Divisional details Television 1
Television Market Update Multiple factors are driving growth in the global television market The global number of television households continues to grow There are a greater number of distribution customers in the marketplace SVOD customers (e.g., Netflix, Amazon Instant Video, local SVOD players) are creating greater demand for studio content U.S. television product, particularly TV dramas, is increasingly sought for international markets Affiliate fees are generally stable; ad sales have rebounded since the 2008 downturn, although economic conditions in some territories have slowed growth The television industry will also face some challenges Studio programming prices continue to rise creating margin pressure on networks Volatility of foreign currencies creates uncertainty for predicting financial results in U.S. dollars Competition across the global TV industry remains strong, however SPE s assets and expertise leave it well positioned to succeed 2
Media networks 3
Media Networks Strategic Priorities Continue to focus on maximizing efficiencies Existing Operation s Continue to invest in both local and global original programming Continue to invest in programming, marketing, ad sales infrastructure, and technology infrastructure for Crackle U.S. Invest in programming and marketing for GSN Launch a Hindi language rural channel, TV ON, in India New Operation s Launch a second Hindi movie channel in India, MAX2 Selectively launch channels in new and existing territories through EBIT accretive acquisitions to build scale and remain competitive 4
Media Networks Networks Brands by Genre SPT s portfolio of network brands cover a wide variety of genres and demographics SONY GENERAL ENTERTAINMENT AXN GENERAL ENTERTAINMENT ANIME/YOUTH LIFESTYLE/MUSIC DIGITAL MOVIES PARTNER NETWORKS 5
Media Networks Networks Worldwide Reach 159 COUNTRIES 860+ MILLION HOMES 124 FEEDS 22 LANGUAGES EUROPE & RUSSIA EUROPE & RUSSIA KOREA NORTH AMERICA JAPAN AFRICA ASIA LATIN AMERICA AUSTRALIA 6
Media Networks Strong and Consistent Earnings Growth Revenue reaches over $2 billion in FYE15, growing at a 21% CAGR over the five year period Operating Income reaches $335 million in FYE15, growing at a 15% CAGR over the five year period (excluding monetizations) OI Revenues Revenues Budget Assumptions One-Time Events/Monetizations $700 $2,500 Operating Income $600 $565 $2,004 $375 $1,500 $300 $200 $930 $266 $266 $36 $230 $336 $1 $335 $243 $100 $1,000 $500 $190 $0 $0 FYE11 ($ In millions) FYE12 FYE13 FYE14 Ad sales across the portfolio are expected to grow by +20% year on year Continue to invest in new business opportunities to help sustain the strong growth profile into the future (i.e. GEC and Movie channel in India, strategic EBIT accretive acquisitions such as Bash Games in US) $2,000 $500 $400 FYE15 Note: All years restated on a consistent basis to include U.S. channels and Networks HO Aspire; excludes 3net
Media Networks Operating Income by Region As a result of recent investments, North America and Europe grow as a percentage of Networks Operating Income from 16% in FYE11 to 41% in FYE15 Operating Income FYE11 Operating Income FYE15 North America; Rest of7% Asia / Australia; 10% Australia; 22% Europe; 8.9% North America; 2 India; 34% India; 29% Latin America; 33% Europe; 14% Latin America; 16% Note: All years restated on a consistent basis to include U.S. channels; excludes 3net 8
Media Networks MSM India update Revenue and EBIT 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 EBIT will grow from $122 million to $151 million (+24%) (excluding new channel launches) with the increase primarily from higher expected performance at SET In spite of FX and economic headwinds, MSM expects to continue its strong growth trajectory in FYE15 and increase its offering in India TV On, a new Hindi GE channel targeting a female-centric, more rural audience, is expected to launch in June 2014 Goal is to capture 10% incremental share from the Hindi GEC market MAX 2, a library Hindi movie channel, is expected to launch in April 2014 A flanker channel for the existing MAX channel which will help MSM mitigate a recent rule change that limits ad minutes by broadcast hour Indian Premier League (IPL) Cricket IPL season 7 will shift to an 8 team, 60 match format - ad sales and license fees reduced accordingly, EBIT expected to grow slightly from Season 6 EBIT margin remains strong at 22% Season 7 may move outside India for the second time in its history due to general elections running concurrently with the tournament. Final decision still TBD 9
Television ProductionS 10
