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**A Peek Into The Future of Theatrical Exhibition** NASDAQ: DCIN

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Presentation on theme: "**A Peek Into The Future of Theatrical Exhibition** NASDAQ: DCIN"— Presentation transcript:

1 **A Peek Into The Future of Theatrical Exhibition** NASDAQ: DCIN

2 Forward-Looking Statements Certain statements and estimates in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements about: expected benefits from the conversion to digital cinema; and the Companys ability to successfully pursue its strategies. These forward-looking statements are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, including the risks set forth under the heading Risk Factors in our 10-K for the year ended June 30, 2012, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Any estimates or other forward-looking statements provided in this presentation speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update or review any estimate and/or forward-looking statement because of new information, future events or other factors. 2

3 Fast-growing U.S. exhibitor (founded 2010) led by digital cinema pioneers (Clearview/Cinedigm legacy), transforming movie theaters into digital entertainment centers Current footprint - 18 theaters/178 screens in six states…added 159 screens since April 12 IPO Goal - national circuit featuring 100 theaters/1,000 screens in 75/top 100 DMAs Targeting 300 screens by 12/31/13 Acquiring cash flow positive theaters, expanding profitability on digital platform, achieving: Incremental revenue and theater level cash flow generation Cost efficiencies/reductions Unique differentiators include: Alternative programming expertise Social media focus Virtual Print Fee (VPF) receipt (film rent offset)…receiving VPFs on current 85 screens (but probably wont receive for all future screens) DigiNext JV + other content JVs (in the works) – downstream/ancillary revenue opportunities Secured Start Media JV and Term Loan to assist in support of theater circuit expansion Digiplex Growth Opportunity/Differentiators 3

4 Corporate Strategy 4

5 Strategy: Opportunistically expand DCINs footprint by identifying and acquiring solid performing theaters in accretive transactions at reasonable cash flow multiples (~5-6X, including initial CapEx) Mid- to Long-term Goal: 100 theaters/1,000 screens in 75/100 top DMAs (Designated Marketing Areas)… creating national circuit where consumers of entertainment can interact with every form of content owner Progress Update: Significantly grew screen count since April 2012 IPO from 3 theaters/19 screens to 18 theaters/178 screens at 2/1/2013 Generating Disciplined/Aggressive Screen Growth StateTheatersScreens3D (#)/(%)Digital AZ114 5100% CA66015100% CT22011100% NJ314 7100% OH116 5100% PA55421100% Total1817864/36%*100% DCIN Screen Growth (#)DCIN Theater Statistics Acquired Cinema Centers (5 theaters, 54 screens) Acquired Lisbon Landing Cinema 12 (1 theater, 12 screens) Selinsgrove, PA – Concessions Area Camp Hill, PA – Theater Exterior View Acquired UltraStar Cinemas (7 theaters, 74 screens) Acquired Solon, OH & Sparta, NJ Theaters (2 theaters, 19 screens) 5 *DCINs goal is to have ~33% of its screens 3-D enabled

6 Strategy: Utilizing managements collective experience and expertise to effectively operate upon state-of-the- art digital platform Near-term goal: Achieve circuit-wide operating efficiencies and immediate benefits from transition to DCINs digital cinema network Progress Update: DCIN continues to make significant headway transforming each acquired facility into a digital entertainment center that adds incremental value to its operating base through accretive revenue, EBITDA and free cash flow generation Maximizing Digital Cinema Circuit and Financial Benefits 6 July 2012: Completed digital rollout of 54 Cinema Centers Screens September 2012: Completed acquisition Lisbon 12 Multiplex Fiscal Q113: First full quarter collecting pre-show ad revenues from National CineMedia (NCM) and Virtual Print Fees (VPFs) from major studios, which are an offset to film rent expense* December 2012: Completed acquisition of 74 UltraStar Cinemas screens January/February 2013: Commenced lease of aggregate 19 screens in Solon, OH and Sparta, NJ Fiscal Q313: Revenue rises more than ninefold to $8.8 million reflecting continued circuit and screen growth *Including Lisbon Landings 12 screens for two-day stub period as this acquisition was completed September 29, 2012

7 Strategy: Schedule wide range of alternative programming, building awareness and attendance gains through active targeted marketing and comprehensive social media customer engagement initiatives Long-term goal: Generate 20% of total box receipts from alternative content, improving attendance metrics at ~50% higher ticket price…replacing underperforming Hollywood titles on screen Progress Update: Continuing to introduce DCINs alternative programming, targeted marketing platform, and active, low-cost social-based outreach strategies that were successfully implemented in its first 3 locations to its newly acquired facilities Alternative programming as a % of total fiscal Q313 admissions revenues averaged ~6% at 8 locations (73 screens) owned for more than one year Alternative Programming Enhanced by Social Media 7 Procure ContentSchedule ProgrammingMarket Events A diverse range of programming that appeals to wide array of audiences Ideally Mon.-Thurs., when average cinemas operate at <10% capacity Create awareness/interest through DCINs consumer engagement initiatives: customer targeting, relationship building, fostering a two-way dialog with guests

