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Home , Father Knows Best, Howard Stringer, Screen Gems, Sony Pictures, Sony Pictures Television, TriStar Television

FEBRUARY 2006 ISSUE 2

SONY PICTURES WANTS YOU TO KNOW

IN GLOBAL MOTION PICTURE MARKETPLACE, SPEAKS Contents MANY LANGUAGES

1 IN GLOBAL MOTION PICTURE Much of the focus of ’ motion The strategy was also intended to allow MARKETPLACE, SONY SPEAKS MANY picture production and distribution Sony Pictures the opportunity to work with LANGUAGES operations is on those produced in the some of the most talented actors and . While awareness of these filmmakers in the world. Local language MICHAEL & AMY WANT YOU TO KNOW 1 operations is broad, many people don’t productions are intended for release in the 2005: The Year in Review realize that Sony Pictures is also the only territories where they are produced and, major studio to maintain stand-alone, local where appropriate, are distributed on a IN THE SPOTLIGHT 3 language motion picture production units wider basis, including the United States. Directing Sony’s Multicultural Vision throughout Europe, Asia and Latin America. In fact, Sony Pictures has been at the Gareth Wigan, Vice Chairman, Columbia 4 THE WORLD OF SPE: TriStar Motion Picture Group (CTMPG), DIVISIONAL UPDATES forefront of bringing local language blockbusters to the global marketplace. heads up this line of business for the Sony Pictures ...... 4 Company. He works very closely with Paul Motion Pictures ...... 4 Recognizing that the international market Smith, Executive Vice President, CTMPG, International . . .4 was growing faster than the domestic Worldwide Marketing and Distribution, Sony Pictures Home Entertainment . . . . .4 market for theatrical releases, Sony Pictures , Jeff Blake, the international ...... 4 launched foreign-language production marketing team headed by Sal Ladestro, and Studio Operations ...... 5 operations about seven years ago as a with production executives in our various Corporate ...... 6 strategy to increase the number of films territories. the Company makes and distributes. 5 INNOVATIONS (continued on page 2) Sony Shines at Annual CES

6 SPE’S BACK STORY : A Sony Institution since 1934

MICHAEL & AMY Want You to Know

2005: THE YEAR IN REVIEW the year in the number three position domestically, ahead of studios such as Disney and Universal, As we settle into a new year, we want to pause with over $1 billion in domestic box office to share a few thoughts about how we did in revenues. Overseas, our performance added 2005. We also want to talk about why we’re so almost another $1 billion. These are great optimistic about our future. accomplishments that deserve acknowledgment.

Focusing on our motion picture performance, However, we know we can do better. Part of what we can’t pretend that 2005 was a great year. happened this year is related to the overall Although the first few months were strong, industry downturn. The entire industry is adjusting with hits like Hitch, Guess Who and The Exorcism to a changing marketplace, where there are more of Emily Rose, we then hit a slump that was and more distractions competing for the attention uncharacteristic of the way we have performed of the movie going audience. We’re looking at the over the last few years of unprecedented way we do business and adjusting where we success. While this slump was disappointing, believe we need to improve. it’s important to remember that we still finished (continued on page 2) 2

In Global Motion Picture Marketplace, Sony Speaks Many Languages (continued)

Sony Pictures’ first local language production was a German , Anatomie, released in 1998. The Company also launched Columbia TriStar Film Productions Asia in 1998. Overseen by Barbara Robinson, this production entity was responsible for, among other films, the Oscar-winning hit Crouching Tiger, Hidden Dragon, directed by , as well as the internationally acclaimed Not One Less and The Road Home, both from director Zhang Yimou. SPE’s most recent success in Asia was Stephen Chow’s box-office Two Sons of Francisco phenomenon , which has grossed over $100 million worldwide, and of a Brazilian singing and songwriting duo, The Incredibles and Wars: Revenge of which swept up the top awards at Asia’s is Brazil’s official 2005 Academy Award the Sith. equivalent of the Oscars. entry for Best Foreign Language Film. It’s also the highest domestic-grossing Brazilian Going forward, SPE’s expansion plans include In addition to its operations in Asia, SPE film of all time, outperforming in that Russia, where the Company plans to start a has produced films in ten other countries. territory international blockbusters such as program of films in 2006. Also, SPE is the European operations are now overseen by first major studio to establish an infrastructure Iona Macedo and have included Spanish, to support co-productions in India. The Italian and French productions. In the UK, Company plans to begin its first Indian film films include Snatch and, more recently, this year. As the market for Indian cinema Layer Cake. The Company’s production continues to grow internationally, SPE’s vast presence in Latin America has been focused global network will allow Indian film on Brazil but also includes Mexico. In producers to showcase their work outside their Brazil, for example, SPE most recently home market and acquire greater exposure for co-produced Two Sons of Francisco with their films. Hopes are high that this marriage local Brazilian production companies. between Bollywood and Hollywood will be a The film, which is based on the true story “win-win” for everyone. Two Sons of Francisco

