORGAN STANLEY RESEARCH May 20, 2013 Media

season, the most among all studios despite the studio’s Exhibit 1 supposed disadvantage given a lack of a captive major PT 18-49: Broadcast networks’ share of ratings network to which it can sell its shows. down ~100bps season-to-date In 2013+, we estimate that Warner could have up to nine 45% 45% scripted shows moving into the syndication window. WB 43% 43% 43% 43% 43% currently has three syndication deals announced including 42% The Middle (starting Fall ’13), Mike & Molly (starting in ’14) 40% 41% 40% and 2 Broke Girls (starting in ’15). In addition, we note the 39% ~70% renewal rate of TWX’s TV shows produced last season suggests a promising syndication pipeline for the 07/08 08/09 09/10 10/11 11/12 12/13 Season Season Season Season Season Season TD studio over the longer term, while the 60% conversion rate Broadcast C3 Share Broadcast Live Share on current season TV pilots implies TWX is spending less

on unsuccessful pilots. Source: Nielsen, Morgan Stanley Research. Note: Share is calculated as broadcast percentage of Total Broadcast and Cable PT18-49 C3 ratings Digital licensing offers a lucrative outlet for serialized dramas: The economics of the recently announced Netflix Exhibit 2 / Warner Bros.’ deal introduces a new and potentially more We expect increasing competition to drive program lucrative option for serialized dramas vs. traditional cable investment across all TV networks, seen most network syndication. In the past, serialized dramas clearly at the standalone cable networks garnered lower demand and pricing in traditional Historical Forecast $1,500 '10-'12 CAGR '13-'15 CAGR 6% syndication compared to non-serialized comedies (such as Big Bang Theory, Modern Family). Under the terms of the $1,200 15% NFLX agreement, Warner Bros. will provide NFLX with past

$900 seasons of serialized dramas (which include The Following 6% 30% and Revolution). Each new season that is produced will be $ millions $600 11% made available to Netflix at a pre-determined step-up in 18% pricing, while also retroactively increasing the pricing on $300 episodes from prior seasons that were available. This

$0 success-based structure of the deal well aligns the interests 2009 2010 2011 2012 2013E 2014E 2015E of both NFLX and WBTV, in our view. AMCX SNI DISCA Source: Company Data, Morgan Stanley Research estimates CBS TV studio producing 21 scripted shows on air for Summary of TV Studio Results: ‘13/’14 season, increase in development: We estimate that 12 of the 20 TV shows produced by CBS last In total, we estimate that major networks picked up 45 new year will be returning to the upcoming season, representing scripted programs from major TV studios for the upcoming a ~60% renewal rate similar to last year. Interestingly, the season. While this is the most pilot pick-ups in recent years number of developed pilots increased from 12 last year to (39 in ’12, 42 in ’11, and 36 in ’10), it was primarily driven by 20 in the current season, with ~50% being picked up a greater number of shows not returning from the prior (similar to last year’s conversion rate). season (39 shows not returning from ‘12/’13 season, vs. 35 last year). Similar to last year, roughly 60% of shows from Rules of Engagement started airing in syndication earlier the prior season are returning in ‘13/’14. this year while NCIS:LA is starting this fall. In 2013, CBS studio will also benefit from the contribution from the TWX’s WBTV production success demonstrated by recently announced syndication of The Good Wife, while highest number of returning shows, most TV pilots. Hawaii Five-O and Blue Bloods will begin to generate We estimate that 16 of the 23 TV shows produced by WBTV meaningful revenues for the studio in 2014. We estimate last year will be returning to the upcoming season, CBS’ production and syndication business will generate representing a ~70% renewal rate, while 12 of the studio’s ~$1bn in EBITDA in ’13 for CBS (including int’l syndication), 18 TV pilots have been picked up (~60% conversion). In ~25% of total. total, WBTV has 28 scripted shows on the air for the ‘13/’14

