BUDGET PRESENTATION Fiscal Year 2015 February 2014 FY14 Accomplishments
SPT achieved several critical milestones in FY14 and will outperform budget despite a challenging economic environment
• Grown revenue year over year and maintained total EBIT despite significant FX headwinds (in excess of $25MM) – Simple margin maintained in high teens (17%) – After adjusting for FX, all regions of the portfolio increased their prior year revenue (10%) • Launched/acquired several new operations across the world – Europe: SET Germany, Animax UK SVOD and UK Freeview expansion – Asia: Dori Indonesia was acquired and GEM Vietnam launched Networks – Americas: Kalixta was launched in Latin America and Get TV in the US in February • Rationalized operations where appropriate with the profitable sale of SPT interests in Dolphin Ad Sales (UK) and FEARnet (completion pending), as well as a profitable and strategic pending deal with SPT’s SPIN properties in Latin America and Brazil • Global programming initiatives Hannibal and Crossing Lines earned critical and ratings successes on various SPT channels around the world with both properties recommissioned for 2nd season • In spite of ad revenue shortfalls, Crackle is up 50% in terms of unique visitors, enjoyed over 35MM app downloads on mobile and TV and achieved more than 25MM views on its top-rated and Emmy nominated show, Comedians In Cars Getting Coffee
• US & International Distribution teams combined efforts to create the first global Netflix deal for Breaking Bad and Saul • International Distribution generated another record breaking year of revenue at $1.74BN • Generated over $40MM in revenue for Russian sitcoms including The Voronins (Everybody Loves Raymond) and Happy Together (Married with Children) • Sold 5th cycle Seinfeld and 3rd cycle King of Queens • Sold Young & the Restless to TVGN as Soapnet shutdown
Distribution • Struck significant long-term deals in major markets with key partners such as HBO Latam, TF1, Sogecable, Foxtel, Seven Network, Shaw, Televisa, Globo, Azteca / Ad Sales • Sold and launched The Blacklist around the world, generating record ratings and the highest revenue ever for an SPT one hour drama • Added 11 new advertisers to the 2013-14 upfront with an overall increase of upfront dollars of $13.1MM • The Queen Latifah Show garnered the highest CPMs of any new talk show • Successfully sold integrations in The Queen Latifah Show to Cover Girl, Pantene, and SC Johnson • Revenue for doctoroz.com continued to grow (calendar year): $3.6MM (2011); $5.1MM (2012); $6.3MM (2013) • Secured ad representation of the Rural Media Group’s two TV networks, RFD-TV and FamilyNet, with a target of $15MM for CY14 • Negotiating 1st ever substantial guild residual changes, freeing up library product and cable-to-cable product to sell
1 FY14 Accomplishments
• Successfully launched Release the Hounds (ITV) followed by German (ProSieben) and pending US (FOX) orders • Drove Left Bank US co-pros (Outlander, Mad Dogs US, Craving) and supported development and sale of The Crown • Latin America: Hired new LatAm MD; acquired 100% of Teleset; launched Mexico production (El Mariachi); in conjunction with SPT International Distribution, negotiating volume deals with Televisa, RCN and pan regional cable channels to fortify 5 year business plan for high quality Spanish language programming • Held WWTBAM summit with key license holders and instigated quarterly review to optimize format Int’l • Identified territories for expansion: Scandinavia, Turkey, Netherlands, Australia, N. Ireland and launched Electric Ray in UK Production • Restructured Silver River, integrating Left Bank, and divested interest in Tuvalu • Collaborated across Sony divisions and companies to maximize business opportunities with SPT International Distribution, SPT Networks, Sony Music, Sony ATV, and Sony Technology Networks • Produced and launched SPT’s first Arabic language telenovela, Betty La Fea, to pan-regional Arabic audience • Grew unscripted IP creation and ownership - The Patch, Tough Young Teachers, Five Minutes to a Fortune, Raid the Cage, Odd Squad, You're Booked, Milky Way Mission, Jokers, among others • Built scripted reality business in Germany, Holland, Russia and the Middle East