Michael & Amy Want You to Know (continued)

Potential changes we’re considering include Sony Pictures Television entered its most At the end of the day, Sony Pictures is not only releasing fewer films in the years ahead, successful development season in recent about box office returns, critical acclaim, TV focusing on more event titles, placing tighter history with over 15 commitments for cable ratings and product sell-throughs. We’re also controls on budgets, and looking at more and broadcast networks. One of these, Heist, about the people who make and sell the movies co-productions. has already been ordered to series by NBC. and TV shows, the , the special effects, and all of you who work tirelessly to make this We’re also very optimistic about our 2006 In Home Entertainment, the team worked place tick. It’s about everybody who makes film slate. The Da Vinci Code, which opens incredibly hard to ensure the successful Sony Pictures such an amazing and rewarding worldwide in May, looks fantastic and should integration of the MGM library into ours. Among place to work, and who makes us so proud to be one of the year’s true event titles. We also the MGM titles we began distributing on DVD in come to the studio each day. have a lot of confidence in other upcoming 2005 were The Amityville Horror and Beauty 2006 titles such as , Click, RV, Shop. Sony Pictures Digital began production on We have many reasons to feel good about how Open Season, and Marie Antoinette. We believe our first two animated features, Open Season we did last year, and even more reasons to be these films and the others in our slate will help and Surf’s Up, and they look great. Sony excited about the future. But, whatever hurdles us reclaim our marketplace dominance. We Pictures Television International had a fantastic and honors may come our way, we know that had an amazing run at the box office in the year with its distribution and its international through it all, we’re working with the best team three years before 2005 and we will again. production businesses, and it launched new in the industry. channels in Korea, Italy and Latin America. Take It’s also extremely important to remember the a look at the Divisional Updates in this issue of Here’s to a great 2006. remarkable achievements in 2005 of our other The Reel for more news. divisions here at Sony Pictures. For example, 3

