Corporate/Business Development Off-Site Findings May 2008

1. Corporate/Business Development Off-Site FindingsMay 2008 CONFIDENTIAL

2. Executive Summary • At the recent Corporate & Business Development offsite, participants identified key challenges facing SPE and each of our divisions, including: • Changing consumer preferences • Maturation of our traditional business and a slow transition to digital • Increasing competition from new players and product offerings • Piracy • Challenges unique to SPE given its current portfolio of businesses and ownership by Sony • A review of competitor growth avenues highlighted potential opportunities for SPE • Content: targeting demographic segments, building and exploiting successful brands/franchises, investing in the production of new forms of content for digital platforms • Distribution: increasing exposure to domestic & international cable networks, launching and/or aggressively exploiting digital services • A number of specific growth initiatives were identified to be further explored and prioritized in the context of SPE’s current economics and strategic objectives • Diversification of SPE’s revenue streams • Maximizing the value from our existing content (especially by leveraging Sony United relationships) • Improving its economics to provide flexibility in the event of a downturn • SPE’s challenges are raising the importance of investment as well as collaboration across SPE’s business units and across Sony

3. SPE Challenges Overall Challenges Division-Specific Challenges CONFIDENTIAL

4. SPE is at a material disadvantage relative to its peers in pursuing a growth strategy • Lack of U.S. networks business hampers ability to grow digital services and family entertainment initiatives, and provides less exposure to the advertising market • Ownership by an electronics company and Wall Street’s focus on this part of Sony’s portfolio may mean a a reduced appetite for media investment on a scale equivalent to SPE’s competition (average competitor investments over last 3 years in media and new media businesses has been in excess of $1.5 billion) • SPE economics are widely reported to lag the competition by a significant margin, potentially due to the reduced scale of our TV business (vs WB), the lack of an integrated family business (vs Disney) and what is generally perceived to be a less bottom line focused approach to product development and distribution (vs Fox), in turn providing less internally generated cash flow to reinvest • An evaluation of competitor growth demonstrates that film studios generally are not the recipients of parent company investment capital, and that most growth occurs in networks and other businesses

5. One major difference between SPE and its competitors is its lack of a sizable domestic networks business, which has contributed to an overall margin gap Film Margins Network Margins % % (1) (1) Network businesses typically carry a higher EBITDA multiple and thus are considered as a larger contributor to overall media conglomerate value than the filmed entertainment businesses (1) Data not published by analysts for 2004 Source: Analyst estimates and research

6. (50%) (50%) Cable network ownership continues to consolidate, improving network leverage and making entry for SPE more challenging Media Conglomerate Broadcast Network Cable Network Assets • Adult Swim • Cartoon Network • Cinemax • Court TV • CNN • HBO • Headline News • TBS • TNT • BET • CMT • Comedy Central • MTV • MTV2 • Nick@Nite • Nickelodeon • Nicktoons • Noggin/The N • SpikeTV • TVLand • VH1 • VH1 Classic • The Movie Channel (1) • Showtime (1) • ABC Family • Disney Channel • SoapNet • Toon Disney • ESPN (80%) • ESPN2 (80%) • ESPN Classic (80%) • ESPNEWS (80%) • Lifetime (50%) • Lifetime Movie (50%) • E! (40%) • Style Network (40%) • A&E (38%) • Biography (38%) • History Channel (38%) • History Int’l (38%) • Fox News • FX • Speed Channel • Turner South • National Geographic (80%) • Bravo • CNBC • SCI-FI Channel • USA • MSNBC (82%) • A&E (25%) • Biography (25%) • History Channel (25%) • History Int’l (25%) 15 of the 20 top-rated U.S. cable networks owned by the 5 major media conglomerates Note: (1) Represents CBS ownership. Source: Kagan Research, company filings, website and equity research reports.

7. Ownership by electronics company has contributed to a lower valuation of SPE (2) Comparative Implied Enterprise Value ($ in MM) Comparative Studio Performance SPE Valuation Range Equity Research (sum-of-the-parts analysis of Sony Corp.) Media Conglomerate Studio Comparables (studio film production: Warner Bros., Fox, Paramount, Disney) -Revenue (1.1x-2.1x) - EBITDA (10.3x-12.3x) Public Studio Comparables(Lions Gate) - Revenue (1.2x-1.4x) - EBITDA (17.6x-28.3x) $6,210 $10,520 (1) • Equity Research values reflect sum-of-the-parts valuation conducted by: Credit Suisse, January 22, 2007; UBS, January 30, 2007; Morgan Stanley, February 23, 2007; and Merrill Lynch, February 23, 2007 -- values do not include interest in MGM valued at approximately $250MM. Valuation range rounded to nearest $5MM. • Competitive studio performance conducted by Bernstein Research, January 2007.

