Digital Networks Strategy and Ad Sales Discussion

August 2007

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Traditional TV Networks Grabbing Digital Real Estate

• Traditional Networks are expanding into digital

• Leveraging assets to create digital versions and new brands

• Fully programmed experiences, predominantly long form

• Locking up prime placement on Digital MSO’s

• Locking up scarce sub fees and MGs from Digital MSO’s

Traditional TV Networks

DigitalNetworks

DigitalMSOs

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“Traditional” Content Aggregators

“Traditional” Content Aggregators

Two Types of Digital MSOs are Emerging

Next-Gen / UGV-Driven Aggregators

Next-Gen / UGV-Driven Aggregators

• Mostly programmed digital networks with established, professionally created content

• EPG-like experience, typically organized by genre, and network brands drive navigation

• Mostly short form, UGV• Some professional content, but

mostly one-off or limited series• Navigation more discovery driven

and viral (Comedy vs. Comedy Central)

• User-involved (e.g. community posting, voting)

4

ContentContent

Without Digital Networks, SPT Loses Influence and Revenue

DistributionDistribution

AdvertisingAdvertising

• Traditional networks aggressively build online & mobile audiences, replicating position & distribution advantage in the digital world

• Difficult to secure real estate on digital MSOs for SPT’s a la carte content, with limited spots available in digital MSO tiers

• Digital MSOs increasingly dictate business models and product development without SPT input

• SPT content continues to build and benefit other parties’ networks, replicating the current creation-distribution ecosystem

• Talent, seeking multi-platform exposure and marketing of productions, turns elsewhere

• Opportunity cost to not making library available online

$0

$500

$1,000

$1,500

$2,000

2005 2006 2007 2008 2009 2010 2011

Source: Adams Media Research, 2007

TV: $568 m

MusicVideo: $447 m

News &Sports: $433 m

Other: $145 m

UGV: $137 m

• Ad dollars shifting from traditional TV to online

• By 2011, TV content captures largest share of online ad spending:

5

Strategy: Create Digital Networks to Address Digital Landscape

Why Digital Networks?Why Digital Networks?

Generate RevenueBuild Assets

• Capture share of developing revenue streams (IP and mobile)

• Unlock and monetize SPT’s vast library

• Give SPT seat at table to shape digital products and business models

• Create program franchises with follow-on windows (e.g. DVD, Direct to Mobile)

• Establish 21st century network / distribution assets for SPT

• Build foundation for SPTAS to bring-in new partners and expand lines of business

• Provide long-term distribution leverage for SPT content

• Provide outlets for new content and talent

6

Current Strategy Tailored to Meet Budget Requirements

Distribution

Budget

• No net investment in digital networks in FY2008

– Breakeven to positive cash flow in year 1

• Minimal incremental headcount

• Limited marketing and music clearance allocations

Content

• Rely heavily on library

• Targeted slate of original programming using high-end and pre-screened talent

• Selective music clearance

• Distribute and build awareness through partners’ large, built-in audiences before attempting to drive traffic to SPT sites

• Multi-platform approach: broadband and mobile

Networks

• Limit number and scope of networks to manageable level

• Build brands on back of content and partners’ traffic

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Four Networks Will Activate SPT’s Multi-Billion Dollar Library*

Your favorite feature length, contemporary classic films across all major genres: comedy, action, drama, family, sci-fi and cult

• Episodes from the heyday of sit-coms

• Outrageous shorts and busted pilots

• Originals by contemporary comedians

• SPT’s “middle tail” content is hard to find

• Deep classic comedy library

• Demand for short form, original comedy exploding online

Classic hard-hitting action TV series and original takes on today’s favorite action movies and stars

• Deep action-themed library

• SPE relationships with

celebrity action stars and film franchises

• Key young male action demo also early adopter of digital tech- nology

• SPE’s 3,500+ feature library

What: 2 Popular Genres, 2 Popular FormatsWhat: 2 Popular Genres, 2 Popular Formats

Why: We matched our assets with market demandWhy: We matched our assets with market demand

Favorite retro TV shows told in in 4-6 minute “minisodes”

• Extensive library of much-loved shows

• Format appeals to today’s “bite sized” video consumption

• Edited to meet the demo’s ironic, camp sensibility

• Popular TV format (Turner, USA, AMC, etc.) embraced by audiences but not yet translated to digital

*Five including SPT’s investment in FearNet and SPT Mobile’s distribution of FearNet Mobile

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Digital Networks and Crackle Complete SPT’s Offering

Distribution

Networks are syndicated to digital “MSOs” (e.g., Joost, AOL, MySpace, Yahoo, MSN) in their player/environment

Distribution

Crackle’s website and Crackle player central to the strategy

Originals

Original programming is more linear in nature, uses high-end talent and is professionally selected and produced

Originals

Short-form programming is largely meant to spur UGV development for the purposes of individual exposure / fame

Content - selection

Content is all pre-screened for quality (like a network) – an “upfront” mentality where we are the buyer

Content - selection

Editorial and user-based rankings of content drive pyramid

•Library play•Original

programming will also appear on Grouper

•User involvement play

•User involvement occurs on and is enabled by Grouper

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Programming Philosophy Based on 4 Building Blocks

Acquisition

Original Production

Library

New Shows

Star-Driven

Branded Ent.