IN THE Spotlight

DIRECTING SONY’S MULTICULTURAL VISION

In countries around the world, Gareth Wigan brings local films to life through Managers, the filmmaker knows that SPE SPE’s local language production units has the machine to get the film distributed elsewhere in the world. The visibility that this provides filmmakers, and the contacts it allows them to develop, is invaluable. Gareth Wigan is Vice Chairman of the Columbia TriStar Motion Picture Group (CTMPG), a position he has held since 1997. We also provide value on the creative front. While Gareth works closely with Amy Pascal and the motion For instance, there are many examples of picture management team on a variety of creative and operational things we may not understand in the matters, his primary focus is on overseeing SPE’s local language United States that are very meaningful to production programs. Gareth recently shared some of his local populations, and you can spend a thoughts about this line of business. learning about that. What try to say to filmmakers is, “I can’t tell you what will work better in your country, but I can share a perspective on what will work in the United States and Europe.” I try to work with them to determine What prompted Sony Pictures to get into The Company plans to expand its whether there may be another way to say the local language production business? production presence into Russia. something that will still achieve their vision About seven or eight years ago, it became Why Russia? but that may be much easier for a broader clear that there was a growing appetite in We anticipate that movie attendance in audience to understand. As long as you are many countries to see their own films in Russia will increase by about 30 percent per tactful and demonstrate to a filmmaker that addition to those produced in Hollywood. year, as it has been for each of the last three you are there to help him or her make the At the same time, we recognized that for years. Also, since Russian film production film they want to make, and not something SPE to maintain its first class global became reinvigorated, their films have come different, the input we offer is generally distribution network, it would be valuable to earn about 30-40 percent of the share of warmly welcomed. to increase the number of films that we the Russian box office. So, clearly there’s a were producing and distributing in all growing audience for these films and we What makes you excited about being media. Because there are practical and want to be a part of that. involved in local language productions financial limits to the number of films we for the Company? The rationale for our upcoming can produce in the United States each year, I believe in the business. A main criterion involvement in India is the same. it was natural that we should look elsewhere in selecting productions is whether a Currently, Hollywood films average a 5 for opportunities. particular film will be able to get its money percent share of box office in India. With back and make a profit in its own territory. How does the Company go about Indian films so dominant there, it makes Sometimes, as in the case of some of our choosing where to establish a production good sense to be involved in local Asian productions, the film breaks out of presence? productions. its own territory and achieves a valuable Our strategy is to find places where it is economic return for the Company. There relatively inexpensive to make films but What is it about Sony Pictures that can be a significant benefit when you get where a lot of people go to see them. China makes foreign filmmakers want to the formula right – the right combination is a good example. India, Russia and Latin produce movies with us? of talent and ideas in local language, as in American countries are others. The thing we’ve learned is that making money available to filmmakers so that they domestic production, is the best path to In the last six years, China has made four can get their films produced, while profitability. films that have grossed over $100 million important, is not the most important thing. But beyond this, films and television theatrically worldwide. Other than the For a talented and determined filmmaker, programs are how we find out about United States, no other country has made money can generally be found from local different countries. People outside the more than one film that has grossed that sources. The bigger challenge for foreign United States learn about our country by much. Happily, SPE was involved in two of filmmakers is how they can get their movies what they see on screen. As the number of these very successful Chinese productions, seen by as broad an audience as possible. local language productions increases and are Crouching Tiger, Hidden Dragon and Kung This is where we come in. If a movie distributed on a wider basis, the same thing Fu Hustle. We hope to begin production on succeeds in its own territory, aided by the can be said for other countries. It’s very two or three more films in China this year. marketing experience SPE can provide both rewarding to be involved in this. from here and from our local General 4