• Breaking Bad $275MM ultimate profit, winning the first Emmy and Golden Globe awards for Best TV Series drama as well as, awards from the DGA, SAG, PGA and WGA • Agreed principal terms with IGT for an extension of rights with a nominal guarantee of $225MM • Shark Tank rose to record ratings ranking as #1 Friday night program two seasons in a row, and successfully launched into syndication with highest rating for CNBC in 6 years • Sold Better Call Saul to AMC which will be profitable from year one • SPT has orders for six direct-to-series shows; Helix, Outlander, Better Call Saul, Unt. KZK, Battle Creek, Before Crack US • The Blacklist is the highest rated new series this season and has received an early second season order from the network, where it is Production their highest rated series among total viewers in a decade and broke US DVR records; The Blacklist is also a worldwide phenomenon, scoring the highest rating telecast in the history of the Sky Living channel in the UK, and was the highest rated new US series launch in Germany in the past 5 years • The Goldbergs emerges as self starter breakout hit series for ABC ranking as #1 Tuesday comedy and beating New Girl • Capitalizing on the global market by creating original programming for new global platforms like Netflix where SPT has sold Unt. KZK Series project and Before Crack. Both series are expected to be profitable year one and projected to generate over $100MM in profit each in success • Young and the Restless and Days of Our Lives have been renewed through the 16/17, and 15/16 broadcast seasons, respectively • Masters of Sex 2nd season order 2
Gross Revenue Generated by SPT For All Product
Gross Revenue Summary $MM 7,000 $6,067 $6,039 6,000 $5,717 $5,515 5,000
4,000
3,000 6,039 5,515 2,000
1,000
0 A B C D FY14 FY15 Budget/Forecast MRP/Budget
Gross Revenue by Product
$MM FY14 FY15 FY14 vs FY15 Budget Q4 Fcst Variance MRP Budget Variance Variance US Distribution 721 768 47 677 713 36 (55) Int'l Distribution 1,728 1,735 7 1,761 1,850 89 115 Int'l Production 321 201 (120) 361 342 (19) 141 US Production & Ad Sales 1,019 1,207 188 1,116 1,115 (1) (92) Networks 1,928 1,604 (324) 2,152 2,019 (133) 415 Total $5,717 $5,515 ($202) $6,067 $6,039 ($28) $524
3 SPT Financial Summary
TV Product & Channel Revenue TV Consolidated EBIT
$MM $MM Monetization $888 5,000 900 $4,620 $4,496 4,500 $4,283 $775 $4,086 750 280 4,000 $4,086 $648 $600 3,500 600 $608 3,000
2,500 450 $4,496 2,000 $648 300 1,500
1,000 150 500
A B C D 0 A B C D 0 FY14 FY15 FY14 FY15 Budget/Forecast MRP/Budget Budget/Forecast MRP/Budget
4 SPT Financial Summary
$MM Revenue FY14 FY15 FY14 vs FY15 Budget Q4 Fcst Variance MRP Budget Variance Variance US Distribution 47 47 -- 46 46 -- (1) Int'l Distribution 16 16 -- 12 12 -- (4) Int'l Production 381 301 (80) 444 434 (10) 133 US Production & Ad Sales 1,911 2,118 207 1,989 2,000 11 (118) Networks 1,928 1,604 (324) 2,129 2,004 (125) 400 TOTAL $4,283 $4,086 ($197) $4,620 $4,496 ($124) $410
EBIT FY14 FY15 FY14 vs FY15 Budget Q4 Fcst Variance MRP Budget Variance Variance US Distribution 33 32 (1) 31 31 -- (1) Int'l Distribution (40) (43) (3) (44) (44) -- (1) Int'l Production 10 10 -- 20 15 (5) 5 US Production & Ad Sales 263 344 81 372 310 (62) (34) Networks 334 265 (69) 396 336 (60) 71 TOTAL $600 $608 $8 $775 $648 ($127) $40
IGT Deal -- 163 163 ------(163) Celador vs Disney Settlement -- 73 73 ------(73) Music Sale -- 44 44 ------(44) TOTAL Including Monetization $600 $888 $288 $775 $648 ($127) ($240) 3Net (5) (4) 1 (2) -- 2 4
5 Variance to Budget / Prior MRP EBIT $MM FY14 FY15 Prior Plan $600 $775 IGT Royalty accelerated as a result of new minimum guarantee (18) Breaking Bad - Netflix sale accelerated to FY14 vs FY15 as assumed 46 (46) FX (38) (17) Variances Related to Timing and F/X 8 (81)
Networks MSM - Lower adsales across both years with FY14 helped by lower IPL amort (5) (30) GSN - Primarily lower digital revenues across both years (11) (11) Domestic Networks - FY14 downside largely from Crackle, FY15 on MRP (12) -- Networks - Asia/Europe/Latam - Lower revenues across nearly all channels in FY14, on MRP in FY15 (20) -- New Networks launches budgeted but not pursued 15 -- Total Networks (33) (41)
International Production Additional sales of library product primarily in Russia: Raymond, Married With Children in both FY14 and FY15, net of LatAm ultimate adjustment 12 4 Production - Lower commissions vs. prior plans primarily Middle East, Europe and Lat Am (14) (2) WWTBAM - Lower format sales India & Middle East. Off air in the UK ($4MM); other format sales ($2MM) (6) Total International Production (2) (4)
US Production & Ad Sales Breaking Bad - Improved ultimate and increased Home Entertainment revenue flow 66 -- Queen Latifah - Lower Ad Sales revenues due to lower ratings (9) (13) Incremental Series - 8 new network series vs 5 assumed (12) Goldbergs continues vs Michael J. Fox and related early SVOD avail (9) (22) Seinfeld - Cable Sale 20 New Netflix straight to series order 10 Total US Production & Ad Sales 36 (5)
Other (1) 4 Total Variance $8 ($127) Forecast/Budget Before Monetization $608 $648 IGT Deal 163 -- Celador vs Disney Settlement 73 -- Music Sale 44 -- 6 Forecast/Budget After Monetization $888 $648 Net Overhead Summary
$MM Net Overhead FY14 FY15 FY14 vs FY15 Budget Q4 Fcst Variance MRP Budget Variance Variance US & Int'l Networks -Existing 327 306 21 339 331 8 (25) Int'l Distribution 52 52 -- 54 54 -- (2) US Distribution 14 15 (1) 15 15 -- -- US Production & Ad Sales 47 47 -- 42 41 1 6 Int'l Production 58 57 1 60 57 3 -- Sub-Total $498 $477 $21 $510 $498 $12 ($21)
Networks - New Investment 24 2 22 30 23 7 (21) Int'l Production - New Investment ------1 1 -- (1) Total $522 $479 $43 $541 $522 $19 ($43)
