1. Summary of Simon Cowell Partnership Opportunities
Replace with SPE, Sony BMG and/or SCA
Summary of Simon Cowell Partnership Opportunities
Draft for internal comment only
November 2007

2. Agenda
New SyCo Overview – 50/50 JV Sony BMG/Simon Cowell, plus related SPT production JV
Overall Deal Structure, New SyCo
Syco Today
New SyCo Operating Assumptions
Value exchange
Sony Pictures Entertainment Contributions
SPT
GSN
Crackle
Film

3. Overall Deal Structure – New SyCo and SPT/NewSyCo TV JV
In $, mm, except as noted
SCA
- Film funding (potentially via 3rd party)
- Facilities
Recoup production
Facilities rent
New SyCo
Development staff
- All projects
- Funded internally
Old SyCo, 2008 – 2010
Music and film copyrights
Estimated value, by line of business
- Syco (’ ): 150
- Music (2010+) : 150
- TV:
- Film:
- GSN:
- Crackle: 25
- SC other: (from SC)
Total:
200mm cash
25% equity (15% vesting) in NewSyCo
- 10% at signing
- 5% Fox renewal
- 5% 1st TV
- 5% 1st Film
Facilities
Simon Cowell
Contributes all:
- Endorsements
- Fees for services
- Payments from Idol
- Est /year?
- thru 2015
- Exclusive creative output through 2015
Receives:
Cash of 200mm
NewSyCo share value
- 10% - 25%
- 45 – 140mm
Overhead and production funding
Transaction occurs before 4/08 (for tax purposes)
Film production funding
Facilities
Sony BMG
- Old SyCo,
- $200 cash
Equity (75-90%)
Old SyCo
200 cash
All creative energies on exclusive basis
All fees and payments for services
SPE
- Film (production and distribution)
- TV (production and distribution)
Scripted
Non scripted
Crackle
GSN
Distribution and
production fees (Film)
Production and distribution svcs
50% equity
Production fees (TV)
Ready to air projects
50% equity
Distribution fees
SPT/New SyCo TV JV
All TV copyrights
Estimated value,
Production and distribution svcs

4. SyCo Today – [Note – Values to be confirmed/refined]
Initially 50/50 venture between Sony BMG and Simon Cowell
2 years ago 50% purchased for $90mm by Sony BMG
value $150 mm (100%), rights include:
Music, film and tv
American Idol artist recording contracts
X Factor, UK’s Got Talent, ___?
XFactor US license from Fox is $10mm/year
Tracking slightly ahead of forecast done at time of acquisition of 50%
3 year term remaining to 2010
Excluded rights today include
Fox payments for Cowell services as judge (est. $10-15mm/year)
Endorsements
Other value of Cowell brand as personality
Production income from current shows (eg – XFactor produced by Freemantle)
Extension for 2010 through 2015, could be $150mm (100%) for music output, before film, television and other revenue streams considered
Cowell equity vesting based on performance

5. NewSyCo Operating Assumptions
Staff - TBD
TV – 10 FTEs, growing to 20 over term,
Split between NewSyCo and SPT/NewSyCo production JV
Film – 2 FTEs
Other
Development budget
TV - $7mm/year, growing to $12mm/year
Film - TBD
Other (eg – Games, merchandising) - TBD
Governance
Board of SCA, SPT, Sony BMG and Simon Cowell
Budget approval, etc

