Divisional details. Media Networks

Transcription

1 Divisional details Media Networks 1

2 Media Networks Strategic Priorities Existing Operation s Continue to invest in programming, marketing, ad sales infrastructure, and technology infrastructure for Crackle U.S. Invest in programming and marketing for MSM and GSN Continue to invest in both local and global original programming for international networks Continue to maximize operational efficiencies Launch a Hindi language rural channel, TV ON, in India New Operation s Launch a second Hindi movie channel in India, MAX2 Pursue opportunities to launch Crackle in additional international territories Selectively launch channels in new and existing territories in order to build scale and remain competitive; seek earnings accretive opportunities where possible 2

3 Media Networks Strong and Consistent Earnings Growth Revenue is expected to reach over $2 billion in FYE15, growing at a 21% CAGR over the four year period Operating Income is expected to reach $336 million in FYE15, growing at a 15% CAGR over the four year period (excluding monetizations) OI Revenues Revenues $700 $600 $565 One-Time Events/Monetizations Operating Income $2,004 $2,500 $2,000 Ad sales across the portfolio to grow by 20%+ year on year $500 $400 $300 $200 $100 $375 $930 $190 $243 $242 $17 $266 $225 $336 $1 $335 $1,500 $1,000 $500 New investments (e.g., GEC and movie channel in India and Bash Games in the US) to drive growth $0 FYE11 FYE12 FYE13 FYE14 FYE15 $0 ($ In millions) Note: All years restated on a consistent basis to include U.S. channels and Networks HO Aspire; excludes 3net

4 Media Networks Operating Income by Region Projected FYE15 Operating Income of $336 million is diversified throughout the world, with MSM in India and GSN in North America continuing to lead the Networks portfolio Projected Operating Income FYE15 sia / Australia; 9% North Ame ; 34% Europe; Latin America; 16% 4

5 Media Networks MSM India update Revenue and Operating Income are budgeted for double digit year-over-year growth Revenue is expected to grow from $588 million to $695 million (+18%) driven mainly by recovery in domestic Indian ad sales performance and ongoing digitization efforts Operating Income is expected to grow from $122 million to $151 million (+24%) (excluding new channel launches) driven primarily by improved performance of SET In spite of FX and economic headwinds, MSM expects to continue its strong growth trajectory in FYE15 and increase its offerings in India TV On, a new Hindi GE channel targeting a female-centric, more rural audience, is expected to launch in June 2014 MAX 2, a library Hindi movie channel is expected to launch in April 2014; this will help MSM mitigate recent legislation limiting ad minutes per broadcast hour Indian Premier League (IPL) Cricket Season 7 projected Operating Income of $31.5 million is 4% lower than Season 6 due to unfavorable FX, one less team and 16 fewer matches than Season 6; however, the operating margin remains strong at 22% 5

6 Media Networks GSN Update Revenue and Operating Income are budgeted for double digit year-over-year growth Revenue is expected to grow 15% from $345 million to $397 million largely driven by increased mobile games and ad sales revenue Operating Income will grow 27% from $71 million to $90 million with the increase expected to come from growth in mobile gaming and lower PPA amortization Despite a decline in GSN s number of Facebook players, GSN expects to grow the digital business in FYE15 Casino Games -Build scale through increased investment in content and via acquisitions Skill Games Invest in technology and broaden the content offering into non-casino casual games and mobile web Advertising expand into mobile and monetize the 98% of users who do not pay GSN s programming investment plan includes nine new series for FYE15 Continued focus on building key audience constituencies Faith-based, building on The American Bible Challenge African American, building on Family Feud (Steve Harvey) Experiment with non-linear digital video to extend brand to younger audiences 6

7 Media Networks GSN update Bash Gaming In February 2014, GSN agreed to acquire Bash Gaming, the creator of breakout hit Bingo Bash, the leading social bingo game in the world with more than 4.8 million monthly active users (MAUs) playing across Facebook, ios, Android and Kindle devices. The acquisition supports GSN s digital strategy to expand its mobile gaming business where it currently has a small presence, providing immediate scale and content with Bash Gaming s users and #1 bingo app The investment will generate synergies including: GSN optimizing Bash Gaming s customer acquisition spending Cross pollinating GSN and Bash Gaming content into GSN s apps and website Cross promoting users to increase customer lifetime value Leveraging Bash Gaming s scalable offshore development team in India The Share Purchase Agreement has been signed and the deal is expected to close in March 2014 Upon closing, $80 million plus closing net working capital to be paid out Two year earn out based on EBITDA growth, capped at $70M GSN s FYE15 Budget includes $10 million operating income for Bash Gaming 7

