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Starz Negotiations Update Document August 2012

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Landscape Summary

1. Sellers: Little direct competition from other studios at present. Disney is only a partial competitor. Universal is exploring but is likely to renew with HBO. Over the next two years, Paramount (if fails) and Fox may be shopping.

2. Buyers:

EPIX: Interested in , but they don’t have DirecTV carriage that they were hoping to get by way of a lawsuit. They may be in trouble. We would like to nail down a pay deal before EPIX implodes and floods the market

HBO: Would be willing to talk to us if Universal falls thru, but that could take a year to determine. If Universal wants in, they will likely renew with Universal because they need carriage on

Comcast: Interested in talking; need to be educated; not clear if they’d actually do the deal or if they are just fishing for market information

Netflix: Interested in Columbia titles, less interest in Classics and titles

Amazon/: Interest in a subset of pictures. Not clear to them what impact this will have on their subscribers / viewers so it may be difficult for them to know how to value the product for lack of experience. Expect some feedback in the next few weeks

Showtime: Interest in Screen Gems and perhaps a portion of Columbia slate

DirecTV: Interested in exploring a shared output deal, e.g., where DirecTV takes a window after Pay1, shared with another linear or SVOD service

We could end up splitting the slate 3 ways (, Showtime, Hulu/) based on the current buyer landscape, but it’s still too early to tell

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Shared Output Deals: Potential Structures

Scenario Description Pay 1 Network Pay 2 Network Pay 3

1 Only

(possible)

2 Linear/SVOD Share Output

(last 6 months)

3 Linear/SVOD Share Output

(post 90 days) (delay TBD)

4 New STB, SVOD, OTT

5 SVOD Split Slate (Col; SG; SPA) (Col; SG; SPA)

(SPC) (SPC)

6 Linear/SVOD Split Slate (some Columbia/SG) (some Columbia/SG)

(Col; SG; SPA) (Col; SG; SPA)

(SPC) (SPC)

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Action Plan

• Take advantage of multiple interested parties in the market and limited competition from other studios to move deliberately towards a deal

• Gather specific proposals/bids on pricing and rights requirements from all parties

• Engage Starz on stand-alone issues (UV, DRM modifications) to slow the discussion until we have market intelligence with which to respond to their offer

• Aim to have proposal back to Starz in September with an ability to move quickly to closure with the party/parties we have identified

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APPENDIX

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Buyers Landscape – Detail

Subscribers • Starz: 19.6 million • Largest footprint/exposure • Comparable footprint/exposure to Starz • Comparable footprint/exposure to • Encore: 35 million • HBO: 28.4 million, 44 million int’l • Showtime: 21.3 million Starz but will grow if gets MSO • : 17 million • (TMC): /A, carriage packaged with Showtime. ala carte with • 2011: 9.8 million (MSOs) DirecTV and Dish • Content also available to 23M Netflix subscribers

Current Studios / • Sony (2016), Disney (2015), • Fox (2017, believed to have • IFC, Weinstein (2015), , • Paramount, MGM, Lions Gate Deal Timing Overture extended to 2019), Warner Bros. Dimension, DreamWorks SKG (2015) (est. thru 2015, based on Netflix (sister co.), Universal (2016), deal timing) Summit (2017)

Financial Stability • Strong • Strong • Strong • Uncertain (Launched in 2009) • 2011: Revenue – $1.6B, Cash • 2011: Revenue – $4.1B, Cash Flow • 2011: Revenue – $1.5B, Cash Flow – • 2011: Revenue – $406M, Cash Flow – $362M – $1.3B $607M Flow – $123M (large portion assumed from Netflix deal)

Movie Output • Seeks 2 studios only • Probably not a buyer for Sony; may • Expressed interest in a small (e.g., • Movies from JV partners Strategy / Buyer • Pays strongest pricing in pay drop from 3 to 2 studios if Universal Screen Gems) portion of SPE’s slate as • Liquidity concerns and LT viability Profile market on more reasonable terms leaves; legal issues if tried for 4 other deals lapse in question than HBO studios • Studio output agreements have become • Due to limited carriage and • In discussions with Amazon and • Fees less attractive than Starz less relevant (lost Paramount, MGM, LG fewer feeds than the other pay /Verizon for a potential • Requires onerous holdbacks and Summit) as shifted to originals channels (8 for EPIX vs. 16 for OTT partnership impacting EST/UV and cable FOD • Pays low prices for and therefore Starz) they put more titles on buys in the low end market SVOD than the other services • Demanding OTT rights on all deals (3,000) without an articulated growth strategy

