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Movies and Entertainment

October 31, 2016

Michael Pachter Alicia Reese Nick McKay (213) 688-4474 (212) 938-9927 (213) 688-4343 [email protected] [email protected] [email protected]

Biweekly Review -- A Look Ahead from Late October and Our Take on Current Events in the Film Exhibition, DVD, and VOD Industries

• Q4 box office appears to be tracking down 16.0% year-over-year. October ended down ≈18%, with best performing films The Girl on the Train and The Accountant collectively grossing $127 million to date (with scores of 48 and 51 respectively) facing a tough comparison to last year’s The Martian (which grossed $228 million, and was much more favorably reviewed with a Metacritic score of 80). Boo! A Madea Halloween appears to be performing better than expectations (grossing $52 million to date), likely benefitting from a fewer number of Halloween releases this year. Doctor Strange has reportedly grossed $86 million overseas, which bodes well for the film’s US and Chinese premieres this week. Despite the potential for any individual film to outperform our expectations however, the overall comparison for Q4 to last year remains a significantly high hurdle, facing the first title in 10 years, the Hunger Games franchise finale, Daniels Craig’s last James Bond performance, and several successful Children’s films. We are thus maintaining our estimate for Q4 of down 8%. • Q3 results: Regal and IMAX posted sizeable revenue and EPS beats, but a tough box office ahead and share appreciation heading into earnings likely weighed negatively on post-EPS reaction. Regal outperformed the industry box office in Q3, benefitting from its well-balanced footprint, market share gains driven by theater enhancements, and premium screens split evenly between IMAX and its own RPX screens ( view full note here ). IMAX beat revenue expectations in Q3 benefitting from some late-quarter theater installations ( view full note here ). The remaining exhibitors will report their results over the coming weeks. AMC will report its full Q3 financial results on Monday, November 7, after market close (having already previewed preliminary results). Carmike will also report its Q3 financial results on November 7 and release its results after market close. Cinemark will report its Q3 financial results on Tuesday, November 8, before market open. • Premium ticket comps appear difficult in Q4:16 and Q1:17, then more favorable in Q2:17. In Figure 1 on page 2, we compare the top ten films in each quarter to the prior year’s, denoting which was or will be available in IMAX or IMAX 3D. We anticipate another difficult comparison in both Q4:16 and Q1:17 for premium films. • IMAX’s solid domestic performance and expanding footprint will likely offset declining PSA’s in China. In Figure 3 on page 4, we take a look at weekend box office results in China for Q4 over the past few years, as well as the quarter-by-quarter growth in Chinese weekend box office over the past few years in Figure 4 on page 5. In Q4, we expect domestic IMAX to decline over the prior year, while in China we see an easier comparison than in the prior few quarters. We continue to believe that IMAX can achieve flat global DMR revenue in 2016 driven by its expanding footprint. We note that China PSAs have been substantially higher than the rest of IMAX’s circuit for quite some time now, and we are not particularly concerned about the reduction in PSA as it normalizes with the rest of the world. We think that IMAX’s current backlog in China is its last big push into the region, and expect the company to focus on other regions going forward. In particular, we expect IMAX to focus on its European expansion now that AMC is entering the region via its recent acquisition of Odeon & UCI, and as evidenced by the recently announced 5-theater deal with Les Cinémas Gaumont Pathé. • SVOD content costs continue to rise . On Thursday of last week reported Q3:16 gross margins that missed expectations, driven in part by what we estimate to be ≈$300 million in video content spending that had not been included in estimates. While ’s Q3:16 results featured higher than expected subscriber additions, the company reported negative free cash flow of $(506) million and guided to a similar figure for Q4, highlighting the trend of escalating content costs which we fully anticipate to continue for the foreseeable future. As the SVOD space has become increasingly crowded, and providers spend incrementally to produce and license more and more exclusive content, we expect heightened video content spending to continue for both Amazon and Netflix, while the spending gap should narrow between the two, approximately reflecting the quality of content as well. Amazon Prime membership (which includes unlimited Prime Video and Prime Music) is only $99 annually (compared to $119 for Netflix), and we think that long time Netflix customers could be persuaded to switch this Holiday season as Amazon markets their video service more aggressively, and as Netflix completes its price increases on its remaining grandfathered subscribers, potentially bringing greater consumer attention to the price comparison and alternative content available. See Figures 5 – 9 on pages 6 – 10 for a summary of Netflix and Amazon’s respective programming).

Wedbush Securities does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors Movies Movies Entertainment and should consider this report as only a single factor in making their investment decision. Please see page 16 of this report for analyst certification and important disclosure information .

Premium ticket comparisons look difficult in Q4 and Q1. In Figure 1 below, we compare the top ten films in each quarter to the prior year’s quarter, denoting which was or will be available in IMAX or IMAX 3D. We anticipate another difficult comparison in both Q4:16 and Q1:17 for premium films.

Figure 1: Top Ten Films by Quarter, Last Four Quarters vs. Estimates for Upcoming Four Quarters

Q4 2015A Q4 2016E Rank Title Gross in Qtr Total Gross Opening Rank Title Est Gross Opening 1 Star Wars: The Force Awakens $654 $936 12/18/15 1 Rogue One: A Star Wars Story $298 12/16/16 2 The Hunger Games: Mockingjay Part 2 $270 $282 11/20/15 2 Fantastic Beasts and Where To Find Them $229 11/18/16 3 The Martian $225 $228 10/2/15 3 Doctor Strange $220 11/4/16 4 Spectre (James Bond 24) $197 $200 11/6/15 4 Moana $173 11/23/16 5 The Peanuts Movie $128 $130 11/6/15 5 Sing $123 12/21/16 6 Hotel Transylvania* $122 $170 9/25/15 6 Passengers $103 12/21/16 7 The Good Dinosaur $110 $122 11/25/15 7 Arrival $82 11/11/16 8 Creed $99 $110 11/25/15 8 Trolls $79 11/4/16 9 Goosebumps $79 $80 10/16/15 9 Office Christmas Party $72 12/9/16 10 Bridge of Spies $70 $72 10/16/15 10 Tyler Perry's Boo! A Madea Halloween $72 10/21/16 ` Top Ten Total $1,954 Top Ten Total $1,452 (26%) IMAX Total (within top 10) $1,121 IMAX Total (within top 10) $747 (33%)

Q1 2016A Q1 2017E Rank Title Gross in Qtr Total Gross Opening Rank Title Est Gross Opening 1 $351 $362 2/12/16 1 Beauty and the Beast $211 3/17/17 2 Star Wars: The Force Awakens* $282 $936 12/18/15 2 The LEGO Batman Movie $174 2/10/17 3 Zootopia $256 $329 3/4/16 3 Logan $146 3/3/17 4 Batman v : Dawn of Justice $209 $328 3/25/16 4 Kong: Skull Island $131 3/10/17 5 The Revenant* $181 $184 12/25/15 5 Rogue One: A Star Wars Story* $128 12/16/16 6 3 $140 $142 1/29/16 6 Fifty Shades Darker $123 2/10/17 7 Ride Along 2 $91 $91 1/15/16 7 The Dark Tower $94 2/17/17 8 Daddy's Home* $86 $150 12/25/15 8 Power Rangers $75 3/24/17 9 10 Cloverfield Lane $59 $71 3/11/16 9 Ghost in the Shell $73 3/31/17 10 Has Fallen $57 $62 3/4/16 10 King Arthur: Legend of the Sword $68 3/24/17 Top Ten Total $1,712 Top Ten Total $1,222 (29%) IMAX Total (within top 10) $982 IMAX Total (within top 10) $862 (12%)

Q2 2016A Q2 2017E Rank Title Gross in Qtr Total Gross Opening Rank Title Est Gross Opening 1 : Civil War $405 $407 5/6/16 1 Guardians of the Galaxy Vol. 2 $318 5/5/17 2 The Jungle Book $359 $362 4/15/16 2 Fast 8 $277 4/14/17 3 $330 $471 6/17/16 3 $217 6/2/17 4 X-Men: Apocalypse $153 $155 5/27/16 4 Pirates of the Caribbean: Dead Men Tell No Tales $200 5/26/17 5 Batman v Superman: Dawn of Justice* $121 $330 3/25/16 5 Transformers: The Last Knight $197 6/23/17 6 Angry Birds $105 $107 5/20/16 6 Cars 3 $156 6/16/17 7 The Conjuring 2 $91 $102 6/10/16 7 Kingsman: The Golden Circle $148 6/16/17 8 Zootopia* $85 $341 3/4/16 8 The Mummy $126 6/9/17 9 Central Intelligence $79 $126 6/17/16 9 Life $89 5/24/17 10 Teenage Mutant Ninja Turtles: Out of the Shadows $78 $81 6/3/16 10 Baywatch $69 5/19/17 Top Ten Total $1,805 Top Ten Total $1,796 (0%) IMAX Total (within top 10) $1,445 IMAX Total (within top 10) $1,638 13%

Q3 2016A Q3 2017E Rank Title Gross in Qtr Total Gross Opening Rank Title Est Gross Opening 1 The Secret Life of Pets $364 $366 7/8/16 1 Spider-Man: Homecoming $210 7/7/17 2 Suicide Squad $319 $324 8/5/16 2 War for the Planet of the Apes $156 7/14/17 3 Jason Bourne $161 $162 7/29/16 3 Dunkirk $136 7/21/17 4 Beyond $158 $159 7/22/16 4 Alien: Covenant $126 8/4/17 5 Finding Dory* $154 $154 6/17/16 5 Jumanji $120 7/28/17 6 Ghostbusters $127 $128 7/15/16 6 It $70 9/8/17 7 The Legend of Tarzan $127 $127 7/1/16 7 Emojimovie: Express Yourself $64 8/11/17 8 Sully $114 $122 9/9/16 8 Bad Dads $63 7/14/17 9 Bad Moms $112 $113 7/29/16 9 The LEGO Ninjago Movie $59 9/22/17 10 Sausage Party $97 $98 8/12/16 10 American Made aka Mena $55 9/29/17 Top Ten Total $1,742 Top Ten Total $1,060 (39%) IMAX Total (within top 10) $1,371 IMAX Total (within top 10) $808 (41%)

* Indicates additional box office revenue earned in another quarter Color-code indicates IMAX title Color-code indicates IMAX 3D title

Source: Boxofficemojo.com, HSX.com, Wedbush Securities, Inc.