8 8 Sample Content and Event Grosses Day of the WeekEvent Offered Event Gross that Day Highest Grossing Movie that Day Lowest Grossing Movie that Day Event Ticket Price (1 adult) Monday Opera Encore: Die Walkure $452.80 $250.39 $0.00 $12.50 Movie Classic: Star Trek 25th Anniversary $911.04 $283.58 $168.66 $12.50 Opera Encore: Wagners Dream $389.07 $360.44 $0.00 $12.50 Tuesday Ballet: Nutcracker Live $1,345.26 $125.40 $0.00 $20.00 Concert: Rolling Stones Live in 1978 $672.03 $89.60 $9.43 $12.50 Ballet: Le Corsaire $566.00 $125.40 $0.00 $15.00 Wednesday Broadway: West Side Story $2,425.00 $73.36 $56.07 $12.50 Broadway: Love Never Dies $1,422.00 $107.94 $0.00 $12.50 Opera: La Traviata $1,339.77 $92.71 $0.00 $20.00 Thursday Movie Classic: Singin in the Rain $2,603.24 $607.84 $47.64 $12.50 Art Show: Leonardo Live $1,591.65 $272.42 $19.82 $12.50 Movie Classic: Singin in the Rain $954.99 $234.82 $28.29 $12.50 Saturday Opera Live: Don Giovanni $7,073.02 $529.97 $21.24 $25.00 Opera Live: La Traviata $3,849.56 $1,168.56 $47.64 $12.50 Sports: Mayweather vs. Ortiz $1,816.86 $2,037.05 $44.34 $18.00 Sunday Opera Live: Phantom of the Opera $1,103.70 $281.50 $28.32 $18.00 Ballet: Le Corsaire $976.35 $309.48 $7.55 $15.00 Los Angeles Philharmonic $479.22 $309.48 $7.55 $18.00 Averages: $783.31 $497.05 $76.41 $15.01 Alternative Programming Successes Alternative programming consistently outperforming lowest (and often highest) grossing movies…at higher prices

9 9 Unique, specialty content joint venture with Nehst Studios featuring a curated series of documentaries and indie features (hand-selected from worlds leading film festivals) shown on Digiplex circuit and at friendly, non-competing theaters DCIN receives 50% of all net downstream/ancillary revenues including DVD, digital downloads and international broadcast rights Additional features and unique benefits of DigiNext: Opportunity for innovative live Q&A between audience and cast members Affordable pricing ($7.00 per ticket, or $6.00 if 5-title subscription purchased) Pay it Forward – a unique program allowing Digiplex patrons to give back to their community Ten releases/year (excluding high-traffic holidays) DigiNext Value-Creation Opportunity December 2012 January 2013 February 2013March 2013

10 10 Select DCIN theater locations have started presenting special engagements of major Hollywood movie releases with both Spanish and English sound tracks Participating locations include, Apple Valley and San Diego, CA, and Reading, PA DCIN plans to expand this entertainment option to include more locations and to feature Asian and other foreign language presentations in addition to Spanish Leveraging digital technology in innovative ways to enhance entertainment options Using Digital Technology to Serve Diverse Audiences

11 Digiplex Model Summary – Cinema Reinvented 11 Cash flow positive theaters Top DMAs Pay reasonable cash flow multiples (including initial CapEx) Convert analog systems Integrate into DCIN digital platform Add additional screens where feasible/profitable Theaters to entertainment destinations Innovative programming + social media = increased seat utilization (especially on slow weeknights) ACQUIRE CONVERT & INVEST TRANSFORM Software systems provide flexibility/efficiency/lower expenses Virtual print fees (VPF) benefit theater level cash flows, offsetting film rent Participation on NCM national pre-show ad network (19K+ screens) Generating guaranteed per attendee minimum rate…or better Attendance gains lead to enhanced concession revenues at attractive gross margins 3D (36% of footprint is 3D compatible) Alternative programming (~50%+ higher ticket prices) Ad revenues of 17¢ per patron is NCM minimum guarantee COST REDUCTIONS PRE-SHOW ADVERTISING INCREMENTAL REVENUES