2 MORGAN STANLEY RESEARCH May 20, 2013 Media

20th Century Fox increases show production to 21 vs. Summary of TV Network Results: 19 last year: We estimate that 12 of the 19 TV shows CBS returns the most shows, similar to recent years: produced by Fox last year will return, down from the 14 that With season-to-date PT C3 household ratings at CBS were returned last year. This decline is offset by a greater performing modestly ahead of peers (down 4% ex-February, number of TV pilots picked up for the upcoming season (9 vs. down 6% for peers), CBS continues to boast the picked up this year vs. 5 last year), resulting in a higher strongest returning programming slate, highlighted by How I conversion rate this year (50% vs 30% last year). Met Your Mother, The Big Bang Theory, Mike and Molly, Two Broke Girls, among others. CBS network has ordered Future syndication possibilities for 20th Century Fox include eight scripted pilots to season (only CW ordered fewer), New Girl, The Cleveland Show, Raising Hope, and Bob’s three of which are owned by CBS Studios. Burgers. Fox also produces Modern Family and Glee, which have previously announced syndication deals and Fox increasing primetime originals: In the ‘13/’14 will begin to generate syndication revenues later this year. season, Fox plans to air ~20 primetime original series up We estimate FOX’s TV business will generate $750-800mm from 16 last year, driven primarily by an increase in TV in EBITDA, or 10-15% of its overall EBITDA in FY13. pilots this year (9 vs. 5 last year). With PT C3 household ratings down ~19% season-to-date (vs. down mid-single ABC Studio production similar to last year: We digits for peers), due to softness at American Idol and estimate that 10 of the 17 TV shows produced by ABC last X-Factor, it is clear that the network is investing in year will return, similar to results from last year. Of ABC programming to fill this ratings shortfall. Further, Fox Studio’s seven pilots picked up last year by networks, three announced that it will introduce four event series in the will be returning for the upcoming season. Roughly eight upcoming season (10-12 episodes each) which includes ABC pilots were picked up, a ~40% conversion rate down the return of 24. modestly from last year. Higher churn at ABC: Roughly 11 of ABC’s 24 TV shows The ABC Studio syndication pipeline includes Brothers & from last season will not return in the ‘13/’14 season, an Sisters, Private Practice, , Happy Endings, increase from 8 shows that were canceled last season. The and potentially Once Upon a Time, Revenge, and Scandal network is airing 11 new TV pilots this season, 7 of which which are all returning in their 3rd season. We believe ABC are produced by ABC studio. production and distribution will account for roughly $500-600mm of EBITDA in FY13, or ~5% of DIS segment Success from The Voice and Revolution last year profits in FY13 (unlike CBS and NWS, DIS reports its TV should benefit NBC, as the network diversifies its studio revenues in the broadcast network line). studio mix: Last year, NBC network canceled 10 of its prior season programs, introducing 13 new scripted series NBC Universal with fewest number of TV shows on air in the ‘12/’13 season (which included Revolution). This new this season, as NBC network explores content from programming was also complemented by strong other studios: We estimate that 11 of the 17 shows performance from The Voice. produced by NBC Universal last season will not be returning (35% renewal rate). Further, full season orders of NBCU Looking to the ‘13/’14 season, the number of canceled TV pilot productions declined from nine to six this year. In series from the prior season increased to 13, including the total, we estimate that NBCU will produce ~12 shows on departure of both 30 Rock and The Office from the broadcast TV this season, down from 17 last year. This network’s slate. The network is set to air 12 new TV pilots, decline appears to be driven by fewer orders from NBC but interestingly, we note that only five of these new network, which ordered only 10 productions this season programs are sourced from NBC’s TV studio (as compared from NBCU vs. 17 last year. to eight of the 13 TV pilots picked up last year).

3 MORGAN STANLEY RESEARCH May 20, 2013 Media

Exhibit 3 Summary of 2013/2014 Scripted Television Shows by Production Studio and Network Summary by Production Studio FOX WBTV DIS CBS NBCU Other Shows Renewed and Canceled from '12/'13 Season Shows Renewed Sole Produce 12 14 9 9 6 3 Co-Produce021300 Total Renewed121610126 3 - - - - - Shows Canceled Sole Produce 7 4 7 4 11 2 Co-Produce 030401 Total Canceled 7 7 7 8 11 3 - - - - - Total '12/'13 Shows19231720176

Pilots Picked Up Sole Produce977367 Co-Produce051600 Total Picked Up 9 12 8 9 6 7

Passed Sole Produce 9 6 10 9 11 6 Co-Produce001203 Total Passed 9 6 11 11 11 9

Total Pilots 18 18 19 20 17 16

Total '13/'14 Shows212818211210

Summary by Network FOX DIS CBS NBC CW Total '12/'13 Shows1624212211 Renewed 11 13 15 9 7 Canceled -5 -11 -6 -13 -4 Picked Up 9 11 8 12 5

Total '13/'14 Shows2024232112 Note: Table excludes event series productions; Co-produced shows are counted in each studio’s total in the above chart and in the text – but are counted as ½ show for each studio in Exhibits 4 and 5. Source: Company Data, Morgan Stanley Research