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Figure 2: Concentration of Domestic Premium Large Format (“PLF”) Screens Across Exhibitors

# of Proprietary % of Avg # of IMAX % of Avg Avg Screens* % of Total PLF PLF Screens Screens Screens Screens

AMC 5,282 17 0.3% 153 2.9% 3.2%

Cinemark 4,556 131 2.9% 14 0.3% 3.2% (domestic)

Regal 7,318 91 1.2% 89 1.2% 2.5%

Carmike 2,946 34 1.2% 21 0.7% 1.9%

*Avg screens at end of Q2:16

Source: Company data, Wedbush Securities, Inc.

AMC’s initiatives continue to drive growth. AMC continues to roll out AMC Prime using Dolby technology and now has 17 screens throughout its footprint. We remind investors that AMC has the largest footprint of IMAX screens among its competitors, and think that AMC will continue to expand its AMC Prime footprint to the same degree as its IMAX footprint, as it views the two as complementary. Additionally, the company also plans to roll out its own proprietary premium large format (“PLF”) screens where it would not have to share revenue as it does with IMAX and Dolby. These screens would be less expansive and high quality compared with the other two premium formats, but would likely be installed in theaters with more price sensitive consumers, and potentially as a complementary PLF screen in any of its higher-end theaters.

Cinemark is focused on continuing its XD rollout internationally. We expect the company will continue to focus on expanding its XD footprint, its private label Premium Large Format (“PLF”) screens. For Cinemark, the profitability and flexibility of showing films on its XD screens compares favorably to IMAX films. At the end of Q2:16, Cinemark had 14 IMAX screens in its domestic circuit and one IMAX screen in LatAm, as well as 216 XD screens worldwide, with 131 domestic XD screens and 85 international XD screens. In Q2:16, Cinemark’s XD screens generated 7.7% of its worldwide admissions revenue, while only constituting 3.7% of its screens. We view large-format screens as important drivers of revenue growth given the ticket price premiums these formats command ($3 premium for 2D and $5 premium for 3D), and the flexibility to display the top movie each week on the XD screens, which often complements the fare available on IMAX in each theater (or even replaces the need for an IMAX theater). Additionally, we believe this gives Cinemark a competitive advantage, affording it more flexibility to show whichever film is performing as opposed to what IMAX locks in with studio contracts.

Regal is expanding its PLF footprint, including both IMAX and RPX. We expect Regal to continue investing in several key areas including expanding its Premium Large Format (PLF) screens. Regal plans to continue investing in both IMAX and its proprietary PLF brand, RPX, and considers PLF screens return’s meaningful, low-risk investments. The company will continue to roll-out its PLF screens over the next several years, with most of its major markets now covered. Regal currently has 89 IMAX screens and 91 RPX screens, each representing roughly 1% of its total circuit.

Carmike is expanding its premium large format (“PLF”) footprint. Carmike currently has 55 PLF screens in its circuit, 32 of which are BigD theaters, 21 of which are IMAX theaters, and 2 are MuviXL which it acquired through its Muvico acquisition. Aside from the IMAX theaters Carmike gained through various acquisitions, the company negotiated a revenue share agreement with IMAX to build a total of ten IMAX theaters, and in July 2015 Carmike expanded its agreement with IMAX for an additional three systems in new build and existing theaters. Given AMC’s strong relationship with IMAX, we expect AMC to expand beyond Carmike’s current commitment of 24 screens throughout its circuit beginning in 2017.

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In Figure 3 below we take a look at weekend box office results in China for Q4 over the past few years, as well as the quarter-by- quarter growth in Chinese weekend box office over the past few years in Figure 4 on page 5. It is clear that the box office has declined substantially over Q4:15, despite more than triple the number of films released each week compared to the prior few years. It appears that the increase in film volume ties to the higher volume of Chinese films coming to market (benefitting from Chinese tax incentives and subsidized production), competing with films imported from the U.S. The Chinese box office total has been steadily decreasing nevertheless, likely as Chinese theater goers are less willing to pay above the subsidized ticket prices they have grown accustomed to, and which we believe to be largely finished for the time being. As a result, IMAX China per screen average (“PSA”) is likewise in decline. Additionally, what appeared to be substantial growth in domestic IMAX box office in Q3 over the prior year may not be as positive on closer inspection, given what we believe may be lower IMAX take-rates as theater-goers opt to see Q3 films on traditional screens and the exhibitors’ proprietary premium large format screens, instead of on IMAX screens. In Q4 2016 we expect domestic IMAX to decline over the prior year, while in China we see an easier comparison than in the prior few quarters. We continue to believe that IMAX can achieve flat global DMR revenue in 2016 driven by its expanding footprint. We note that China PSAs have been substantially higher than the rest of IMAX’s circuit for quite some time now, and we are not particularly concerned about the reduction in PSA as it normalizes with the rest of the world. We think that IMAX’s current backlog in China is its last big push into the region, and expect the company to focus on other regions going forward. In particular, we expect IMAX to focus on its European expansion now that AMC is entering the region via its recent acquisition of Odeon & UCI, and as evidenced by the recently announced 5-theater deal with Les Cinémas Gaumont Pathé.

Figure 3: Weekend Box Office Receipts in China, in local currency

Change from IMAX Q4:16 QTD Top 10 Total Currency YoY Change # Movies #1 Movie Week prior week Title? October 21–23 358,613,294 RMB (39.5%) 0.8% 35 Mechanic: Resurrection 43 October 14–16 353,748,803 RMB (53.9%) 0.3% 37 Operation MeKong 42 October 7–9 349,716,408 RMB (71.9%) (51.4%) 32 Operation MeKong 41 September 30–October 2 719,206,209 RMB (52.3%) 228.9% 33 I Belonged to You 40 Totals / Averages : 1,781,284,714 (56.7%) 34 (28.5%) Q4:15 October 19–25 592,769,714 RMB 45.8% (22.9%) 10 Ant-Man 43 October 12–18 767,518,026 RMB 74.3% (38.3%) 10 Goodbye Mr. Loser 42 October 5–11 1,244,604,409 RMB 82.8% (17.5%) 10 Goodbye Mr. Loser 41 September 28–October 4 1,507,849,299 RMB 56.6% 63.1% 10 Lost in Hong Kong 40 Totals / Averages : 4,112,741,448 65.1% 10 185.5% Q4:14 October 20–26 406,665,453 RMB 65.2% (7.6%) 8 Lucy 43 October 13–19 440,282,295 RMB 36.0% (35.4%) 10 Guardians of the Galaxy 42 October 6–12 680,750,790 RMB 134.6% (29.1%) 10 Breakup Buddies 41 September 29–October 5 962,732,130 RMB 65.8% 270.3% 10 Breakup Buddies 40 Totals / Averages : 2,490,430,668 72.9% 9

Color Code Indicates Year/Year Comparison Color Code Indicates 2-Year Comparison

Source: Boxofficemojo.com, Wedbush Securities, Inc.

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Figure 4: Weekend Box Office Receipts in China, in local currency Total Weekend Box YoY Avg # of QQ:YY Office (in RMB) Change Films Q4:16 QTD 1,781,284,714 (56.7%) 34 Q4:15 QTD 4,112,741,448 65.1% 10 Q4:14 QTD 2,490,430,668 72.9% 9 Q4:13 QTD 1,440,706,792 10 weeks 40 - 52 Q3:16 6,075,007,234 (48.0%) 26 Q3:15 11,684,573,110 53.4% 10 Q3:14 7,618,792,759 55.2% 10 Q3:13 4,908,350,015 10 weeks 27 - 39 Q2:16 6,382,261,031 (37.3%) 22 Q2:15 10,171,881,389 60.6% 9 Q2:14 6,335,512,488 14.9% 9 Q2:13 5,514,280,648 10 weeks 14 - 26 Q1:16 7,884,949,130 (14.1%) 17 Q1:15 9,180,514,825 39.3% 10 Q1:14 6,591,969,711 29.9% 10 Q1:13 5,075,054,728 10 weeks 1 - 13

Source: Boxofficemojo.com, Wedbush Securities, Inc.

As the number of local Chinese films in the box office has proliferated over the past year, benefitting greatly from the Chinese government’s considerable investment in the growth of their domestic film industry (including tax incentives and other forms of subsidized film production), Chinese demand for movies appears to have been spread over a wider array of releases. As Chinese exhibitors largely price movie tickets in relation to demand for specific titles (vs. the traditionally fixed ticket cost which has characterized the U.S. industry for many years), it makes sense to us that the Chinese box office is significantly weaker this year. Other deflationary factors that we consider as driving box office weakness in China include: the completion of the vast majority of the government’s subsidization of movie tickets via select online providers, and the depreciation of the RMB by ~5% from a year ago.

