DISTRIBUTION
Market Update and Strategy Overview
• The marketplace has evolved past traditional delivery platforms, creating new opportunities for SPT
– Emerging platforms (VOD/Internet/Mobile) and non-traditional competition (Comcast, Google, mobile) are now
buying content and rights
– To remain competitive, established platforms are diversifying the ways they deliver programming, requiring them
to buy more rights
• As more companies buy more content and rights; SPT is uniquely positioned to sell to all of them
– Taking an “all rights under one roof” approach, including broadcast, cable, satellite and digital
– Coordinating strategic approach to customers multi-faceted business objectives
– Licensing more rights and creating innovative deal structures to position our content to relevant viewers and
advertisers
• As a result, we are distributing shows from more sources now than ever before:
– Off broadcast (Rules of Engagement, Power of 10)
– Off cable (Rescue Me, Damages)
– 1st run (Judge David Young)
– Internet developed shows (The 9)
– 3rd party acquisitions (G.B.B., Just for Laughs)
– New library strategies (Minisode network)
2
Distribution Sales – Total Revenues
SPT will generate over $867 million in total current and library sales for SPE
($ in MM)
Free/Basic TV
PayTV
Syndication
Pay Per View/VOD
$1,000
$900
$867
$800
$110
$700
$164
$107
$600
$500
$754
$695
$91
$78
$113
$122
$113
$216
$264
$400
$318
$285
$300
$200
$728
$377
$286
$100
$190
$210
$0
FY07
FY08
FY09
Budget/
Prior MRP
$846
$663
$631
Variance
$21
$32
$123
[Last Year’s Numbers]
FY10
3
Free / Basic TV
Market Dynamic
• Cable networks growing appetite for original
programming is coming at the direct
expense of acquisition budgets
• For movies and TV shows, SPT is
employing new strategic initiatives and
licensing new rights
– New internal ratings systems
– Shorter and dual windowing
– Inclusion of barter
– Repurposing
– Network VOD/SVOD
– Network branded MSO VOD
– EST
MRP Initiatives
•Increase revenue by 2 to 3% by increasing
sales of non-linear digital rights across platforms
•Increase library film sales by 5% by utilizing
newly developed ratings and competitive
database
•Increase library film sales by 2-3% by
converting “event” movie buyers into ongoing
buyers (e.g., Hallmark, G4, and E!)
•Increase library sales by 1-2% by converting
non-buyers (e.g., TV Land, Nick @ Nite, and
SoapNet) into at least occasional buyers
4
Free / Basic TV – Revenues
$400
$377 $370
Q2/MRP
Budget/Prior MRP
$350
$286
$300
$250
$210
$190
$200
$171
$152
$150
$100
$50
$0
FY07
[Last Year’s Numbers]
FY08
FY09
FY10
5
Syndication
Market Dynamic
• Consolidation of buyers has created the
need to partner and co-develop programs
for first-run programming, vesting clients in
our mutual success
• Off net programming continues to be a
highly desired product that commands
premiums
• For library sales, new clients are emerging
through Spanish language channels and
digital second channel owners
• Local stations and cable networks are
seeking rights to stream episodes on their
web sites
MRP Initiatives
•Aggressive sales efforts of library & new shows
–King of Queens 2nd cycle
–4th cycle renewal of Seinfeld
–Upgrades and renewals for Judge Maria
Lopez and Judge David Young
–New first run syndication shows (The 9;
Power of 10)
–Steve Harvey as an ad-supported strip in
2008
•Stream products on local TV station/cable
network sites
•Secure additional 3rd party products
•Add new clients from digital second channel
owners (GTN) and ION Television and Spanish
Language channels (Telemundo, etc.)
•Exploit the relationship with WGN+ for new
library sales
•Pursue co-development deals with NBC,
Tribune and other station groups
6
Syndication – Revenues
$180
$160
Q2/MRP
$164
Budget/Prior MRP
$149
$140
$122
$113
$120
$113
$103
$106
$100
$80
$60
$40
$20
$0
FY07
[Last Year’s Numbers]
FY08
FY09
FY10
7
Pay Per View / VOD
Cable Market
•Continued focus on the triple play; commitment
to being the single provider of into the home for
TV, voice, data
– Eager to improve the traditional PPV/VOD
offerings
– Seeking earlier windows and HD rights
– Focus on content to increase sales of
broadband services
Satellite Market
•Satellite Cos. are trying to catch-up with cable
on VOD and broadband
–Creating new products for their home
customers to compete with the triple play
–DIRECTV and EchoStar are building out a
closed IP delivered products to the home
MRP Initiatives
•Primary product is traditional PPV/VOD rights
–Locked a 3 year extension output deal for
PPV/VOD rights (expires Dec 31, 2010)
–Leveraging interest in PPV / VOD for better
placement, higher prices, better splits
•Expanding licensing discussions to on-line
rental VOD and EST based on MSO focus on
broadband services
MRP Initiatives
•Leveraging satellite's need to provide VOD,
SPT is in negotiations for PPV/VOD output
deals with both DIRECTV and EchoStar
–Securing commitment from DIRECTV SPT
FOD product
–Securing commitment from EchoStar to carry
The Minisode Network.