4 MORGAN STANLEY RESEARCH May 20, 2013 Media

Exhibit 4 Prior Season Scripted Television Shows Returning and Canceled for 2013/2014 Season Network Title Renewed/Canceled Studio Net New Shows on Air Summary 1 FOX The Goodwin Games Renewed* 20th Cent. Fox FOX WBTV ABC CBS NBCU 2 ABC Last Man Standing Renewed 20th Cent. Fox Canceled (7.0) (5.5) (7.0) (6.0) (11.0) 3 ABC Modern Family Renewed 20th Cent. Fox Picked up 9.0 9.5 7.5 6.0 6.0 4 CBS How I Met Your Mother Renewed 20th Cent. Fox Net Gain/Loss 2.0 4.0 0.5 0.0 (5.0) 5 FOX American Dad Renewed 20th Cent. Fox 6 FOX Bob's Burgers Renewed 20th Cent. Fox Total Shows on Broadcast TV 7FOX Bones Renewed 20th Cent. Fox FOX WBTV ABC CBS NBCU 8 FOX Family Guy Renewed 20th Cent. Fox Renewed 12.0 15.0 9.5 10.5 6.0 9 FOX Glee Renewed 20th Cent. Fox Picked Up 9.0 9.5 7.5 6.0 6.0 10 FOX New Girl Renewed 20th Cent. Fox Total On Air 21.0 24.5 17.0 16.5 12.0 11 FOX Raising Hope Renewed 20th Cent. Fox 12 FOX The Simpsons Renewed 20th Cent. Fox Note: Tables above count co-productions 13 ABC Don't Trust the B- in Apt 23 Canceled 20th Cent. Fox as 1/2 shows 14 ABC How To Live With Your Parents (For The Rest Of Your Life) Canceled 20th Cent. Fox 15 FOX Ben & Kate Canceled 20th Cent. Fox 16 FOX The Cleveland Show Canceled 20th Cent. Fox 17 FOX Touch Canceled 20th Cent. Fox 18 NBC 1600 Penn Canceled 20th Cent. Fox 19 NBC The New Normal Canceled 20th Cent. Fox 20 CBS Criminal Minds Renewed ABC / CBS 21 ABC Mistresses Renewed* ABC Studios 22 ABC Castle Renewed ABC Studios 23 ABC Renewed ABC Studios 24 ABC Grey's Anatomy Renewed ABC Studios 25 ABC Nashville Renewed ABC Studios 26 ABC Once Upon a Time Renewed ABC Studios 27 ABC Revenge Renewed ABC Studios 28 ABC Scandal Renewed ABC Studios 29 ABC The Neighbors Renewed ABC Studios 30 ABC Body of Proof Canceled ABC Studios 31 ABC Family Tools Canceled ABC Studios 32 ABC Happy Endings Canceled ABC Studios 33 ABC Malibu Country Canceled ABC Studios 34 ABC Private Practice Canceled ABC Studios 35 ABC Zero Hour Canceled ABC Studios 36 ABC Red Widow Canceled ABC Studios 37 CBS Friend Me Renewed* CBS Studios 38 CBS Blue Bloods Renewed CBS Studios 39 CBS CSI Renewed CBS Studios 40 CBS Elementary Renewed CBS Studios 41 CBS Hawaii Five-O Renewed CBS Studios 42 CBS NCIS Renewed CBS Studios 43 CBS NCIS Los Angeles Renewed CBS Studios 44 CBS The Good Wife Renewed CBS Studios 45 CW Beauty And The Beast Renewed CBS Studios 46 CBS CSI NY Canceled CBS Studios 47 CBS Rules of Engagement Canceled CBS Studios 48 CBS Vegas Canceled CBS Studios 49 CW 90210 Canceled CBS Studios 50 CW Emily Owens, MD Canceled CBS Television Studios / Warner Bros. 51 CBS Made in Jersey Canceled CBS/ Sony 52 NBC Hannibal Renewed* Gaumont International Television 53 FOX The Mindy Project Renewed NBC Universal 54 NBC Chicago Fire Renewed NBC Universal 55 NBC Grimm Renewed NBC Universal 56 NBC Law & Order SVU Renewed NBC Universal 57 NBC Parenthood Renewed NBC Universal 58 NBC Parks and Recreation Renewed NBC Universal 59 NBC 30 Rock Canceled NBC Universal 60 NBC Animal Practice Canceled NBC Universal 61 NBC Deception Canceled NBC Universal 62 NBC Do No Harm Canceled NBC Universal 63 NBC Go On Canceled NBC Universal 64 NBC Guys with Kids Canceled NBC Universal 65 NBC Next Caller Please Canceled NBC Universal 66 NBC Smash Canceled NBC Universal 67 NBC The Office Canceled NBC Universal 68 NBC Up All Night Canceled NBC Universal 69 NBC Whitney Canceled NBC Universal 70 NBC Save Me Renewed* Sony 71 NBC Community Renewed Sony 72 ABC Last Resort Canceled Sony 73 FOX Mob Doctor Canceled Sony 74 ABC Suburgatory Renewed Warner Bros 75 ABC The Middle Renewed Warner Bros 76 CBS Mike and Molly Renewed Warner Bros 77 CBS Person of Interest Renewed Warner Bros 78 CBS The Big Bang Theory Renewed Warner Bros 79 CBS The Mentalist Renewed Warner Bros 80 CBS Two and a Half Men Renewed Warner Bros 81 CBS Two Broke Girls Renewed Warner Bros 82 CW Arrow Renewed Warner Bros 83 CW Nikita Renewed Warner Bros 84 CW Supernatural Renewed Warner Bros 85 CW The Carrie Diaries Renewed Warner Bros 86 FOX The Following Renewed Warner Bros 87 NBC Revolution Renewed Warner Bros 88 ABC 666 Park Avenue Canceled Warner Bros 89 CBS Golden Boy Canceled Warner Bros 90 CBS Partners Canceled Warner Bros 91 FOX Fringe Canceled Warner Bros 92 CW Hart of Dixie Renewed WB / CBS 93 CW Vampire Diaries Renewed WB / CBS 94 CW Cult Canceled WB / CBS 95 CW Gossip Girl Canceled WB / CBS Source: Company data, Morgan Stanley Research Note: Green shading denotes the show was new last season (2012 Pilots); excludes event series * denotes show premieres during Summer 2013 – we assume renewal for next season

