ATTORNEY / CLIENT PRIVILEGED Confidential Draft Starz / Netflix Considerations FOR SONY INTERNAL USE ONLY December 19, 2008

Attorney / Client Privileged and Confidential 1 Executive Summary Since reviewing the proposed deal on December 5, we have further refined several deal points Internet SOD pricing was adjusted. Non-premium subscribers are subject to an “adjusted cap” –Open internet suggested retail price (SRP) for bundles will be $13.99 through 2012 then return to the $16.99 price previously discussed –A la carte SRP will be $5.99 through 2012 then return to the $7.99 price previously discussed –DSL bundle SRP remains at $33 with the exception of Verizon, which is at $29.99 (accommodating existing deal); however DSL bundle SRP will decrease (but never below $20) or increase with changes in prevailing DSL prices Clarified that where Starz is delivered on a web site, it can be bundled with (a) video only services or (b) packages that include video and music / games; provided that video is the primary value Netflix will be similar to “Open Internet” sites within six months Bonus payment timing and value has been clarified –Starz previously offered the opportunity to receive $38.5MM cash in our FY (March payment) or $40MM out of our FY (June payments) –We’ve set the payment at $38.5MM to keep the payment in our FY

Attorney / Client Privileged and Confidential 2 YearHH Cap MM MM MM MM MM 2014+% growth Cap applies to all instances of Starz Play (TV+BB, DSL Only, and Open Internet) Household cap for Starz Play is 35MM in 2009; growing to 50MM in 2013 Post 2013, cap grows as a % of growth in high-speed internet households (but never less than 50MM) % Decrease from Retail Price Subscriber Multiplier 0 – 10%1.75x 10 – 20%2.5x 20 – 50%3.25x 50 – 80%4x 80 – 100%10x Subscribers purchasing below suggested retail price are subject to a lower cap than other subscribers Example: Subscriber Cap AdjustmentHH Cap Adjusted Cap Mechanism 10M subs at retail price10.0M 10M subs at 15% below retail price 25.0M (10.0 x 2.5 = 25.0) Total Subs35.0M

Attorney / Client Privileged and Confidential 3 Revised Internet SOD Suggested Retail Prices CableDSLOpen Internet PreviousNewPreviousNewPreviousNew Bundles Not applicable; but may only bundle with packages that include basic cable Greater of $33 or basic+$7.99+$.01 Greater of $33 ($29.99 Verizon) or Basic+$5.99+$.01 $33 threshold moves up and down with market changes $16.99 $13.99 through 2012 $16.99 thereafter A La Carte in addition to a video service N/A $7.99 $5.99 through 2012 $7.99 thereafter A La Carte without an underlying video service $7.99 $5.99 through 2012 $7.99 thereafter $16.99 $13.99 through 2012 $16.99 thereafter

ATTORNEY / CLIENT PRIVILEGED Confidential Draft Starz / Netflix Considerations FOR SONY INTERNAL USE ONLY December 5, 2008

Attorney / Client Privileged and Confidential 5 Executive Summary We have identified terms for an extension of the output deal and a framework for the internet -All terms now subject to SPE and Liberty senior management approval Terms of the output deal extension are largely the same as previously presented Internet SOD terms revised to ensure premium access and premium messaging –Minimum bundle pricing –Also available on a la carte basis –Not a “barker” for data service –Rate card for “Open Internet” subscribers only –Cap on number of subscribing households

Attorney / Client Privileged and Confidential 6 Overall Deal Parameters Extension3 year extensionExtends beyond current deal, which expires December 2013 Provides Sony security of Pay TV deal through December 2016 ValueAnnual value in of $160MM - $225MM Above market Specific annual fees depend on slate $40MM bonus + 35% rate reduction translates to a roughly 30% decrease in annual revenues Above Market Deal Terms 50 title capAll studios have title caps; ours would be the highest and is distinct from a cap on absolute dollar fees $40MM annual bonus Sony maintains the only studio bonus in the industry Other Benefits 72 hour PPV/VOD viewing Reduce Pay 2 EST Floor to $3.50 Pay 2 Black Periods eliminated Increases Sony value in pre-PayTV windows One retained for sale by Sony; one for exhibition by Starz Internet SOD Premium pricing / access Premium branding Modest incremental fees Structure is in the spirit of traditional Pay TV flat fee model; but provides clear definition for “Pay TV on the internet” Potential additional upside for Sony SPE Concessions Volume cap Pay 1 contractual start date Rate card reductions Cap on titles and near-term reduction are non-negotiable for Starz Existence of cap traded for greater flexibility within our slate Cap exceeds historical and projected SPE slates Contractual dates to conform with SPE practice, with carve-outs for holiday-themed titles : Pay 1 to be 16 months : Pay 1 to be 18 months Pay 1 market is 18 months Terms Comments

Attorney / Client Privileged and Confidential 7 Ensure Premium Access Model for Starz Play –Only bundled with premium packages or available a la carte –Cap on the number of total households receiving Starz Play Maintain Premium Messaging for Starz Play –Starz Play clearly identified as part of the value of upgrading to a premium package; contractual prohibition on marketing as “free” or equivalent of “gift with purchase” –A la carte price to establish value Internet SOD: Guiding Principles