6. Value exchange At inception
Simon Cowell: contributes Idol fees (3 years valued at 30mm) plus 5 year SyCo deal extension, gets 200mm plus 10% of newSyCo (valued at 35mm)
NewSyCo value is SyCo plus extension (300), plus Crackle (25), plus Idol fees (30) = 355
Sony BMG: contributes SyCo (valued at 150mm) plus 200mm, gets 90% of NewSyCo (valued at 320mm)
SPE: Nothing beyond any Crackle net value, unless some current TV production shifts to SPT (eg – XFactor)
Assuming full value realized over life of deal
Simon Cowell: contributes Idol fees (8 years valued at 80mm) plus 5 year SyCo deal extension, gets 200mm plus 25% of NewSyCo (valued at 140mm)
NewSyCo value is SyCo plus extension (300), plus Crackle (25), plus Idol fees (80), plus TV, Film and GSN (185) = 590
Sony BMG: contributes SyCo (valued at 150mm) plus 200mm, gets 75% of NewSyCo (valued at 450mm)
SPE: Fees plus 50% of SPT/NewSyCo production JV (valued at 20-50mm)

7. Potential Value of Partnership Opportunities - SPT
Deal Component
Entity Value
% to NewSyCo
Implied Value
Entity Value Basis
Simon / SBMG Equity Basis
Sony Pictures Television JV
$45MM - $100MM
50%
$20MM - $50MM
2 successful shows w/ network, sponsors, and syndication
Funding for pilots required to yield 2 shows
OH funding
Based on % of development and OH funding provided
Crackle
$62.5MM
22.5% - 30%
$15MM - $20MM
Acquisition price
5% at close for cash
15.5% based on EBIT funding
7.5% based on financial milestones
GSN
$600MM - $700MM 5%
$30MM - $35MM
Negotiated value between Sony and Liberty Media
Warrants
Based on financial milestones
Partnership opportunities with SPT would provide $70-100MM in equity plus additional income to SPT/ NewSyCo

8. Television Production
Sony Pictures Television Business Overview
SPT is the top independent studio for network and cable television
Creator and distributor of top comedies, dramas, and game shows:
#1 comedy of all-time (Seinfeld)
#1 primetime comedy last season (Rules of Engagement)
#1 daytime drama (Young and the Restless)
#1 and #2 game shows of all time (Wheel of Fortune and Jeopardy!)
#1 producer of TV movies, won 3 Emmys for Broken Trail this year
Broad range of on-air shows, including 10 network shows, 8 cable shows, 5 syndicated shows, and 6 made-for-TV movies
Industry leader in television distribution with records for shows like Seinfeld and King of Queens
Large ad sales organization with over $200MM in annual revenues
Deal Overview
Establish a JV with Simon and Sony Pictures Television
Provide Simon access to SPT’s drama and comedy writers as well as our creative executives
Cover multiple genres as well as scripted and non-scripted formats
Provide Simon screen credits including Executive Producer, Logo Credit, and paid ads
Simon will tap into Sony Picture Television’s resources, industry leadership, and expertise to expand the range of his television offerings

9. TV Production Company Overview
Content Focus
Reality Shows (e.g., America’s Got Talent, Cupid)
Game Shows (e.g., Power of 10)
Business Model
$7 MM annually required for development budget, 6 pilots (50% license fees covered by networks), and overhead in Year 1; growing to $12 MM by Year 5
Only network shows assumed without need for deficit financing (i.e., no cable shows modeled)
Reality shows assumed to generate incremental revenue from sponsorship and format sales
Game shows assumed to generate incremental revenue from First Run Syndication, Advertising (syndication barter), and international format sales
Organizational Structure
JV headed by Simon Cowell with 10 professionals in the first year growing to 20 professionals by Year 5
Wholly owned by SPT and NewSyCo (50/50 JV)
Key Success Factors
Pilot pickup rate throughout the plan period in line with industry averages (33%)
Successful first run syndication of best game shows (e.g., Who Wants to be a Millionaire)
Reality formats attract significant sponsorship ($20 MM/Year by Year 3)
NewCo earns all EP fees at 10% of production budget (60-85% of PV)
PV of production company cash flows ranges from $40 MM to $100 MM driven by Simon’s ability to continue to create exciting television content