5 MORGAN STANLEY RESEARCH May 20, 2013 Media

Exhibit 5 2013/2014 Upfront Picked Up and Dropped Scripted Television Pilots Network Title Picked Up? Studio ABC Back in the Game Yes 20th Century Fox Television ABC Mind Games Yes 20th Century Fox Television By studio: CBS Friends With Better Lives Yes 20th Century Fox Television FOX WBTV ABC CBS NBCU CBS The Crazy Ones Yes 20th Century Fox Television Picked Up 9.0 9.5 7.5 6.0 6.0 FOX Dads Yes 20th Century Fox Television Not Picked Up 9.0 6.0 10.5 10.0 11.0 FOX Enlisted Yes 20th Century Fox Television Total Pilots 18.0 15.5 18.0 16.0 17.0 FOX Gang Related Yes 20th Century Fox Television check: 18 15.5 18 16 17 FOX Sleepy Hollow Yes 20th Century Fox Television % Picked Up 50% 61% 42% 38% 35% NBC Crisis Yes 20th Century Fox Television ABC The Crazy Gene No 20th Century Fox Television CBS Anatomy of Violence No 20th Century Fox Television Note: Tables above count co-productions CBS Backstrom No 20th Century Fox Television as 1/2 shows FOX Delirium No 20th Century Fox Television FOX The Gabriels No 20th Century Fox Television FOX The List No 20th Century Fox Television By network: FOX Two Wrongs No 20th Century Fox Television FOX CW ABC CBS NBC NBC Joe, Joe and Jane No 20th Century Fox Television Picked Up 9.0 5.0 11.0 8.0 12.0 NBC The Gates No 20th Century Fox Television Not Picked Up 7.0 3.0 13.0 15.0 16.0 ABC Betrayal Yes ABC Studios Total Pilots 16.0 8.0 24.0 23.0 28.0 ABC Killer Women Yes ABC Studios check:168242328 ABC Lucky 7 Yes ABC Studios ABC Mixology Yes ABC Studios ABC S.H.I.E.L.D. Yes ABC Studios ABC The Resurrection Yes ABC Studios ABC Trophy Wife Yes ABC Studios ABC Bad Management No ABC Studios ABC Big Thunder No ABC Studios ABC Gothica No ABC Studios ABC King John No ABC Studios ABC Middle Age Rage No ABC Studios ABC Murder in Manhattan No ABC Studios ABC Pulling No ABC Studios ABC Reckless No ABC Studios ABC Spy No ABC Studios NBC Hatfields & McCoys No ABC Studios CBS Intelligence Yes ABC Studios, CBS Television Studios ABC Divorce: A Love Story No ABC Studios, Sony Pictures Television CBS Reckless Yes CBS Television Studios CBS The Millers Yes CBS Television Studios CBS We Are Men Yes CBS Television Studios CBS NCIS: Red No CBS Television Studios CBS Second Sight No CBS Television Studios CBS Super Clyde No CBS Television Studios CBS The Ordained No CBS Television Studios CBS The Surgeon General No CBS Television Studios CBS Untitled Rottenberg & Zuritzsky project No CBS Television Studios CBS Untitled Tad Quill project No CBS Television Studios CW Blink No CBS Television Studios CW Company Town No CBS Television Studios CBS Jacked Up No CBS Television Studios, Sony Pictures Television CBS The McCarthys No CBS Television Studios, Sony Pictures Television ABC The Goldbergs Yes Sony Pictures Television FOX Rake Yes Sony Pictures Television FOX Us and Them Yes Sony Pictures Television NBC