Traffic Creating

New Access

SPE Film

SPT TV

Prosumer

Short & longform

Credence WalkerWTF with

Penn Jillette

Busted Pilots

Short-Lived Series

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The Minisode Network Programming*

Currently Playing

Coming Soon

*Minisode Network cross-programmed with AXN and FunnyBone to drive additional viewing

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Screening Room Programming

Men in BlackMen in Black IIGhostbusters Bruce Lee’s SecretGodzilla vs. DestroyerGodzilla vs. Space GodzillaMothraRebirth of MothraThe 7th Voyage of SinbadThe BlobThe Golden Voyage of SinbadStarmanBlack DragonJourney to the Center of EarthUnderworld EvolutionThe HowlingMary Shelley’s FrankensteinSwept AwayUrban Legends

Cup-a-Joe Lunch Crunch Afternoon Snack Drive Thru Open All Night

Men in BlackMen in Black IIGhostbustersMy Best Friend’s WeddingGroundhog DaySleepless in SeattleTootsieFools Rush InManhattan Murder MysteryHigh School HighMultiplicityBlind DateJury DutyJust One of the GuysKrullReal GeniusThe Adventures of Baron MunchausenThe FreshmanThe Toy

AnacondaAs Good As It GetsClose Encounters of the 3rd KindAir Force OneThe Fifth ElementThe NetThe Cable GuyGhostbusters 2UltravioletThe Freshman In the Line of FireTaxi DriverWild ThingsSomething’s Gotta GiveAdaptationDeuce Biglow: European GigoloDonnie DarkoSlackers

The Karate Kid SeriesAnnieBaby GeniusesLook Who’s Talking TooMuppets from SpaceMy Girl 2Short CircuitGroundhog DaySoccer DogThe Indian in the CupboardThe Muppets Take ManhattanLast Action HeroBrian’s SongFly Away HomeBingo The Adventures of Baron MunchausenHigh School High

PhiladelphiaThe NaturalOn the WaterfrontLaurence of ArabiaAwakeningsAnatomy of a MurderGandhiLa BambaThe Buddy Holly StoryThe Remains of the DayA Passage to IndiaMy Best Friend’s WeddingSleepless in SeattleTootsieManhattan Murder MysteryEasy RiderThe Fisher KingThe Last Picture ShowCloserIn the Cut

Classic comedy and lighter action films targeting the morning

commuter and those viewers looking to ease into their day

Re-fuel with a shot of adrenaline through edgier comedy and action movies

Out and about with the kids? Drop in and allow the whole family to snack on feel-good

films that keep everyone engaged

Get wrapped up in other people’s wrenching and gripping lives – a block of classic dramas

While others sleep, become engulfed by the endless possibilities

contained in our unique cult/sci-fi classics

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FunnyBone Programming

Original Production

& Acquisition

Library

WTF with Penn Jillette

GaytownHobo Joe & Big Head

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AXN Programming

Original Production

& Acquisition

Library

Credence Walker

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Distribution Philosophy

Network Distribution Approach

Partners D2C

Online Mobile Online Mobile

• Portals / Aggregators

• Syndicators

• Social Networks

• Virtual Worlds

• Carriers

• Non-Carrier Aggregators

Other

• MSOs & IPTV

• SCE: PS3, PSP

• SEL: Bravia, VAIO

• Vertical sites

• Originals sites

• WAP

• Application

• Text

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Review of Networks to Date

• We have only made a limited number of shows available on FunnyBone and AXN

• FunnyBone: NewsRadio, Who’s the Boss, Action, Lenore

• AXN: Charlie’s Angels, Starsky & Hutch, SWAT, Animated Spider-Man, Astro Boy

• Strong placement + limited programming + no brand recognition = limited traffic

• Minisodes launch more indicative of go-forward plan

• Wide selection of shows

• Dedicated marketing support

• Broad cross-platform rollout

• We are dramatically increasing the number of classic shows available on each network