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Figure 5: Current Netflix Original Programming

Avg Total Original Title Premiere Seasons Episodes Metacritic Genre Content Type Production Company Language Content Premiere Q Score Mins

House of Cards 1-Feb-13 1Q:13 4 52 77 Drama Original Series Media Rights Capital, Panic Pictures (II), Trigger English 2,704 Street Productions Hemlock Grove 19-Apr-13 2Q:13 3 33 37 Horror Original Series Gaumont International , ShineBox English 1,700 SMC, United Bongo Drum, Inc. 11-Jul-13 3Q:13 4 52 85 Comedy Original Series Tilted Productions, Television English 3,718 Russell Peters vs. the World 3-Oct-13 4Q:13 1 4 No Score Docuseries Original Series Netflix English 110

BoJack Horseman 22-Aug-14 3Q:14 3 36 79 Comedy Original Series Tornante Company, ShadowMachine English 918 Marco Polo 12-Dec-14 4Q:14 2 20 48 Drama Original Series Electus, English 1,130 Unbreakable Kimmy Schmidt 6-Mar-15 1Q:15 2 26 80 Comedy Original Series , English 767 Bloodline 20-Mar-15 1Q:15 2 23 68 Drama Original Series Pictures Television, KZK Productions English 1,357 Marvel's Daredevil 10-Apr-15 2Q:15 2 26 72 Action Original Series , Marvel English 1,391 Entertainment, ABC Studios Chef's Table 26-Apr-15 2Q:15 2 12 59 Docuseries Original Series Boardwalk Pictures, City Room Creative, FINCH English 570

Grace and Frankie 8-May-15 2Q:15 2 26 60 Comedy Original Series Skydance Productions English 780 5-Jun-15 2Q:15 1 12 63 Science fictionOriginal Series Motion Picture Capital, Javelin Productions English 684 : First Day of 31-Jul-15 3Q:15 1 8 74 Comedy Original Series Abominable Pictures English 228 Camp 7-Aug-15 3Q:15 1 13 No Score Comedy Original Series Alazraki Films Spanish 533 28-Aug-15 3Q:15 2 20 77 Drama Original Series Dynamo, Gaumont International Television, Spanish, 1,000 Netflix English Beasts of No Nation 16-Oct-15 4Q:15 1 1 79 Drama Original Movie Red Crown Productions, Media, Twi, English 136 Come What May Productions Master of None 6-Nov-15 4Q:15 1 10 91 Comedy Original Series Universal Television, 3 Arts Entertainment English 295 W/ Bob & David 13-Nov-15 4Q:15 1 5 76 Comedy Original Series Odenkirk Provissiero Entertainment, Brillstein English 150 Entertainment Partners, , Netflix Marvel's Jessica Jones 20-Nov-15 4Q:15 1 13 81 Action Original Series ABC Studios, English 657 A Very Murray Christmas 4-Dec-15 4Q:15 1 1 68 Comedy Original Movie , Departed Productions English 56 The Ridiculous 6 11-Dec-15 4Q:15 1 1 18 Comedy Original Movie Happy Madison Productions English 119 F Is for Family 18-Dec-15 4Q:15 1 6 75 Comedy Original Series Gaumont International Television, Wild West English 159 Television, Big Jump Productions 18-Dec-15 4Q:15 1 10 84 Docuseries Original Series Synthesis Films, Netflix English 565 23-Jan-16 1Q:16 1 4 62 Docuseries Original Series English 272

Cooked 19-Feb-16 1Q:16 1 4 69 Docuseries Original Series Jigsaw Productions, Netflix English 216 Love 19-Feb-16 1Q:16 1 10 72 Comedy Original Series , Legendary Television English 335

Crouching Tiger, Hidden Dragon: Sword of 26-Feb-16 1Q:16 1 1 47 Action Original Movie China Film Group, Netflix, The Weinstein English 103 Destiny Company 11-Mar-16 1Q:16 1 8 43 Comedy Original Series The Hurwitz Company English 256 Netflix Presents: The Characters 11-Mar-16 1Q:16 1 8 No Score Comedy Original Series Jax Media English 260 Pee-wee's Big Holiday 18-Mar-16 1Q:16 1 1 63 Comedy Original Movie Apatow Productions, Pee Wee Pictures English 89 1-Apr-16 2Q:16 1 10 56 Original Series English 300 Special Correspondents 29-Apr-16 2Q:16 1 1 Comedy Original Movie , Unanimous Entertainment English 101 Marseille 5-May-16 2Q:16 1 8 No Score Drama Original Series Federation Entertainment French 316 Chelsea 11-May-16 2Q:16 1 65 50 Comedy Original Series Netflix English 2,178 20-May-16 2Q:16 1 12 85 Comedy Original Series The Hurwitz Company, Wounded Poodle English 366 The Do-Over 27-May-16 2Q:16 1 1 22 Comedy Original Movie Happy Madison Productions English 108 Hibana (Spark) 2-Jun-16 2Q:16 1 10 No Score Drama Original Series Netflix Japanese 530 The Fundamentals of Caring 24-Jun-16 2Q:16 1 1 55 Drama Original Movie Worldwide Pants English 97 Brahman Naman 7-Jul-16 3Q:16 1 1 58 Comedy Original Movie Riley Productions English 95 Rebirth 15-Jul-16 3Q:16 1 1 Drama Original Movie Campfire English 100 Stranger Things 15-Jul-16 3Q:16 1 8 76 Science fictionOriginal Series , Monkey Massacre English 328 29-Jul-16 3Q:16 1 6 79 Sports Original Series Conde Nast Entertainment, Endgame Pictures English 324

Tallulah 29-Jul-16 3Q:16 1 1 63 Comedy Original Movie Maiden Voyage English 111 12-Aug-16 3Q:16 1 6 69 Drama Original Series Television, Bazmark Films English 438 Fearless 19-Aug-16 3Q:16 1 6 No Score Sports Original Series 25/7 Productions, Brazil Production Services English 324 XOXO 26-Aug-16 3Q:16 1 1 No Score Drama Original Movie Netflix English 92 Chef's Table: France 2-Sep-16 3Q:16 1 4 No Score Docuseries Original Series FINCH, City Room Creative, Boardwalk Pictures English 190

ARQ 16-Sep-16 3Q:16 1 1 No Score Original Movie MXN Entertainment, XYZ Films, Lost City English 88 Easy 22-Sep-16 3Q:16 1 8 72 Comedy Original Series Sparrow Grass English 224 Marvel's Luke Cage 30-Sep-16 3Q:16 1 13 79 Action Original Series The Walt Disney Company, Marvel English 722 Entertainment, ABC Studios The Siege of Jadotville 7-Oct-16 4Q:16 1 1 No Score Action Original Movie Parallel Films English 108 Mascots 13-Oct-16 4Q:16 1 1 57 Comedy Original Movie English 95 14-Oct-16 4Q:16 1 8 54 Comedy Original Series , The Firm English 232 Sky Ladder: The Art of Cai Guo-Qiang 14-Oct-16 4Q:16 1 1 73 Documentary Documentary Explosion Art, Insurgent Docs, Rock Paper English 79 7 Años 28-Oct-16 4Q:16 1 1 No Score Drama Original Movie CactusScissors F lowerEntertainment Producciones, Metronome Musica Spanish 77 Midnight Diner: Tokyo Stories 21-Oct-16 4Q:16 1 10 No Score Drama Original Series Shogakukan,de Peliculas Kinoshita Komuten, Toei Company Japanese 235 I Am the Pretty Thing That Lives in the 28-Oct-16 4Q:16 1 1 68 Horror Original Movie Film, Zed Filmworks, Go Insane Films English 87 House

*Excludes documentaries, specials, continuations, partnerships, and children’s’ programming. Grey shading indicates Netflix listed as a producer on .com Source: IMDB.com, Deadline.com, Variety.com, HollywoodReporter.com, Netflix.com, Metacritic.com, Company Data, and Wedbush Securities, Inc.

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Figure 6: Current Amazon Original Programming

Original Avg Total Amazon Title Premiere Seasons Episodes Metacritic Genre Content Type Production Company Language Content Premiere Q Score Mins

Betas 19-Apr-13 2Q:13 1 11 69 Comedy Original Series Groundswell Productions, Alan & Alan English 297 Productions, Picrow, Alpha House 19-Apr-13 2Q:13 2 21 68 Comedy Original Series Sid Kibbitz Productions, Picrow, Amazon English 525 Studios Mozart in the Jungle 6-Feb-14 1Q:14 2 20 72 Comedy Original Series Amazon Studios, American English 580 Zoetrope, Coconut Pictures Transparent 26-Sep-14 3Q:14 3 30 92 Comedy Original Series Amazon Studios, Picrow English 900 Bosch 13-Feb-15 1Q:15 2 20 74 Drama Original Series Amazon Studios, Fabrik Entertainment English 1020 Hand of God 4-Sep-15 3Q:15 1 10 44 Drama Original Series Amazon Studios, LINK Entertainment, Picrow English 600

Red Oaks 10-Oct-15 4Q:15 1 10 70 Comedy Original Series Amazon Studios, Picrow English 300 The Man in the High Castle 20-Nov-15 4Q:15 1 10 77 Drama Original Series Amazon Studios, Big Light English 600 Productions, Electric Shepherd Productions

Mad Dogs 22-Jan-16 1Q:16 1 10 64 Drama Original Series Amazon Studios, , Mesquite English 560 Productions Chi-Raq 4-Feb-16 1Q:16 1 1 77 Drama Original Movie 40 Acres & A Mule Filmworks, Amazon English 127 Studios Presents 16-Feb-16 1Q:16 1 11 63 Docuseries Original Series Amazon Studios, Jigsaw Productions English 330 All or Nothing: A Season with 1-Jul-16 3Q:16 1 8 No Score Docuseries Original Series Amazon Studios, NFL Films 400 the Arizona Cardinals Elvis & Nixon 25-Aug-16 3Q:16 1 1 59 Comedy Original Movie Amazon Studios English 86 Eat the World with Emeril Lagasse 1-Sep-16 3Q:16 1 6 Docuseries Original Series Amazon Studios 162 The Collection 2-Sep-16 3Q:16 1 8 No Score Drama Original Series Amazon Prime Instant Video, BBC English 480 Worldwide, Federation Mississippi 9-Sep-16 3Q:16 1 6 77 Comedy Original Series Amazon Studios, FX Studios English 156 Crisis in Six Scenes 30-Sep-16 3Q:16 1 6 44 Comedy Original Series Amazon Studios English 138 Goliath 14-Oct-16 4Q:16 1 8 64 Drama Original Series Amazon Studios, Picrow English 480 Good Girls Revolt 28-Oct-16 4Q:16 1 10 63 Drama Original Series Amazon Studios, Sony Pictures English 550 Television, TriStar Television

*Excludes documentaries, specials, continuations, partnerships, and children’s’ programming. Grey shading indicates Amazon listed as a producer on imdb.com Source: IMDB.com, Deadline.com, Variety.com, HollywoodReporter.com, Amazon.com, Metacritic.com, Company Data, and Wedbush Securities, Inc.