The Blacklist Yes Sony Pictures Television NBC The Michael J. Fox Show Yes Sony Pictures Television NBC The Night Shift Yes Sony Pictures Television NBC Welcome to the Family Yes Sony Pictures Television ABC Doubt No Sony Pictures Television CBS Bad Teacher No Sony Pictures Television CBS Beverly Hills Cop No Sony Pictures Television CBS Untitled Jim Gaffigan comedy No Sony Pictures Television FOX The Wild Blue No Sony Pictures Television NBC Brenda Forever No Sony Pictures Television FOX Brooklyn Nine-nine Yes NBC Universal NBC About a Boy Yes NBC Universal NBC Crossbones Yes NBC Universal NBC Family Guide Yes NBC Universal NBC Ironside Yes NBC Universal NBC Sean Saves the World Yes NBC Universal NBC Assistance No NBC Universal NBC Bloodlines No NBC Universal NBC Downtowners No NBC Universal NBC Girlfriend in a Coma No NBC Universal NBC Holding Patterns No NBC Universal NBC Mr. Robinson No NBC Universal NBC Mulaney No NBC Universal NBC The Donor Party No NBC Universal NBC The Sixth Gun No NBC Universal NBC Victor No NBC Universal NBC Wonderland No NBC Universal ABC Super Fun Night Yes Warner Bros. Television CBS Hostages Yes Warner Bros. Television CBS Mom Yes Warner Bros. Television FOX Almost Human Yes Warner Bros. Television FOX Surviving Jack Yes Warner Bros. Television NBC Believe Yes Warner Bros. Television NBC Undateable Yes Warner Bros. Television ABC Westside No Warner Bros. Television CBS The Advocates No Warner Bros. Television CW The Selection No Warner Bros. Television FOX Boomerang No Warner Bros. Television FOX The untitled Bilsing-Graham and Kreamer project No Warner Bros. Television NBC The Secret Lives of Husbands and Wives No Warner Bros. Television CW Reign Yes Warner Bros. Television, CBS Studios Television CW Star-Crossed Yes Warner Bros. Television, CBS Studios Television CW The 100 Yes Warner Bros. Television, CBS Studios Television CW The Tomorrow People Yes Warner Bros. Television, CBS Studios Television CW The Originals Yes Warner Bros. Television, CBS Studios Television Note: Table excludes event series Source: Company data, Morgan Stanley Research

6 MORGAN STANLEY RESEARCH May 20, 2013 Media

Exhibit 6 Traditional Syndication Pipeline: Potential & Announced Syndicated Shows for FY13 and Beyond Seasons Est. License Fee Potential Seasons Est. License Fee Potential CBS Studios Aired Network Per Show ($000s) Revs ($000s) ABC Studios Aired Network Per Show ($000s) Revs ($000s) NCIS: Los Angeles* 4 CBS $2,350 $207,000 Private Practice** 6 ABC $800 $106,000 Vampire Diaries** (50% w WBTV) 4 CW $500 $22,000 Brothers And Sisters 5 ABC $900 $99,000 The Good Wife* 4 CBS $350 $39,000 Body of Proof** 2 ABC $1,000 $44,000 Hawaii Five-O* 3 CBS $2,250 $149,000 Once Upon a Time** 2 ABC $800 $35,000 Blue Bloods 3 CBS $1,000 $66,000 Revenge** 2 ABC $800 $35,000 Hart of Dixie** (50 % w WBTV) 2 CW $700 $15,000 Scandal** 2 ABC $800 $35,000