Attorney / Client Privileged and Confidential 8 Examples Incremental Compensation Premium TV + BroadbandDSL Only Open Internet (cable + broadband) (DSL) Starz Play only marketed as part of packages that include TV (e.g., double play / triple play) Available as an a la carte “add-on” or part of a premium tier with minimum pricing Available as a la carte “add-on” or part of a premium tier with minimum pricing Caps to Ensure Premium Internet SOD: Overview

Attorney / Client Privileged and Confidential 9 YearHH Cap MM MM MM MM MM Cap applies to all instances of Starz Play (TV+BB, DSL Only, and Open Internet) Household cap for Starz Play is 35MM in 2009; growing to 50MM in 2013 Post 2013, cap grows as a % of growth in high-speed internet households (but never less than 50MM) SubsRate Card Incremental/ Max Total 0-10MM$0.33/yr$3MM / $3MM 10-15MM$0.50/yr$3MM / $6MM 15-20MM$0.75/yr$4MM / $10MM 20-25MM$1.00/yr$5MM / $15MM 25-30MM$1.25/yr$5MM / $20MM Rate card applies to Open Internet subscribers only (i.e., excludes TV+BB and DSL Only and excluding Netflix) Total annual fees to SPE capped at $20MM (expected value is less than $20MM as much of cap likely to be filled by TV+BB and DSL Only subs) Separate Netflix settlement: $2MM per year for next 3 yrs (if Netflix terminates, SPE receives single $2MM payment) Rate CardHH Cap Internet SOD: Household Cap and Rate Card

Attorney / Client Privileged and Confidential 10 May only be marketed as a bundle with offering that includes cable TV service Can not be marketed as a bundle with data only by cable companies A la carte pricing made available No pricing restrictions for Starz Play as a result of it being bundled with TV Must maintain Starz branding Household cap applies Rate card does not apply Acceptable Marketing Messages “Sign up for Comcast ‘Double Play’ and get TV, Starz Play, and Broadband” Unacceptable Marketing Messages “Get Starz Play when you sign up for HSIP” Bundling with TV likely within Starz’ rights; nearly all cable broadband households have cable TV service -May offer Starz Play to these households without incremental fees to SPE -Marketing must still focus on access included with TV or premium packages -Cap on total households reinforces premium access Basic TermsRationaleExamples SOD Scenario 1: TV (Cable/Sat/IPTV) + Broadband

Attorney / Client Privileged and Confidential 11 Can be bundled with any tier above basic as long as minimum price is $33/month -Today, only allows Starz Play to be bundled with highest of 3 tiers on Verizon and highest of 4 tiers on AT&T Can be offered a la carte for $7.99 on top of any tier Can not be positioned as “free” to consumer; value must be clearly identified Must maintain Starz branding Household cap applies Rate card does not apply Current Verizon DSL Plans “Starter” plan: $19.99  Starz Play available a la carte at $7.99 “Power” plan: $29.99  Starz Play available a la carte at $7.99 “Turbo” plan: $42.99  Starz Play can be bundled at no extra charge Potential Verizon DSL + Starz Bundled Plan “Power Plus” plan: $33.00  Starz Play plus “Power” plan DSL providers shifting to cable-like offerings of IPTV + broadband (e.g., FIOS) Starz views cable-like treatment as critical; rate card does not apply $33 minimum price ensures premium position even if DSL prices fall Basic TermsRationaleExamples SOD Scenario 2: DSL Only

Attorney / Client Privileged and Confidential 12 Basic TermsRationaleExamples Limited to content provider websites Can be offered a la carte for $7.99 in addition to basic video subscription of $4.99 Minimum bundled price of $16.99 If website has no subscription, Starz Play can be offered a la carte for $16.99 Must maintain Starz branding Household cap applies Rate card applies Hulu (no base subscription) Starz Play costs $16.99 Blockbuster “1 at a time” minimum plan for $9.99  Starz Play available a la carte for $7.99 “2 at a time” premium plan for $16.99  Starz Play can be bundled Applying rate card acknowledges that rights are incremental to output deal Subscription requirement is analogous to cable -Ensures Starz continues to bundle with content (not software) -Today, $4.99 basic video, $7.99 a la carte fee, plus $20 for BB requires customers pay ~ $33 before Starz Play is bundled -As BB prices decline, $16.99 price ensures Starz Play remains premium SOD Scenario 3: Open Internet (excluding Netflix)

Attorney / Client Privileged and Confidential 13 APPENDIX

Attorney / Client Privileged and Confidential 14 Timeline of Current and Proposed Windows Theatrical Release DVD / VOD Day & Date PPV / VOD Standard 10 months from theatrical (was 12 months) 3.5 months from VOD (was 8 months; not necessary with home theater carve-out) 4.5 months from DVD (was 6 months) 3.5 months from PPV (was 6 months) Home Theater / Early Window Pay 1 Triggers Pay 1 Window: No Black; 16 mos. current, 18 mos. in extension (was 15 plus black) No Pay 1 trigger