Television Production Strategic Priorities U.S. TV Productio n Int l 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) Maximize prelaunch of The Crown through integrated sales, marketing and publicity campaign 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 Seek extension of HUASO (China) license and restructure operation Explore expansion opportunities for network of production companies in key strategic markets (e.g. Scandinavia, Turkey, Netherlands, Australia, N. Ireland) 11
U.S. Production Current Programs SPT s portfolio of current programs is diversified across all genres to balance risk vs. reward Scripted Drama Network Game Show Goldbergs (ABC) Before Crack Men at Work (TBS) (Netflix) Better Call Saul (AMC) Drop Dead Diva (Lifetime) Helix (SyFy) Justified (FX) Masters of Sex (Showtime) Outlander (Starz) Untitled KZK Project (Netflix) Current Programs reflect named programs projected for the 14/15 broadcast season. Cable Note: Battle Creek (CBS) Blacklist (NBC) Days of our Lives (NBC) Unforgettable (CBS) The Young & the Restless (CBS) Comedy Non-Scripted Other Reality/Talk MOWs / Mini Shark Tank (ABC) Sing Off (NBC) Mom s Got Game (OWN) TBD series are not reflected. The Dorm (MTV) Fallout Asylum (SyFy) Outlaw Prophet (Lifetime) Red Tent (Lifetime) 12
U.S. Production Current Series, Pilots & Development Significant contribution from current series Operating Income from Current Series, Pilots & Development: $140 Budget Assumptions $120 $100 Breaking Bad approaches $275 million in series ultimate profit due to performance in all markets (i.e Home Entertainment, SVOD and international), contributing $150 million in operating income for FYE14 The Blacklist is ordered for a second season and becomes available in syndication in FYE15 $80 $126 $60 $92 $40 $57 $20 $0 ($20) $0 ( $52) ($40) ($60) ($80) FYE11 New series investment FYE12 FYE13 FYE14 FYE15 ($82) ($95) ($93) ($134) ($77) All other current series $30 $95 $150 $260 $169 Total current series ($52) $0 $57 $126 $92 & development ($ In millions) 13
U.S. Production Library, Game Shows and Daytime Series Core programs continue to perform Licensing Wheel of Fortune and Jeopardy! $500 Daytim e Serials Library Budget Assumptions $419 $400 Wheel of Fortune and Jeopardy! are renewed through 15/16 season Licensing deal extended through 2024 generating $163 million in EBIT in FYE14 Days of Our Lives and The Young and the Restless renewed through 15/16 and 16/17 seasons, respectively $163 $300 $267 $26 $200 $249 $34 $103 $104 $271 $36 $117 $250 $38 $32 $106 $91 $100 $138 $111 $118 $112 $127 FYE12 FYE13 FYE14 FYE15 $0 FYE11 ($ In millions) 14
International Production Operating Companies Companies in 13 countries around the world covering multiple regions; Programs aired in 88 countries, 73 languages and counting London Paris Amsterdam Cologne Beijing Moscow ASIA Rome Culver City Beirut Cairo Miami (Latin America/USH) Dubai Bogota AMERICAS EMEA (Europe, Middle East, Africa) Sao Paolo Tuvalu Hong Kong
International Production Financial Summary Revenue $434 $450 $301 $300 $199 $206 Continue internal collaboration to drive business across Sony companies $220 $150 $-FYE11 FYE12 Op Income $20 FYE13 FYE14 FYE15 Shi ne Equi t y $17 $15 $5 Budget Assumptions Who Wants to Be a Millionaire continues to be a major profit contributor Strong growth from Production across UK and Europe $10 $10 $6 $12 $-($3) ($10) Margin FYE11 FYE12 9% NM ($ In millions) FYE13 3% FYE14 3% FYE15 3% Note: FYE12 and FYE13 exclude gains from the Shine monetization of $26 million and $12 million, respectively 16
Television distribution 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 in diginet space (e.g. Antenna, Cozi, GetTV) Split rights with Turner to sell an additional Seinfeld window Maximize growth opportunities across SVOD and emerging markets International Distribution Look for local content creation opportunities (e.g. Russia, UK, Latam) and work within SPT to find new ways to create shows (e.g., EMEA coproduction with US Production) Close long-term deals in key markets (i.e. Russia, S. Korea, Italy) Pursue distribution opportunities with non-traditional content creators such as Amazon 18
Television Distribution Maximize Distribution Sales Generate over $2.5 billion in gross revenue in FYE15 Distribution Gross Revenue MPG Acquisitions TV $3,000 $2,478 $2,500 $2,000 $2,563 $2,329 $2,019 $1,335 $1,500 $2,504 $1,443 $1,328 $1,274 $1,200 $231 $1,000 $278 $240 $586 $716 $795 FYE11 FYE12 FYE13 $221 Budget Assumptions 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) $233 $500 $944 $1,068 FYE14 FYE15 $0 ($ In millions) 19