Ownership • • Time Warner • CBS Corporation • Paramount/Viacom, MGM and Lions Gate

Growth Strategy • Aims for but • Leader in original programming • Heavy investment in original TV • Carriage on Cox, FiOS and Dish, limited success • HBO GO/Max GO are their programming ~$600M, paying off based including an authenticated SVOD • Has been willing to grow with low authenticated online video portals, on increased Emmy wins/nominations platform (epixhd.com) and OTT margin over-the-top SVOD in the preserving branding and driving • Showtime Anytime is authenticated app via Netflix (they say they’ll have past value to cable (~HBO GO) driving value to cable another OTT service soon) • seeking a low-margin SVOD • OTT strategy is undefined • 5 year deal with Netflix for $1 OTT strategy for Encore and high- billion (Sept 2010-2015) with priced SVOD for Starz/Pay1 exclusive window for cable • Launching apps for authenticated viewing

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Buyers Landscape – Detail (Cont’d)

Subscribers • 23 million • 1.5 million • 8-10 million overall instant • N/A (partnership announced video subs 2/2012)

Current Studios / • DreamWorks Animation (begins in • Library only (, Criterion, • Library only • In discussions with Starz and Deal Timing 2013), EPIX (est. through 2015), Film Lifetime MOWs) EPIX on potential deals District, Relativity, Open Road, Miramax

Financial Stability • Moderate? • Moderate • Strong • Moderate • 2011: Revenue – $3.2B, Cash Flow – • 2011: Revenue – $420M $226M

Movie Output • Netflix entered premium pay space • No output strategy (library only) to • No output strategy (library • Untested Strategy / Buyer with Starz (deal expired) date only) to date • No SVOD purchasing to date Profile • Signed premium EPIX ($1B) and • Intends to spend $500M in 2012 on • Potentially willing to Relativity deals; appetite for catalog content (no split between TV/film) contemplate an output deal diminishing • Pursuing original production (unknown timing) • Potentially willing to contemplate • Known to pay low prices for another output deal (unknown timing) film and TV product for all or part of SPE’s output (e.g., a window share for SPC) • Heavy TV buyer, perhaps limited feature buyer • Rights package may be favorable to SPE i.e., flexible partner • Pursuing original production

Ownership • Publicly traded • NBC/Comcast, FOX, ABC, • Publicly traded • Verizon:65%, Redbox ( of Coinstar): 35%

Growth Strategy • Looking to become a cable channel • Hulu Plus, for premium content • Potential to spin SVOD • Redbox moving away from like HBO allows for dual revenue stream service out of Prime hard DVD business to online • Seeking carriage on MSOs model • SVOD service may help model similar to Netflix • Expansion across multiple devices • UK and Japan with Kindle sales (or vice- and into int’l territories versa) • May strike additional deals with premium Pay TV providers/studios for content

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Buyers Landscape – Detail (Cont’d)

Xfinity StreamPix

Subscribers • Footprint/exposure comparable to • Footprint/exposure comparable to • N/A [12million?] • +90M total accounts Starz Starz • FOD service only available • ~12-18M active worldwide • Potentially available to 22 million • 19.2 million on and accounts Comcast subs • ~5-7M U.S. accounts • Also affiliated with Comcast and Cox

Current Studios / • N/A • N/A • N/A • N/A Deal Timing

Financial Stability • Uncertain (large parent company) • Strong • Uncertain • Strong • 2011: Revenue – $27.2B, Income – $2.6B

Movie Output • Rumors of a pay deal with Universal • Unknown whether DTV plans to • No output strategy (library • No SVOD purchasing to date Strategy / Buyer • No proven output strategy (library from carrying Pay TV channels on its only) to date • Currently an a la carte Profile only) to date service to buying content directly from • Any commitment to movie service where customers can studios and launching their own output deal would require purchase/rent and TV service as a direct competitor full JV board to agree: TW, shows • Potential access hurdle Comcast, Cox, BH

Ownership • Comcast • Publicly traded • Comcast, Cox • Sony • Major shareholders include Liberty Communications, Time Media and Warren Buffet Warner Cable, and Bright House Networks

