SPE FYE15 Budget Pres TV Section 3514.Pptx.Pdf
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Divisional details Media Networks 1 Media Networks Strategic Priorities • Continue to invest in programming, marketing, ad sales infrastructure, and technology infrastructure for Crackle U.S. Existing • Invest in programming and marketing for MSM and GSN Operation s • Continue to invest in both local and global original programming for international networks • Continue to maximize operational efficiencies • Launch a Hindi language rural channel, TV ON, in India • Launch a second Hindi movie channel in India, MAX2 New Operation • Pursue opportunities to launch Crackle in additional international s territories • Selectively launch channels in new and existing territories in order to build scale and remain competitive; seek earnings accretive opportunities where possible 2 3 Media Networks Strong and Consistent Earnings Growth • Revenue is expected to reach over $2 billion in FYE15, growing at a 21% CAGR over the four year period • Operating Income is expected to reach $336 million in FYE15, growing at a 16% CAGR over the four year period (excluding monetizations) OI Revenues Revenues One-Time Events/Monetizations $700 $2,500 Operating Income • Ad sales across the portfolio to $600 $561 $2,004 grow by 20%+ year on year $2,000 $500 $375 • New investments (e.g., GEC $1,500 $400 and movie channel in India and $336 Bash Games in the US) to drive $1 $300 $242 $335 $1,000 growth $17 $930 $200 $260 $225 $235 $500 $100 $186 $0 $0 FYE11 FYE12 FYE13 FYE14 FYE15 ($ In millions) Note: All years restated on a consistent basis to include U.S. channels and Networks HO Aspire Media Networks Operating Income by Region Projected FYE15 Operating Income of $336 million is diversified throughout the world, with income split fairly evenly across MSM in India, GSN in North America and the branded international Networks Projected Operating Income FYE15 Rest of Asia / Australia; 9% North America; 27% India; 34% Europe; 14% Latin America; 16% 4 Media Networks MSM India update ● Revenue and Operating Income are budgeted for double digit year-over-year growth − Revenue is expected to grow from $588 million in FYE14 to $695 million in FYE15 (+18%) driven mainly by recovery in domestic Indian ad sales performance and ongoing digitization efforts − Operating Income is expected to grow from $122 million in FYE14 to $151 million in FYE15 (+24%) (excluding new channel launches) driven primarily by improved performance of SET ● In spite of FX and economic headwinds, MSM expects to continue its strong growth trajectory in FYE15 and increase its offerings in India − TV On, a new Hindi general entertainment channel targeting a female-centric, more rural audience is expected to launch in June 2014 − MAX 2, a library Hindi movie channel is expected to launch in April 2014; this will help MSM mitigate recent legislation limiting ad minutes per broadcast hour ● Indian Premier League (IPL) Cricket − Season 7 projected Operating Income of $31.5 million is 4% lower than Season 6 due to unfavorable FX, one less team and 16 fewer matches than Season 6; however, the operating margin remains strong at 22% ● India SET ratings continue to be lower than target and management is taking steps to improve − Recent management changes include a new channel head from STAR and a new programming head (starting in April) from Zee − Immediate activity includes more airplay for our older proven shows to draw the core audience back to sample the new shows, introducing new weekday shows and an increased focus on SET’s core strength at the weekends to help raise overall ratings 5 Media Networks GSN Update ● Revenue and Operating Income are budgeted for double digit year-over-year growth − Revenue is expected to grow 15% from $345 million in FYE14 to $397 million in FYE15 largely driven by increased mobile games and ad sales revenue − Operating Income is expected to grow 27% from $71 million in FYE14 to $90 million in FYE15 mainly from growth in mobile gaming and lower PPA amortization ● Despite a decline in GSN’s number of Facebook players, GSN expects to grow the digital business in FYE15 − Casino Games - Build scale through increased investment in content and via acquisitions − Skill Games – Invest in technology and broaden the content offering into non-casino casual games and mobile web − Advertising – Expand into mobile and monetize the 98% of users who do not pay ● Management will drive FYE15 ratings growth by: − Building on GSN’s success in original programming with nine new series − 2013 was the most watched year in network history, with double-digit audience growth across all key demos and total viewers − The American Bible Challenge built upon its successful Season One and has now been seen by over 21 million viewers − The Chase has established itself as one of GSN’s most popular series ever and has been seen by more than 15 million viewers − Experimenting with non-linear digital video to extend brand to