BUDGET PRESENTATION Fiscal Year 2015 February 2014 FY14 Accomplishments SPT achieved several critical milestones in FY14 and will outperform budget despite a challenging economic environment • Grown revenue year over year and maintained total EBIT despite significant FX headwinds (in excess of $25MM) – Simple margin maintained in high teens (17%) – After adjusting for FX, all regions of the portfolio increased their prior year revenue (10%) • Launched/acquired several new operations across the world – Europe: SET Germany, Animax UK SVOD and UK Freeview expansion – Asia: Dori Indonesia was acquired and GEM Vietnam launched Networks – Americas: Kalixta was launched in Latin America and Get TV in the US in February • Rationalized operations where appropriate with the profitable sale of SPT interests in Dolphin Ad Sales (UK) and FEARnet (completion pending), as well as a profitable and strategic pending deal with SPT’s SPIN properties in Latin America and Brazil • Global programming initiatives Hannibal and Crossing Lines earned critical and ratings successes on various SPT channels around the world with both properties recommissioned for 2nd season • In spite of ad revenue shortfalls, Crackle is up 50% in terms of unique visitors, enjoyed over 35MM app downloads on mobile and TV and achieved more than 25MM views on its top-rated and Emmy nominated show, Comedians In Cars Getting Coffee • US & International Distribution teams combined efforts to create the first global Netflix deal for Breaking Bad and Saul • International Distribution generated another record breaking year of revenue at $1.74BN • Generated over $40MM in revenue for Russian sitcoms including The Voronins (Everybody Loves Raymond) and Happy Together (Married with Children) • Sold 5th cycle Seinfeld and 3rd cycle King of Queens • Sold Young & the Restless to TVGN as Soapnet shutdown Distributio • Struck significant long-term deals in major markets with key partners such as HBO Latam, TF1, Sogecable, Foxtel, Seven n/ Ad Network, Shaw, Televisa, Globo, Azteca Sales • Sold and launched The Blacklist around the world, generating record ratings and the highest revenue ever for an SPT one hour drama • Added 11 new advertisers to the 2013-14 upfront with an overall increase of upfront dollars of $13.1MM • The Queen Latifah Show garnered the highest CPMs of any new talk show • Successfully sold integrations in The Queen Latifah Show to Cover Girl, Pantene, and SC Johnson • Revenue for doctoroz.com continued to grow (calendar year): $3.6MM (2011); $5.1MM (2012); $6.3MM (2013) • Secured ad representation of the Rural Media Group’s two TV networks, RFD-TV and FamilyNet, with a target of $15MM for CY14 2 • Negotiating 1st ever substantial guild residual changes, freeing up library product and cable-to-cable product to sell FY14 Accomplishments • Successfully launched Release the Hounds (ITV) followed by German (ProSieben) and pending US (FOX) orders • Drove Left Bank US co-pros (Outlander, Mad Dogs US, Craving) and supported development and sale of The Crown • Latin America: Hired new LatAm MD; acquired 100% of Teleset; launched Mexico production (El Mariachi); in conjunction with SPT International Distribution, negotiating volume deals with Televisa, RCN and pan regional cable channels to fortify 5 year business plan for high quality Spanish language programming • Held WWTBAM summit with key license holders and instigated quarterly review to optimize format Int’l • Identified territories for expansion: Scandinavia, Turkey, Netherlands, Australia, N. Ireland and launched Electric Ray in UK Productio • Restructured Silver River, integrating Left Bank, and divested interest in Tuvalu n • Collaborated across Sony divisions and companies to maximize business opportunities with SPT International Distribution, SPT Networks, Sony Music, Sony ATV, and Sony Technology Networks • Produced and launched SPT’s first Arabic language telenovela, Betty La Fea, to pan-regional Arabic audience • Grew unscripted IP creation and ownership - The Patch, Tough Young Teachers, Five Minutes to a Fortune, Raid the Cage, Odd Squad, You're Booked, Milky Way Mission, Jokers, among others • Built scripted reality business in Germany, Holland, Russia and the Middle East • Breaking Bad $275MM ultimate profit, winning the first Emmy and Golden Globe awards for Best TV Series drama as well as, awards from the DGA, SAG, PGA and WGA • Agreed principal terms with IGT for an extension of rights with a nominal guarantee of $225MM • Shark Tank rose to record ratings ranking as #1 Friday night program two seasons in a row, and successfully launched into syndication with highest rating for CNBC in 6 years • Sold Better Call Saul to AMC which will be profitable from year one • SPT has orders for six direct-to-series shows; Helix, Outlander, Better Call Saul, Unt. KZK, Battle Creek, Before Crack US • The Blacklist is the highest rated new series this season and has received an early second season order from the network, Productio where it is their highest rated series among total viewers in a decade and broke US DVR records; The