10. Case Specific Assumptions
Slate Assumptions
General Assumptions
6 pilots per year with a 33% pick-up rate for both reality and game shows
Mix of successful (3+ seasons, syndication and format sales) and under performing (average 1-2 seasons, limited sponsorship, no syndication) game show and reality programming
100% network shows with license fees equal to production budgets
Successful shows reach steady state economics in Year 3
Case Specific Assumptions
Success Rates
Overall Programming Mix*
Aggressive Case
Base Case
Industry Average
Aggressive Case
Base Case
Show Type
Year 1 to 2
60%
27%
30%
Reality Success 2
Reality Underperform 2 3
Year 2 to 3
50%
61%
67%
Game Show Success 3 2
Year 3 to 4
67%
50%
Game Show Underperform 3
*Numbers represent picked-up shows

11. Crackle-based Online Partnership
Crackle Overview
Crackle is a premier destination for online video, focused on high-quality short-form video
Crackle is elevating the quality of online video and attracting the best creators of short-form video
Crackle has attracted a large and loyal audience, making it the ideal destination to extend Simon’s brand online
Crackle’s model is an ideal fit for identifying talent, with a brand built on offering fame-based incentives to emerging talent
Deal Specifics
Sony would grant equity in Crackle as part of the venture
Crackle would provide technology, infrastructure, and management team
Partnership would include marketing support and music video distribution
Simon would receive cash compensation for his services, including contribution of his expertise in developing the Network concept
Simon would contribute his name and likeness, public relations support, and on-going interaction with audience members
With no cash investment, Simon would participate in creating the leading online destination for talent and extend his brand to a site that reflects his style of straight talk and celebrity

12. GSN-based Game Partnership
GSN Overview
Collaborate with Simon to build a game-based business around his brand
With the backing of Sony Pictures, Liberty Media, and new management, GSN is redefining its brand
GSN is building on its position as a leader in TV game shows (reaching 66MM households) to expand into online and casual games
GSN’s affiliation with Fun Technologies uniquely positions it to be the leader in games across platforms
Deal Specifics
GSN would guarantee exclusive carriage for a defined number of Simon’s game shows each year (number of shows / format would be negotiated)
Partnership would provide equity to Simon
Simon would have a dedicated programming block one night per week
Simon, GSN, and FUN Technologies would collaborate in developing online skill-based games
Deal would build on Sony’s partnership with IGT and history of introducing the most successful gaming machines of all time to offer slot machines based on Simon’s game shows
Leverage GSN and FUN Technologies to extend Simon Cowell’s brand into both television game shows and skill-based casual video games

13. Preliminary Proposal for an Overall Feature Film Deal
Sony Pictures Overview
Sony Pictures is Hollywood’s leading studio
#1 in openings (2006 & 2007)
#1 in market share (2006 & 2007)
#1 in opening day receipts / weekend receipts (Spider-Man 3)
12 Best Picture Oscars
Deal Overview
An exclusive producing deal with Sony Pictures for all theatrical projects through 2015
Overhead and fringe related to film operations covered out of NewSyCo operations
NewSyCo would produce pictures and retain copyright
SPE would distribute on a “rent-a-system” basis, and potentially provide production services for fee
Simon will leverage Sony Pictures’ resources and feature film production expertise, providing Simon a vehicle to bring his theatrical projects to the screen

14. Key SPE Assumptions – Film
Development and Greenlight process
Ultimate greenlight decisions made by NewSyCo, with input from SPE
Overhead and development funding (amount TBD) covered by NewSyCo
NewSyCo bears production costs, via recoupable contribution from SCA
Copyright would remain with NewSyCo
Production services provided by SPE for fee
Distribution
SPE would be worldwide distributor in all markets in perpetuity on a rent-a-system basis
NewSyCo would provide theatrical marketing funds, via recoupable contribution from SCA
SPE would charge distribution fees and recoup other releasing costs
Output Assumptions
1 – 2 projects developed per year
1 film produced every 2-3 years
Alternative structure option could be to shift greenlight, copyright, production funding and marketing costs to SPE