DRAFT
Channel 5 Deal Overview February 2014 DRAFT Executive Summary
Sony Pictures Television (“SPT”) has an opportunity to acquire Channel 5 (a subsidiary of Northern & Shell), an FTA channel that is the only privately owned commercial public service broadcaster in the UK • Channel 5 is a multi-channel network with its channels (i.e., Channel 5, Multichannel 5*, Multichannel 5 USA, and Demand 5) available on Freeview, satellite (e.g., Sky), cable (e.g., Virgin) and IPTV • Northern & Shell (“N&S”) has hired Barclays to run a sale process for the entire business with initial non- binding indications of interest due by February 27, 2014 – We estimate a preliminary valuation for 100% of Channel 5 in the range of $825M – $945M (£516M – £591M), representing a 10.3x to 11.7x CY13 Adj. EBITDA multiple and a 7.6x – 8.7x CY14 Adj. EBITDA multiple – This is a preliminary valuation estimate based on limited information and prior to due diligence • Channel 5 provides an opportunity for SPT to become a powerhouse in a key international free-to-air market and to realize significant synergies across Sony Pictures Television networks, distribution, production, ad sales divisions as well as Sony One benefits – Expand SPT’s distribution and reach and cross promote channels and drive viewership and ad sales – Platform to launch new formats and co-productions in the UK – Distribution outlet for SPE content (film and TV series, soaps, talk shows, children’s, library product) – Immediate digital presence in the UK market with Demand 5’s catch-up and VOD service • SPT proposes to submit a preliminary and non-binding indication of interest, subject to due diligence, of $850M (£531M) for Channel 5, representing a 10.6x CY2013 Adj. EBITDA multiple and 7.8x CY2014 Adj. EBITDA multiple – SPT to form a JV and own 51% of the equity, which would allow for consolidation [TBD] – Transaction assumes no leverage 2 • With preliminary synergies, the Channel 5 acquisition has an NPV of $26M, IRR of 13.4%, DWM of ($434M), Note: Assumes £ to $ exchange rate of 1.60. and payback in FY23 based on an SPT equity investment of $434M for 51% of the equity DRAFT Situation Overview
• In July 2010, RTL Group, the leading European entertainment network, announced the sale of Channel 5 to the N&S company owned by British publisher Richard Desmond for a total cash consideration of $167M (£104M)
– The deal valued Channel 5 at LTM revenue multiple of 0.4x and LTM EBITDA multiple of 12.4x
– Channel 5 experienced significant revenue and profit decline relative to the market in 2008 and 2009; the company underwent a comprehensive restructuring process at the time of sale
– Rival bidders also included Channel 4, Time Warner and Endemol
• Northern & Shell has now appointed Barclays to advise on a potential sale of Channel 5
– Process expected to be a competitive auction and possibly a two-stage process
– Interest so far from a broad array of bidders, although private equity seen to be relatively reluctant
– Signing expected prior to the summer break
• Next Steps: Indicative non-binding proposals are due by 9:00am GMT on February 27, 2014 3 Note: Assumes £ to $ exchange rate of 1.60. DRAFT Company Overview
Company Highlights
• Channel 5 is a multi-channel network with channels available on Freeview, satellite (e.g. Sky), cable (e.g. Virgin) and IPTV • 6.0% Channel 5 family Share of Viewing (“SOV”)1 in all of UK • Launched in 1997 as the fifth and final national terrestrial UK network • Acquired by Northern & Shell from RTL Group in 2010 • The Department for Culture, Media and Sport announced in November 2012 that Channel 5’s PSB license would be renewed until 2024. The final license renewal announcement was made by Ofcom on February 11th 2014 for the licensing period starting from January 2015 to end of 2024 Key Brands
Channel 5 Multichannel 5 Multichannel 5 USA Demand 5 • UK’s fifth most popular • 0.6% SOV1 in 2013 • 1.0% SOV1 in 2013 • Catch-up and VOD service channel, with 4.4% SOV1 and • Shows a mix of soaps, • Shows drama, films, sports, • Provides PC, tablet, mobile reached 48M viewers in movies, dramas and comedies and youth and connected TV access to December 2013 documentaries with a focus programming from the US Channel 5’s programming • Programming revolves around on 16 – 34 year olds • Key Programming: • Achieves 12M views per entertainment, • Key Programming: month documentaries, kids, news, • Partner in the YouView films and sports consortium, a next generation • Key Programming: IPTV service
Channel 5 is the UK’s only privately owned commercial Public Service Broadcaster (“PSB”)2, viewed by 80% of the UK population in a typical month and has a 9.6% UK Share of Commercial Impacts (“SOCI”)
4 (1) Source: Broadcasters Audience Research Board. Refers to 2013 and Channel 5’s main channel, 5USA, 5* Multichannels and +1 channels. (2) PSB’s include Channel 5, BBC1, BBC2, ITV and Channel 4. DRAFT Strategic Acquisition Rationale