7
1. Networks
Networks – FY15 Outlook
In FY15, Networks will cross the $300MM EBIT threshold, over a 35% CAGR across eight consecutive years of record earnings
• Major new financial milestones will be achieved by SPT Networks FY15 budget – Revenue will surpass $2BN – EBIT will exceed $330MM – This represents year over year revenue and EBIT growth of 25% and 27%, respectively • Despite the year over year progress, Networks EBIT is projected to be ($60MM) behind the MRP target for FY15 due to variances from two businesses – MSM is ($48MM) behind MRP following a ($30MM) EBIT miss in FY14 as a result of a very difficult ad market and lower ratings on the flagship channel and the inclusion of launching MAX2 (movie channel) in FY15 ($4MM) – GSN is ($11MM) behind plan due largely to a lower outlook for the Digital business based upon lower performance levels than anticipated in FY14 – Branded channels are in line with MRP • The year over year earnings growth will be achieved while also continuing to invest in the business to help sustain the strong growth profile into the future. Specific growth opportunities factored into the Budget include: – A GEC channel in India – An Indian movie channel – CineSony France – Dori Israel • Included within the Budget are several significant assumptions that add an element of risk to the outlook – The MSM Budget assumes that there will be significant ratings growth on the flagship channel – The UK operation has an inflection point year as it seeks to fully monetize the new investment in Freeview distribution – Latin America has an aggressive outlook with EBIT growth underpinned by channel ratings increases across the region – Crackle US is projected to become profitable based largely upon a 30%+ increase in base business ad revenues year over year 9 Networks – Financial Summary vs. Budget/PY MRP
Revenue EBIT
$MM FX Impact $MM FX Impact
2,500 450 $396 400 $2,129 17 $2,004 2,000 $1,928 52 350 $334 $336 93 38 $1,604 300 $265 1,500 $1,604 250 $265
200 379 1,000 2,077 $2,004 1,835 $336 150 296
100 500 50
0 0 FY14 FY15 FY14 FY15 Budget/Forecast MRP/Budget Budget/Forecast MRP/Budget • Revenue and EBIT targets missed across the portfolio in FY14 with material EBIT downside in MSM (-$25MM incl. Challenge), Crackle (-$8.5MM), and GSN (-$11MM) • FY15 downside versus MRP largely from MSM (-$48MM) and GSN (-$11MM)
Note: Revenue unfavorable FX variance is ($93MM) in FY14, ($52MM) in FY15; EBIT unfavorable FX variance is ($38MM) in FY14, ($17MM) in FY15. 10 Note: EBIT excludes 3Net EBIT of ($4MM) in FY14 forecast. Networks – Competitor EBIT Margins (LTM 3/31/13)
US-Owned Branded International Channels
Branded International Channels 60%
• Business model based primarily on acquiring US scripted 40% 22% 25% content 20% Average 20% 22%
0% Sony Int'l (1) Fox Int'l Channels (2) Chellomedia Networks (ex Nat Geo)
Factual-Based Programming 60% 41% 40% 44% • Business model based on factual and reality Average 40% 42% programming which is cheaper than US scripted content 20%
0% (2) Discovery (3) Scripps NatGeo (Fox)
Programming Allocated from US Parent 60% • US parent supplies own programming at an “allocated” 40% 25% 28% Average 27% cost, which may not always be at true market rates 20%
0% Viacom (4) Disney (5) Source: Company filings and CapIQ. (1) Excludes US Networks, GSN, Crackle GSN Purchase Price Amort. and Home Office Overhead Allocation. Includes MSM. (2) FIC estimated margin range of 25%-30%; NatGeo and FIC margins for FY12 as per FIC Investor Presentation (3) Per Citi, 33%-34% pro forma for SBS and Euro Sport acquisitions 11 (4) Includes MTV/VH1, Nickelodeon, Comedy Central International Networks margin estimate per Citibank, reported Media Networks margin of 41% (5) Per Citibank guidance, mid/high 20%. Networks – Competitor EBIT Margins (LTM 3/31/13)
India Networks 100%
80%
60% 51%
40% 25% 27% 25% Average (ex-Sun) 20% 25%
0% Sony MSM Sun (1) Star (2) Zee
US Basic Cable Networks
100%
80%
60%
40% 33% 34% Average 34% 20%
0% Sony GSN (3) AMC
Source: Company filings and CapIQ. (1) Sun’s business model allows them to realize higher margins through its library with rights in perpetuity and revenue sharing arrangements with content providers 12 (2) Star margin estimates per MSM India and include Hindi GEC + Movies business; overall EBIT margin including Sports and regional channels is 7%. (3) GSN excludes purchase price amortization. Networks – Financial Summary
Revenue $MM FY14 FY15 FY14 vs FY15 Variance Variance Budget Forecast Variance MRP Budget Variance Variance Excl. FX Excl. FX International EMEA 242 233 (9) (11) 237 232 (5) (14) (1) Latin America 221 197 (24) (9) 252 234 (18) (15) 37 Asia (excl. MSM & Ch 8) 208 178 (30) (7) 196 195 (1) 1 17 Sub-Total 671 608 (63) (27) 685 661 (24) (28) 53
India 692 591 (101) (44) 747 699 (48) 7 108 New Business Investment (FY14/FY15) 102 3 (99) (99) 80 74 (6) (6) 71
Total International 1,465 1,202 (263) (170) 1,512 1,434 (78) (27) 232