SVOD competition for exclusives and originals has become fierce. Netflix was the first mover in subscription-based online streaming and has delivered compelling original content. In addition to the list of originals in Figure 5 on page 6, Netflix has many original specials (including a growing list of stand-up comedy specials), miniseries, children’s programming, and exclusive series continuations not included in this list. Amazon is increasingly releasing new original series of its own (see Figure 6 above), and although historically Amazon has produced content at a slower release pace than Netflix, we believe Amazon’s approach demonstrates a more calculated and balanced strategy. Amazon is capitalizing on its strong user engagement (its users are used to rating products on its site) by allowing users to rate pilot episodes before greenlighting shows to full seasons. We believe this significantly reduces Amazon’s risk with original content. Netflix’s release pattern is far less predictable, in our view. For example, the second and third seasons of Bojack Horseman far surpassed the scores on its debut season, while a second season release of very low scoring series Between is at best surprising and at worst unwise content management. However, the sheer volume of Netflix’s original content and several top-rated shows has led to a total of 54 Emmy nominations in 2016, compared to Amazon’s 16 nominations (see Figure 10 on page 11 for a comparison of this year’s Emmy nominations and results).

Since Netflix released its first exclusive feature film, Beasts of No Nation , on October 16, which received very strong reviews, most of its following feature films have received very poor reviews. A Very Murray Christmas received decent reviews, but The Ridiculous Six received scathing reviews ( actually giving it a zero). Amazon Studios released its first feature film, Chi-Raq , a Spike Lee production, on December 4. The film was released to a limited theater base, and became available on Amazon Prime on February 1. The film received solid reviews but not a ton of publicity. Since its debut film, Amazon Studios has distributed nine more films to date, and produced one of them. The films have received mostly decent reviews while, Love & Friendship , (which premiered in wide theatrical release on May 13) received very high scores. We detail the full list of films distributed by Amazon to date in Figure 7 on page 9, with upcoming originals for Amazon and Netflix listed in Figures 8 and 9 on pages 9 and 10 respectively.

Amazon’s reviews have overall been more favorable than Netflix’s so far. Amazon’s film titles have received mostly solid scores ( The Handmaiden , Manchester by the Sea , and Paterson ). Netflix, on the other hand, has remained consistent with its very poorly reviewed films, including another dismally reviewed film (the second of a four-film contract with Adam Sandler). In late August Netflix released The Little Prince , its first highly rated film since Beasts of No Nation .

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We expect the theater releases corresponding to Netflix’s and Amazon’s original films to earn minimal revenue, as the prominent domestic exhibitor group has refused to participate in simultaneous VOD – theatrical releases. Netflix stated that it paid enough for Beasts of No Nation for the studio to turn a profit, indicating that it paid in excess of the widely estimated $6 million budget. With many other independent, smaller budget films vying for distribution and more certain repayment, we expect this to become a more common distribution method for smaller, independent films. Interestingly, this issue is currently being debated after Netflix and Amazon were very active bidders at the 2016 Sundance festival. We note that Amazon has paid as much as $10 million for a film ( Manchester by the Sea with Casey Affleck), and reportedly paid an undisclosed 8-figure sum to distribute Woody Allen’s Café Society . Netflix has paid $5 – 7 million for some of its successful bids ( Tallulah and The Fundamentals of Caring , respectively), and it was recently reported that the company paid $40 million for 2 one-hour comedy specials from . This is evidence that Amazon is putting upward pressure on content prices, and we believe that this pressure has, and will continue to, drive Netflix’s content costs to rise much faster than our competitors have modeled.

Since September of 2016, Amazon has offered domestic customers a standalone video subscription (separate from Prime) on a pay- as-you-go basis for $8.99 monthly. The service provides subscribers access to Amazon Prime Instant Video content without free shipping, music, Kindle library books, and other Prime offerings. Unlike Prime, which offers an annual subscription for $99, the new service is billed monthly, for a total annual cost of $107.88. In our view, the offerings reflect Amazon’s determination to take on Netflix in the largely untapped SVOD market. We think that Amazon’s heightened focus on content spending, particularly for Originals, is a shot across Netflix’s bow. We estimate that Amazon will spend as much as $3.5 billion on content this year, and that the company will grow its spending on video content by $500 million or more annually for the next several years. While Netflix spends nearly double what Amazon will spend this year, Netflix must deliver content to 200 countries compared to Amazon’s five. We believe that an apples- apples comparison (stripping out DVD purchases and content spending in 190 plus countries) suggests that Amazon is spending 80% or more of the amount that Netflix will spend in 2016. We think that the content gap will narrow as a result, and think that spending is a reasonable proxy for content quality. Once consumers discover that Amazon’s monthly video service is $8.99 (compared to $9.99 for Netflix), and that a Prime membership (which includes unlimited Prime Video and Prime Music) is only $99 (compared to $119 for Netflix), we think that Amazon may compete with Netflix for new subscribers. We expect Amazon to aggressively promote its standalone video offering this holiday, and we think that long-time Netflix customers who are facing a price increase (from the grandfathered $7.99 or $8.99, to $9.99) may consider switching to check out the “new” content offered by Amazon at lower prices.

Amazon is beginning to look more compelling on price comparison. Netflix’s recent price increases mean that a typical customer will pay over $119 per year for Netflix’s service, or $20 more than Amazon charges for its annual Prime membership and $1 more per month than Amazon’s new standalone video subscription. We have long believed that Netflix’s content was superior to Amazon’s, but the termination of Netflix’s EPIX partnership, coupled with Amazon’s continued EPIX deal and its exclusive license from HBO, makes us believe that consumers may begin to appreciate that the Amazon offering is competitive, especially as several of its shows (Transparent, Mozart in the Jungle) are now quite widely known and critically acclaimed. Additionally, we think that because Amazon recently launched its own standalone SVOD option, but has yet to market it aggressively to its customers, a likely Q4 marketing push for its standalone SVOD product has the potential to hit Netflix even harder as its long-time customers have a compelling alternative to consider.

On December 4, 2012, Netflix and The Walt Disney Company (“Disney”) announced an exclusive multi-year content licensing agreement that will allow Netflix’s domestic streaming subscribers to watch first-run live-action and animated feature films during the pay TV window beginning with the 2016 feature film slate. Financial terms of the agreement were not disclosed, but we estimate that the deal has required Netflix to pay $250 million or more per year prior to 2016, and we believe that the payments will escalate to as much as $600 million per year now that Disney’s newer content will finally be part of its available package.

On May 10, Amazon announced Amazon Video Direct (“AVD”), providing film and television content creators a platform on which they can earn royalties. This is Amazon’s Fulfillment by Amazon (“FBA”) equivalent for content, and we think it will ultimately prove to be a high-margin similar to its subscription services (see Figure 11 on page 12) and potentially much larger. AVD is a self-service program on which content will be available to all Prime members, available as an add-on subscription, offered as a one-time rental or purchase, or available to all Amazon customers as an ad-supported item. The content creator can choose which model it prefers and collect royalties based on viewership. Further, Amazon will make $100 million per month available to content creators as a bonus for successful titles.

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Figure 7: Films Distributed by Amazon

Theatrical Amazon Prime Total Theatrical Owned by Metacritic Content Title Wide Prime Release Genre Production Company Language Content Release Q Amazon? Score Type Release Premiere Quarter Mins Love & Friendship 13-May-16 2Q:16 20-Oct-16 4Q:16 Not Owned 87 Westerly Films, Blinder Films, Centre English 93 National de la Cinématographie et de l'Image Animée, Chic Films, Protagonist Pictures, Revolver Wiener-Dog 24-Jun-16 2Q:16 1-Sep-16 3Q:16 Not Owned 66 Drama Film , Killer Films English 88

The Demon 24-Jun-16 2Q:16 3-Nov-16 4Q:16 Not Owned 51 Thriller Film Space Rocket Nation, Vendian English 118 Entertainment, Café Society 1-Jul-16 3Q:16 Not Owned 64 Drama Film FilmNation Entertainment, Gravier English 96 Productions, Perdido Productions

Gleason 29-Jul-16 3Q:16 Not Owned 80 Documentary Documentary Exhibit A English 110

Complete Unknown 26-Aug-16 3Q:16 Not Owned 58 Drama Film Parts and Labor, Heron English 92 Television, Great Point Media

Author: The JT LeRoy 9-Sep-16 3Q:16 Not Owned 72 Documentary Film A&E IndieFilms, Fancy Film Post English 110 Story Services, RatPac Documentary Films, Vice Films The Dressmaker 23-Sep-16 3Q:16 Not Owned 47 Drama Film Screen Australia, Ingenious Senior English 119 Film Fund, Film Art Media The Handmaiden 21-Oct-16 4Q:16 84 Drama Film Moho Film, Yong Film Korean, 144 Japanese

Source: IMDB.com, Deadline.com, Variety.com, HollywoodReporter.com, Amazon.com, Metacritic.com, Company Data, and Wedbush Securities, Inc.