Opportunity Consideration • Revenues are highly concentrated on advertising • Inter-company revenues (predominantly air time) amount to 9.4% of total sales. Channel 5’s contracts with N&S expected • Become a powerhouse in a key free-to-air international market to be extended to CY16, thereafter N&S likely needs to be by combining SPT and Channel 5’s networks replaced • Utilize unused digital spectrum to launch new channels • Big Brother makes up a significant portion of total impacts • Refocus strategic positioning of multichannels 5* and 5USA to (15%), which creates uncertainty in projected periods Networks target key demos and improve ratings • SPT recently signed a 7 year ad deal with Sky to sell the UK • Cross-promote channels to increase ratings and ad revenues channels’ ad inventory ; ad synergies in the first 7 years may • Utilize Channel 5’s program library across SPT channels come from multichannel launches only • Potential to improve ad rates by bundling SPT channels ad • TV ads and N&S publications ads appear to be sold in inventory with ad inventory from new Channel 5 launches packages. The impact from selling TV ads on stand alone basis is unclear • Ad sales team of 97 people appears to be shared across all N&S properties • Channel 5 predominantly outsources original production - opportunity to leverage SPT’s production capabilities in the UK • Channel 5 has an in-house production company which Production • Test and launch new formats in the UK - creates a larger contributes relatively small revenue and has not generated opportunity to discover a hit format and capture international flagship IP sales • Expiration of current distribution agreement with DRG is • Incremental distribution of TV series, soaps, library product unknown Distribution • Distribute original shows produced by SPT and in-house • Limited near-term upside given estimated small size of productions in international markets international revenue from original productions • Immediate digital presence in UK market and ability to • Digital economics not provided at this time leverage the team and technology across SPT channels Digital • YouView is incurring significant losses and Channel 5 has • Ownership in YouView, a JV with 6 others, UK’s fastest funding commitments; may be diluted thereafter if it stops growing connected TV platform funding • The channel has had steady ratings and share over the last 4 years • Improve ratings and diversify revenue streams (digital, • Certain factual Channel 5 productions are co-produced and production, retransmission) co-financed by an agency (GroupM). Without the co-financing partner Channel 5 may need to increase its program spend • High upside from retransmission fees, if allowed Financial although unlikely to be very significant • Cut G&A and operating costs, such as transmission fees, • Retransmission fees are uncertain,subject to regulatory when bundled with SPT channels approvals 5 • Channel 5 has a lean overhead operation • Channel 5 and N&S expected to renew inter-company contracts at market rates through CY16 DRAFT Programming Overview ($M) Overview Key Program Spending
• Acquisitions (licensed content) comprise $184M (56%) of 2013 • Big Brother: $54M (£33.6M) of program spend in CY13 total programming costs – Reality show produced by Endemol targeting ages 16-34 – TV and film account for $141M and $43M, respectively demo, Channel 5’s flagship commission – SPT Distribution expected to sell ~$21M of content to Channel – Last contract extension was in July 2012 5 – Contract expires in December 2015 • Original programming (commissions) comprise $144M (44%) of • Neighbours: $36M (£20M) of program spend in CY13 2013 total programming costs – Soap opera produced by FremantleMedia Australia – Top 3 shows (Big Brother, Neighbours and Home and Away) – Contract renegotiated in 2010 to reduce costs by $19M comprise $111M or ~80% of original programming spend (£12M) annually – Remaining original shows cost $31M or ~20% of original – Contract expires in 2017 and represents the biggest programming spend contract commitment - $128M (over 50% of total commitments) – SPT expected to produce 50% of original shows outside of top 3, which accounts for $15M or ~10% of original programming • Home and Away: $24M (£15.3M) of program spend in spend CY13 • Channel 5 comprise 87% ($286M) of total programming spend in – Soap opera produced by Red Heart Entertainment 2013 – Contract expires in December 2016 and represents the 2nd largest acquired contract commitment - $69M • MultichannelsCY10 – CY13 comprise Programming 13% ($42M) of total Breakdown programming spend, Channel 5 CY13 Programming by Genre (£43M) with over 90% on acquisitions (licensed content)
Original Scripted Childrens Drama Documentary Special Interest Reality Other Non-Scripted Format