8 Media Networks Regional Update Europe Operating Income is expected to grow by close to 60% year on year, reaching $50 million for the region The UK operation will benefit from a full year on Freeview Strong growth is expected in the emerging markets of Russia and Central Europe where we already have several profitable channels Latin America Operating Income is expected to grow approximately 60% year on year to $59 million Bottom line growth driven by revenue growth of over 20% (from both ad sales and subscribers), cost containment and a new joint venture opportunity for the SPIN channels Asia (excluding India) Operating Income is expected to grow a more modest 10% year on year Renewed growth in the Pan Asia operation is expected In Japan, subscriber growth continues to be challenged US (excluding GSN) The US portfolio outside of GSN is projected to break even in FYE15 Crackle is poised for a breakeven year and the recently launched GET TV is expected to be profitable in its first full year 8

9 Divisional details Television Productions 9

10 Television Productions Strategic Priorities U.S. TV Productio n Drama Maximize value of worldwide appetite for quality drama across all outlets with continued emphasis on broadcast and cable and additional focus on new platform opportunities Comedy Maintain and support a strong comedy strategy as part of our overall portfolio business as comedy continues to maintain strong value in the syndicated marketplace First Run Syndication Stabilize and grow the Queen Latifah daytime series for the 14/15 broadcast season and look to expanding the business into new lower cost opportunities Create IP that travels (e.g. The Patch, Fan Band, Popheads, Beat Shazaam) Develop and sell The Crown including an integrated sales, marketing and publicity campaign Int l TV Productio n Rebuild SPT Russia s capacity to produce enduring sitcoms and dramas that travel Support and strengthen existing production companies Support SPT Latin America/Teleset to execute 5 year plan to build high quality, sustainable library of Spanish language programming for the region Explore expansion opportunities for network of production companies in key strategic markets (e.g. Scandinavia, Turkey, Netherlands, Australia, N. Ireland) 10

11 U.S. Production Current Programs SPT s portfolio of current programs is diversified across all genres to balance risk vs. reward Scripted Non-Scripted Other Drama Comedy Game Show Reality/Talk MOWs / Mini Network Battle Creek (CBS) Blacklist (NBC) Days of Our Lives (NBC) Unforgettable (CBS) The Young & the Restless (CBS) Cable Before Crack (Netflix) Better Call Saul (AMC) Drop Dead Diva (Lifetime) Helix (SyFy) Justified (FX) Masters of Sex (Showtime) Outlander (Starz) Untitled KZK Project (Netflix) Goldbergs (ABC) Men at Work (TBS) Shark Tank (ABC) Sing Off (NBC) Mom s Got Game (OWN) Note: Current Programs reflect named programs projected for the 14/15 broadcast season. TBD series are not reflected. The Dorm (MTV) Fallout Asylum (SyFy) Outlaw Prophet (Lifetime) Red Tent (Lifetime) 11

12 U.S. Production Current Series, Pilots & Development Significant contribution from current series $140 Operating Income from Current Series, Pilots & Development: $120 $100 $80 $60 $126 $40 $92 $20 $57 $0 $0 ($20) ($52) ($40) ($60) ($80) FYE11 FYE12 FYE13 FYE14 FYE15 New series investment ($82) ($95) ($93) ($134) ($77) & development All other current series $30 $95 $150 $260 $169 Total current series ($52) $0 $57 $126 $92 ($ In millions) Breaking Bad contributes $150 million in operating income in FYE14 and is expected to exceed $300 million in series ultimate profit $46 million of the Operating Income pertains to Netflix SVOD sale previously expected in FYE15 The Blacklist is ordered for a second season and becomes available in syndication in FYE15 Decrease in new series investment from FYE14 to FYE15 is due to fewer deficit series in FYE15 12