younger audiences 6 Media Networks GSN update – Bash Gaming ● In February 2014, GSN agreed to acquire Bash Gaming, creator of breakout hit Bingo Bash, the leading social bingo game in the world with more than 4.8 million monthly active users playing across Facebook, iOS, Android and Kindle devices ● The acquisition provides GSN with immediate scale and content in mobile gaming − Bingo Bash is a Top 10 grossing casino game on both the iPad and iPhone and number 13 on Android * − Bingo Bash has a user database of over 20MM and a user demographic prone to spending on virtual goods − Slots Bash, a new casino game, was recently launched and is performing better than initially envisaged at the time the Bash acquisition was first considered ● The investment will generate synergies including: − Optimizing Bash Gaming’s customer acquisition spending − Cross pollinating GSN and Bash Gaming content into GSN’s apps and website − Cross promoting users to increase customer lifetime value − Leveraging Bash Gaming’s scalable offshore development team in India ● The Share Purchase Agreement has been signed and the deal is expected to close in March 2014 − GSN’s FYE15 Budget includes $10 million operating income for Bash Gaming 7 *Source: App Annie March 5, 2014 rankings Media Networks Crackle Update ● Revenue and Operating Income for Crackle U.S. are both budgeted for significant growth in FYE15 − Revenue is expected to grow 70% from $35.8 million in FYE14 to $60.6 million in FYE15 largely driven by ad sales revenue − Operating Income is expected to turn positive with $5.1 million in FYE15 ($1.1 million including SPT content cost) driven by increased ad sales and cost controls ● Crackle will continue building its best-in-class digital ad sales organization and will leverage the growth in this market − Crackle has already closed $8M in ad sales deals for FYE15 and has an additional $15M under negotiation − The team will incorporate Playstation into Crackle’s sales team to create operational efficiency and opportunities to bundle packages ● Strategic investment in premium content and originals will expand Crackle’s core offerings ● Crackle’s Canada investment plan expects to drive revenue growth of nearly 200% over the prior year with increased CPM’s, new marketing efforts, and investment in new content and resources 8 Media Networks Branded Networks - Regional Update ● Europe − Operating Income is expected to grow by close to 60% year on year, reaching $50 million for the region − The UK operation will benefit from a full year on Freeview − Strong growth is expected in the emerging markets of Russia and Central Europe where we already have several profitable channels ● Latin America − Operating Income is expected to grow approximately 60% year on year to $59 million − Bottom line growth driven by revenue growth of over 20% (from both ad sales and subscribers), cost containment and a new joint venture opportunity for the SPIN channels ● Asia (excluding India) − Operating Income is expected to grow a more modest 10% year on year − Renewed growth in the Pan Asia operation is expected − In Japan, subscriber growth continues to be challenged ● US (excluding GSN) − The US portfolio outside of GSN is projected to break even in FYE15 − Crackle is poised for a breakeven year* and the recently launched GET TV is expected to be profitable in its first full year 9 *Including SPT content costs and Crackle Canada Divisional details Television Productions 10 Television Productions Strategic Priorities • Drama – Maximize value of worldwide appetite for quality drama across all outlets with continued emphasis on broadcast and cable and additional focus on new platform U.S. TV opportunities Productio • Comedy – Maintain and support a strong comedy strategy as part of our overall portfolio n business as comedy continues to maintain strong value in the syndicated marketplace • First Run Syndication – Stabilize and grow the Queen Latifah daytime series for the 14/15 broadcast season and look to expanding the business into new lower cost opportunities • Create IP that travels • Nurture unscripted titles including Release the Hounds, The Patch, Fan Band and Popheads • Maximize prelaunch of The Crown and drive co-productions at Left Bank Pictures in the U.K. • Strengthen SPT Russia’s capacity to produce enduring sitcoms and dramas that travel • Build high quality, sustainable library of Spanish language programming for Latin America Int’l TV Productio • Support and strengthen existing production companies n • Seek extension of HUASO (China) license and restructure operation • Nurture new start-up JV’s – Electric Ray and Stellify • Help maximize program sales and operational efficiencies at each operating company • Explore expansion opportunities for network of production companies in key strategic markets (e.g. Scandinavia, Turkey, Netherlands, Australia, N. Ireland) 11 U.S. Production Current Programs SPT’s portfolio of current programs is diversified across all genres to balance risk vs.