SPE INTERNAL

Channel Acquisition Opportunities

September 2008

2

Executive Summary

• As we begin informal discussions, we need to confirm SPE and SCA’s appetite for a significant investment (e.g., up to $200MM-$400MM for 50% of a mid-size channel)

• These trends provide us with several options for expanding our domestic channel presence

– Lower investment “HD build” strategy: Use library to secure carriage and minimize investment; new channel on-par with MGM HD

– Lower investment “HD partner” strategy: Invest in a smaller HD player (e.g., HD Net, Mojo); use the Sony brand and library to reinvigorate and grow the channel

– Significant investment in a mid-size channel: Invest in a sizable channel (e.g., G4); better define the channel’s voice and grow the audience by leveraging all Sony assets

• Recent market trends have created new opportunities for SPT to invest in US channel assets

– Demand for HD content has opened the window for new channels

– Smaller start-up channels are seeking investment or acquisition at reduced valuations

– Established mid-size channels are seeking strategic investment partners to support growth

• Our current hypothesis is that investing in a partnership would lead to greater returns

– Library-only plays like MGM are not getting immediate traction

– Partnership/investment will significantly increase speed-to-market

3

Demand for HD Content has Opened the Window for New Channels

Available SlotsDrivers

• Both DBS providers are increasing capacity by launching new satellites in 2008

• DirecTV > 150 national• Dish > 100 national• DirecTV is launch

partner of choice for HD channels

• IPTV based on fiber to the home allows hundreds of HD channels

• Verizon plans over 150 HD channels by 2008 and has capacity for up 500

• AT&T capacity expected to reach 250+ HD channels

• Conversion of analog channels to digital/HD will create new channel capacity for MSOs

• Switched Digital Video (SDV) technology, which will be deployed in select markets, theoretically allows infinite number of HD channels

• Number of available slots will vary by market and MSO

4

Network Age & Gender Mapping (2007 Primetime)Bubble area reflects ad revenue

Nickelodeon

Noggin/The N

GSN

ABC Family

Adult Swim

A&E

AMCAnimal Planet

BET

Biography

Bravo

Comedy Central

CourTV

Discovery Health

E!

ESPN

ESPN 2 FOOD

FUSE

FX G4

GOLF

Hallmark

HGTVHistory

Lifetime

Military

MTV MTV2

National Geographic

Nicktoons

Oxygen

Sci-FiSOAPnet Speed

Spike

StyleTBS

TLC

TNT

Cartoon Network

Travel

TV One

TV Land

USA

VH1

VH1 Classic

WEWGN

VersusFOX

ABC

CW

CBS

NBC

Movies Sports Unscripted Drama Kids

80%

Median Age 70

Median Age 5

Median Age 40

20%50%Percentage Female-Oriented

Analysis of the Network Demographic Landscape Suggests a Younger, Male-Skewing Network is an Attractive Opportunity and Fit with Sony’s Strengths

Target Opportunity: Younger; Male Skewing

5

Sony’s Capabilities and Assets Would Enable us to Create Significant Value for a Network with a Male-Slanted Programming Voice

Branding

Programming

Distribution/ Syndication

• Re-brand channel to leverage the strength and relevance of the Sony brand with the targeted male demographic

Proposed Approach

• Leverage the development, production, and programming expertise of the Sony Pictures Television to create distinctive original programming that resonates with the male audience

• Syndicate channel content on key Sony assets that share the target male demographic (e.g., PSN, Crackle)

• Given its brand, programming and distribution strengths, Sony is uniquely positioned to invest in and re-program a network to target the male 18-49 demographic

6

We Have Identified Four Potential Targets

2007 Subscribers

Seller’s Likely Valuation

Target Demographic

2007 Cash Flow*

• Male 18-34 • Male 25-49

• Affluent, early adopters

• Male/Female 18-49 • “Males and Movie Lovers”

• 66.6MM • 9.0MM• 83.3MM • 8.1MM

• $58MM • $18MM• $46.5MM • $1MM

• $700-800MM • <$100MM• $400-500MM

“Partner Small”

Investment Advantages/Challenges

• Excellent fit with Sony target demo and brand

• Asking price may be prohibitively expensive

• Provides access to targeted male demo; Ad sales relationship already in place

• High subscriber count and strong channel placement on with most affiliates

• Carriage agreements may limit our ability to rebrand/reprogram channel

• After initial conversations with Marc Cuban, HDNet is currently a lower priority • Network is being shut

down and thus carriage opportunity may not exist

*Cash Flow as reported by SNL/Kagan; Defined as Net Operating Revenue less SG&A and Programming Expenses. These numbers seem high and are subject to further review

• <$100MM

“Partner Large”

7

NEXT STEPS

• Continue discussions with target channels, including value expectations and critical diligence areas (financial, operational/carriage agreements)

– G4: Initial discussions with Comcast complete; diligence commencing

– TV Guide: Approaching in conjunction with Constellation Ventures; diligence commencing

– Mojo HD: Need to initiate discussion with Comcast immediately to confirm if investment is feasible prior to December ’08 shutdown

– HDNet: Completed initial conversations with Mark Cuban; currently lower priority for diligence

• Confirm SCA support for an approximately $200MM-$400MM channel investment