Original International Non-Scripted
6 Note: Assumes £ to $ exchange rate of 1.60. DRAFT Programming Overview (cont.)
• Channel 5’s ratings and impacts are strongly influenced by several shows (i.e. Big Brother, CIS, NCIS), which creates uncertainty in projected periods
• Big Brother contract is up for renewal after Dec 2015; a loss of this show may significantly impact financial performance
– Show viewed as not very attractive to competitors, expected to remain with Channel 5
– Content spend of $54M per year
– SPT projections assume a renewal at 5% increase ($2.7M increase per year)
• Home and Away expires in Dec 2016
– SPT projections assume a renewal at a significant increase of 20% or $4.8M increase per year
• Neighbours was renegotiated in 2010 at a $19M per year lower cost and expires in 2017
– SPT projections assume a renewal at similar terms
• SPT production companies in the UK expected to develop original shows for Channel 5
– Currently, Channel 5 spends ~$31M on original shows excluding its top 3 shows
– SPT projections assume that SPT can develop ~50% of the original shows outside of the top 3 shows
– Expected revenue contribution of $15M and EBIT contribution of $1.5M to SPT
– Original shows produced by SPT expected to increase international sales for SPT distribution
7 Note: Assumes £ to $ exchange rate of 1.60. DRAFT
Programming Overview (cont.)
• SPT distribution expected to sell incremental content to Channel 5 (e.g., film, series, talk shows, soaps, library, children’s)
– SPT projections assume $10M of incremental distribution revenue, ramping up to $20M before participations
– Participations projected at 25%
• Channel 5’s library can be utilized across SPT channels
– Projected programming savings ramping up from 5% to 10% related to a reduction of SPT UK Networks programming costs from airing Channel 5 library content on SPT’s UK channels
• Certain factual Channel 5 productions are co-produced and co-financed by an agency (GroupM). Without a co-financing partner, Channel 5 may need to increase its program spend although unlikely to be very significant
– GroupM provides deficit funding on top of the broadcaster’s fee to ensure the show can be made. In return, it takes a percentage of ancillary revenues, including international sales (effectively acting as co-producer)
8 Note: Assumes £ to $ exchange rate of 1.60. DRAFT In-House Production
Overview
• In-house production launched in 2011 and expected to generate $13.6M (£8.5M) in CY14 – Formats generally developed for target Channel 5 demo with the ability to sell internationally and re- Criminals: On Benefits & Jamie’s Got a versions (e.g. British voiceovers for US shows) Caught on Proud Mountain to Camera Climb • Channel 5 currently airs in-housed produced shows Criminals: Caught on Camera, Marco Pierre White’s Kitchen Wars, On Benefits & Proud and Go Hard or Go Marco Pierre Speidi: Scandal, The Great Home with numerous other shows in production White’s Kitchen Secrets & Christmas Toy • Internationally, in-house produced shows are distributed Wars Surgery! Giveaway through DRG
• CY14 pipeline includes recommissions (e.g., And Proud, John Barrowman’s Go Hard or Go Caught on Camera, Tesco Mum of the Year) and a new Dallas Home commission (i.e., Plantagenets)
Opportunities • SPT expects to bring Channel 5’s in-house production team under the UK umbrella companies • SPT could distribute Channel 5’s in-house produced content outside of the UK – Expiration of current distribution agreement with DRG is unknown – Limited near-term upside given estimated small size of international revenue
9 Note: Assumes £ to $ exchange rate of 1.60. DRAFT Ad Sales
Overview Channel 5 Pricing Premium/(Discount) to Comps • In-house ad sales operations comprised of 97 employees in 2013 which is shared with all N&S properties – Airtime revenue generated 87% of Channel 5’s total revenue in CY13 • Inventory is priced at a premium to the broader UK TV market across all demographics but at a discount to ITV reflecting a potential upside • Select advertisers include:
Opportunities • Potential to improve ad rates by bundling SPT channels ad inventory with ad inventory from new Channel 5 launches • Potential to utilize Channel 5’s in-house ad sales team to sell SPT’s channels ad inventory. However, given that SPT recently signed a 7 year deal with Sky to sell the UK channel’s ad inventory, it is unlikely SPT is able to realize any immediate synergies from Channel 5’s ad sales team, unless SPT: – 1) Shuts down Channel 5’s ad sales group and move Channel 5’s inventory to Sky or, – 2) Exits the contract with Sky (without penalty) and move SPT Network’s existing UK channels ad inventory to be represented by Channel 5’s ad sales team • As the upside for ad sales synergies are longer term, such opportunities are not included in the business plan • As Channel 5’s ad sales team appears to be shared with N&S, it is currently unclear how it could be separated and impact on ad revenue • TV ads and N&S publications ads are sometimes sold in packages which can improve rates. Channel 5 and N&S expected to renew inter-company contracts at market rates through CY16. SPT projections assume 5% decrease in ad revenue due to the 10 inter-company impact, partially offset by a 3% ad market growth DRAFT Inter-Company Revenue and Cross-Promotion ($M)
