1. PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT Operating Model September 2010 WORK IN PROGRESS

2. page 1 Executive Summary Options for handling complexities of Physical New Release –#1 Greater studio control over terms and customer relationships; less cost savings –#2 Less studio control; greater cost savings Confirm assumptions that: Key Areas to Discuss Digital is not handled by Newco To minimize start-up/system investment for Newco, each studio independently selects a 3 rd party distributor to handle and secure cost savings in distribution, invoicing, and cash collections Newco is a 50 / 50 J.V. (not a profitable entity) that includes headcount and systems for sales, marketing, ops, finance/accounting for the functions it performs (primarily Sales and Marketing, rather than distribution or vendor of record) –Overhead costs split 50/50 –All product costs passed as actuals Performance Metrics will be developed for Newco –Financial: Performance vs Budget –Operational: Returns, Freight, Inventory Turns, Merchandising –Incentive plan based on performance vs Budget’s (Financial and Operational) Goal The over-arching goal is to merge as much of our Home Entertainment businesses as possible to extract as much cost as possible and create greater efficiencies Source:1 Screen Digest, August 2010. Digital includes “VOD/PPV” (total on-demand movie consumer revenues) and “On-line” (transactional movie retail and rental download/subscription consumer revenues) 2 Nielsen Home Scan, title-level analysis; box office adjusted for inflation and 3D admissions

3. page 2 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS New Release Physical Considerations Class of TradePossible Models Complexity of Deal Brick-and-mortar RetailWholesaleLow Brick-and-mortar RentailRev share vs. WholesaleMedium Output vs. Non-output SubscriptionRev shareHigh Window vs. non-Window Output vs. Non-output KioskCopy Depth vs. WholesaleHigh Window vs. non-Window Output vs. Non-output

4. page 3 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS New Release Physical Considerations: Option #1: Less Control / Greater Cost Savings Pro’s 1)Maximizes Savings Potential 2)Maintains control of strategic elements of a products life cycle (windows, pricing, rev share/subsript) 3)Maintain creative control over a Title (Pkg, Value-Add) 4)Allows SPHE to set marketing direction/strategy without having to execute 5)Eliminates all Operational aspects of distribution Class of Trade Each Studio Independently Newco Retail Brick-and-mortar Rentail Subscription Kiosk Each studio partner separately negotiates agreement with customer for their respective new release titles. Street dates follow Retail sets street date; establishes deemed wholesale, marketing budgets, sku strategy - by title. Additionally establishes annual incentive programs, by customer if applic. Executes: Sales, Marketing (e.g., national and customer marketing (co-op), secure shelf space, etc.), mfg and distribution Executes: Sales (negotiates matrix buys within a tolerance per contract), Marketing (national and customer marketing (co-op),Trade Spend etc.), Mfg and Distribution Execute contract within parameters. Con’s 1)Removes the Launch responsibilities of the Title in the market. This is viewed as the most critical element in the products life cycle.

5. Proposed Operating Model: Option #1 Operating Parameters by Function: page 4 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS *Individual studio’s negotiate specific contract terms (s/t or rental, windows, discount programs, etc.) and communicate sensitive information to the DADC directly Newco executes all sales, marketing and operations functions relative to the launch of the title

6. Option #1: New Release page 5 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS *Studio Partner #1 *Studio Partner #2 Newco Customers Third Party Distributor(s) (outside Newco, services and distributor independently determined/negotiated by studio but potential for synergies) Invoicing, Cash Collections, Potential Consolidated Distribution, VMI New Release: Individual studio’s negotiate specific contract terms (s/t or rental, windows, discount programs, etc.) Individual Studio’s communicate sensitive information to the DADC directly Newco executes all sales, marketing and operations functions relative to the launch of the title Newco manages 100% of the transitional responsibilities of New Release *Studio Partner’s continue to own the product development process (Key Art, Programming, Packaging, Value-Add, etc.). Components are delivered for manufacturing.

7. Option #1: Catalog page 6 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS Studio Partner #1 Studio Partner #2 Newco Customers Third Party Distributor(s) (outside Newco, services and distributor independently determined/negotiated by studio but potential for synergies) Invoicing, Cash Collections, Potential Consolidated Distribution, VMI Catalog: Individual studio’s establish guidelines for Newco regarding catalog management: reprices, annual incentive plans, resets, auctions, integrated promotional campaigns, etc. Newco manages 100% of the transitional responsibilities of Catalog

8. page 7 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS New Release Physical Considerations: Option 2: Greater Independent Control / Less Cost Savings Class of Trade Each Studio Independently Newco Retail Brick-and-mortar Rentail Subscription Kiosk Each studio partner separately handles Sales, Marketing, Operations, Finance, Accounting, H.R., Legal, I.T., for their respective new release titles. No responsibilities for new release titles. Cost savings exist in relation to reduction of catalog sales force and associated support plus potential for supply chain savings. Pro’s 1)Maintains control of strategic elements of a products life cycle (windows, pricing, rev share/subsript) 2)Maintain creative control over a Title (Pkg, Value-Add) 3)Allows SPHE to set marketing direction/strategy without having to execute 4)Eliminates all Operational aspects of distribution Con’s 1)Reduces savings realized

9. Proposed Operating Model: Option #2 Operating Parameters by Function: page 8 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS

10. Option #2: New Release page 9 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS Studio Partner #1 Studio Partner #2 Newco Customers Third Party Distributor(s) (outside Newco, services and distributor independently determined/negotiated by studio but potential for synergies) Returns Processing Returns New Release (Physical and Digital) Catalog - digital Catalog (Physical Only) Pricing, Terms & Conditions Sales and Marketing Invoicing, Cash Collections, Potential Consolidated Distribution, VMI Potential Other Studio’s *Studio Partner’s continue to own the product development process (Key Art, Programming, Packaging, Value-Add, etc.). Components are delivered for manufacturing.

11. Option #2: Catalog page 10 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT WORK PRODUCT WORK IN PROGRESS Studio Partner #1 Studio Partner #2 Newco Customers Third Party Distributor(s) (outside Newco, services and distributor independently determined/negotiated by studio but potential for synergies) Invoicing, Cash Collections, Potential Consolidated Distribution, VMI Catalog: Individual studio’s establish guidelines for Newco regarding catalog management: reprices, annual incentive plans, resets, auctions, integrated promotional campaigns, etc. Newco manages 100% of the transitional responsibilities of Catalog