8. SPE margins appear to trail most of our competitors Studio EBITDA Margins EBITDA ’99-’06 CAGR** 29.8% 3.8% 18.9% 1.5% (4.8%) Sources: Bernstein Research (December 2006, Adjusted for calendarization by SPE Corp Dev), MRP & Budget presentations, SPE Finance **Paramount CAGR for 2001-2006 Notes: (1) Calendarization does not reflect actual results and is based on formula (i.e. CY 2005 = .75*FY2008 +.25*FY2007) (2) SPE CY 06 EBITDA margin of 7.1% represents: $499M EBITDA = 25% FY 06 EBIT ($277M) + 75% FY 07E EBIT ($400M) + D&A ($110M) $7B Revenue = 25% FY 06 Revenue ($6.6B) + 75% FY 07E Revenue ($8B)

9. For large media enterprises, growth at the studio level is generally not driven by M&A activity – most of competitor investment funded outside of studio divisions In the last 20 years there have only been a handful of major studio-driven M&A deals Warner Communications acquisition of Lorimar Telepictures $1.2B1 Paramount acquisition of Dreamworks $1.6B LIBRARY SOLD IMMEDIATELY FOR $900M Sony Pictures acquisition of 2waytraffic3 $225M 1989 2006 2008 2005 2007 Sony Corp of America acquisition of MGM $250M for 20%2 Warner Bros. acquisition of Travelers’ Tales $210M Notes: 1. Equal to $2.1B in today’s dollars with 3% annual inflation 2. Total transaction value of $5B 3. Offer launched; closing pending regulatory approvals

10. Divisional Challenges: Motion Pictures • Motion pictures are facing increased competition in the marketplace: • At home vs. theatrical consumption: shrinking windows / improvements in home theater technology make the theatrical experience less differentiated • Piracy • Alternative content • Overseas productions • At the same time, the underlying economics of motion pictures have become more challenging: • Escalating production and marketing costs • Less attractive production financing terms • Impact of flat DVD market on film ultimates • Sales of motion picture product to broadcast networks is increasingly difficult • Currency risk has increased

11. Divisional Challenges: SPHE & Acquisitions • Inflection point of significant transition to next format, whether Blu-ray or IP Distribution, is at least 3-5 years out • SKU proliferation and competition from video games driving competition for shelf space and pressuring price and marketing costs • Competition for 3rd party acquisition product is increasing • Rebates from manufacturers are declining as the market softens and drives down footage—manufacturers are compensating by reducing rebates • Overall margins are shrinking as marketing and distribution costs increase to support mining of catalog titles and react to overall adverse market conditions • Demand for deep catalog is flattening as consumer libraries become built-out • Piracy threatens demand for home entertainment product • An economic recession could reduce home entertainment spending

12. Divisional Challenges: SPT • Advertising revenues have limited growth due to DVRs and increasing shift of spend to online and mobile platforms • Clarify (Amy is expanding with 3rd parties; upside on Crackle; Mobile) • Television catalog distributed via DVD market is nearly tapped out—reducing a lucrative revenue stream • No near term syndication opportunities • Clarify 2 yrs isn’t long • Need to kee

13. Divisional Challenges: SPTI • Audiences are migrating from TV to mobile and new forms of entertainment • As a result, advertising spend is shifting from TV networks to new media • Our content faces competing entertainment sources (e.g., user generated content) • Our competitors are growing their investment in international markets - SPE will need to increase investment levels to remain competitive