U.S. GSN 369 345 (24) (24) 428 396 (32) (32) 51 Crackle 47 39 (8) (8) 75 63 (12) (12) 24 Sony Movie Channel, CineSony 16 8 (8) (8) 33 33 -- -- 25 Games 9 6 (3) (3) 11 8 (3) (3) 2 New Business Investment (FY14/FY15)/Bash Games 22 2 (20) (20) 70 70 -- -- 68 Total U.S. 463 400 (63) (63) 617 570 (47) (47) 170 Home Office/Other -- 2 2 2 ------(2) Total $1,928 $1,604 ($324) ($231) $2,129 $2,004 ($125) ($74) $400 EBIT FY14 FY15 FY14 vs FY15 Variance Variance Budget Forecast Variance MRP Budget Variance Variance Excl. FX Excl. FX International EMEA 35 28 (7) (9) 46 47 1 (4) 19 Latin America 53 41 (12) (4) 61 59 (2) -- 18 Asia (excl. MSM & Ch 8) 48 30 (18) (11) 37 35 (2) -- 5 Sub-Total 136 99 (37) (24) 144 141 (3) (4) 42
India 150 120 (30) (5) 194 150 (44) (26) 30 New Business Investment (FY14/FY15) (24) (7) 17 17 (19) (19) -- -- (12) Total International 262 212 (50) (12) 319 272 (47) (30) 60
U.S. GSN 82 71 (11) (11) 101 90 (11) (11) 19 Crackle (1) (10) (9) (9) 3 -- (3) (3) 10 SMC, CineSony, FEARnet, Games, Hollywood Suite (4) (8) (4) (4) 1 1 -- -- 9
New Business Investment (FY14/FY15)/Bash Games -- (2) (2) (2) 10 10 -- -- 12 Total U.S. 77 51 (26) (26) 115 101 (14) (14) 50 Home Office Overhead/Support (36) (34) 2 2 (39) (38) 1 1 (4) General/MSM India Challenge 31 -- (31) (31) ------Monetization (Dolphin, FEARnet, SPIN deal, Tamil) -- 36 36 36 1 1 -- -- (35) Total $334 $265 ($69) ($31) $396 $336 ($60) ($43) $71 13 3NET (5) (4) 1 1 (2) -- 2 2 4
2. Distribution & Ad Sales US Distribution – FY15 Outlook
Maximize value of key properties • Broadcast: – Renewed Queen Latifah – Create new development/syndication model with Hearst or Tribune – Increase licensing of library product in diginet space (Antenna, Cozi, Bounce, MeTV, GetTV) – Maximize and secure top offnet value for The Blacklist – Further progress guild waiver negotiations to free up residually-locked current and library TV product for monetization in broadcast, cable and diginet space • Cable: – Working with FX to close feature slate output deal – Split rights with Turner to sell an additional Seinfeld window – License English language product to US Spanish networks – Sell second window of Days of Our Lives; sold cable-to-cable shows based on residual waivers • SVOD: – Close SPA output deal – Negotiate AVOD/SVOD Amazon deal – Negotiate OTT Comcast library deal – Maximize offnet value for The Blacklist and Helix – Concentrate efforts on building sales team
15 US Distribution – Financial Summary
Gross Revenue $MM FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance 2012 to 2015 Major Releases (Pay) 137 132 (5) 109 102 (7) (30) 2010 to 2014 Major Releases (Free) 67 85 18 80 80 -- (5) Other Current 72 72 -- 78 70 (8) (2) Library 75 75 0 75 75 -- (0) Total MPG 351 364 13 342 327 (15) (37)
Total WW Acquisitions 48 55 7 49 45 (4) (10) Starz Bonus 47 47 -- 46 46 0 (1) First Run and off-net Syndication 228 220 (8) 185 150 (35) (70) Library 47 82 35 55 145 90 63 Total TV 322 349 27 286 341 55 (8) Total 721 768 47 677 713 35 (55)
Profit Contribution / EBIT FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance MPG 183 192 9 179 171 (8) (21) WW Acquisitions 20 24 4 21 19 (2) (5) TV 75 128 53 91 77 (14) (51) Starz Bonus 47 47 0 46 46 0 (1) Total 325 391 66 337 313 (24) (78) G&A (14) (15) (1) (15) (15) -- (0) Profit Contribution $311 $376 $65 $322 $298 ($24) ($78) Transfer to Product Owners (278) (344) (66) (291) (267) 24 77 EBIT $33 $32 ($1) $31 $31 ($0) ($1)
16 US Distribution – Motion Picture Revenue
Library/Flow Motion Picture Revenue
$MM Library Free - Flow Pay - Flow 150 $128 $121 $126 $127 6 8 10 9 100 38 47 41 43
50 75 75 75 75
0 FY14 FY15 Budget/Forecast MRP/Budget Current Motion Picture Revenue $MM Starz Bonus Free - Current Pay - Current 375
$276 $283 $262 $246 250 148 147 131 118 125 82 87 85 82 47 47 46 46 0 FY14 FY15 Budget/Forecast MRP/Budget
Pay DBO ($B) $0.97 $0.91 $0.92 $0.86
17 Note: Based on film slate as of 1/22/14. US Distribution – TV Revenue
$MM Library First Run Syndication Off-Net Syndication
350
$302 $295 300 $275
$240 250 97 146
200 153
128 53 150
74 100 75 57 145 50 82 47 55 0 FY14 FY15 Budget/Forecast MRP/Budget
18 US Ad Sales – FY15 Outlook
Upfront volume key to growth in pricing
• Marketplace – Low upfront volume created challenging scatter market – Q4 was extremely slow with reduced pricing – Direct response was critical to Q4, 30% of inventory vs. 15% of inventory a year ago – Lining up new upfront prospects for 14/15 to improve volume • Broadcast – Only new entry to syndication daytime will be Meredith Vieira. Cancellation of Katie should boost revenue for Queen Latifah and Dr. Oz – Sell advertisers across slate of comedy (Seinfeld, King of Queens, Community, and Rules of Engagement). Increase variety of clients in Rules of Engagement and Community – :10’s challenge of $2MM with new 20 second unit – Integrations critical to delivering budget goals • Cable – Representing RFD Channel for CY 2014 – Rural Entertainment in 50MM homes – Deliver $15MM budget (RFD) with a combination of direct response and general rate