THE World of SPE

DIVISIONAL UPDATES track to gross approximately $200 million all the problems a policeman would face worldwide. Memoirs of a Geisha garnered on land. Off duty, he tackles additional Sony Pictures Television critical praise, including a Golden Globe challenges of his own, including his affection nomination for Ziyi for two different women. SPT’s critically acclaimed animated series Zhang for Best The Boondocks, which debuted in the fall, Actress and a Golden has become the highest-rated original series Globe award for ever on The ’s late night John Williams’ animation block . masterful musical In January, the studio had five projects score. Our 2006 slate debuting on broadcast and cable networks, is off to a strong start including the well-received Love Monkey with the number one Memoirs of a Geisha (CBS). Two motion pictures for television debut of Screen Coast Guard also premiered: Surrender, Dorothy (CBS) Gems’ : Evolution. Screen and Night Passage (CBS). On cable, The Gems also produced the sleeper hit Hostel. Shield returns to FX for its fifth season. Sony Pictures Home Entertainment In the international marketplace, The The DVD releases of Volumes 5 Legend of has reached $90 million to and 6 (along with the previous Seinfeld date, and The Exorcism of Emily Rose has Volumes 1-4), Christmas with the Kranks grossed $61 million so far, and is set to open and Stealth achieved in and Korea in March. outstanding sales has grossed $68 million overseas. Hostel performance. SPHE also secured the second biggest opening ever for generated record-breaking a in tiny Iceland, our first profits from the international release. Fun with Dick and performance of its third- Jane has also been playing well overseas, party acquisition titles, Love Monkey opening number one in 14 of 17 markets Stealth including Left Behind: so far, including Germany, Mexico, , SPT has also begun production on three World at War; Black Dawn; Ladies in Switzerland and . Local production network pilots: hour dramas Kidnapped Lavender; and, Dave Chappelle’s For What 2 Filhos de Francisco (Two Sons of and Heist for NBC, and a half-hour It’s Worth. comedy, Sex, Power, Love & Politics for Francisco) was the number one film in CBS. The studio has already received Brazil in 2005 and the biggest local SPHE also continued to release feature films network put pilot commitments for eight production there ever, grossing $15.5 on the UMD format for PSP with more than additional projects, and cable network million. 75 UMD films released to date, six of which commitments for nine new projects. It has have shipped in excess of 100,000 units. been one of the most active development Sony Pictures Television International Finally, the legendary MGM roster of titles seasons for the studio in several years. SPTI continued to expand its channels was successfully integrated into the SPHE business by announcing that it would catalogue, creating one of the largest and Motion Pictures launch a new channel in Korea in richest film libraries in the world. SPE finished 2005 as the number three 2006. On the TV production side, two studio with just over $1 billion in domestic German comedies produced by SPTI won Sony Pictures Digital box office receipts for the fourth year in a the top TV awards in Germany. Alles Atze row. The year ended with the strong won for Best Comedy Series at the 2005 Sony Pictures Digital’s Ratchet & Clank: performance of Fun with Dick and Jane, German Comedy Awards, and Nicola won Going Mobile has been recognized as the which debuted as the number one comedy in the Best category at the German Best Wireless Platform Game for 2005 by in America its first three weekends in release Television Awards. Both ceremonies were the editors at videogame and entertainment and has held in Cologne, Germany. website IGN.com. Ratchet & Clank, generated which originally debuted on the Sony SPTI’s new original scripted drama series more than PlayStation®2 computer entertainment Gente di Mare (Coast Guard) on Italy’s $100 system, completed its successful evolution Rai Uno premiered in December and is million in from home entertainment systems to mobile the number one show on the channel. The U.S. ticket handsets earlier this year. series is an hour long drama in which a sales. The young Coast Guard lieutenant faces at sea film is on Fun with Dick and Jane 5

INnovations

Sony Online Entertainment Inc. announced SONY SHINES AT ANNUAL entertainment companies. Videos of SPE’s that the second expansion for EverQuest®II, CONSUMER ELECTRONICS movies and television programs were displayed entitled Kingdom of Sky™, will be available SHOW on hundreds of screens. The first titles that at retail and for download on Feb. 21. At the Sony Pictures Home Entertainment will release Consumer Electronics Show held in Las Billed as the world’s largest consumer on Blu-ray, Sony’s next-generation, high- Vegas last month, SOE also showcased its technology tradeshow, the annual Consumer definition disc format, were also a prominent forthcoming Untold Legends: The Electronics Show (CES) features thousands of feature. Director picked up Warrior’s Code, a follow up to the hit PSP new products and technologies, and regularly on Sony’s “Higher Definition” theme by game Untold Legends. draws a global audience. The 2006 CES was speaking to the CES audience about the power held in Las Vegas in early January, and of this next generation of home entertainment. Imageworks and its work on The attracted more than 125,000 visitors looking Chronicles of Narnia: The Lion, The In addition, Sony Pictures Television for the latest in consumer electronics, gadgets Witch and The Wardrobe received wide announced the production of Jeopardy and and gizmos. Thanks to a united effort across acclaim, including a nomination for a Visual Wheel of Fortune as the first two game shows the entire Company, Sony made entertainment Effects Society Award for Best Visual to be recorded in high definition. Sony Pictures and content primary themes of this year’s CES. Effects. Imageworks continues to be fully Animation also demonstrated the process of engaged in Sir delivered the keynote bringing cartoonist Steve Moore’s humor to production of address at CES, focusing on Sony’s “unique the screen with presentations from Moore and Superman Returns, marriage of content and technology.” A highlight animation artists Andy Harkness, Mike Ford Click, Monster and Sean Mullen. was the focus House, , of a presentation by Imageworks visual effects and Sony Pictures supervisor Jay Redd, and post production Animation’s first two supervising sound mixer Gary Bourgoise animated features, revealed the many layers and details of sound Open Season and that go into both the theatrical and home Surf’s Up. theater experience. Open Season At the end of December, the Open Season As Sir Howard explained at CES, it is clear that crew completed work on animation — and “Sony understands the creative process, Surf’s Up officially went into production at consumer desires and the technologies that Sir Howard Stringer talks with CBS Sports Imageworks. Members of the Open Season broadcaster Greg Gumbel onstage at CES unite them. No other content company has art and visual effects crew provided an inside Sony’s intuitive grasp of technology. And no of his address was a first look at a scene from look at the CG process at the Consumer other technology company has Sony’s intimate The Da Vinci Code and a special appearance by Electronics Show. understanding of the creative demands and filmmakers Brian Grazer and Ron Howard, as possibilities of content.” Certainly, Sony’s well as the movie’s star, . Studio Operations displays at CES drove this home, spotlighting the bright future of electronics and ’ 21 stages continued On the show floor, there was complete entertainment. to be full with a wide range of productions. integration between Sony’s hardware and The television drama What About Brian (CBS) started shooting, and Columbia’s Holiday crew moved onto stages to prep for their early 2006 start of production. Stage 15 was utilized by television events VH1 Big in ‘05 and the VIBE Awards. Commercials for Kellogg’s, Puma, GE, and the returning Victoria’s Secret campaign are just a few of the short-term projects that also kept the backlot busy.