8
Pay Per View / VOD – Revenues
$120
$110 $110
$100
Q2/MRP
$107
Budget/Prior MRP
$91
$91
$75
$80
$78
$60
$40
$20
$0
FY07
[Last Year’s Numbers]
FY08
FY09
FY10
9
Pay TV – Strategy
•
Exercise the Starz option. Once exercised, the deal will expire December 31, 2013.
•
Secure an additional long-term Pay TV extension with Starz.
•
Anticipate and analyze the issues that will be raised in such discussions, including but
not limited to:
– Caps on Sony's theatrically released product
– Expansion of on demand rights
– Reductions in overall license fees
– Earlier windows to Pay TV
•
Starz is committed to establishing an on-line presence through VONGO. SPT's
strategy is to provide a full bouquet of Sony content across all Starz distributed
products.
•
SPT has closed a rental on-line VOD deal. SPT is negotiating EST, The Minisode
Network and SPT on-line channels.
•
Close library deals with Showtime and HBO
10
Pay TV – Revenues
Q2/MRP
$350
Budget/Prior MRP
$318
$285
$300
$298
$298
$264
$250
$216 $217
$200
$150
$100
$50
$0
FY07
[Last Year’s Numbers]
FY08
FY09
FY10
11
Distribution Sales – FY08 Slate
SPT will generate over $389 million in sales from the FY08 slate
Title
SPIDER-MAN 3
SUPERBAD
VANTAGE POINT
30 DAYS OF NIGHT
THE OTHER BOLEYN GIRL
WALK HARD
PPV
$8,500
$3,000
$2,950
$2,160
$2,500
$3,750
Pay TV
$22,500
$10,350
$13,450
$9,290
$9,510
$11,130
Free TV
$50,000
$6,500
$11,380
$4,000
$6,500
$8,130
TOTAL
$22,860
$76,230
$86,510
SURF'S UP
PPV
$5,000
Pay TV
$18,890
Free TV
$19,500
TOTAL
$5,000
$18,890
$19,500
Title
[Update / Reformat]
Title
VACANCY
RESIDENT EVIL 3
BONE DEEP
UNTRACEABLE
THIS CHRISTMAS
UNDERWORLD 3
STEP FATHER
PPV
$2,500
$2,160
$2,380
$2,500
$1,890
$2,250
$2,350
Pay TV
$9,510
$9,510
$7,830
$9,510
$8,850
$10,460
$7,830
Free TV
$6,500
$4,000
$4,880
$6,500
$3,060
$7,310
$4,880
TOTAL
$16,030
$63,500
$37,130
Title
TBD#1-2008
TBD#2-2008
TBD#3-2008
TBD#4-2008
TBD#5-2008
TBD#6-2008
TBD#7-2008
TBD#8-2008
TBD#9-2008
TBD#10-2008
TBD#11-2008
TBD#12-2008
TBD#14-2008
TBD#15-2008
TBD#16-2008
TBD#17-2008
TBD#18-2008
TBD#19-2008
PPV
$10
$800
$10
$5
$10
$20
$800
$10
$10
$10
$5
$10
$455
$10
$10
$10
$10
$5
Pay TV
$90
$2,560
$290
$190
$380
$440
$2,560
$580
$90
$290
$190
$380
$2,340
$380
$380
$180
$750
$190
Free TV
$300
$300
$170
$80
$150
$220
$300
$150
$190
$170
$80
$180
$250
$450
$150
$190
$290
$80
TOTAL
$2,200
$12,260
$3,700
Title
PERFECT STRANGER
ARE WE DONE YET?