19 US Ad Sales – Financial Summary
$MM FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance Gross Revenue KING OF QUEENS 15 13 (2) 13 13 -- -- TIL DEATH 4 3 (1) 2 1 (1) (2) RULES OF ENGAGEMENT 23 21 (2) 22 22 -- 1 COMMUNITY 8 4 (4) 13 7 (6) 3 SEINFELD 30 29 (1) 27 27 -- (2) DR OZ 52 49 (3) 50 50 -- 1 QUEEN LATIFAH 25 14 (11) 55 36 (19) 22 WHEEL OF FORTUNE, JEOPARDY! 14 13 (1) 13 13 -- -- :10s CHALLENGE ------2 2 -- 2 All Other 4 2 (2) 2 -- (2) (2) Subtotal 175 148 (27) 199 171 (28) 23
Playstation (1) 25 13 (12) ------(13) Fearnet 3 2 (1) 4 3 (1) 1 Doctoroz.com 6 6 -- 8 8 -- 2 RFD ------15 15 -- 15 Other Third Party Distribution 2 1 (1) 1 1 -- --
Total Gross Revenue $211 $170 ($41) $227 $198 ($29) $28 Costs Related to Revenue (184) (154) 30 (188) (178) 10 (24) Ad Sales Overhead (16) (16) -- (14) (13) 1 3
Profit Contribution $11 $-- ($11) $25 $7 ($18) $7 Transfer to Product Owner (19) (11) 8 (35) (16) 19 (5)
EBIT ($8) ($11) ($3) ($10) ($9) $1 $2
(1) Effective FY15, PlayStation is reflected within Crackle. 20 International Distribution – FY15 Outlook
Outperforming historical high revenue in FY14, reaching a new record in FY15
• Revenue of $1.85BN projected in FY15 - $115MM up from FY14, $89MM up on MRP – US and International scripted TV product sales are the main drivers of growth – Delivering higher value through better exploitation of flow/library content • Maximize growth opportunities across SVOD and Emerging Markets: – Netflix and Amazon are rolling out services to more countries, plus more local SVOD players (e.g., DLA, Avex, Rogers) – Buying patterns are evolving away from bulk to more targeted buying (e.g., Netflix Breaking Bad/Saul deal) – Partner with new SVOD and AVOD platforms and grow in emerging markets (e.g., China, Indonesia, Russia, India and Africa) • Work within SPT to find new ways to create shows – EMEA co-productions with US Production – Look for local content creation opportunities (e.g., UK, Russia, LatAm) – Partnering with Crackle to create original content Key Deal Road Map • Collaborate across Sony divisions to maximize opportunities Country/Deal Estimated Completion Estimated Term Value ($MM) – Negotiate carve-outs (SEN) Russia/FTV Q3FY15 3 Years $100 - $120 S. Korea/BC/Pay Q4FY15 3 Years $75 - $100 – Develop “Millionaire” Project in India, Middle East Italy/Pay Extension (Sky) Q3FY15 3 Years $100 - $120 – Tie in with Playstation in Japan and France Italy/FTV Q4FY15 3 Years $50 - $80
– The Blacklist opportunity with Sony Mobile Total $325 - $420 • Supplement/reallocate resources in key markets to support continued growth
21 International Distribution – Financial Summary
$MM Gross Revenue FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance MPG Current 561 531 (30) 526 513 (13) (18) MPG Flow 197 225 28 191 214 23 (11) MPG Library 197 208 11 192 220 28 13 Total MPG 955 964 8 909 947 38 (17)
WW Acquisitions 178 176 (2) 174 176 2 --
TV Current 437 404 (34) 505 544 39 141 TV Library 75 70 (5) 70 70 -- -- TV Int'l Production 61 101 41 86 93 7 (8) TV Int'l Acquired/Other 22 20 (2) 17 20 3 (0) Total TV 595 595 (0) 678 727 49 132 Total $1,728 $1,735 $6 $1,761 $1,850 $89 $115 Total Excl Digital Trans. $1,644 $1,660 $16 $1,695 $1,777 $82 $117
Profit Contribution / EBIT FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance MPG 513 526 13 488 516 28 (10) WW Acquisitions 78 78 -- 77 78 1 -- TV 115 175 60 171 155 (16) (20) TOTAL 706 779 73 736 749 13 (30) G&A (52) (52) -- (54) (54) -- (2) Profit Contribution $654 $727 $73 $682 $695 $13 ($32) Transfer to Product Owners (694) (770) (76) (726) (739) (13) 31 EBIT ($40) ($43) ($3) ($44) ($44) $-- ($1)
22 International Distribution – Motion Picture Revenue
Library/Flow Motion Picture Revenue
$MM Flow Library $434 450 $433 $394 $383 375 208 220 300 197 192 225
150 197 225 214 75 191
0 A FY14 B C FY15 D Budget/Forecast MRP/Budget
Current Motion Picture Revenue
$MM Top 10 Driver Titles Released 2012 - 2016 All Other Current 700 600 $561 $531 $526 $513 500 400 419 375 300 398 383 200 100 142 133 151 130 0 A FY14 B C FY15 D Budget/Forecast MRP/Budget
23 International Distribution – TV Revenue
$MM U.S. Scripted/Nonscripted Intl Scripted/Nonscripted Library/Other (Acquired Product)
750 $727 $678 90
$595 $595 87 600 93 97 90 86
61 450 101
300 544 505 437 404 150
0 FY14 FY15 Budget/Forecast MRP/Budget
24 Key Feature and TV Drivers – FY15
$ in thousands US Distribution International Distribution