14. Divisional Challenges: Digital Production • The CG- animated film market has become more competitive in recent years, with an increased number of releases and declining average performance at the box office • The digital effects business faces increased competition from overseas players with tax incentives and lower labor costs • Foreign markets offer significant tax incentives, attracting work offshore (UK, Canada, New Zealand) – U.S. states have also begun to put more aggressive postproduction tax incentives in place (NM, NY) • Digital effects studios are setting up operations or partnerships in India, Singapore, China, etc., to take advantage of low-cost labor – the quality of overseas work is increasing (TMNT, Alvin & the Chipmunks) • Increase in number of digital effects shots per film has resulted in large number of second, tier competitors who can compete very aggressively on price – projects are sometimes sold at cost to boost utilization of facilities

15. Competitor Avenues for Growth CONFIDENTIAL

16. Analysis of competitors’ growth reveals several basic strategies TARGET DEMOGRAPHIC • Many media conglomerates have focused overtly on specific demographic segments: Disney with kids/family, NBCU with women, Viacom with tweens & teens • All offer a variety of general entertainment as well INTERNATIONAL EXPANSION • A combination of organic initiatives, acquisitions and JVs with local players in the territory • Mechanism for extending strong brands overseas as well as producing local content • Occurring in both mature and emerging territories BRANDS, FRANCHISES & CHARACTERS • Mix of original brand/character development and acquisitions of established franchises • Ability to leverage properties across various businesses is key differentiator CABLE NETWORKS • Have been a strong source of EBIT growth across all the conglomerates • Attractive because of dual revenue streams: advertising & license fees • Scale driven: portfolios of channels are more likely to get carriage and maximize ad revenues NEW MEDIA • All comgloms aggressively pursuing new media – games is one common focus area • While some competitors are focused on owning new distribution channels for their content, others are pursuing a syndication strategy STUDIO VS. MEDIA CONGLOMERATE • Other than SPE, all other major studios sit within a larger media conglomerate • Most major growth initiatives (acquisitions and launches) are taking place at the parent level

17. Our competitors’ growth strategies raise significant questions for SPE TARGET DEMOGRAPHIC • Does Sony/SPE have a target demographic? Should we? INTERNATIONAL EXPANSION • In which territories should we be investing in more aggressively? BRANDS, FRANCHISES & CHARACTERS • Should we take a more proactive approach to building/acquiring new franchises? • Do we have the necessary capabilities to make the most of our brands? CABLE NETWORKS • Is it too late for SPE to establish a strong domestic networks position? • How aggressively should we pursue building new international and digital networks? NEW MEDIA • What role(s) should SPE play in Sony Corp.’s new media initiatives (content producer, aggregator, service provider)? • How can we turn Sony’s strengths in games and devices into an advantage for SPE? STUDIO VS. MEDIA CONGLOMERATE • How can we work more closely with our sister divisions within Sony to drive growth?

18. Growth Opportunities for SPE CONFIDENTIAL

19. Growth Opportunities: Content • Build on SPEs male 18-34 demographic strength, and its fit with Sony’s PS3 division. Consider investments and company initiatives in the context of a demographic focus • Skew development activities towards 18-34 demo • Critically evaluate family genre activities, and either go in, potentially if a necessity for Walmart position for the broader line, or discontinue, given the inherent competitive disadvantages of SPE in this space • Amend approach to development to focus on controlling all rights in brand and franchise content, even if at an incremental cost • Differentially motivate content acquisition process to skew towards early identification of emerging brands • Evaluate partnering with or acquiring an independent publisher as a source • Adapt acquisition process to require all rights at initial signing • Ensure that SPE is as relevant a content supplier to new distributors (eg – Google, MySpace) as its existing one, to stay with consumer time and traffic • Shift content production capabilities and focus from linear story telling to interactive story telling • Assess and identify how to coordinate with PlayStation for games category

20. Growth Opportunities: Distribution • Develop a US network strategy, not necessarily via acquisition • Virtually all competitor growth has been from network businesses (will this be true going forward, or is it shifting?) • Partner with or acquire an unaffiliated network group driven by content that fits with SPE/Sony strength? (eg – technology driven shows) Consider acquiring a programming block? Consider acquisitions of Rainbow Media, Starz/Liberty? • Develop and push an integrated, Sony-wide network strategy as an investment priority for SCA, and in partnership with SMSS and Playstation • Invest in digital services • Identify those areas where SPE can compete on the internet without a companion cable channel • Develop and launch an internet offer, with sufficient marketing, that meets a consumer need as made possible by interactive capabilities. Potential services could be: • Light entertainment and games (this is GSN) • Virtual worlds (eg – Gaia) • Shorts and mobile content, as derivatives of branded content (eg –minisodes) • Movie services with unique positioning (eg – Lionsgate/MGM digital subscription network plans) • Develop approach to encourage divisional risk taking where appropriate