Growth Strategy • Launch video streaming service to • Expected to launch its own website • Authenticated SVOD • Unify its online services compete with Netflix, Amazon Prime movie portal in Q212 akin to Xfinity’s services competing against • Goal is to give consumers and Hulu Plus StreamPix Netflix access to entertainment • Expanding on Xfinity TV service with • Their Audience Network channel is • Very limited number of titles across many Sony and non- greater selection of films and TV exclusive on DirecTV and has been (~100-200) Sony devices shows licensing series/films and producing • Grow video • Bundling opportunity with triple play originals service called Video • Must obtain additional content deals Unlimited to make it competitive • Limited content (40% NBC/Universal library) mostly TV • Launching service on multiple devices

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Buyers Landscape – Detail (Cont’d)

Subscribers • None to date • 13.9 million Dish subscribers • N/A • +1 million viewers as of May 2011

Current Studios / • N/A • N/A • N/A • N/A Deal Timing

Financial Stability • Strong • Uncertain (large parent company) • Uncertain (large parent • Uncertain • 2011: Revenue – $54.0B, Net • 2011: Dish Rev – $14.0B, Dish company) Income – $12.9B Net Income – $1.5B • 2011: Blockbuster Rev – $975M, Blockbuster Net Income – $4.0M

Movie Output • Very early stage; no SVOD • No output strategy to date • No subscription service • No subscription service Strategy / Buyer purchasing to date. • Potential Internet access hurdle • No SVOD purchasing to date • No SVOD purchasing to date Profile • Uncertain viability of stand- since limited Dish subs have web • Currently an a la carte service • Primarily hardware company alone business model. connected set-tops where customers can purchase/rent films and TV shows

Ownership • Publicly traded • • Wal-Mart • Privately held

Growth Strategy • Announced OTT set-top box • Combined streaming/DVD-by-mail • Wal-Mart can put significant • Streams more than a hundred product in development (like package with in-store exchanges resources behind in order Internet video and audio services, ) • Offering streaming service to non- to build a streaming library. Wal- including Netflix, Hulu Plus, • Difficult strategy to make work, Dish subscribers (currently only Mart's clout with Hollywood Amazon, etc. even with retail power of Intel available to Dish subscribers) studios, as a traditional partner • Must face competition among • Speculation that strategy will in home video, gives it huge other internet connected devices migrate to devices sold by other additional credibility. manufacturers • Make available on multiple devices • Power disc to digital initiative at Wal-Mart stores whereby customers can view films on Vudu

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Sellers Landscape - Detail

Annual Film Output Studios/Sellers Output Deal Expiration Date (2002 ► 2011 Releases)*

Sony Pictures Starz 2016 31 ► 23

SPC Starz 2016 19 ► 17

Warner Bros. HBO N/A – Sister company 28 ► 26

New Line HBO N/A – Sister company 10 ► 0

2017 (NOTE: Believe to have extended FOX HBO deal thru 2019 with lower fees and 14 ► 15 retrofitted EST/UV terms)

2017 (NOTE: Believe to have extended Searchlight HBO deal thru 2019 with lower fees and 7 ► 11 retrofitted EST/UV terms)

Universal HBO 2016 15 ► 15

Focus Features HBO 2016 7 ► 8

Paramount EPIX 2015 (est.) 19 ► 15 (3 P/DW)

Vantage EPIX 2015 (est.) 9 ► 1

Buena Vista Starz 2015 22 ► 14

MGM / UA EPIX 2015 (est.) 19 ► 0

Lionsgate / Summit EPIX 2015 (est.) 13 ► 20

Note: Exhibit 34. BMO Filmed Entertainment Report. Source: Motion Picture Association of America, Hollywood Reporter, boxofficemojo.com, company reports and BMO Capital Markets and industry estimates. New Line tracked from 2002-2008. Paramount Classics/Vantage consolidated. /Summit consolidated.

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Pay TV Networks – Output Deal Calendar

2005 2006 200 7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2 017 2018 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Disney (Touchstone) STARZ (Columbia, SPC, Screen Gems, Tri-) HBO (Overture defunct) SHOWTIME Lions Gate (1st Pay Library Window) EPIX ThinkFilm NETFLIX Warner Bros. (New Line, Castle Rock) FOX Est./ Unconf . End Date (, ) DreamWorks Animation IFC CBS Films Summit Entertainment ( retained through 2014) DreamWorks SKG (Disney Distributed) Miramax IFC ThinkFilm Films Paramount MGM Lions Gate EPIX (Paramount, Lions Gate, Summit & MGM titles on 3 mo. delay) The Weinstein Company (Foreign, Docu.) Film District DreamWorks Animation

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