Feature Films / WW Acquisitions Television Total Feature Films / WW Acquisitions Television Total Title FY15 Revenue Title FY15 Revenue Title FY15 Revenue Title FY15 Revenue AMAZING SPIDER-MAN, THE 25,000 BLACKLIST 44,000 AMAZING SPIDER-MAN 35,200 BLACKLIST, THE 62,100 MEN IN BLACK 3 20,500 DR. OZ SHOW, THE 34,800 AMAZING SPIDER-MAN 2 30,000 SOAPS 53,900 CLOUDY WITH A CHANCE OF MEATBALLS 2 14,700 QUEEN LATIFAH SHOW, THE 18,600 MEN IN BLACK 3 [3D] 29,300 UNFORGETTABLE (2011) 39,300 CAPTAIN PHILLIPS 14,100 Y&R/Days of Our Lives 9,700 DJANGO UNCHAINED 23,800 14/15 NETWORK DRAMA A 32,500 AMERICAN HUSTLE 14,700 CLOUDY 2 18,700 BREAKING BAD 22,000 MONUMENTS MEN 10,500 CAPTAIN PHILLIPS 18,100 BATTLE CREEK 35,000 ZERO DARK THIRTY 11,500 HOTEL TRANSYLVANIA 16,300 OUTLANDER (2014) 20,800 AMAZING SPIDER-MAN 2 10,900 TOTAL RECALL 12,800 MASTERS OF SEX 18,200 22 JUMP STREET 10,900 PIRATES! BAND OF MISFITS, THE 12,700 EVRYBODY LOVES RAYMOND 15,900 BASIC MATH (FKA SEX TAPE) 9,500 ELYSIUM 11,600 HELIX (TV SERIES) 13,600 THINK LIKE A MAN 2 9,100 WHITE HOUSE DOWN 10,000 JUSTIFIED 13,000 ARTHUR CHRISTMAS 9,800 RAKE 13,000 BASIC MATH (FKA SEX TAPE) 9,400 BETTER CALL SAUL 12,000 NIGHT SHIFT, THE 11,600 FRANKLIN & BASH 11,200 DROP DEAD DIVA 11,000 GOLDBERGS, THE 10,900 WWTBM 10,900 DR. OZ SHOW, THE 10,700 All others individually < $9M 43,000 All others individually < $9MM 100,400 Starz Bonus 46,100 All others individually < $9MM 489,300 All others individually < $9M 239,400 Feature Library 75,000 TV Library 145,000 Feature Library 220,000 TV Library 70,000 Subtotal Features 326,800 Subtotal Features 947,000
WW Acquisitions 44,600 WW Acquisitions 176,000
Total 371,400 341,200 712,600 Total 1,123,000 727,000 1,850,000
25
3. Production
International Production – FY15 Outlook
Strong growth from Production across UK and Europe
• Create IP that travels – Support creation, launch and sales of formats that travel: The Patch, Fan Band, Popheads, Beat Shazaam among others – Maximize prelaunch of The Crown through integrated sales, marketing and publicity campaign – Rebuild SPT Russia’s capacity to produce enduring sitcoms and dramas that travel • Explore expansion opportunities for network of production companies in key strategic markets – Scandinavia, Turkey, Netherlands, Australia, N. Ireland • Support and strengthen existing production companies – Support SPT Latin America/Teleset to execute 5 year plan to build high quality, sustainable library of Spanish language programming for the region – Monitor progress of Toro Italy, Floresta (Brazil), SPT Arabia – Seek extension of HUASO (China) license and restructure operation – Support startup and integration of Electric Ray into SPT • Continue internal collaboration to drive business across Sony companies – SPT International Distribution: Continue close collaboration to maximize profits from new and library programming – SPT Networks: Expand original production opportunities with SPT’s network group – Sony Music: Continue to work on individual projects and build wider strategic partnership
27 International Production – Financial Summary
Revenue EBIT
$MM $MM $20 500 20
$444 $434
400 $381 $15 15
$301 300 $301 $10 $10 10 $10 $434 200 $15
5 100
0 0 FY14 FY15 FY14 FY15 Budget/Forecast MRP/Budget Budget/Forecast MRP/Budget
28 International Production – Detailed Revenue
REVENUE ($MM) FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance TV Licensing - WWTBAM 15 16 1 14 12 (2) (4) TV Licensing - Other Formats 19 10 (9) 18 16 (2) 6 Global Hit Format Assumptions ------11 (11) -- Sub-Total Central Formats 34 26 (8) 43 28 (15) 2
EMEA: France 26 21 (5) 30 30 -- 9 Russia 74 69 (5) 68 81 13 12 Germany 25 15 (10) 33 33 -- 18 United Kingdom (excl. Left Bank) 40 30 (10) 51 53 2 23 Left Bank 65 52 (13) 62 61 (1) 9 Netherlands 3 2 (1) ------(2) Italy 11 13 2 21 25 4 12 Middle East 39 20 (19) 50 38 (12) 18 EMEA 283 222 (61) 315 321 6 99
Latin America / U.S. Hispanic 59 52 (7) 84 80 (4) 28-- Asia ------New TBD Start Up JVs ------2 2 2 Other 5 1 (4) 2 3 1 2 Total Other 64 53 (11) 86 85 (1) 32 Total Revenue $381 $301 ($80) $444 $434 ($10) $133
29 International Production – Detailed EBIT
EBIT ($MM) FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance TV Licensing - WWTBAM 14 13 (1) 13 10 (3) (3) TV Licensing - Other Formats 11 6 (5) 12 10 (2) 4 Global Hit Format Assumption -- 3 (3) -- Sub-Total Central Formats 25 19 (6) 28 20 (8) 1
EMEA: France 4 5 1 5 5 -- -- Russia 9 30 21 14 20 6 (10) Germany 1 -- (1) 1 1 -- 1 United Kingdom (excl. Left Bank) 1 (2) (3) 3 4 1 6 Left Bank 6 4 (2) 4 4 -- -- Netherlands ------Italy 1 (2) (3) 2 -- (2) 2 Middle East 2 (2) (4) 4 2 (2) 4 EMEA 24 33 9 33 36 3 3 Latin America / U.S. Hispanic 6 6 (0) 6 6 -- -- Asia (1) (1) -- (1) -- 1 1 -- Central Development Fund (6) (2) 4 (6) (6) -- (4) Net SG&A (21) (22) (1) (22) (22) -- -- New TBD Start Up JVs -- -- (2) (2) -- (2) Other 2 (3) (5) -- -- 3 Total Other (20) (22) (2) (25) (24) 1 (2) Profit Contribution before PPA $29 $30 $1 $36 $32 ($4) $2 Purchase Price Amortization (19) (20) (1) (16) (17) (1) 3 EBIT $10 $10 ($0) $20 $15 ($5) $5
30 US Production – FY15 Outlook
Global market creates increased demand for content
Further strengthen portfolio by creating and selling content in all genres
• Drama – Maximize value of worldwide appetite for quality drama across all outlets with continued emphasis on broadcast and cable and additional focus on new platform opportunities