• FunnyBone: Bewitched, Diff’rent Strokes, What’s Happening, Benson, I Dream of Jeannie, Married with Children, Muddling Through, Dana Carvey Show, Great Scott, The Partridge Family, The Tick, Barney Miller, Over the Top, What’s Happening Now

• AXN: Fantasy Island, Forever Knight, Hart to Hart, Hex, Police Woman, Sledge Hammer, The Rookies, Kidnapped

• We will cross-program Minisodes with FunnyBone and AXN across common outlets in the expanded Minisode launch

• We will begin to add original programming to the networks

• FunnyBone: WTF Penn, Gaytown, Groundlings

• AXN: Action Theater, Afterworld

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Issues / Topics

• Adding dedicated personnel to expand our Networks

• All Original Programming now MUST support one of SPT’s Digital Networks

• Many Original Programs will be dually located on Networks

• WTF Penn on FunnyBone and Crackle

• We will have multiple Networks on common distribution outlets

• FunnyBone, AXN and Minisodes on AOL / Joost

• We will launch direct .com sites for the Networks (minisodenetwork.com will be first)

• We will expand the Networks to mobile

Source: Adams Media Research, 2007

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Issues / Topics

• What to do with current channels on AOL and Joost?

• Sell the SPT Digital Network?

•Can we leverage the MInisode launch to sell ads and/or sponsorships across all of the Networks?

•Add FunnyBone, etc to overall Crackle packages?

• Do we want to let AOL and/or Joost sell until we have more traffic?

• Is there a remnant-type deal (e.g., advertising.com) that makes sense?

• What can we collectively do to help / expand / improve

• Additional IP outlets to discuss

• Expanded Minisodes distribution

•AOL, Joost, Yahoo, YouTube

• GAIA Deal

•FunnyBone, AXN, Minisodes and Screening Room (Launching 10/1)

• Screening Room on Yahoo!

•Inventory that may work?

Source: Adams Media Research, 2007

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Issues / Topics

• Mobile Advertising

• Current Deal Strategy (e.g., secure rights for future)

•Limited current inventory but will become much more significant in near future

• Can we include in larger IP packages?

• Technologies to support business?

• Specific Opportunities

• Off deck - Minisodes WAP

• Minisodes, FunnyBone and Crackle on Verizon Wireless

• Screening Room, Crackle on Cingular

• Screening Room, Crackle on Sprint

Source: Adams Media Research, 2007

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Online Partners

Partner Rationale StatusAXN, FunnyBone Live

Minisodes (Q2)Early leader in online video in a content owner-friendly branded environment; heavily-trafficked

Minisodes Live

Others TBD

FunnyBone, AXN, Minisodes Theaters (Q2)

Screening Room and Minisodes in (Q2-Q3)

Opportunistically

Groundbreaking online TV platform with lots of buzz and an ad-friendly business model

#3 in video streams, #2 in unique streamers, instant viral “citizen syndication” platform

Heavily-trafficked virtual world with Chat Cinema functionality

#2 in video streams

#1 in unique video streamers and minutes viewed

Portfolio approach to catching the next hot Internet video startups

Close competitor to Joost with an attractive interface and greater focus on niche, long tail & original programming

AXN, FunnyBone Live

Minisodes (Q2)

Heavily-trafficked parent site with growing branded video opportunities and expanding ad networks

Minisodes (Q2)

Others TBD

FunnyBone, AXN, Minisodes (Q3-Q4)

TBD

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Mobile Partners

Partner Rationale Status

Screening Room (Q2-Q3)

Minisodes, AXN (Q2-Q3)

Screening Room, MinisodesF(Q3-Q4)

FQ4

TBD

FQ4

Leading mobile video application provider allows for D2C offering without carrier.

Provider of MediaFLO service cross-carriers, seeking additional network.

Subscriber base open to mix of business models: subscription, transaction and advertiser. Open to differentiated video offerings, especially originals.

Current mobile video partner with SPT’s Inside Sony Pictures and Sprint Movies services.

Market leading mobile video provider: first to market with V-CAST and MediaFLO and the most

video subs. Cross-platform opportunity with FiOS.

Most mobile subscribers. Have expressed interest in SPT programming for CV and MediaFLO platforms.

Cross-platform opportunity with U-verse.

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Other Partners:

Partner Rationale Timing

Q3-Q4

Q2-Q3

Q2-Q3

Q2-Q3

Opportunistically

Other OEM Partners

Playstation installed base large and growing; SCE looking to provide networked video services to users

Differentiate on-demand IPTV content offering. Cross-platform opportunity with AT&T Wireless.

BIVL offering provides direct route for SPT online video offerings to the living room TV

OEM partners looking to differentiate media-focused hardware with content

Differentiate on-demand IPTV content offering. Cross-platform opportunity with Verizon Wireless.