Total $268,000 Total $354,000

Seasons Est. License Fee Potential Seasons Est. License Fee Potential 20th Century Fox Aired Network Per Show ($000s) Revs ($000s) Warner Bros. TV Aired Network Per Show ($000s) Revs ($000s) Glee* 4 FOX $750 $66,000 Chuck** 5 NBC $700 $77,000 Modern Family* 4 ABC $1,400 $123,000 The Middle* 4 ABC $850 $75,000 The Cleveland Show* 4 FOX $700 $62,000 Vampire Diaries** (50% w CBS) 4 CW $800 $35,000 Raising Hope** 3 FOX $700 $46,000 Mike & Molly* 3 CBS $1,200 $79,000 Bobs Burgers* 3 FOX $700 $46,000 Nikita** 3 CW $700 $46,000 New Girl** 2 FOX $700 $31,000 2 Broke Girls* 2 CBS $1,700 $75,000 Suburgatory 2 ABC $1,000 $44,000 Person of Interest 2 CBS $1,000 $44,000 Hart of Dixie** (50% w CBS) 2 CW $700 $15,000 Following** 1 FOX $325 $5,000 Revolution** 1 NBC $350 $8,000

Total $374,000 Total $495,000 Source: Company data, Morgan Stanley Research. Note: * Denotes announced deals; ** Denotes a show currently in digital syndication

.

7 MORGAN STANLEY RESEARCH May 20, 2013 Media

Disclosure Section The information and opinions in Morgan Stanley Research were prepared by Morgan Stanley & Co. LLC, and/or Morgan Stanley C.T.V.M. S.A., and/or Morgan Stanley Mexico, Casa de Bolsa, S.A. de C.V. As used in this disclosure section, "Morgan Stanley" includes Morgan Stanley & Co. LLC, Morgan Stanley C.T.V.M. S.A., Morgan Stanley Mexico, Casa de Bolsa, S.A. de C.V. and their affiliates as necessary. For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA. 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8 MORGAN STANLEY RESEARCH May 20, 2013 Media

Coverage Universe Investment Banking Clients (IBC) % of % of % of Rating Stock Rating Category Count Total Count Total IBC Category Overweight/Buy 1034 36% 399 39% 39% Equal-weight/Hold 1250 44% 479 47% 38% Not-Rated/Hold 105 4% 27 3% 26% Underweight/Sell 473 17% 123 12% 26% Total 2,862 1028

Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months. Analyst Stock Ratings Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months. Analyst Industry Views Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below. In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below. Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below. Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index. . Important Disclosures for Morgan Stanley Smith Barney LLC Customers Citi Research publications may be available about the companies or topics that are the subject of Morgan Stanley Research. Ask your Financial Advisor or use Research Center to view any available Citi Research publications in addition to Morgan Stanley research reports. 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9 MORGAN STANLEY RESEARCH May 20, 2013 Media

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10 MORGAN STANLEY RESEARCH

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Industry Coverage:Media

Company (Ticker) Rating (as of)Price* (05/17/2013)

Benjamin Swinburne, CFA AMC Networks, Inc. (AMCX.O) E (01/25/2013) $66.44 CBS Corporation (CBS.N) O (07/20/2009) $51.53 Cinemark Holdings, Inc. (CNK.N) E (01/17/2011) $30.19 Discovery Communications E (07/20/2009) $78.85 (DISCA.O) Dreamworks Animation SKG, Inc. U (05/11/2010) $21.74 (DWA.O) Interpublic Group (IPG.N) E (01/11/2013) $14.78 Lamar Advertising Co. (LAMR.O) O (09/24/2012) $48.67 Liberty Media Corp (LMCA.O) E (08/13/2012) $126.2 News Corporation (NWSA.O) O (01/28/2013) $33.22 Omnicom Group Inc. (OMC.N) E (07/25/2010) $63.31 Regal Entertainment Group U (04/17/2009) $18.45 (RGC.N) Scripps Networks Interactive U (01/25/2013) $69.05 (SNI.N) Starz (STRZA.O) E (03/04/2013) $22.7 The Madison Square Garden, Inc. O (12/08/2011) $61.5 (MSG.O) Time Warner Inc. (TWX.N) E (04/13/2010) $60.71 Viacom (VIAB.O) E (03/28/2010) $69.72 Walt Disney Co (DIS.N) O (07/20/2009) $66.58

Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

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