Inter-Company Revenue CY10 – CY16 Inter-Company Revenue
• Channel 5 inter-company revenue comprises of airtime and online advertising for The Health Lottery and other N&S’s titles, in-house production of these and other ads, and sublet fees for DTT bandwidth – CY13 inter-company revenue of $55.5M (£34.7M) represented 9.4% of total revenue • Inter-company costs include marketing costs estimated to remain at $3.4M (£2.1M) over the next few years • Volume of cross-media deals between Channel 5 and N&S CY13 Inter-Company Revenue ($56M) print titles have been limited, with most of the campaign Breakdown value in TV advertising – CY13 cross-media deals amounted to $14.1M (£8.8M) with 17% of the total allocated to N&S print • N&S anticipates that the existing commercial agreements between Channel 5 and N&S will continue on an arm’s length basis in the business plan period after transaction close Considerations • Inter-company revenue represents ~8% of total revenue going forward. Inter-company agreements are expected to be extended at market terms through CY16. Thereafter, Channel 5 will likely need to replace N&S as a client. SPT projections assume that 50% of the inter-company revenue will not be recovered past CY16 • The Financial Times estimates that the free coverage of Channel 5 content on N&S publications is valued at approximately $32M (£20M). However, N&S contends that Channel 5 content would receive N&S coverage regardless of ownership due to the overlap in viewer and consumer demographics. SPT projections assume $15M of incremental annual marketing after CY16 • Adjusted EBITDA, as provided by the Company, includes additional overhead costs Channel 5 would incur on a standalone basis including inter-company rent and other central services currently provided by N&S. SPT projections assume that 11 Company estimates of $3.6M to $4.6M per year accurately reflect any stand-alone adjustments Note: Assumes £ to $ exchange rate of 1.60. DRAFT Summary Financials: SPT Case
12 Note: Assumes £ to $ exchange rate of 1.60. (1) Other adjustments provided by Company Management, including stand alone costs, redundancy costs, transmission costs adjustments, and Top Up TV bandwidth buy back. DRAFT Synergies and Other Adjustments to Business Plan SPT($M) projections assume no changes to Management Case revenues through CY16. Post CY16, we extended the Management Case forecast to CY19 to include the following revenue adjustments starting in CY17: • 5% decrease in ad rates/revenue in CY17 when Channel 5 ads discontinue to be sold in packages Ad Rates Decrease with N&S ads and when inter-company contracts expire. Impact is partially offset by 3% ad market growth Decline in Inter- • 50% decline in inter-company revenue starting in CY17. Contracts with N&S expected to be company Revenue extended through CY16, thereafter 50% of N&S business expected to be replaced We made the following expense adjustments to the Management Case in order to derive Pro-forma Standalone EBIT: (1) Increase in • 5% increase in Big Brother program costs once current licensing deal expires at end of CY15 Programming Spend • 20% increase in Home and Away program costs once current licensing deal expires at end of CY16 (2) Additional • Expected increase in marketing due to the loss of free publicity of Channel 5 on N&S publications Marketing past CY16 We made the following assumptions in order to derive SPT EBIT with Synergies: • Proceeds of $10-$20M (less participations) from selling incremental available content. SPT (3) Incremental Distribution expected to sell only $6M of content to Channel 5 in FY15. Amount expected to Distribution Proceeds increase to include additional sales of TV film and series, talk shows, soaps, library that are not currently sold in the UK (4) Programming • Programming savings ramping up from 5% to 10% related to a reduction of SPT UK Networks Savings programming costs from airing Channel 5 library content on SPT’s UK channels • Additional production fees to SPT for producing ~50% of Channel 5’s original shows (excluding top 3 (5) Production Fees shows) • Assumes $15M of annual revenue at 10% EBIT margin to SPT
(6) Cross Promotion • Increase of ad revenue to UK SPT networks of 10% due to promotion on Channel 5
13
Note: Assumes £ to $ exchange rate of 1.60. DRAFT Upside Potential – Not Included in Business Plan
There are a number of opportunities that are not included in the business plan:
• Utilize unused digital spectrum to launch new channels (increasing impacts for key 16 – 34 demographics) New Channels • Refocus strategic positioning of multichannels 5* and 5USA to target key demos and improve ratings