21. Growth Opportunities: Distribution (cont’d) • Launch new business models early (eg – early window products) • Captures incremental value from our content and get us in front of high risk piracy areas • Develop action plan around VOD day-and-date – Do we believe Bewkes statement that WB will sustainable capture a disproportionate share of VOD and not cannibalize retail sell thru by being day-and-date? • Identify opportunities to leverage SEL and PS3 as unique assets available to SPE • Form a cross-divisional team with PS3 and SEL to identify potential opportunities to leverage SPE content and SEL/PS3 footprint • Systematically evaluate game-driven PS IP for new creative ideas • Develop a business plan for Sony Ericsson leveraging PIX channel • More product bundling with game console sales • Gain a position in SMSS in exchange for content?

22. Growth Opportunities: Other • Significantly increase investment profile internationally, by establishing divisional targets and an aspiration for future mix of business?? • Initiate a significant margin improvement program designed to bring SPE in line with its studio peers • Make more hits, or fewer misses • Cost reductions • Initiate a significant anti-piracy program, to monitor, influence and mitigate the pending risk from internet piracy

23. Next Steps • Identify risks of failure to act and implications for SPE’s overall strategy • Agree on which content categories we should/must extend to (e.g., linear, event, games, news, sports…) • Gain alignment on priority initiatives • Develop divisional objectives and incentives

24. Appendix: Key Competitor Profiles CONFIDENTIAL

25. CONFIDENTIAL

26. Warner Bros, arguably the most similar studio to SPE, has focused on franchises and new media Key Characteristics Description • Time Warner plays in a nearly all segments of the media value chain • However, Time Warner is run as a holding company with limited cross-divisional interaction and opportunistic approach to synergies All-Encompassing Media Holding Company Parent • Warner Bros. aggressively leverages its owned or licensed IP to develop franchise brands • Approaches each brand as an individual asset to be monetized through the most advantageous distribution opportunities, without favoring other Time Warner businesses Monetizes Franchises Independent of Synergies • Emphasizes making movies available to as wide and varied an online audience as possible through multiple partners • Highly active internationally – over 70% of digital download deals signed have been abroad (other studios average 40-50%) • Other early new media initiatives include WBs’ Studio 2.0 (TMZ.com) and Turner’s online game network, GameTap Fast-Mover in New Media

27. Within Time Warner’s content divisions, TV production and Networks have been the key drivers of revenue and margin growth TWX Filmed Entertainment & Networks – Revenue & Operating Income Growth (2004-2007) 2004-2007 Performance Drivers FILMED ENTERTAINMENT • Market-leading TV production player • Recent franchise hits in final windows • Larger film slate with higher production costs NETWORKS • Incumbent position in high-growth market • Innovation in new media: HD channels, interactive programming, online games • Lack of new channel launches despite TWC TV Production ’04-’07 Operating Income CAGR Theatrical Film/TVDistribution Home Entertainment ’04-’07 Revenue CAGR = Overall Filmed Entertainment Note: All data excludes inter-company eliminations and corporate allocations Source: Morgan Stanley; Lazard; Bear Stearns; Bernstein Research; Secondary research

28. Going forward, WB and Turner are focused on new content development, cost containment and exploiting new platforms Focus Areas Examples Networks Investing in Original Programming RigorousCost Containment Digital Rental to the Living Room Exploit Franchises Through Games & Virtual Worlds

29. CONFIDENTIAL

30. Strong Centralized Ownership Willingness to Invest in New Areas Ability to Take a Long-Term Perspective Studio Focused on Cost Controls News Corp has centrally made significant digital investments and focused on select demographics and costs • Consolidated ownership (the recent repurchase of shares through the DTV sale to Liberty Media now gives the Murdoch family ~40% voting control) • Strong balance sheet with little debt and excellent margins • Long history of embracing new media opportunities • Has spent at least $1.5 BN for acquisitions within the Internet media space since 2005 (Scout, IGN, Intermix/MySpace and Strategic Data Corp) • Has also shown to be patient, allowing businesses to grow; investments in 1998 (such as Star TV, Fox News and Sky Italia) just beginning to show growth and profit • Willing to make investments that are not positively supported by Wall Street analysts at the time • Considered to be one of the most aggressive studios in controlling production costs – much less “talent friendly” • Beginning to demonstrate potential to build franchises (X-Men, Ice Age)