• Comedy – Maintain and support a strong comedy strategy as part of our overall portfolio business as comedy continues to maintain strong value in the syndicated marketplace
• First Run Syndication – Stabilize and grow the Queen Latifah daytime series for the 14/15 broadcast season and look to expanding the business into new lower cost opportunities
• Long Form – Continue to be the industry leader in MOW and limited series production, expanding our partners to include networks like FX, SyFy, Starz and Cinemax
• Non – Scripted – Capitalize on growth opportunities in cable (USA, TBS, AMC, WE) and continue to strengthen our foothold in broadcast
Content will continue to be created and sold across all platforms
• Digital / Online – Capitalize on growth opportunities in emerging platforms (Amazon, Netflix, Hulu)
• Cable – Consistently profitable with some of the most critically acclaimed and respected series in the industry
• Broadcast – Leverage the strength of our international partners to increase global demand and extend life of series on air in the US – Continue to invest in top tier creative talent
31 US Production Assumptions
13/14 14/15 Changes NETWORK Season Season since MRP CABLE FY14 FY15 Changes since MRP Bad Teacher 1st Before Crack 1st Incremental series Battle Creek 1st Straight to series Better Call Saul 1st Blacklist 1st 2nd Boondocks 4th Community 5th Breaking Bad 6th Goldbergs 1st 2nd 2nd season assumed Client List 2nd No 3rd season Michael J Fox 1st Not returning Drop Dead Diva 5th 6th 6th season assummed Night Shift 1st Franklin and Bash 4th No 5th season Rake 1st Helix 1st 2nd Unforgettable 2nd 3rd Justified 5th 6th Us & Them 1st KZK Project 1st Welcome to the Family 1st Masters of Sex 2nd 3rd Men at Work 3rd 4th Pilots 14 7 7 vs 8 pilots for 14/15 Necessary Roughness 3rd New Comedies 5 1 Outlander 1st 2nd Successful TBD Comedies 1 Pilots 1 2 FY14 1 pilot vs 2 New Dramas 3 2 Includes Battle Creek New Dramas 2 3 Successful TBD Dramas 1 1 Successful TBD Dramas 2 1
Days of Our Lives 49th 50th NON-SCRIPTED 13/14 14/15 Changes since PY Plan The Young and the Restless 41st 42nd Shark Tank 5th 6th SYNDICATED SERIES Sing Off 4th 5th Summer Camp 1st No second season assumed Dr. Oz 5th 6th Talking Bad 1st Queen Latifah 1st 2nd Mom's Got Game 1st 2nd Wheel of Fortune 31st 32nd Work for hire 1 Jeopardy! 30th 31st Pilots 5 5 MADE-FOR-TV MOVIES New Cable Series 2 2 Successful Cable Series 2 1 Movie 9 9 New Network Series 1 Mini-Series 1 1 Successful Network Series 1
32 Projected Value of Shows in Syndication
Attractive returns with upside potential for shows that prove to be a ‘hit’
Show in Syndication / Anticipated Expected to Syndicate Value to SPE(1)
Breaking Bad $275MM Dr. Oz $90MM Justified $53MM Current Drop Dead Diva $49MM Examples Rescue Me $45MM Damages $33MM Rules of Engagement $30MM Community $21MM
Before Crack (6 Seasons) $140MM Family Murder Mystery (KZK) $109MM (6 Seasons) Projected Dr. Oz (8 Seasons) $105MM Examples Better Call Saul (5 Seasons) $100MM Unforgettable (5 Seasons) $65MM New Network series such as: The Goldbergs (5 Seasons) or The $75MM – $145MM Blacklist (6 Seasons) 33 (1) Values are on an ultimate basis; current and projected values are as of January 2014. US Production – Current Series, Pilots & Development Cost
Revenue EBIT
$MM Impact from IGT Deal $MM Impact from IGT Deal
2,000 $1,927 450 $433 $1,802 $1,799 1,800 $1,714 $216
1,600 $163 1,400 $300 300 1,200
1,000 $215 $184 $1,711 800 150 600 $270
400
200
0 A B C D 0 A B C D FY14 FY15 FY14 FY15 Budget/Forecast MRP/Budget Budget/Forecast MRP/Budget
34 US Production – Current Series, Pilots & Development Cost
$MM Revenue FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance Broadcast Network: Scripted Pilots and Series 601 518 (83) 577 573 (4) 55 Cable Network: Scripted Pilots and Series 474 567 93 537 577 40 10 First-Run Syndication 167 155 (12) 175 155 (20) -- Non-Scripted 41 69 28 91 93 2 24 Total Before Embassy Row 1,283 1,309 26 1,380 1,398 18 89 Embassy Row 41 17 (24) 34 34 -- 17 Subtotal 1,324 1,326 2 1,414 1,432 18 106 Days of Our Lives, Young & The Restless 176 174 (2) 178 179 1 5 Wheel of Fortune, Jeopardy! 214 211 (3) 210 188 (22) (23) Total Daytime & Games 390 385 (5) 388 367 (21) (18) TOTAL Before IGT Deal $1,714 $1,711 ($3) $1,802 $1,799 ($3) $88 IGT Deal -- 216 216 -- -- 0 (216) TOTAL After IGT Deal $1,714 $1,927 $213 $1,802 $1,799 ($3) ($128)
$MM EBIT FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance Broadcast Network: Scripted Pilots and Series (15) (36) (21) 58 24 (34) 60 Cable Network: Scripted Pilots and Series 69 176 107 106 76 (30) (100) First-Run Syndication 18 10 (8) 30 20 (10) 10 Non-Scripted 2 8 6 2 3 1 (5) Development Expense (38) (38) -- (38) (38) -- -- Total Before Embassy Row 36 120 84 158 85 (73) (35) Embassy Row 6 6 -- 7 7 -- 1 Subtotal 42 126 84 165 92 (73) (34) Days of Our Lives, Young & The Restless 30 38 8 31 32 1 (6) Wheel of Fortune, Jeopardy! 112 106 (6) 104 91 (13) (15) Total Daytime & Games 142 144 2 135 123 (12) (21) TOTAL Before IGT Deal $184 $270 $86 $300 $215 ($85) ($55) IGT Deal -- 163 163 ------(163) TOTAL After IGT Deal $184 $433 $249 $300 $215 ($85) ($218) 35 US Production – New Series Investment & Development