Blacklist is also a n worldwide phenomenon, scoring the highest rating telecast in the history of the Sky Living channel in the UK, and was the highest rated new US series launch in Germany in the past 5 years • The Goldbergs emerges as self starter breakout hit series for ABC ranking as #1 Tuesday comedy and beating New Girl • Capitalizing on the global market by creating original programming for new global platforms like Netflix where SPT has sold Unt. KZK Series project and Before Crack. Both series are expected to be profitable year one and projected to generate over $100MM in profit each in success • Young and the Restless and Days of Our Lives have been renewed through the 16/17, and 15/16 broadcast seasons, respectively 3 • Masters of Sex 2nd season order Gross Revenue Generated by SPT For All Product Gross Revenue Summary Gross Revenue by Product 4 SPT Financial Summary TV Product & Channel Revenue TV Consolidated EBIT 5 SPT Financial Summary 6 Variance to Budget / Prior MRP EBIT 7 Net Overhead Summary 8 1. Networks Networks – FY15 Outlook In FY15, Networks will cross the $300MM EBIT threshold, over a 35% CAGR across eight consecutive years of record earnings • Major new financial milestones will be achieved by SPT Networks FY15 budget – Revenue will surpass $2BN – EBIT will exceed $330MM – This represents year over year revenue and EBIT growth of 25% and 37%, respectively • Despite the year over year progress, Networks EBIT is projected to be ($60MM) behind the MRP target for FY15 due to variances from two businesses – MSM is ($48MM) behind MRP following a ($30MM) EBIT miss in FY14 as a result of a very difficult ad market and lower ratings on the flagship channel and the inclusion of launching MAX2 (movie channel) in FY15 ($4MM) – GSN is ($11MM) behind plan due largely to a lower outlook for the Digital business based upon lower performance levels than anticipated in FY14 – Branded channels are in line with MRP • The year over year earnings growth will be achieved while also continuing to invest in the business to help sustain the strong growth profile into the future. Specific growth opportunities factored into the Budget include: – A GEC channel in India – An Indian movie channel – CineSony France – Dori Israel • Included within the Budget are several significant assumptions that add an element of risk to the outlook – The MSM Budget assumes that there will be significant ratings growth on the flagship channel – The UK operation has an inflection point year as it seeks to fully monetize the new investment in Freeview distribution – Latin America has an aggressive outlook with EBIT growth underpinned by channel ratings increases across the region – Crackle US is projected to become profitable based largely upon a 30%+ increase in base business ad revenues year 10 over year Networks – Financial Summary vs. Budget/PY MRP Revenue EBIT • Revenue and EBIT targets missed across the portfolio in FY14 with material EBIT downside in MSM (-$25MM incl. Challenge), Crackle (-$8.5MM), and GSN (-$11MM) • FY15 downside versus MRP largely from MSM (-$48MM) and GSN (-$11MM) Note: Revenue unfavorable FX variance is ($93MM) in FY14, ($52MM) in FY15; EBIT unfavorable FX variance is ($38MM) in FY14, ($17MM) in FY15. 11 Note: EBIT excludes 3Net EBIT of ($4MM) in FY14 forecast. Networks – Competitor EBIT Margins (LTM 3/31/13) US-Owned Branded International Channels Branded International Channels 60% • Business model based primarily on acquiring US 40% 22% 25% scripted content 20% Average 20% 22% 0% Sony Int'l (1) Fox Int'l Channels (2) Chellomedia Networks (ex Nat Geo) Factual-Based Programming 60% 41% 40% 44% • Business model based on factual and reality Average 40% 42% programming which is cheaper than US scripted 20% content 0% (2) Discovery (3) Scripps NatGeo (Fox) Programming Allocated from US Parent 60% 40% 25% • US parent supplies own programming at an 28% Average 27% “allocated” cost, which may not always be at true 20% market rates 0% Viacom (4) Disney (5) Source: Company filings and CapIQ. (1) Excludes US Networks, GSN, Crackle GSN Purchase Price Amort. and Home Office Overhead Allocation. Includes MSM. (2) FIC estimated margin range of 25%-30%; NatGeo and FIC margins for FY12 as per FIC Investor Presentation 12 (3) Per Citi, 33%-34% pro forma for SBS and Euro Sport acquisitions (4) Includes MTV/VH1, Nickelodeon, Comedy Central International Networks margin estimate per Citibank, reported Media Networks margin of 41% (5) Per Citibank guidance, mid/high 20%. Networks – Competitor EBIT Margins (LTM 3/31/13) India Networks 100% 80% 60% 51% 40% 25% 27% 25% Average (ex-Sun) 20% 25% 0% Sony MSM Sun (1) Star (2) Zee US Basic Cable Networks 100% 80% 60% 40% 33% 34% Average 34% 20% 0% Sony GSN (3) AMC Source: Company filings and CapIQ. 13 (1) Sun’s business model allows them to realize higher margins through its library with rights in perpetuity and revenue sharing arrangements with content providers (2) Star margin estimates per MSM India and include Hindi GEC + Movies business; overall EBIT margin including Sports and regional channels is 7%.