0. Channel Acquisition Opportunities
SPE INTERNAL
Channel Acquisition Opportunities
September 2008

1. Executive Summary
Until recently, the window for new domestic channels has been closed and existing channels have been prohibitively expensive
Now several mid-size channels are seeking strategic investment
Simultaneously, demand for HD content has opened a window for HD-only channels; several now need strategic partners to strengthen their programming voice and reach
These trends provide us new opportunities for expanding our domestic channel presence
Lower investment “HD build” strategy: Use library to secure carriage and minimize investment; new channel on-par with MGM HD
Lower investment “HD partner” strategy: Invest in a smaller HD player (e.g., HD Net, Mojo); use the Sony brand and library to reinvigorate and grow the channel
Significant investment in a mid-size channel: Invest in a sizable channel (e.g., G4); better define the channel’s voice and grow the audience by leveraging all Sony assets
As we begin informal discussions, we need to confirm SPE and SCA’s appetite for a significant investment (e.g., up to $200MM-$400MM for 50% of a mid-size channel)

2. Demand for HD Content has Opened the Window for New Channels
Drivers
Available Slots
Both launching new satellites in 2008 (DirecTV 11 to be launched in Q1 2008/ Dish in to expand HD offerings)
DirecTV > 150 national
Dish > 100 national
DirecTV is launch partner of choice for HD channels
IPTV architecture with fiber to the home or node inherently allows hundreds of HD channels with exact number depending on how far fiber extends toward the customer premises and whether MPEG-2 or MPEG-4 compression is used
Verizon FiOS extends all the way to the home, while AT&T U-verse has fiber to the node only
Verizon plans over 150 HD channels by 2008, capacity for > 250 in MPEG2 format and > 500 in MPEG4 format
AT&T currently facing pixelation issues but slots should be between MSOs and Verizon in number
Conversion of analog channels creates room for greater number of digital or HD channels (greater than one-to-one conversion)
Node splits also impact the number of channels that can be offered and MSOs shift node size on a market-by-market basis
Switched Digital Video (SDV) technology theoretically allows infinite number of HD channels – SDV implementation is based on demographics and competition on a market-by-market basis
MSO’s will need to be handled on a case-by-case basis
Most likely initial candidates would be Charter, Cox, Cablevision

3. Target Opportunity: Younger; Male Skewing Percentage Female-Oriented
Analysis of the Network Demographic Landscape Suggests a Younger, Male-Skewing Network is an Attractive Opportunity and Fit with Sony’s Strengths
Median Age 70
Median Age 40
Target Opportunity: Younger; Male Skewing
Median Age 5
80%
Percentage Female-Oriented
50%
20%

4. Distribution/ Syndication
Sony’s Capabilities and Assets Would Enable us to Create Significant Value for a Network with a Male-Slanted Programming Voice
Proposed Approach
Re-brand channel to leverage the strength and relevance of the Sony brand with the targeted male demographic
Branding
Given its brand, programming and distribution strengths, Sony is uniquely positioned to invest in and re-program a network to target the male demographic
Leverage the development, production, and programming expertise of the Sony Pictures Television to create distinctive original programming that resonates with the male audience
Programming
Syndicate channel content on key Sony assets that share the target male demographic (e.g., PSN, Crackle)
Distribution/ Syndication

5. Seller’s Likely Valuation Investment Advantages/Challenges
We Believe Investment/Partnership is the Way to Capture This Opportunity and Have Identified Four Potential Targets
“Partner Large”
“Partner Small”
Target Demographic
Male 18-34
Male/Female 18-49
“Males and Movie Lovers”
Male 25-49
Affluent, early adopters
2007 Subscribers
66.6MM
83.3MM
8.1MM
9.0MM
Cash Flow*
$58MM
$46.5MM
$1MM
$18MM
Seller’s Likely Valuation
$ MM
$ MM
<$100MM
<$100MM
Investment Advantages/Challenges
Excellent fit with Sony target demo and brand
Asking price may be prohibitively expensive
High subscriber count and strong channel placement on with most affiliates
Carriage agreements may limit our ability to rebrand/reprogram channel
After initial conversations with Marc Cuban, HDNet is currently a lower priority
Provides access to targeted male demo; Ad sales relationship already in place
Network is being shut down and thus carriage opportunity may not exist
*Cash Flow as reported by SNL/Kagan; Defined as Net Operating Revenue less SG&A and Programming Expenses. These numbers seem high and are subject to further review

6. NEXT STEPS
Continue discussions with target channels, including value expectations and critical diligence areas (financial, operational/carriage agreements)
G4: Initial discussions with Comcast complete; diligence commencing
TV Guide: Approaching in conjunction with Constellation Ventures; diligence commencing
Mojo HD: Need to initiate discussion with Comcast immediately to confirm if investment is feasible prior to December ’08 shutdown
HDNet: Completed initial conversations with Mark Cuban; currently lower priority for diligence
Confirm SCA support for an approximately $200MM-$400MM channel investment