Figure 8: Upcoming Amazon Original Programming

Expected Amazon Expected Title Genre Content Type Premiere Premiere Q

The Grand Tour 18-Nov-16 4Q:16 Motoring Original Series Z: The Beginning of Everything Feb-17 1Q:17 Drama Original Series Britannia 2017 TBA Drama Original Series I Love Dick 2017 TBA Comedy-drama Original Series Jean-Claude Van Johnson 2017 TBA Comedy-drama Original Series The Idolmaster KR 2017 TBA Drama Original Series The Tick 2017 TBA Comedy Original Series Buckaroo Banzai TBA TBA Sci-Fi Original Series Great Men TBA TBA Drama Original Series Highston TBA TBA Comedy Original Series Lore TBA TBA Docuseries Original Series Patriot TBA TBA Drama Original Series Sneaky Pete TBA TBA Drama Original Series The Departed TBA TBA Drama Original Series The Last Tycoon TBA TBA Drama Original Series Tom Clancy's Jack Ryan TBA TBA Drama Original Series Tremors TBA TBA Sci-Fi Original Series

Source: Deadline.com, Variety.com, HollywoodReporter.com, Amazon.com, Metacritic.com, Company Data, and Wedbush Securities, Inc.

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Figure 9: Upcoming Netflix Original Programming

Expected Expected Title Seasons Episodes Genre Content Type Production Company Language Premiere Premiere Q The Crown 4-Nov-16 4Q:16 1 10 Drama Original Series Left Bank Pictures, Sony Pictures Television English Production UK True Memoirs Of An International 11-Nov-16 4Q:16 1 1 Action Original Movie PalmStar Media, Global Film Group English Assassin White Rabbit Project 9-Dec-16 4Q:16 1 TBA Reality TV Original Series Beyond Productions English Blue Jay 2016 4Q:16 1 1 Comedy Original Movie Duplass Brothers Productions, Netflix, English The Orchard Girlfriend's Day 2016 4Q:16 1 1 Comedy Original Movie Odenkirk Provissiero Entertainment English A Handsome Mystery Movie: "A 2016 4Q:16 1 1 Comedy Original Movie JZM Films English Lil Dab'll Do Ya" First They Killed My Father 2016 4Q:16 1 1 Drama Original Movie Netflix English Most Hated Woman in America 2016 4Q:16 1 1 Drama Original Movie (III) English

The OA 2016 4Q:16 1 8 Drama Original Series , English 3% 2016 4Q:16 1 TBA Science fiction Original Series Boutique Filmes Portuguese 2016 4Q:16 1 20 Drama Original Series Argos Comunicación Spanish Mercy 2016 4Q:16 1 1 Thriller Original Movie Uncorked Productions, XYZ Films English One Day at a Time 6-Jan-17 1Q:17 1 14 Comedy Original Series Act III Productions, Snowpants English Productions,Small Fish Studios, in association with Sony TV A Series of Unfortunate Events 13-Jan-17 1Q:17 1 8 Drama Original Series Netflix, Paramount Television English Marvel's Iron Fist 17-Mar-17 1Q:17 1 13 Action Original Series ABC Television Studio, Marvel Entertainment, English The Walt Disney Company Spring 2017 TBA 1 TBA Talk Show Original Series Bunim-Murray Productions (BMP) English Big Mouth 2017 TBA 1 10 Comedy Original Series English Blame! 2017 TBA 1 1 Anime Original Movie Japanese 2017 TBA 1 13 Comedy Original Series (II), Kapital Entertainment English A Futile And Stupid Gesture 2017 TBA 1 1 Comedy Original Movie Principato-Young Entertainment, Abominable English Pictures Journey to Greenland 2017 TBA 1 1 Comedy Original Movie Bobi Lux, Envie de Tempête Productions English Little Evil 2017 TBA 1 1 Comedy Original Movie Bluegrass Films, English Naked 2017 TBA 1 1 Comedy Original Movie English 2017 TBA 1 1 Comedy Original Movie Happy Madison Productions English Mindhunter 2017 TBA 1 TBA Drama Original Series Netflix English Ozark 2017 TBA 1 10 Drama Original Series Zero Gravity Management, Media Rights Capital English

Untitled Horse Mystery Project 2017 TBA 1 TBA Drama Original Series English Divines 2017 TBA 1 1 Drama Original Movie Easy Tiger, France 2 Cinéma, France French Télévisions Our Souls at Night 2017 TBA 1 1 Drama Original Movie Netflix English The Discovery 2017 TBA 1 1 Drama Original Movie Endgame Entertainment, Protagonist Pictures English

Wheelman 2017 TBA 1 1 Action Original Movie Solution Entertainment Group English 2017 TBA 1 13 Drama Original Series Kicked to the Curb Productions, Anonymous English Content , July Moon Productions Dark 2017 TBA 1 10 Science fiction Original Series German Death Note 2017 TBA 1 1 Horror Original Movie Lin Pictures, English Suburra 2017 TBA 1 TBA Drama Original Series Cattleya, Rai Cinema Italian Gypsy 2017 TBA 1 TBA Thriller Original Series Universal Television, Working Title Television English Dear White People 2017 TBA 1 TBA Drama Original Series Lionsgate Television English Okja 2017 TBA 1 1 Science fiction Original Movie Kate Street Picture Company, Lewis English, Pictures , Plan B Entertainment Korean Edha 2017 TBA 1 13 Drama Original Series Spanish Las chicas del cable 2017 TBA 1 TBA Drama Original Series Bambú Productions Spanish Marvel's The Defenders 2017 TBA 1 TBA Action Original Series ABC Studios, Marvel Studios, Marvel Television English

War Machine 2017 TBA 1 1 Comedy Original Movie Netflix, Plan B Entertainment English 2017 TBA 1 6 Drama Original Series Netflix English

*Excludes documentaries, specials, continuations, partnerships, and children’s’ programming. Grey shading indicates Netflix listed as a producer on imdb.com Source: IMDB.c om, Deadline.com, Variety.com, HollywoodReporter.com, Netflix.com, Metacritic.com, Company Data, and Wedbush Securities, Inc.

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Figure 10: 2016 Emmy Nominations and Wins Summary – Netflix & Amazon

Total Major Categories* Creative Arts Categories** Major Major 2016 Emmy Nominations Total Awards / Awards / Creative Arts Creative Awards / Total Wins Category Category and Wins Nominations Nominations Nominations Nominations Arts Wins Nominations Nominations Wins Netflix 54 9 17% 17 3 18% 37 6 16% House of Cards 13 0 0% 4 0 0% 9 0 0% Making a Murderer 6 4 67% 0 0 6 4 67% What Happened, Miss Simone? 6 1 17% 0 0 6 1 17% Master of None 4 1 25% 4 1 25% 0 0 Unbreakable Kimmy Schmidt 4 0 0% 3 0 0% 1 0 0% Chef's Table 3 0 0% 0 0 3 0 0% Narcos 3 00% 0 0 3 0 0% Bloodline 2 1 50% 2 1 50% 0 0 A Very Murray Christmas 2 0 0% 1 0 0% 1 0 0% Grace and Frankie 2 0 0% 1 0 0% 1 0 0% Marvel's Daredevil 2 00% 0 0 2 0 0% Marvel's Jessica Jones 2 1 50% 0 0 2 1 50% : The Comeback 1 0 0% 1 0 0% 0 0 Kid*** Talking for Clapping*** 1 1 100% 1 1 100% 0 0 Orange Is the New Black 1 00% 0 0 1 0 0% Sense8 1 0 0% 0 0 1 0 0% Winter on Fire: Ukraine's Fight 1 00% 0 0 1 0 0% for Freedom

Amazon 16 6 38% 6 2 33% 10 4 40% Transparent 10 3 30% 5 2 40% 5 1 20% The Man in the High Castle 4 2 50% 0 0 4 2 50% Catastrophe 1 0 0% 1 0 0% 0 0 Mozart in the Jungle 1 1 100% 0 0 1 1 100%

*Includes: Program, Acting, Directing, and Writing categories **Presented in recognition of technical and other similar achievements in American television programming, including guest acting roles ***Comedy Special

Source: Company data, Emmys.com, Wikipedia.com, Wedbush Securities, Inc.

The 2016 Emmy Awards clearly demonstrated that SVOD is fast becoming a major contributor to original television series, with Netflix leading the way.

Netflix scored a total of 54 Emmy nominations and 9 wins in 2016, up from 23 nominations in 2013 (2 wins), 30 in 2014 (7 wins), and 34 in 2015 (4 wins).

Amazon scored a total of 16 Emmy nominations and 6 wins in 2016, up from 5 nominations and 2 wins in 2015.

