Acquisition of Additional Equity Stake

in Multi Screen Media

Presentation to the Group Executive CommitteeOctober 12th, 2011

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Executive Summary

• SPE believes it is important to the growth of its Indian Networks to buy out the current minority partners in Multi Screen Media (“MSM”)

– Acquisition and launch of new operations are important elements to an India expansion strategy

– Minority partners have rights which allow them to block, slow down, or limit the funding of these initiatives and to block the hiring/firing of MSM’s CEO

– Such rights have complicated and slowed MSM’s ability to maximize growth opportunities

– Independent of any increased flexibility on new channels or other significant growth initiatives, having full control could help increase revenue by up to 5% and EBIT/cash flow by up to 10% by FYE15

• SPE has sought to buy out the current minority partners for some time and now has an opportunity to do so, due in part to the minority shareholders’ liquidity issues

• Acquisition of the minorities' shares of MSM would be at an attractive valuation, improve long-term cash flow and net income, and generate a 25% IRR

• SPE seeks approval to increase its MSM holdings from 62% to 100% for $311MM

– Payments spread over 4 years beginning in FYE13

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Importance of SPT Networks & MSM India• SPE’s global portfolio of networks is a significant contributor to SPE’s overall revenue and EBIT

– Diversifies SPE’s revenue and profit base with higher growth and margins than content business lines

– Delivered 9-year CAGR of 17% for revenue and 43% for EBIT

– Delivered close to $900MM of incremental EBIT through monetizations / one-off transactions over the past 10 years

• MSM India is critical to the overall network portfolio

– Delivered 9-year CAGR of 17% for revenue and 47% for EBIT

– Delivered $65MM EBIT in FYE11, was budgeted in FYE12 to grow by 40% to $91MM, and is now expected to exceed $100m in EBIT in FYE12

($MMs)

SPT Networks Revenue and EBIT(excluding monetizations / one-off transactions)Revenue EBIT

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MSM India Business/Performance Highlights

• SET is currently the #1 general entertainment channel in Primetime and is close to taking the #1 spot in All Day

• SAB is the #1 channel among the tier 2 general entertainment channels (overall #5 position) and has overtaken all of its competitors

• SET MAX: Consistently ranked as the top 3 movie channel in India

– Locked in the rights for the strongest television property in India - IPL Cricket until 2017 (including the 10th season option)

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Gross Rating Points: Prime Time

Sony Ent. TV

Star Plus

Colors

Zee TV

Imagine TV

SAB

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Sahara One

Star Utsav

FYE12

Importance of Indian Marketplace

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• India is an important growth market to Sony Corporation and SPE

– India is critical to Sony Corporation and SPE due to its size, growing middle class, growth potential , and the value ascribed to the Sony brand by its population

– Sony and SPE have a history of working together to capitalize on this market, including exposing 350MM viewers to the Sony brand via SPE’s Sony-branded channels

• Opportunities from synergies have already delivered significant benefits to MSM and other Sony companies

– The Sony brand on MSM’s channels has increased brand awareness and helped electronics sales

– Implementation of one-click exclusive access to MSM’s library content on various hardware products like Sony Bravia TVs and Sony Ericsson phones supported premium pricing for these products and cross-marketing for MSM

– Availability of exclusive ringtones from Indian Idol on Sony Ericsson phones provided a unique offering

• Sole ownership will increase the ability to exploit future opportunities and further build on these past successes

– IPL: Utilize Sony equipment (e.g., broadcast cameras, etc.) including shooting IPL matches in 3D 

– Exclusive window / early look for advertising opportunities or discounted ad pricing (value transfer)

– Integration of all Sony products on MSM programs (phones, cameras, computers, televisions, etc)  

– Display Sony monitors on the current #1 primetime show on SET: Who Wants to Be a Millionaire (Monitors are currently Samsung and prominently displayed)

  

MSM Historical and Projected Financial Results

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• With strong historical growth and outlook, MSM is critical to SPT networks portfolio

– MSM performance has improved significantly in recent years and is now consistently profitable 