31. Cable Networks and Film have been key drivers of Fox’s operating income since 2004 Cable Networks Operating Income by Segment (2004 –2009E) in US Bn ‘04-’09 CAGR • Recently launched a new channel – FOX Business Network • Cable businesses and Sky contribute 30% of EBIT 206.3% 213.6% 22.9% 5.2% Film Business 5.5% • Recent success with superhero and animated films (X-men, Fantastic Four, Ice Age) has driven growth in international markets • Strict cost control practiced across entire slate as film productions maintain industry-leading EBIT margins of ~18% 10.3% Source: Credit Suisse equity research report, 9/18/07.

32. Going forward, Fox is investing in international TV, online ad platforms and mobile/game content Expanding International TV Presence Acquiring Internet Platforms for Advertising Monetization Aggregating Game and Mobile Content • Investments in BSKyB, Sky Italia and Star TV have begun to show significant growth and profit • Recent purchase of stake in Premiere AG of Germany • With Hulu JV, building its own platform for premium television and motion picture content • MySpace targeting growth both internationally and through new music service • FIM’s new Audience Network designed to maximizing advertising revenue across online properties • Recently announced launch of Slingshot – a web business incubator • Acquisition of 51% of Jamba (mobile content) • Acquisition of games and sports content destination sites – not developing games today Source: Credit Suisse equity research report, 9/18/07, Press Releases, News Articles.

33. CONFIDENTIAL

34. Disney’s integrated approach targets the youth demo with its leading category brands, aiming primarily for brand leverage across its divisions Global Brand Recognition • Strong loyalty and recognition among children and youth for family entertainment • ESPN is a leader for sports programming Franchise Monetization • Demonstrated ability to monetize content across all distribution channels, from theatrical to digital (games, virtual worlds) • Consistently consumer-facing and cross-promotes effectively Owns the Youth Demo • Recent acquisitions have provided opportunities to build other youth oriented brands • Successfully produced new franchises in-house, courting younger, digitally savvy audiences

35. EBIT CAGR: 141% 18% Successful franchises have fueled Disney’s growth in recent years Studio Entertainment: Fewer Films Focused on Family Franchises FY05 – FY07 Studio EBIT • Since FY05, reduced annual film slate to ~15 films and shifted focus to franchises, Pixar films & various family-friendly films • Last few years’ major hits (Pirates, Narnia, Cars, Ratatouille, Enchanted) drove significant EBIT growth with a 141% CAGR despite flat revenues • Theatrical releases drive other business units’ performance (e.g., Cars franchise) Media Networks: ESPN, TV Production, and Online as Growth Drivers FY05 – FY07 Networks EBIT • ESPN (34% of total co. EBIT) and ABC (9% of total EBIT) drove EBIT growth over last few years • Hit content (Hannah Montana, High School Musical) originally developed for cable but leveraged through all parts of Disney • Recent digital investments include developing online extensions of core brands, online interactive games & virtual worlds / social networking sites -8% 23% Chart data In $ millions(1) Includes ABC network, stations, TV production, and online properties (ABC.com, Disney.com, Club Penguin) Source: Press Releases, News Articles

36. Beyond investing in its core businesses, Disney’s future growth initiatives focus on new media and games • Recently announced $1b over next 5 years to revamp California Adventure • Another $1b for two cruise ships that will double cruise capacity Theme Parks & Resorts • FY08 CapEx estimated to be $250-$350mm, mostly for digital improvements at its studios & networks • Continue acquiring / developing online community sites & VWs targeting kids & tweens • Demonstrated willingness to invest despite unsuccessful track record (Mobile ESPN, MovieBeam) New Media Initiatives • Committed to increasing game development spend from $150mm in FY08 to $350mm by FY11 • Venturing into console-based video game market with Turok (FPS) & developing a future Toy Story 3 game in-house Games Development • Distributes content through flagship site, Disney.com • Only current 3rd party digital distribution partner is iTunes (Steve Jobs is Disney’s largest shareholder & board member) Digital Distribution Source: Press Releases, News Articles