13 U.S. Production Library, Game Shows and Daytime Series Core programs continue to significant earnings Operating Income from Library, Game Shows and Daytime Series: $500 Licensing Wheel of Fortune and Jeopardy! Daytim e Serials Library $400 $419 Wheel of Fortune and Jeopardy! are renewed through 15/16 season $300 $200 $267 $26 $103 $249 $34 $104 $271 $36 $117 $163 $250 $38 $32 $106 $91 Licensing deal with IGT extended through 2024 generating $163 million of Operating Income in FYE14; Includes $18 million related to royalties from IGT previously assumed in FYE15 $100 $0 $138 $111 $118 $112 $127 FYE11 FYE12 FYE13 FYE14 FYE15 Days of Our Lives and The Young and the Restless renewed through 15/16 and 16/17 seasons, respectively ($ In millions) 13

14 International Production Financial Summary $20 $10 $- - ( $10) Op Incom e Shi ne Equi t y $17 $15 $5 $10 $6 $12 ( $3) FYE11 FYE12 FYE13 FYE14 FYE15 Strong organic growth from Production across UK and Europe Distribution of formats including Who Wants to Be a Millionaire & Everyone Loves Raymond remain significant profit contributors LATAM performance underpinned by expansion into Mexico and new production deals with Televisa in Mexico and RCN in Colombia Continued investment in companies and individuals with track record of creating IP that will travel Excluding purchase price amortization, FYE15 operating income is $32 million 14 ($ In millions) Note: FYE12 and FYE13 exclude gains from the Shine monetization of $26 million and $12 million, respectively

15 International Production Update Formats Who Wants to Be a Millionaire ( WWTBAM ) continues to deliver healthy profits world-wide; however, it is off the air in major European territories: UK, Italy, Spain and Holland There is a push to become less reliant on profits from high-margin WWTBAM (90%), while generating earnings from newly developed/acquired IP which generate lower margins in their infancy stage Europe Projected Operating Income decline of 3% year-over-year is primarily due to significant profits recognized in FYE14 on the re-licensing of sitcom remakes in Russia ( Everybody Loves Raymond & Happy Together ) not projected at the same levels in FYE15 Europe s organic businesses are projected to show healthy year-over-year growth as the economic environment is expected to improve Middle East Operating Income is expected to grow as FYE14 productions are expected to deliver in FYE15 Middle East provides great opportunity for growth, despite political volatility and a scarcity of experienced local TV personnel Latin America Revenue is projected to increase year-over-year by $28 million (54%) driven by the result of the recently closed volume deal with Mexican broadcaster Televisa Operating Income remains flat as the deal shares profits with Televisa (which facilitates SPT s production in Mexico), allows access to Televisa s talent, and assures minimum commitments in Mexico and US Hispanic market 15

16 Television distribution 16

17 Television Distribution Strategic Priorities Leverage existing relationships to find new homes for cancelled series and maximize selling opportunities for serialized dramas (e.g. The Blacklist, Helix) U.S. Distribution Negotiate a lucrative, long-term deal for feature slate output on basic cable Increase licensing of library product to traditional cable and broadcast networks, emerging diginets (e.g., Antenna, Cozi, GetTV), and SVOD players (e.g., Amazon, Comcast OTT); this may also include renegotiation of residuals obligations with the guilds Split rights with Turner to sell an additional Seinfeld window Maximize growth opportunities across SVOD/AVOD and emerging markets International Distribution Pursue partnerships for original content production with broadcasters and, where possible, our own production companies Close long-term deals in key markets (e.g., Russia, S. Korea, Italy) Negotiate Sony platform carve-outs wherever possible 17

18 Television Distribution Continued Generate over $2.5 billion in gross revenue in FYE15 Distribution Gross Revenue $3,000 $2,500 $2,000 $1,500 $1,000 $500 MPG Acquisitions TV $2,478 $2,504 $2,563 $2,329 $2,019 $1,274 $1,328 $1,443 $1,335 $1,200 $221 $231 $278 $240 $233 $944 $1,068 $586 $716 $795 Secure long-term deals in key territories Exploit growth opportunities with SVOD players across the globe Maximize the value of key properties (e.g. The Blacklist, Seinfeld) $0 ($ In millions) FYE11 FYE12 FYE13 FYE14 FYE15 18