Represents ONLY development expense and deficit pilots/series and EXCLUDES profitable series
$MM Scripted Pilot/Series Scripted Development Allocated Overhead
(160)
(140) ($134)
($19) (120) ($104) (100) ($20) ($38)
(80) ($77) ($68) ($8) ($38) ($6) (60) ($38) ($38) (40) ($77)
(20) ($46) ($31) ($24) 0 FY14 FY15 Budget/Forecast MRP/Budget
36 US Production – FY14 Q4 New Series Investment & Development
$MM
New Series Investment Pool - FY14 Budget ($104) 13/14 B'cast Pilot Slate 14/15 B'cast Pilot Slate 3 add'l Network series (Us & Them, Night Shift, Bad Teacher) (12) FY14 Budget FY14 Q4 FY14 Budget FY14 Q4 GOLDBERGS back-10 order (9) 8 FY13 8 FY13 5 FY14 5 FY14 Network product mix (9) 5 FY14 6 FY14 4 FY15 2 FY15 13/14 Pilots - timing with FY13 6 13 Total 14 Total 9 Total 7 Total 14/15 Pilots - timing with FY15 1 All Other (7) Net Variances ($30)
Total Investment Pool - Q4 Forecast ($134)
FY14 Variance Co- FY14 Budget Economic Production Volume Timing Total Q4 Forecast Network: GOLDBERGS (vs coprod) (5) -- (2) (7) (9) (14) WELCOME TO THE FAMILY (7) (1) -- (1) (8) MICHAEL J FOX (13) -- (13) RAKE -- (10) (10) (10) BLACKLIST (2) 2 -- 2 -- US & THEM -- (5) (5) (5) NIGHT SHIFT -- (2) (2) (2) BAD TEACHER -- (5) (5) (5) SAVE ME -- (5) (5) (5) BATTLE CREEK -- (1) (1) (1) 13/14 Network Pilots (15) 5 2 (1) 6 (9) 14/15 Network Pilots (16) 1 1 (15) Subtotal Network (58) (14) 3 (17) (1) (29) (87) Cable: OUTLANDER (2) -- (2) HELIX (2) (1) (1) (3) NECESSARY ROUGHNESS (1) -- (1) Cable Pilots (3) -- (3) Subtotal Cable (8) (1) ------(1) (9)
Development (38) -- (38) Total ($104) ($15) $3 ($17) ($1) ($30) ($134)
37 Note: Includes allocation of departmental overhead. US Production – FY15 Budget New Series Investment & Development
$MM
New Series Investment Pool - MRP ($68) 14/15 B'cast Pilot Slate 15/16 B'cast Pilot Slate GOLDBERGS - Season 2 not assumed in MRP (10) MRP FY15 Budget MRP FY15 Budget 14/15 Pilots - fewer pilots 2 5 FY14 5 FY14 4 FY15 4 FY15 BATTLE CREEK - higher production deficit than TBD (1) 3 FY15 2 FY15 5 FY16 5 FY16 Net Variances (9) 8 Total 7 Total 9 Total 9 Total
Total Investment Pool - FY15 Budget ($77)
FY15 Variance MRP Economic Volume Total FY15 Budget Network: THE GOLDBERGS -- (10) (10) (10) BATTLE CREEK (2) (1) (1) (3) 14/15 TBD Comedy (2) -- (2) 14/15 Network Pilots (6) 2 2 (4) 15/16 Network Pilots (10) -- (10) Subtotal Network (20) (1) (8) (9) (29) Cable: OUTLANDER (6) -- -- (6) Cable Pilots (4) -- (4) Subtotal Cable (10) ------(10)
Development (38) -- (38) Total ($68) ($1) ($8) ($9) ($77)
Note: Includes allocation of departmental overhead. 38 US Production – Library and Net Overhead
Revenue $MM FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance US TV Library 189 186 (3) 177 195 18 9 All Other Products -- 1 1 6 2 (4) 1 Net G&A ------TOTAL $189 $187 ($2) $183 $197 $14 $10
EBIT $MM FY14 FY15 FY14 vs FY15 Budget Forecast Variance MRP Budget Variance Variance US TV Library 112 112 -- 108 127 19 15 All Other Products (5) (1) 4 (4) -- 4 1 Net G&A (20) (26) (6) (22) (23) (1) 3
TOTAL $87 $85 ($2) $82 $104 $22 $19
39 US Production – Product Library
Revenue EBIT
Int'l Dist US Dist SPHE Merch/Other Co Dist Ad Sales $MM $MM 225 160
$195 $189 $186 140 $177 21 $127 23 22 19 12 120 $112 $112 8 $108 13 1 1 150 1 11 21 $112 21 1 100 36 25
80 65 71 44 53 60 $127 75 112 108 40
72 69 69 68 20
0 0 FY14 FY15 FY14 FY15 Budget/Forecast MRP/Budget Budget/Forecast MRP/Budget
40 Year Over Year EBIT $MM EBIT FY14 Q4 Forecast Before IGT and Monetizations $608 Networks MSM - SET ratings recovery, increased ad/sub revenue 36 GSN - Increase in digital revenue, $8MM reduction in purchase prize amortization 19 Domestic Networks - Crackle $10MM higher due to increased ad sales 16 Networks - Asia/Europe/Latam - Mainly higher ad/sub revenue across majority of the channels 44 FY14 Monetization (Dolphin, FEARnet, SPIN Latam/Brazil in FY14) (35) Total Networks 80
International Production Growth in Int'l Production operating companies with more commissions assumed: UK, ME, Italy, Germany 15 Lower revenue from sales of library product primarily Russia: Raymond, Married With Children (7) WWTBAM - Lower format sales; Germany renewal booked in FY14. Production: Off air in the UK (6) Lower Int'l Production purchase price amortization 4 Total International Production 6
US Production & Ad Sales Breaking Bad no longer on air. Lower revenue assumed across all markets (131) IGT FY14 earned royalties not in FY15 (18) Happy Endings - No 4th Season (6) Fewer deficit broadcast series (9 in FY14 vs. 2 assumed in FY15) 40 SVOD Avails in FY15 - Blacklist and Helix 26 Profitable Netflix Series assumed in FY15 - KZK, Before Crack 22 Seinfeld - Cable sale 20 Better Call Saul - Pre-sold to Netflix 8 Total US Production & Ad Sales (39)
Other 1 FX (8)
Total Variance $40 41 FY15 Budget $648