12 Appendix/Financials 12

13 BUD MAYO, Chairman and CEO (Board Member): Industry veteran with over two decades of experience. Founder and former leader of Cinedigm Digital Cinema Corp. (NasdaqGM:CIDM) and Clearview Cinemas BRIAN PFLUG, CFO (Board Member): Former Controller at Clearview Cinemas and former SVP of Accounting and Finance at Cinedigm Digital Cinema Corp. CHUCK GOLDWATER, Senior Vice President (Board Member): Industry veteran with over two decades of experience (Clearview Cinemas, Loews, Mann Theatres). Former CEO of Digital Cinema Initiatives, the major studio consortium that set digital standards; and was the former Head of Cinedigms digital cinema unit JEFF BUTKOVSKY, Chief Technology Officer: Former Senior Vice President and CTO for Cinedigm Digital Cinema Corp Experienced Management and Board w/Cinema Expertise 13 DCIN Corporate Officers DCIN Independent Board Members NEIL ANDERSON, Partner / Of Counsel – Sullivan & Cromwell: Experienced veteran in M&A transactions across the globe, formerly Sr. M&A Partner at Sullivan & Cromwell; frequent speaker and faculty member on professional seminars and programs dealing with M&A RICHARD CASEY, Software Entrepreneur / Founder – The Casey Group: Operating since 1989, IT consulting firm that helps clients leverage technology to gain strategic advantages; Board Member of Affinity Federal Credit Union MARTIN OCONNOR, II, Managing Partner – OConnor, Morss & OConnor P.C.: Law Firm focused on advising clients of strategic planning, wealth management and family offices; specializes in entertainment law. Board Member of Cinedigm and Rentrak CAROLYN ULLERICK, Global Chief Financial Officer, the Legal and Professional Group of LexisNexis: A leading global provider of content-enabled workflow solutions, LexisNexis uniquely unites proprietary brands, advanced Web technologies and premium information sources

14 SUMMARY AND SUPPLEMENTARY FINANCIAL DATA (unaudited) (1) Theater level cash flow and Adjusted EBITDA are supplemental non-GAAP financial measures. Reconciliations of these metrics to the net loss for the three and nine months ended March 31, 2013 and 2012 are included in the supplementary tables accompanying this news announcement. These metrics as shown above are net of Start Medias share of these items. DCIN Summary Financials 14

15 SUMMARY NON-GAAP RECONCILIATIONS (unaudited) (1) TLCF is intended to be a measure of theater profitability. Therefore, our corporate general and administrative expenses have been excluded. (2) Represents the fair value of shares of Class A common stock and restricted stock awards issued to employees and non-employees for services rendered. As these are non-cash charges, we believe that it is appropriate to show Adjusted EBITDA excluding this item. The increase from the prior year is due to the magnitude of the Lisbon and UltraStar we intend to acquire additional theaters, we have laid the groundwork for our acquisition program and we expect to incur reduced legal fees in connection with future acquisitions. (3) Primarily represents professional fees incurred in connection with start-up activities, the creation of acquisition template documents that will be used by us for future transactions, and certain other costs related to our acquisition strategy. While we intend to acquire additional theaters, we have laid the groundwork for our acquisition program and expect to incur reduced legal and other fees in connection with future acquisitions. We therefore believe that it is appropriate to exclude these items from Adjusted EBITDA. (4) To add back management fees to Digiplex from JV. DCIN Summary Financials 15

16 Sources: Box Office Mojo, Box Office Magazine U.S. Annual Box Office Performance (billions $US) VCR Internet DVD Commercial Penetration of New Media Forms Competing With Box Office: Cable 5% Box Office CAGR* (1970-2011) 2012 $10.8 Steady (1970-2012) industry growth despite new media outlets and alternative distribution methods 2012 broke all-time domestic box record set in 2009 by ~$240 million, for a total of $10.8 billion Stable industry with consistent pricing power Inexpensive out-of-home entertainment option typically resilient to economic pressures Long-Term Industry Box Office Success and Stability 16 Cinema Has Performed Well Over Decades

17 Case Study: Clearview - IPO/Growth/Successful Sale 17 Sep. 1994: Co-founded by Bud Mayo with 4 theaters and 8 screens Dec. 1994: Received equity from CMNY Capital and added 3 screens 1995: Acquired 3 theaters and 11 screens May 1996: Received equity investment of $4.5M from MidMark Capital 1996: Acquired 9 theaters and 39 screens Aug. 1997: IPO – Sold 1.15M shares for $9.2M gross Jan. – Sep. 1998: Acquired 11 theaters and the right to operate one theater for a total of 54 screens 1997: Acquired 14 theaters with 79 screens, added 6 screens to acquired theaters and constructed a 5-screen theater Dec. 1998: Sale to Cablevision (NYSE: CVC) for $160M, including New York Citys Ziegfeld Theatre PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS: The above information is presented solely for informational purposes, and no representation, warranty or guarantee is being made relative to the future performance of the Company or the trading price of its Class A common stock whatsoever. Share Price Aug 21, 1997 (market open):$ 8.00 Sold for Share Price Dec 8, 1998 (on or about 12/8):$24.25 Hold Time (# of days): ~ 474 Return on Investment (approximate): 233% 1994 Clearview Cinemas Corporate Timeline 1995199619971998 Clearview Cinemas: Attractive exit return for IPO Investors when sold to Cablevision

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