GSN/FUNStatus Update

April 30, 2008

2

Executive Summary

• Liberty acquired FUN at an average valuation of $298MM and has requested SPE to acquire 50% of FUN for at least $100MM

– Liberty acquired 53% at a $367MM valuation in March 2006

– Liberty acquired the remainder of FUN at roughly $220MM(1) valuation in December 2007

• We have requested additional information to assess this $100MM investment opportunity. However, if FUN is unable to achieve aggressive forecasts, it would be overvalued

• If FUN is overvalued, investing in it requires believing a merger is the only way to unlock significant synergies in GSN (i.e., similar value cannot be unlocked though a partnership)

• Investment also would require Sony to become comfortable with gaming aspects of FUN’s business and their associated risks

• Liberty has already taken several steps to integrate GSN and FUN which have increased GSN’s exposure to both the risks and advantages of FUN’s business

• Given this context, upon completing diligence SPE has two options:

– 1) Invest $100MM in FUN and complete merger with GSN– 2) Formalize partnership with FUN that captures integration synergies for GSN, revise governance, and limits SPE exposure to FUN litigation risks

(1) Acquisition was in Pound Sterling; $220MM based on exchange rate at closing

3

$30

$20

$11

$9

$6

$2

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

2008 2009 2010

EB

ITD

A (

$M

M)

Fun Games EBITDA Free Games EBITDA

FUN Provided Financials That Would Justify The Requested $100MM InvestmentBut if Forecasts are Missed; FUN would be overvalued

FUN MANAGEMENT CASE

• DCF Valuation: $305MM ($55MM 2008-2010; $250MM Terminal Value)

• Represents a $42MM Gain for SPT

$13

$26

$39EBITDA

(1) Valuation based on 10X 2010 EBITDA and 16.5% discount rate

$127

$77

$104

$6

$24

$17

$0

$20

$40

$60

$80

$100

$120

$140

$160

2008 2009 2010

RE

VE

NU

E (

$M

M)

Fun Games Revenue Free Games Revenue

$83

$120

$151

35%REVENUE VALUE (1)

$72MM

$233MM

TOTAL:$305MM

(2) Gain/loss calculations assume 50% FUN is acquired at a $200MM valuation plus additional $20MM invested in Free Games

Value if FUN hits forecasts

• DCF Valuation Without Free Games: $233MM• Valuation is only in-line with requested investment level if core business meets aggressive growth projections

Value if FUN cannot build “Free Games”

4

Coordination Synergies Have Not Been Explicitly Modeled By GSN But May Be Reflected in Management’s $2MM EBITDA Adjustment In December 2007

Pre-D. Goldhill 2007 GSN Stand-alone Actual

2008 EBITDA FORECASTS

GSN Preliminary 2008 Plan - D. Goldhill Forecast Before Potential FUN Merger

D. Goldhill Revision of Preliminary 2008 Plan

Description:

Date:

GSN Forecast in FUN Merger Scenario

Dec 2007 Dec 2007 Feb 2008 April 2008

EBITDA $MM: $25.6 (1) $36.5 (2) $37.1 (3) $38.4 (4)

+$2MM

• $2MM increase in EBITDA from the GSN December 2007 preliminary plan to the April 2008 forecast has not been named a “FUN synergy”

• However, if this EBITDA increase is related to FUN, an additional value of $20MM (10x terminal multiple) could be attributable to GSN/FUN integration

1) Taken from GSN 2008 Budget-Final model as provided by GSN Management on February 29, 2008.

2) Taken from GSN Preliminary 2008 Plan dated Dec. 13, 2007. Includes operational improvements and strategic initiatives. Excludes FUN Games and Free Games Roll-up.

3) Taken from GSN 2008 Budget-Final model emailed out on February 29, 2008. Excludes FUN Games and Free Games Roll-up.

4) Taken from the most recent GSN/FUN 3-year plan. Excludes FUN Games and Free Games Roll-up.

+$11MM

5

GSN and FUN Have Already Begun Integrating Operations in Order to Gain Synergies

• GSN selling ads on behalf of FUN in exchange for a 20% ad sales fee

Current Integration

Headcount

Facilities

Programming

• GSN/FUN operates with one management team

• Increased cross-platform content development

• FUN is shutting down its Toronto headquarters

Potential Synergies

Ad Sales

Potential Impact

• Increased CPM rates

• Increased multiplatform sponsorships

• Shift in ad mix away from direct response

• GSN shows are being jointly developed with FUN to ensure multiplatform functionality (e.g., Big Deal/ Catch 21)

• Reduced FTE cost

• Reduced facilities cost

• FUN hosts GSN.com and pays GSN a license fee of 20% of revenue for website content

Online• Reduced hosting and network

management costs

6

Steps Required to Complete Merger

If We Believe A Merger Is Necessary We Will Need To Gain Comfort With Specific Risks

• Single management team

• Complete business diligence

Potential Risks Associated with Merger

• Exposure to litigation and/or liabilities for failure to comply with gaming laws

– Lack of FUN compliance in a merger scenario would pose a risk to the SPT/ IGT relationship

Generally Operate In-line with Current Model:

Finalize Merger Process:

• Integrated operations (e.g., ad sales, web hosting)

• Coordinated programming

• Consolidated facilities

• Complete legal diligence

• Paper and close transaction including renegotiation of 50/50 joint venture

• SPE faces a potential FUN investment loss if business execution risks prevent management from hitting aggressive targets (e.g., free games)

7

Steps Required to Formalize Partnership

A Partnership Would Need To Balance Desire For Integration Synergies With A Need For Governance And Risk Mitigation

• Move from casual partnership to structured arms-length agreements for all coordinated activities

• Construct marketing spend agreement across the two business to achieve purchasing scale

• Sub-lease GSN office space to FUN at market rates as needed

• Develop new governance model (e.g., board level reviews)

• Recruit additional management to ensure proper corporate governance of the separate entities (e.g., second general counsel to support/manage GSN/FUN joint deals and/or GSN stand-alone deals)

Potential Risks Associated with Partnership

• Reduced communication may limit value creation opportunities for both businesses

• Potential to de-motivate and possibly lose current management

• Unwinding businesses likely a complicated legal and operational challenge

• Difficulty ensuring equal allocation of joint-management resources across business

8

Next Steps and Timing

• FUN historical financial performanceImmediate

Overall

Overall

Finance

Legal

Data Requests

• Waiting on FUN

Status

• Upon receipt adjust trend-line numbers

Next Steps

• Detailed financial forecasts (summary forecasts received)

• Ongoing • Continue to update model for 2-3 weeks

• Data on most pressing legal issues requestedImmediate

• First box of documents received—SPE and external counsel coordinating review

• Compile key legal issue summary upon receipt of required materials

• Detailed legal diligence request pending

• In process • 2-3 weeks to review followed by travel to FUN’s Boston data room