BROTHERS SOLOMON
NEXT
ACROSS THE UNIVERSE
WATERHORSE
PPV
$3,000
$4,880
$1,130
$3,025
$3,000
$3,750
Pay TV
$0
$0
$0
$0
$0
$0
Free TV
$0
$0
$0
$0
$0
$0
TOTAL
$18,785
$0
$0
Title
A HOPE
LUST, CAUTION
PPV
$700
$300
Pay TV
$2,830
$1,300
Free TV
$780
$500
TOTAL
$1,000
$4,130
$1,280
Title
PPV
TBD
Pay TV
Free TV
12
Library Sales – Market Trends
The consistent licensing of our library product is evolving
with new business models and applications
• Dual windowing (Just Shoot Me – cable and broadcast)
• 3rd party distribution (RTN – premium guarantees)
• Repacking library products (Minisodes)
13
Library Sales Targets by Market
($ in MM)
Free/Basic
$160
Forecast
$150 +
$140
$17
Pay TV
PPV/VOD
$120
$60
In-House
$103MM
$100
Budget
$65MM
$60
$5
$90
$8
$5
$80
$40
$102
$73
$77
FY07
FY08
$77
$20
$6
$5
$77
$66
$20
$0
FY09
FY10
• 3 year annual average of $106MM in FY07-FY09, and $90MM in FY08-FY10
• 4 year annual average of $105MM
Last Year’s Numbers]
14
Library Revenue by Division
($ in MM)
MPG
TV
$160
SPHE
$146
$140
$133
$28
$120
InHouse
$100$103MM
$124
$18
$111
$26
$101
$42
$40
$34
$26
$81
$80
$16
In-House
$77MM
$77
$46
$60
$44
$30
$32
$40
$11
In-House
$62MM
$76
$48
$75
In-House
$31MM
$52
$20
$33
$33
$36
$27
$0
FY07
Q2/BDGT.
FY08
MRP/PRIOR
FY09
MRP/PRIOR
FY10
MRP
NOTE: Assumes a consistent volume and quality of SPHE acquired product.
[Placeholder Numbers]
15
Digital Distribution Landscape: Growing Demand
• Spending on paid and ad-supported content is forecasted to grow at double-digit rates
well into the next decade
•
U.S. Consumer /
Advertiser Spending ($M)
Studios are continuing to make an increasing
amount of premium content available for digital
distribution
–
Primetime TV, movies, and original content
$7,775
846
$5,942
•
Content owners are leveraging wide distribution
networks, rather than exclusivity, to drive demand
–
•
–
–
Ad supported streams on ABC.com and DST on
iTunes
DST and VOD on XBox360
Ad supported and subscription TV and movies on
Verizon Wireless and Sprint
2,629
$4,238
NBCU and Fox to launch JV “Hulu” in Q4 as well as
distributing through Yahoo! and MSN
TV and movie content is fully cross platform
utilizing a variety of business models
–
651
447
2,191
$2,765
1,691
$1,663
774
775
2007
Ads
4,300
1,170
3,100
2,100
1,350
2008
2009
TV Downloads*
2010
2011
MovieDownloads*
Source: eMarketer; *includes DST and rental
16
Digital Distribution
SPT Strategy & Financials
•
Aggressively build the distribution network
–
•
Continue to expand the overall content offering
–
–
•
Broaden selection of film and TV product
Introduce the most compelling short-form/original content into the offering
Continue to lead the market in innovating the digital product offering and usage models
–
•
Strike partnerships across the complete spectrum of traditional and on-line players
Focus on Digital Sell-Through as foundational/core product
Build a strong, retail-focused organization
–
–
Create innovative marketing and promotional programs
Continue to lead the industry with respect to asset delivery and digital operations
Total Revenue
17
Mobile Overview
SPT Strategy & Financials
•
Taken responsibility for game development from SPDE and coordinating greenlights with SPTI
–
•
Slating 8 games per year
Now directly responsible for personalization products focusing on
–
–
•
Tones/graphics based on film/TV properties
Packages based on compelling brands/themes
Market approach
–
–
–
Close carrier relationships and marketing support
Consistent product development
Reinvigorate the library
($ in MM)
EBIT
$9
Total Revenue
($ in MM)
$8.0
$8
$8.0
$35
$30.0
$30
$7
$6.0
$6
$6.0
$25.0
$25
$5
$4.0
$4.0
$4
$25.0
$20.0
$20.0
$20
$30.0
$15
$15.0
$15.0
$3
$2
$2.0
$2.0
$10
$1
$5
$0
Q2/BGT
FY08
FY09
FY10
Q2/MRP
[Placeholder Numbers]
$0
FY07
FY08
FY09
FY10
Budget/Prior MRP
18