The Facilities group tallied 2005 as one of its busiest years with the many restacks resulting from the MGM acquisition.

(continued on page 6)

Consumer Electronics Show 6

Divisional Updates (continued) SPE’SSPE’S Back Back Story Story Among other moves, Corporate Audit relocated to SCREEN GEMS: A SONY INSTITUTION SINCE 1934 Corporate Pointe and some IT groups Screen Gems, a division of Sony Pictures, has relocated to the been mining for film and television jewels for Howard Hughes over 70 years. It began life in 1934 to produce building. animated shorts for , Stage 15 including the series , Scrappy and Corporate Fantasies. The original Screen Gems stayed in business for about 12 years when, in 1946, it SPE’s employee volunteer program, LINKS, became the last studio to had a very busy holiday season. Every stop producing black and white cartoons. December, employees volunteer for the Annual Children’s Holiday Party. This year, In 1948, Columbia revived Screen Gems when it became one of the first studios to venture LINKS reached out to over 500 kids into the television business. As Columbia’s television division, Screen Gems produced a through its holiday programs. number of notable television programs including , The Show and Bewitched.

Columbia retired the Screen Gems name again in 1974 when the television subsidiary became known as Columbia Pictures Television, then Columbia TriStar Television and, finally, Sony Pictures Television.

In 1999, Columbia resurrected the Screen Gems label once again as a specialty film production and acquisition arm. Today, Screen Gems is headed up by Clint Culpepper, who suggested using the label once again. As Clint explains, “Screen Gems produces and releases modestly budgeted films that can be marketed to more targeted audiences” than Columbia Pictures. Among its recent releases were The Exorcism of Emily Rose, The Cave, The Gospel Children’s Holiday Party and Underworld: Evolution. Releases from Screen Gems in 2006 will include Ultraviolet and Other holiday volunteer programs included The Covenant. Day of Thanks on Skid Row, Holiday Toy & Book Drive, Books Are Fun Book Fair, LA Goal Holiday Boutique, SAVES Holiday Food Drive, U.S. Marine Corps Toys for Tots, St. Vincent Meals on Wheels Operation rolled out to 1,800 users in 23 countries The deployment of SAP has enabled SPE to Holiday Stockings and the Midnight supporting 10 different languages (including retire over 40 legacy systems, greatly Mission’s Adopt-A-Family Program. Japanese). According to John Stubbs, SPE’s reducing the complexity of the Company’s chief information officer, SPE has achieved information technology environment while On the Information Technology and what only a handful of companies of a providing a platform for functional Finance front, all business entities operating similar size have done in terms of enhancement and growth. in Europe recently went live on the new standardizing business processes on a global SAP Financial system, marking the basis. All of SPE’s territories and lines of completion of a two-and-a-half year global business now manage their finance and SAP rollout. SAP, which is used for various accounting with a single integrated system. finance and accounting functions, has been

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