The list above shows the summary of Netflix’ and Amazon’s Emmy nominations and wins for 2016. Netflix continues to trail HBO, which garnered 94 total nominations in 2016, down from the 126 HBO was nominated for in 2015. FX received 56 nominations in 2016, up from 38 last year, suggesting that Netflix and Amazon are not the only competitors taking share. Amazon, with far fewer original series but a growing library, received 16 nominations in 2016. Amazon has a better ratio of Emmy wins per nominated original show than Netflix, and if Amazon continues to produce quality content we suspect it will be in the next year or two that Amazon surpasses Netflix at the Emmy awards.

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On December 8, 2015, Amazon announced that it partnered with various content owners to offer users a variety of subscription streaming offerings. In effect, the user can pick and choose which curated group(s) of content he or she prefers, and the user can also cancel any subscription any time. The monthly subscription prices vary from $2.99 to $9.95 per month following a free trial period lasting between seven and thirty days. The content bundles most likely to be purchased – Showtime and – are priced at $8.99 per month following a seven day trial period. We compiled a list of the various subscription bundles and included a description of each, along with the trial period and monthly price (see Figure 6 below).

There is no base cost for the service, and since users have the flexibility to add and remove subscriptions at any time, we think that this presents an interesting value alternative to cable users who are not avid sports fans. We expect Amazon to benefit from both sides; Amazon will host the content and process payments for the content owners, presumably earning a fee from the content owners, and we suspect that the subscription service availability will drive Prime user engagement. This service does not appear to be cannibalizing Amazon content, as the service is directed toward existing Amazon Prime users with “special Prime member pricing”. Amazon is clearly trying to capture incremental share of the streaming market, and that can only serve to limit Netflix’s addressable market in the U.S.

Figure 11: Amazon Subscriptions

Free Trial Monthly Price Service Description (days) (post-trial) Showtime Showtime content 7 $8.99 STARZ STARZ content 7 $8.99 Stand-Up Plus Stand-up specials 7 $3.99 Acorn TV British TV 30 $4.99 Lifetime Movie Club New and Classics 7 $3.99 Gaia Yoga, Documentaries, etc. 7 $9.95 Featured Content Featured Qello Concerts Full-length concerts, Documentaries 7 $7.99 Drama Fever Korean TV 7 $3.99 Shudder Horror films 14 $4.99 Curiosity Stream Documentaries 30 $5.99 Hoopla Kidz Children's content 7 $5.99

Everyone Screen Junkies Talk on all things film and tv 7 $4.99 Something for Something CONtv Comic Con-related content 7 $4.99 Tribeca Shortlist Tribeca's gems - indies, foreign, classics 14 $4.99 Sundance Now Doc Club Award-winning documentaries 30 $6.99

Indie Indie IndieFlix Shorts Internationally acclaimed short films 30 $2.99 Movies FlixFling Cinefest Films for the movie buff 14 $4.99 Smithsonian Earth Nature and wildlife documentaries 7 $3.99 Nature Vision TV The world's most beautiful places 14 $2.99 Docurama Award-winning documentaries 7 $4.99 History - Vault Curated historical videos 7 $4.99 Daring Docs Hot topics and social issues 7 $2.99 Documentaries FlixFling DOX Award-winning documentaries 14 $2.99 AcaciaTV Fitness - workout videos 10 $6.99 The Ring TV Boxing 7 $2.99 Paula Deen Cooking and lifestyle shows 7 $4.99 Dove Channel Children's content 7 $4.99 UMC Urban Movie Channel 14 $4.99 Monsters and Nightmares Horror from the last decade 14 $2.99

More to Explore to More Fear Factory Horror films 7 $2.99 FlixFling Warriors & Gangsters Action, adventure films 14 $2.99

Source: Company data, Wedbush Securities, Inc.

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Figure 12: Netflix Historical Content Signings (continued in Figure 11)

Movies TV Exclusive/Non- Date Company New Old New Old Details provided on deal Exclusive? 05/2008 MTV Networks Non-Exclusive X X Catalog movies and catalog TV (all from Logo network) Newish movies (90 days after premium cable window), new TV content (sneak preview of series premiere of Crash, with future episodes available day-and-date), catalog movies, and catalog TV through Starz Play 10/2008 Starz Non-Exclusive X X X X broadband subscription movie service; content from Disney, Sony, Overture Films, , and Warren Miller Films New TV (10-day pre-debut of series premiere of United States of Tara; day-and-date season premieres for 01/2009 Showtime Non-Exclusive X Secret Diary of a Call Girl and , three week pre-debut of Californication) 04/2009 MTV Networks Non-Exclusive X Catalog TV (Comedy Central and Nickelodeon) 07/2010 Non-Exclusive X New movies (12 to 15 per year, up to 30 annually) available during pay TV window 07/2010 Warner Bros. TV Non-Exclusive X Catalog TV 07/2010 Warner Bros. Studios Non-Exclusive X Catalog movies Newish movies (90 days after premium pay TV and subscription-on-demand debuts) and catalog movies; 08/2010 EPIX Non-Exclusive X X 3,000 movies total 09/2010 Nu Image / Millennium Films Non-Exclusive X Long-term agreement for new movies (5 to 10 per year) during pay TV window NBC Universal (replaced by new 09/2010 Non-Exclusive X Catalog movies and catalog TV; day-after broadcasts of agreement in 07/2011) Universal Studios (replaced by new 09/2010 Non-Exclusive X agreement in 07/2011) 10/2010 Sony Non-Exclusive X Catalog movies 12/2010 FilmDistrict Non-Exclusive X New movies (first-run, theatrically released films in the pay TV window) CBC, FremantleMedia, New Video, 12/2010 Non-Exclusive X X Catalog movies and catalog TV for streaming service in Canada Maple, Sony Mainly catalog TV; new TV (programming will be available no earlier than 15 days after initial broadcast); Disney-ABC Television Group (replaced 12/2010 Non-Exclusive X X $50,000 - $150,000 per episode; Disney holds an option to extend the deal; content from ABC, Disney by new agreement in 10/2011) Channel, and ABC Family Disney Studios (replaced by new 12/2010 Non-Exclusive X Catalog movies agreement in 12/2012) 02/2011 CBS Non-Exclusive X Catalog TV; CBS holds option to extend the agreement by two years 03/2011 Media Rights Capital Exclusive X House of Cards to debut exclusively on Netflix in late 2012; Netflix has committed to a minimum of 26 episodes 03/2011 Paramount Non-Exclusive X Catalog movies (over 350 titles) for streaming service in Canada 04/2011 Fox TV Non-Exclusive X First season of Glee and first two seasons of Sons of Anarchy 04/2011 Twentieth Century Fox Studios Non-Exclusive X Catalog movies (after premium pay TV license periods expire) Catalog TV; first four seasons of Mad Men with additional three seasons available after airing on AMC 04/2011 Lionsgate TV Non-Exclusive X Network; Netflix paying close to $1 million per episode 05/2011 Non-Exclusive X US only; catalog movies (several hundred movies with dozens of titles added on a rotating basis) 06/2011 Non-Exclusive X Movies distributed theatrically to be available during pay TV window Multi-year renewal; expands selection of non-exclusive catalog movies and TV; certain series to be available on 07/2011 NBC Universal Non-Exclusive X X a one season delay basis 07/2011 CBS Non-Exclusive X X Canada and Latin America; non-exclusive; includes CBS, CW, and Showtime content Non-exclusive renewal; prior-season series and specials from Animal Planet, Discovery Channel, Investigation 09/2011 Discovery Communications Non-Exclusive X Discovery, Military Channel, Science Channel, TLC Multi-year premium pay TV window agreement; makes Netflix the exclusive subs TV service for first-run 09/2011 DreamWorks Exclusive X X X feature films (beginning with 2013 films) and select TV specials US and Canada; prior seasons of The Walking Dead; licensed non-exclusive rights in the US to programming 10/2011 AMC Networks Non-Exclusive X from AMC, IFC, Sundance Channel, and WE TV US only; licensed rights to stream over 700 hours of previous-season episodes of The CW’s dramas and future 10/2011 CBS, Warner Bros. (for The CW) Non-Exclusive X programs US only; extension of existing licensing agreement; content from ABC Studios, ABC Family, and Disney 10/2011 Disney-ABC Television Group Non-Exclusive X X X Channel; episodes from new seasons will be available 30 days after the last episode of each season airs UK and Ireland; movies available during pay TV window; makes Netflix the exclusive subs streaming service in 11/2011 MGM Exclusive X X UK and Ireland for most first-run feature films; catalog titles as well UK and Ireland; movies available during pay TV window; makes Netflix the exclusive subs streaming service in 11/2011 Lionsgate UK Exclusive X X UK and Ireland for first-run feature films; catalog titles as well 11/2011 Miramax Non-Exclusive X UK and Ireland; new digital licensing agreement for a broad range of Miramax films Twentieth Century Fox Television, Arrested Development; US only; all new episodes available exclusively on Netflix; premiering in the first half of 11/2011 Exclusive X Imagine Television 2013 12/2011 BBC Worldwide Non-Exclusive X UK and Ireland; begins in early 2012 US only; multi-year agreement; foreign language, documentary, certain other movies exclusively available; 02/2012 The Weinstein Company Non-Exclusive X X "The Artist" to make pay TV debut on Netflix; slate of specialty films to appear on Netflix within 1 year of theatrical release Multi-year agreement for ten TV franchises; five franchises available now, with remainder available later in 04/2012 Hasbro Studios Non-Exclusive X 2012

Twentieth Century Fox Television 05/2012 Non-Exclusive X X X Latin America and Brazil; multi-year agreement; past seasons of multiple shows and current seasons of a few Distribution shows available July 15; certain films available July 1; additional films and TV series to be added going forward Warner Bros. Domestic Television 06/2012 Non-Exclusive X Distribution US only; multi-year agreement; previous seasons of ABC Family’s Pretty Little Liars and The Lying Game

08/2012 RADiUS-TWC Non-Exclusive X US only; multi-year agreement with new distribution label from The Weinstein Company; starts in early 2013 11/2012 CBS Non-Exclusive X Canada, Latin America, UK, and Ireland; extension of international licensing agreements

Source: Company data, Wedbush Securities, Inc.

