1. DRAFT
Epic Channel Launch
Deal Overview
July 2012

2. Executive Summary
SPT has an opportunity to carve out a segment of the Indian GEC and news channel audience by launching Epic, a digital “green field” channel focused on Indian mythology, folklore and rich cultural history
Management will be led by Mahesh Samat, 14-year industry veteran and former CEO of Disney India
SPT to have 80% ownership with management owning the remaining 20% (Samat 12%, key executives 8%). SPT will have a fair market value call option on the full minority position starting in year 5
India remains an attractive market for both acquisitions and launches; through 2016 advertising and subscription revenues are expected to grow at CAGRs of 14.7% and 19%, respectively(1)
This opportunity will allow SPT to target the underserved Indian male segment with innovative scripted programming: mystical stories, historical dramas and comedies, superheroes, styled documentaries and historical interpretations
Launch of Epic will complement SPT’s existing India presence, broaden MSM’s portfolio into new areas of media and provide an opportunity to exploit content in other Indian regions and to the Indian diaspora worldwide
Estimated deep water mark of [$23MM], NPV of [$17MM] and IRR of [8%] with cash-flow breakeven in Year [9]
EPIC will be contingent upon the roll out of digitization in November 2012; launch expected in FYE14
(1) FICCI-KPMG Indian Media and Entertainment Industry Report, 2012

3. Television Industry in India
The Indian TV market is critical to the continued success of SPT Networks
India is expected to be one of the top 3 world economies by 2050, is currently the 3rd largest TV audience in the world and is adding ~9MM TV households annually
The media industry in India is forecast to grow at a 15% CAGR through 2016; television is expected to be a primary driver of this growth, with an expected 17% CAGR over the same period
Television remains the largest media industry in India, comprising ~45% of total industry revenue
Television penetration in India is currently less than 70%, leaving significant headroom for growth
Indian Media Revenues
Indian Television Industry Growth
Notes: Based on FICCI-KPMG Indian Media and Entertainment Industry Report, 2012

4. Epic Opportunity
Currently there are no male-skewing entertainment channels in India
This represents an opportunity to carve out viewers from GEC and news channels
Indian Mythology, folklore and history
Rich cultural history that has not yet been exploited
Epic provides an entertaining look at history and mythology with investigative stories
Few key fictional programs for broader appeal
Mahesh Samat, former CEO of Disney India will lead management team on a startup format
Highly-experienced management team reduces risk to SPT
Deal structure allows SPT to have a controlling majority stake
Leverages MSM’s advertising sales, distribution and back office services
MSM’s extensive relationships, bargaining power, ad sales expertise and market presence will provide Epic with a high probability for success
After first launch campaign, avoid mass media and use digital viral elements to spread awareness

5. Strategic Benefit to SPT/MSM
Epic provides SPT/MSM a natural entry into the digital channels market
Opportunity to develop relationships and build digital ad sales relationships
Broadens our existing channel portfolio with a new area of media
Makes TheOneAlliance a stronger offering in all parts of the country
Over 80% of India is Hindu and identifies with historical mythology

6. Epic Channel Forecast – Mgmt Case

7. Preliminary NPV Analysis
Assumes constant EBIT to cash flow conversion rate of 35%
NPV of $17MM at 7% perpetual growth and 14% cost of capital
$33.7
$31.5
Estimated NPV: $17MM
$9.0
$9.5
(1)
(2)
NOTES:
DCF based on discount rate range of 13%-15% and exit multiples of 6x-8x FY23 EBIT
DCF based on discount rate range of 13%-15% and perpetuity growth rates of 6%-8%

8. Sensitivities to Operating Assumptions
Base Case
TRP growth: 3% per year
Sub Growth: 7% per year
Sensitivity Case
TRP growth: 2% per year
Sub Growth: 5% per year
OpEx: 120% of Base Case
NPV decreases to $10.3MM

9. Risk and Mitigation Risk Mitigation
Digitalization does not proceed as expected
Delaying start of any significant expenditure until Phase I of digitalization is rolled out on November 1, 2012
Programming does not resonate with the target audience
Experience management team with a proven track record that is fully aligned to succeed
Cost inflation in production of content
Leverage MSM relationships to keep costs in line
Management turnover
Management is part owner with a phased vesting for retention

10. Next Steps Seek Necessary SPE and SCA approvals Complete and execute:
Long form documents
employment agreements
carriage agreements
Submit filings and obtain regulatory approvals
Prepare for launch

11. Appendix

12. Valuation Details
Sensitivities to discount rate, terminal growth and exit multiples of EBIT
($MMs)
($MMs)