– EBIT is projected to grow strongly over the next few years

– In FYE11 MSM had $300MM in debt which will be repaid by FYE16

• MSM is generating positive cash flow and has started paying down its debt

*Includes interest and taxesNote: WSG/Cricket debt and routine A/R financing may remain beyond FYE16

- FYE10 cash flow includes $56MM net investment in IPL Cricket

- FYE11 cash flow includes $68MM WSG litigation deposit with the Indian High Court

US$ MMs Projection Projection Projection ProjectionFYE10 FYE11 FYE12 FYE13 FYE14 FYE15

REVENUEBase Business 216.9 320.3 393.1 432.8 469.8 520.8 IPL 142.9 75.8 195.1 186.0 213.7 244.8 TOTAL REVENUE 359.8 396.1 588.2 618.7 683.5 765.6

COSTSBase Business 229.0 279.1 346.5 365.2 399.4 438.8 IPL 114.7 51.6 141.5 143.2 163.6 186.1 TOTAL COSTS 343.8 330.7 488.0 508.4 563.1 624.9

EBITBase Business (12.1) 41.2 46.6 67.6 70.4 82.0 IPL 28.1 24.2 53.6 42.7 50.1 58.7 TOTAL EBIT 16.0 65.4 100.2 110.3 120.5 140.7

Net Cash Flow * (124.1) (69.0) 22.9 26.3 40.4 69.1

Man Jit Singh

Executive Summary MSM is seeking approval to launch a sports channel in India - SONY SIX (“SIX”) in April 2012

SIX will capitalize on the 3rd largest genre in advertising spend and maximize full potential of

distribution revenues

Business plan for SIX has been developed on an incremental basis:― IPL will be moved from SET MAX to SIX in FY14 and no revenues or costs are included in this business

plan except for some advertising revenue from the spill over effect of bundling of various sports properties

on SIX along with IPL

― Benefit of 2 months of SET MAX ad inventory freed up from IPL has been reflected annually in this business

plan

Key Properties assumed in the business plan:― IPL Archive content

― UFC/Fight Sports: Library and live content (revenue share model)

― English Premier League (EPL): 3 years starting in FY14 (total license fee approximately $70M for 3 years)

― BCCI cricket rights have not been factored into this model

― Remaining schedule will be filled with miscellaneous wallpaper properties

SIX will be internally funded by MSM’s existing cashflow and/or existing credit facilities

SIX will turn positive in 3 fiscal years and has a deep water mark $20M, IRR 71% and NPV $91M

Quite apart from subscription revenues the Sports advertising market is large and growing

Sports Advertising currently constitutes over

$350m (2010)

It is the 3rd largest genre in terms of Advertising

revenue after Hindi and regional GEC –

constitutes 16% of the market

Availability of high-definition televisions along

with digitization and growth in Indian TV homes

will increase the importance of Sports advertising

Sports offers advertisers unique male viewership

that commands a premium

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Share of Sports genre in TV advertising

CAGR 40%

CAGR 21%

India Sports Advertising Market*

* - FICCI-KPMG Indian Media and Entertainment Industry Report 2011

9.7% 12.2% 15.8% 22.1% 20.3%

We have the #1 cricket sports property – IPL, but currently do not have the Sports channel

Over 50% of Indian population follows cricket on TV, making cricket the cornerstone for a Sports

channel

LIVE Sports genre is perceived as premium content and a “must have”

Without a dedicated channel, we are unable to monetise the full potential of the LIVE IPL

broadcast in terms of:

― Releasing MAX inventory to be a movie channel

― Leveraging IPL to command a premium on other Sports properties

― Monetize Subscription revenues for the IPL property, which can only be achieved on a

dedicated Sports channel

MSM wants USD 11 Mn in FY13 to start SIX – India’s premiere sports channel and the home of “Indian Leagues”

Acquiring a sports channel like Neo or starting a

home-grown sports channel is imperative

Key LIVE properties currently owned include:

BCCI Cricket rights: We will have to wait and

watch over the next few months and will

evaluate an aggressive bid

EPL opens up to bid in FY13 for the FY14-16

season

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FY13 FY14 FY15 FY16 FY17 FY18