• Potential to improve ad rates by bundling SPT channels ad inventory with ad inventory Ad Sales from new multichannel launches
• Channel 5 may benefit from retransmission fees coming from pay TV platforms - represents a significant future revenue opportunity, all of which should flow to EBITDA Retransmission Fee Upside • Equity research analysts quantify the retransmission opportunity for ITV at $160M (£100M) annually, although ITV has significantly larger scale (~6x revenue size of Channel 5)
Hit Show Format • $50M to $75M over 5 years potential upside from creating a hit show
• Incremental fee potential from the distribution of original shows produced by SPT and Distribution Fees Channel 5 in-house production in international markets
• Targeted marketing and advertising using customer data • Next generation VOD features including downloadable content and second screen apps Digital • Expansion of companion apps • Further growth of next generation IPTV platform, YouView
14 Note: Assumes £ to $ exchange rate of 1.60. DRAFT Preliminary Valuation ($M)
• SPT estimates a preliminary enterprise value range of $825M – $945M (£516M – £591M) before synergies based on Channel 5 financial projections and by equally weighting the DCF, trading multiples, and comparable transaction valuation methodologies – The valuation implies 10.3x – 11.7x CY13 Adj. EBITDA and 7.6x – 8.7x CY14 Adj. EBITDA – The valuation is pre-diligence and gives full credit to Channel 5’s projections – Includes NOLs valuation of $35.2M • Analysis assume a purchase price for 100% of $850M (£531M) for Channel 5, representing 10.6x CY13 EBITDA and 7.8x CY14 EBITDA
15 Note: Assumes £ to $ exchange rate of 1.60. (1) Implied enterprise values include NOL valuation of $35.2M. DRAFT Returns Analysis (w/ SPT Synergies) ($M)
• Analysis assumes purchase price of $850M with SPT contributing $434M for a 51.0% equity stake
16 Note: Assumes £ to $ exchange rate of 1.60. NOLs of $200M included to offset Channel 5 taxes. DRAFT Next Steps
• Internal structuring discussion with executives
• Get Sony Corp acknowledgement to proceed with first round auction
• Hire an investment bank
• Prepare internal analysis
• Assess potential financing scenarios
• Submit a non-binding proposal by February 27th
• Due diligence
17 DRAFT
Appendix A: Company and Industry Information
DRAFT Company Revenue Breakdown
CY13 Revenue Breakdown
Sources of Revenue Descriptions
• Sale of TV advertising inventory to advertisers, largely done via media agencies and direct sales Airtime • Competes with other UK commercial TV channels for share of UK TV NAR Revenue • Core revenue component of Channel 5
• Select partnerships: Mark Brown, Super Casino Commercial • Telephony revenue from phone-in competitions on the Channel 5 family Partnerships • Teleshopping in non-peak hours, back-end licensing of 3rd party programming, live events ticket sales and merchandising, licensing of music rights
Digital • Comprehensive online content offering with years’ worth of programming content across all major platforms Media Group • Advertising inventory sold on CPM basis to monetize rapidly increasing volume of long form video views
• Sponsorship deals on select programs typically sources via media agencies Sponsorship • Incremental opportunity above airtime sales
Other • Other revenue includes HD carriage fees from Sky and Virgin Media, cross-media production deals, and inter-company production
19 DRAFT Channel 5 (Main Channel) Programming Slot Analysis
20 Note: Slot analysis includes only Channel 5. DRAFT Programming Impact Analysis
• Big Brother makes up a significant portion of total impacts
• Big Brother, CSI, and NCIS combined make up 27% of CY13 total impacts
21 Note: Impact analysis includes Channel 5, Multichannel 5*, and Multichannel 5 USA. (1) Impact defined as a viewer watching one 60 second commercial. DRAFT Comparable Analysis ($M)
Channel 5 still has room for margin growth compared to its main competitors
TBU
22 Source: Capital IQ and company filings. Note: Comparable public company LTM financial data as of February 5, 2014. (1) Comparable public company programming spend based on latest annual filing. DRAFT UK Television Market Snapshot
Largest European Advertising Markets: 2011-2014 (£ in BN) CAGR: % (0.3%) : 4.8 AGR 15.7 15.5 15.3 15.6 C 14.0 13.1 12.4 12.2 CAGR: (1.6%) 8.5 CAG 8.3 8.0 8.1 R: CAGR: (8.2 %) (8.5%) 5.2 4.8 4.7 4.2 4.0 3.9 3.5 3.6
2011 2012 2013E2014E
Germany UK France Italy Spain
2011 2012 2013E 2014E UK Advertising Breakdown: 2013-2017 UK TV Advertising Revenue: 2013-2017 (£ in M) 3.5% AGR: 36% 36% 35% 34% 34% C 4,219 4,114 3,955 3,855 3,680 38% 39% 40% 41% 42%
28% 28% 25% 25% 25%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 (1) Television Internet Other 23 Source: Company information, Zentih OptiMedia, Screen Digest, and Informa 2013. (1) Other includes radio, newspapers, magazines, outdoor, cinema, and mobile. DRAFT UK Television Market Snapshot (Cont.)