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Figure 13: Netflix Historical Content Signings (continued)

Movies TV Exclusive/Non- Date Company New Old New Old Details provided on deal Exclusive? US only; multi-year agreement; makes Netflix exclusive US subscription TV service for first-run live-action and 12/2012 The Walt Disney Studios Exclusive X animated feature films; Beginning with 2016 theatrically released feature films, new titles to be available in pay TV window; direct-to-video new releases available starting in 2013 12/2012 The Walt Disney Studios Non-Exclusive X US only; multi-year agreement; catalog films US only; Netflix becomes exclusive online home for several full seasons of serialized dramas produced by 01/2013 Warner Bros. Television Group Exclusive X Warner Bros.; covers a slate of eight shows as well as potential future shows US only; multi-year agreement; previous seasons of animated and live-action programming from Cartoon 01/2013 Warner Bros. Television Group Non-Exclusive X Network, Warner Bros. Animation, Adult Swim; cartoon content available March 30, 2013; serialized drama Dallas available January 2014 US Only; Exclusive multi-year agreement to pick movies for Netflix shortly after theatrical release; beginning 02/2013 Flavor Unit Entertainment Exclusive X X Spring 2013 House of Bodies and Percentage will be available on Netflix 02/2013 DreamWorks Animation Exclusive X Netflix Original; Turbo: F.A.S.T in December 2013 based of summer kids movie 03/2013 Fox Television Studios Non-Exclusive X The Killing; Offered in All Territores Season 1 & 2 and offer Season 3 after finale airs in 2013 03/2013 Georgeville Television Exclusive X Netflix Original; Ten episodes of SENSE8 US & Canada; Multi-year exclusive agreement for kids programming for five shows available one month after 04/2013 Hasbro Studios Exclusive X finale airs 05/2013 Disney/ABC Television Group Non-Exclusive X US Only; Multi-year agreement for five Disney Junior & Disney XD shows beginning May 2013 05/2013 Derek Productions Non-Exclusive X All Territories (except for UK); first season of Derek available September 2013 US, Canada, Latin America and Europe; Netflix multi-year exclusive deal for over 300 hours of original kids 06/2013 DreamWorks Animation Exclusive X programming from DreamWorks library including The Croods and Mr. Peabody and Sherman 06/2013 Gaumont International Television Exclusive X Netflix Original; Hemlock Grove Second Season (10 episodes) available 2014 06/2013 Lionsgate Television Group Exclusive X Netflix Original; Orange is the New Black Second Season available 2014 All Territories; Mako Mermaids Netflix exclusive. First 13 episodes available July 26, second half available in 06/2013 ZDF Enterprises Exclusive X September US Only; Exclusive multi-year agreement for first season of New Girl available July 1, with subsequent seasons 07/2013 Twentieth Century Fox Exclusive X to come

07/2013 PBS Non-Exclusive X US and Canada; Expanded multiyear agreement to include children catalog TV exclusive to Netflix and other catalog TV; The Bletchley Circle available Fall 2013 and Super Why! available starting in 2014 US Only; Extension of multiyear agreement; ensure continued availability of TV catalog offered and extend to 07/2013 CBS Non-Exclusive X other catalog TV Becomes exclusive U.S. subscription TV service for first-run films in 2016; starts with 2016 theatrically released 08/2013 The Weinstein Company Exclusive X feature films from TWC and … Netflix is already the pay TV home for TWC documentaries and foreign films New thriller series from creators of Damages called Bloodline; 13-episode first season premieres exclusively in 10/2013 Sony Pictures Television Exclusive X all territories 10/2013 CBS Non-Exclusive X All 8 seasons of Dexter become available in the U.S. on October 31 Better Call Saul available exclusively in Europe and Latin America shortly after airing in the U.S.; first season 12/2013 Sony Pictures Television Exclusive X available in the U.S. and Canada after the season finale Multi-year deal to bring feature films in first pay TV window to members in the U.S. 05/2014 Starz Non-Exclusive X starting in 2014 with Cloudy with a Chance of Meatballs 2 and The Smurfs 2

08/2014 Sony Pictures Television Non-Exclusive X Acquired rights to The Blacklist for $2 million per episode; seasons will be available following linear broadcasts Warner Bros. Worldwide Television Exclusive subscription VoD home of Gotham in each of Netflix's current territories and select other territories; 09/2014 Exclusive X Distribution each season will be available following the linear broadcast Allows customers to stream past seasons of shows like the Food Network's Cutthroat Kitchen and Travel 10/2014 Scripps Networks Interactive Non-Exclusive X Channel's Man v. Food; deal is limited in scope and duration Fourth season of Longmire; 10 new episodes will premiere exclusively in the U.S., Canada, Australia, and New 11/2014 Warner Horizon Television Exclusive X Zealand 11/2014 Universal Television Exclusive X Ordered two seasons of The Unbreakable Kimmy Schmidt; Netflix will be the exclusive home Our Planet will premiere across all Netflix territories in 2019; 8-part natural history series from the creators of 04/2015 Silverback Films / WWF Non-Exclusive X Planet Earth One season after original release of Zoo and Jane the Virgin will be available exclusively on Netflix in the U.S. 09/2015 CBS Exclusive X (immediately and on Oct 12, respectively) and over 50 countries worldwide (in the coming months); First season will be available on Netflix as 2nd season airs on TV. Legendary Television/Universal Cable One season after original release of COLONY will be available on Netflix in the US, Canada, and other 09/2015 Exclusive X Productions territories; First season will be available on Netflix as 2nd season airs on TV.

01/2016 DreamWorks Animation Exclusive X X Deal extends original series for domestic viewing and expands to international viewing, and includes new original series - and Trollhunters . Deal also includes a variety of film library content from Dreamworks. The new relationship spans all current CW series, as well as all future programs, beginning with the 2015-2016 7/5/2016 The CW Network Exclusive X X broadcast season. Starting in the 2016-2017 season, full seasons for each program will be available 8 days after each show's season finale. First global SVOD licensing agreement, allowing Netflix to be the exclusive global streaming home for FX's hit 7/25/2016 20th Century Fox Television Exclusive X American Crime Story in 2017 . Seasons will become available after their broadcast windows. Available globally except in Canada.

Source: Company data, Wedbush Securities, Inc.

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Figure 14: Amazon Historical Content Signings

Movies TV

Date Company Exclusive/Non-Exclusive? New Old New Old Details provided on deal 7/19/2011 CBS Non-Exclusive X X Terms not disclosed. Deal adds 2,000 videos to Prime. (8,000 Prime tv/movies) 9/26/2011 FOX Non-Exclusive X X Terms not disclosed. Deal adds 3,000 videos to Prime. (11,000) 10/19/2011 PBS Non-Exclusive X X Terms not disclosed. Deal adds 1,000 videos to Prime. (12,000) 10/31/2011 Disney-ABC Non-Exclusive X Terms not disclosed. Deal adds >800 videos to Prime. (~13,000) 2/8/2012 Viacom Non-Exclusive X Terms not disclosed. Deal adds 2,000 videos to Prime. (15,000) 3/14/2012 Discovery Non-Exclusive X X Terms not disclosed. Deal adds 2,000 videos to Prime. (17,000) 5/23/2012 Paramount Non-Exclusive X Three year deal. Deal adds 100s of videos to Prime. (>17,000) 6/13/2012 MGM Non-Exclusive X X Terms not disclosed. Deal adds 100s of videos to Prime. (18,000) 7/20/2012 Warner Bros TV Some Exclusive X X Terms not disclosed. Deal adds more videos to Prime. (>18,000) 8/24/2012 NBCUniversal Cable/New Media Non-Exclusive X X Terms not disclosed. Deal adds 100s of videos to Prime. (22,000) 9/4/2012 EPIX Non-Exclusive X X Multi-year deal. Deal adds 1,000s of videos to Prime. (25,000) Turner-TNT's Falling Skies (new/catalog), Warner Bros - TNT's The Closer (7 seasons). (30,000) 12/17/2012 Turner/Warner Bros TV Exclusive X X

1/4/2013 A+E Networks Non-Exclusive X Terms not disclosed. Deal adds 1,000s of videos to Prime. (33,000) Downton Abbey to be exclusive for seasons 3-5 beginning 6/18/13; later in 2013 all seasons. 2/1/2013 PBS Exclusive X X (36,000) Under the Dome to be exclusive on Prime for online subscription viewing (6/24/13 premier). 2/11/2013 CBS Exclusive X (36,000) 2/13/2013 CBS Non-Exclusive X X Terms not disclosed. Expanded licensing agreement. (36,000) FX Network TV series Justified to be exclusive, plus adding TV series The Shield . (37,000) 2/26/2013 Sony Pictures TV Exclusive X X

Terms not disclosed. Deal adds catalog plus exclusive shows: Grimm , Suits , Hannibal , Defiance . 5/16/2013 NBCUniversal Cable/New Media Some Exclusive X (40,000) Multi-year, multi-nation deal. Deal adds 1,000s of videos to Prime, some kids shows exclusive. 6/4/2013 Viacom Some Exclusive X X (41,000) 6/26/2013 PBS Non-Exclusive X Terms not disclosed. Deal adds 100s of videos to Prime. (41,000) Terms not disclosed. Expanded licensing agreement for tv series Vikings plus some film titles. 10/22/2013 MGM Non-Exclusive X X