Net Ad Revenues Distribution Revenues

DWM (USD M) (20)

NPV (USD M) 91

IRR 71%

EBIT

(10.1)

(1.2) 3.2 6.0 13.8 16.6

CAGR 17%

Timelines

Jan Feb Mar Apr May Jun Jul

CONTENT ACQUISTION & RENEWALS FA CupWallpaper Prog & OtherLive UFC material

PRODUCTION Channel ID & Graphics Promo production Footage based shows

POST & BROADCASTStudio & Equipment Test Signals Launch

DISTRIBUTION Seeding Boxes Marketing

MARKETING Creative / PR brief Launch Campaign On Air Launch Campaign On Air

OTHERS HR / Team

2012

Back-up slides

Summary P&L - FY13-18

Summary PnLP&L (USD Mn) FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Total (FY13-18)RevenuesNet Ad Revenues 3.5 21.6 24.9 25.5 29.0 32.9 137.6Net Subscription Revenue (Domestic) 0.0 13.0 20.1 25.5 28.4 31.4 118.4Net Subscription Revenue (International) 0.0 0.0 0.0 0.0 0.0 0.0 0.00Other Income 0.0 0.2 0.2 0.1 0.1 0.1 0.76Bad Debts, Discounts & Rebates (0.0) (0.2) (0.3) (0.4) (0.4) (0.4) (1.74)Total Revenues 3.5 34.6 44.9 50.8 57.1 64.0 254.9

Expenses FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Total (FY13-18)License Fee (Amortized) 4.9 22.6 27.3 34.0 31.9 35.4 156.2Programming Cost 0.8 5.6 6.2 3.6 4.1 4.3 24.7Broadcast Cost 0.8 1.0 1.0 1.1 1.1 1.2 6.1Marketing Cost 4.6 2.6 2.8 1.5 1.6 1.8 14.9Dealer Incentives 0.1 0.3 0.4 0.4 0.5 0.5 2.2G&A 2.1 2.8 3.1 3.2 3.5 3.9 18.6Bank Guarantee 0.0 0.3 0.3 0.3 0.3 0.3 1.5Total Expenses 13.3 35.2 41.1 44.2 43.0 47.4 224.2

EBITDA (9.8) (0.6) 3.9 6.6 14.1 16.6 30.8Depreciation 0.31 0.6 0.7 0.7 0.4 0.0 2.7EBIT (10.1) (1.2) 3.2 6.0 13.8 16.6 28.1

Summary Cash Flow - FY13-18

Summary Cash Flow

CF (USD Mn) FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Total (FY13-18)

Inflows FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Total (FY13-18)Net Ad Revenues 2.6 19.4 23.7 24.9 27.7 31.4 129.6Net Subscription Revenue (Domestic) 0.0 10.8 18.2 23.5 26.6 29.4 108.5Net Subscription Revenue (International) 0.0 0.0 0.0 0.0 0.0 0.0 0.00Other Income 0.0 0.2 0.2 0.1 0.1 0.1 0.71Total Inflow 2.6 30.4 42.1 48.5 54.3 60.9 238.9

Outflows FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 Total (FY13-18)Capex 1.5 1.0 0.1 0.0 0.1 0.0 2.7License Fee Payout 4.9 26.4 27.9 29.7 33.5 35.4 157.8Programming Cost 0.6 4.5 6.1 4.2 3.9 4.3 23.6Broadcast Cost 0.7 1.0 1.0 1.0 1.1 1.2 6.0Marketing Cost 3.5 3.1 2.7 1.8 1.6 1.7 14.5Dealer Incentives 0.1 0.3 0.4 0.4 0.5 0.5 2.2G&A 2.0 2.7 3.1 3.3 3.5 3.9 18.4Bank Guarantee 0.0 0.3 0.3 0.3 0.3 0.3 1.5Total Outflows 13.3 39.3 41.5 40.8 44.6 47.3 226.8

Net Cash Flow (10.7) (9.0) 0.6 7.7 9.8 13.6 12.1Terminal Value (based on FY18 NCF) 177.4Total NCF (10.7) (9.0) 0.6 7.7 9.8 191.1 189.5