TV Households (HHs) Multichannel TV HHs by Platform(1) (M) (M) 27.9 28.2 28.5 28.8 29.1
12.0 12.2 11.4 11.7 11.9 1.2 1.5 1.9 2.2 2.4
20.9 21.1 21.4 21.6 21.8
3.8 3.8 3.9 3.9 3.9 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Penetration 97.8% 97.8% 97.9% 97.9% 98.1% Cable DTT IPTV DTH : Competitive Landscape
• State-owned • Public • State-owned • Public • 2 PSBs (BBC1, BBC2) • 1PSB (main channel) • 1 PSB (main channel) • DTH operator • 6 multichannels • 4 multichannels • 5 multichannels • Owns channels including sky1, Sky • Selected brands: • 4 +1 time-shift channels • 4 +1 time-shift channels Sports, Sky Movies • Selected brands: • Selected brands: • Selected brands:
24 Source: Informa 2013. (1) Includes both primary and secondary sets. DRAFT Company Performance
Viewing Share of Multichannel Homes Share of TV Advertising
5.9% 6.0% 5.9% 5.9% 6.0% 5.9% 5.6% 8% 8% 7% 6% 8% 7% 5.1% 0.7% 0.8% 1.0% 0.1% 0.6% 0.9% 1.0% 1.0% 0.5% 33% 0.1% 0.4% 0.6% 0.5% 0.5% 0.5% 0.5% 37% 40% 39% 40% 42%
19% 18% 17% 17% 16% 15% 4.9% 4.6% 4.7% 4.6% 4.5% 4.4% 4.5% 4.4% 40% 38% 37% 38% 36% 36%
2006 2007 2008 2009 2010 2011 2012 2013 YTD 2007 2008 2009 2010 2011 2012
Channel 5 5* 5 USA ITV Channel 4 Other Channel 5 2012 UK Viewing Share(1) by Broadcaster(2) 2012 Programming Investment vs. (£ in M) Competitors BBC; 24% 1390
Others; 39% 814
492
215 ITV; 18% Channel 5 Channel 4 BBC ITV % Rev.: 66% 53% 27% 32% 25 ChannelSource: 5;OfCom, 5% Company information, and Informa 2013. (1) Viewing ShareChannel is defined as the total 4; percentage 13% of televisions tuned into a specific channel. (2) Includes all channels in family. DRAFT
Appendix B: Valuation Schedules
DRAFT Comparable Company Analysis ($M)
• SPT assumes trading multiples based off CY13 and CY14 Adj. EBITDA that are within the range of comparable public companies. SPT applied:
— CY13 Adj. EBITDA: 9.5x – 10.5x
— CY14 Adj. EBITDA: 8.5x – 9.5x
27 Note: Western European Comparables’ multiples do not include a control premium. DRAFT Comparable Transaction Analysis ($M)
• SPT assumes transaction multiples based off CY13 Adjusted EBITDA that are within the range of observed comparable recent transaction multiples
— SPT applied a CY13 Adj. EBITDA multiple range of 10.5x – 11.5x
28 DRAFT WACC Analysis ($M)
29 Note: Market data as of February 5, 2013. DRAFT WACC Analysis (Cont’d)
30 Note: Market data as of February 5, 2013.