11/20/2013 PBS Exclusive X TV series Mr. Selfridge to be exclusive on Prime for online subscription viewing. 11/21/2013 Exclusive X X Multi-year deal for select A24 films on Prime for exclusive online subscription viewing. TV series Extant to be exclusive on Prime for online subscription viewing, four days after airing 1/8/2014 CBS Exclusive X on CBS (begins July 2014). TV series Veronica Mars to be exclusive on Prime for online subscription viewing (ahead of 1/9/2014 Warner Bros TV Exclusive X theatrical release). 2/6/2014 Fox TV Exclusive X TV series The Americans to be exclusive on Prime for online subscription viewing. TV series Teen Wolf to be exclusive on Prime for online subcription viewing, plus some non- 2/18/2014 MGM Exclusive X exclusive film titles. Film The Broken Circle Breakdown to be exclusive for online-only, plus other documentaries and 2/20/2014 Tribeca Film Some Exclusive X X films. 3/7/2014 BBC Worldwide North America Exclusive X X TV series Orphan Black to be exclusive on Prime for online subscription viewing, TV series 24 to be exclusive on Prime for online subscription viewing (8 seasons + TV movie 4/1/2014 Fox TV Exclusive X ahead of new release on FOX) Multi-year deal for select HBO tv series to be exclusively available online via Prime, mostly three 4/23/2014 HBO Exclusive X years after initial airing. First wave of HBO content available: The Sopranos, The Wire, Deadwood, Rome, Six Feet Under, 5/21/2014 HBO Exclusive X Eastbound & Down, , + more TV & series Wallace & Gromit , , , and to be 6/19/2014 Aardman Exclusive X X exclusive on Prime. *New episodes not exclusive. 6/26/2014 Cinedigm - Exclusive X Exclusive deal for select film content from indie film distributor Drafthouse Films 1/28/2015 Starz Digital Media Exclusive X TV series The White Queen to be exclusive on Prime for online subscription viewing. 3/31/2015 Bleecker Street Exclusive X Multi-year exclusive deal for select film content from Bleecker Street. 9/16/2015 HBO Non-Exclusive X All Sex and the City episides now available on Prime. 9/25/2015 NBCUniversal Cable/New Media Exclusive X Mr. Robot season 1 online exclusive in US as of Spring 2016 TV series BrainDead to be exclusive on Prime for online subscription viewing, four days after airing on CBS (begins Summer 2016). The deal also includes an exclusive summer release for 10/1/2015 CBS Exclusive X 2017 and 2018, each also to be released four days after airing on CBS.

Along with the exclusive deal above, CBS extended and expanded its CBS and SHOWTIME TV 10/1/2015 CBS Non-Exclusive X X and film titles available on Prime. New PBS series Mercy Street will become available on Prime 7 days after airing on PBS. 1/14/2016 PBS Non-Exclusive X

Signed a multimillion dollar production deal with American Girl (a premium toy brand for girls, and 2/1/2016 Mattel, Inc. Exclusive Original Series X subsidiary of Mattel) to produce four live-action original specials. Will premier on Amazon Prime Video in the US, UK, Germany, and Austria. Signed a multi-year agreement with PBSKIDS to be the exclusive VOD home for several 7/1/2016 PBS Exclusive X PBSKIDS programs available in the U.S.

Source: Company data, Wedbush Securities, Inc.

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Covered Public Companies Mentioned in this Report (priced as of close 10/28/16)

COMPANY TICKER RATING PRICE PRICE TARGET AMC AMC OUTPERFORM $31.35 $33 AMAZON AMZN OUTPERFORM $776.32 $900 CARMIKE CKEC NEUTRAL $32.60 $33 CINEMARK CNK NEUTRAL $38.82 $40 IMAX IMAX OUTPERFORM $30.34 $41.50 NETFLIX NFLX UNDERPERFORM $126.57 $60 REGAL RGC OUTPERFORM $21.28 $25

Analyst Certification I, Michael Pachter, Alicia Reese, Nick McKay, certify that the views expressed in this report accurately reflect my personal opinion and that I have not and will not, directly or indirectly, receive compensation or other payments in connection with my specific recommendations or views contained in this report.

Disclosure information regarding historical ratings and price targets is available at http://www.wedbush.com/ResearchDisclosure/DisclosureQ316.pdf

Investment Rating System: Outperform: Expect the total return of the stock to outperform relative to the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months. Neutral: Expect the total return of the stock to perform in-line with the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months. Underperform: Expect the total return of the stock to underperform relative to the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months.

The Investment Ratings are based on the expected performance of a stock (based on anticipated total return to price target) relative to the other stocks in the analyst’s coverage universe (or the analyst’s team coverage).*

Rating Distribution Investment Banking Relationships (as of September 30, 2016) (as of September 30, 2016) Outperform: 55% Outperform: 16% Neutral: 42% Neutral: 2% Underperform: 3% Underperform: 0%

The Distribution of Ratings is required by FINRA rules; however, WS’ stock ratings of Outperform, Neutral, and Underperform most closely conform to Buy, Hold, and Sell, respectively. Please note, however, the definitions are not the same as WS’ stock ratings are on a relative basis.

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Wedbush Equity Research Disclosures as of October 31, 2016

Company Disclosure AMC Entertainment 1 Amazon.com 1 Carmike Cinemas 1 Cinemark Holdings 1 IMAX 1 Netflix 1 Regal Entertainment 1

Research Disclosure Legend 1. WS makes a market in the securities of the subject company. 2. WS managed a public offering of securities within the last 12 months. 3. WS co-managed a public offering of securities within the last 12 months. 4. WS has received compensation for investment banking services within the last 12 months. 5. WS provided investment banking services within the last 12 months. 6. WS is acting as financial advisor. 7. WS expects to receive compensation for investment banking services within the next 3 months.

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8. WS provided non-investment banking securities-related services within the past 12 months. 9. WS has received compensation for products and services other than investment banking services within the past 12 months. 10. The research analyst, a member of the research analyst’s household, any associate of the research analyst, or any individual directly involved in the preparation of this report has a long position in the common stocks. 11. WS or one of its affiliates beneficially own 1% or more of the common equity securities. 12. The analyst maintains Contingent Value Rights that enables him/her to receive payments of cash upon the company’s meeting certain clinical and regulatory milestones.

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* WS changed its rating system from (Strong Buy/Buy/Hold/Sell) to (Outperform/ Neutral/Underperform) on July 14, 2009. Please access the attached hyperlink for WS’ Coverage Universe: http://www.wedbush.com/services/cmg/equities-division/research/equity- research Applicable disclosure information is also available upon request by contacting Noeth Hing in the Research Department at (212) 938- 9925, by email to [email protected] , or the Business Conduct Department at (213) 688-8090. You may also submit a written request to the following: Business Conduct Department, 1000 Wilshire Blvd., , CA 90017.

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EQUITY RESEARCH DEPARTMENT

DIRECTOR OF RESEARCH Gil B. Luria (213) 688-4501

RETAIL AND CONSUMER TECHNOLOGY, INTERNET AND MEDIA HEALTHCARE

Building Supplies/Materials Business Services/IT Services Biotechnology/Biopharmaceuticals Environmental Services Moshe Katri (212) 938-9947 David M. Nierengarten, Ph.D. (415) 274-6862 Al Kaschalk (213) 688-4539 Dilip Joseph (415) 273-7308 Misha Levental (213) 688-4557 Consumer Entertainment Products Robert Driscoll, Ph.D. (415) 274-6863 Nick McKay (213) 688-4343 Homebuilders Michael Pachter (213) 688-4474 Heather Behanna, Ph.D. (415) 274-6874 Jay McCanless (212) 833-1381 Alicia Reese (212) 938-9927 Emerging Pharmaceuticals Leisure Enterprise Software Liana Moussatos, Ph.D. (415) 263-6626 James Hardiman, CFA CPA (212) 833-1362 Steve Koenig (415) 274-6801 Kelechi Chikere, Ph.D. (415) 273-7304 Sean Wagner (212) 833-1363 Entertainment: Retail/Entertainment: Software Medical Devices Restaurants Michael Pachter (213) 688-4474 Tao Levy (212) 938-9948 Nick Setyan (213) 688-4519 Nick McKay (213) 688-4343 Colin Radke, CFA (213) 688-6624 Alicia Reese (212) 938-9927

Specialty Retail: Hardlines Internet: eCommerce FINANCIAL INSTITUTIONS Seth Basham, CFA (212) 938-9954 Aaron Turner (213) 688-4429 Nathan Friedman (212) 938-9955 Real Estate Finance and Financial Infrastructure Internet: Media and Gaming Jason Weaver, CFA (212) 833-1383 Specialty Retail: Softlines Internet: Social Media, Advertising and Technology Morry Brown, CFA (213) 688-4311 Michael Pachter (213) 688-4474 Regional Banks/Texas Banks Taryn Kuida (213) 688-4505 Nick McKay (213) 688-4343 Peter J. Winter (212) 938-9942 Alicia Reese (212) 938-9927 David J. Chiaverini, CFA (212) 938-9934

Media Specialty Finance James Dix, CFA (213) 688-4315 Henry J. Coffey Jr., CFA (212) 833-1382 Aria Ertefaie (212) 938-9958

Movies and Entertainment Michael Pachter (213) 688-4474 Alicia Reese (212) 938-9927 Nick McKay (213) 688-4343

Payments Gil B. Luria (213) 688-4501 Aaron Turner (213) 688-4429 Amir Chaudhri (213) 688-4538

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