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DISTRIBUTION. Market Update and Strategy Overview. The marketplace has evolved past traditional delivery platforms, creating new opportunities for SPT Emerging platforms (VOD/Internet/Mobile) and non-traditional competition (Comcast, Google, Verizon) are now buying content and rights
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Market Update and Strategy Overview • The marketplace has evolved past traditional delivery platforms, creating new opportunities for SPT • Emerging platforms (VOD/Internet/Mobile) and non-traditional competition (Comcast, Google, Verizon) are now buying content and rights • To remain competitive, established platforms are diversifying the ways they deliver programming, requiring them to buy more rights • As more companies buy more content and rights; SPT is uniquely positioned to sell to all of them • Taking an “all rights under one roof” approach, including broadcast, cable, satellite and digital • Coordinating strategic approach to customers multi-faceted business objectives • Licensing more rights and creating innovative deal structures to position our content to be relevant to viewers and advertisers • As a result, we are distributing shows from more sources now than ever before: • Off broadcast (Rules of Engagement, Power of 10) • Off cable (Rescue Me, Damages) • 1st run (Judge David Young) • Internet developed shows (The 9) • 3rd party acquisitions (G.B.B., Just for Laughs) • New library strategies (Minisode network)
Distribution Sales – Total Revenues SPT will generate over $867 million in total current and library sales for SPE Budget/ Prior MRP $846 $663 $631 Variance $21 $32 $123 [Last Year’s Numbers]
Free / Basic TV Market Dynamic MRP Initiatives • Increase revenue by 2 to 3% by increasing sales of non-linear digital rights across platforms • Increase library film sales by 5% by utilizing newly developed ratings and competitive database • Increase library film sales by 2-3% by converting “event” movie buyers into ongoing buyers (e.g., Hallmark, G4, and E!) • Increase library sales by 1-2% by converting non-buyers (e.g., TV Land, Nick @ Nite, and SoapNet) into at least occasional buyers • Cable networks growing appetite for original programming is coming at the direct expense of acquisition budgets • For movies and TV shows, SPT is employing new strategic initiatives and licensing new rights • New internal ratings systems • Shorter and dual windowing • Inclusion of barter • Repurposing • Network VOD/SVOD • Network branded MSO VOD • EST
Free / Basic TV – Revenues [Last Year’s Numbers]
Syndication Market Dynamic MRP Initiatives • Aggressive sales efforts of library & new shows • King of Queens 2nd cycle • 4th cycle renewal of Seinfeld • Upgrades and renewals for Judge Maria Lopez and Judge David Young • New first run syndication shows (The 9; Power of 10) • Steve Harvey as an ad-supported strip in 2008 • Stream products on local TV station/cable network sites • Secure additional 3rd party products • Add new clients from digital second channel owners (GTN) and ION Television and Spanish Language channels (Telemundo, etc.) • Exploit the relationship with WGN+ for new library sales • Pursue co-development deals with NBC, Tribune and other station groups • Consolidation of buyers has created the need to partner and co-develop programs for first-run programming, vesting clients in our mutual success • Off net programming continues to be a highly desired product that commands premiums • For library sales, new clients are emerging through Spanish language channels and digital second channel owners • Local stations and cable networks are seeking rights to stream episodes on their web sites
Syndication – Revenues [Last Year’s Numbers]
Pay Per View / VOD Cable Market MRP Initiatives • Continued focus on the triple play; commitment to being the single provider of into the home for TV, voice, data • Eager to improve the traditional PPV/VOD offerings • Seeking earlier windows and HD rights • Focus on content to increase sales of broadband services • Primary product is traditional PPV/VOD rights • Locked a 3 year extension output deal for PPV/VOD rights (expires Dec 31, 2010) • Leveraging interest in PPV / VOD for better placement, higher prices, better splits • Expanding licensing discussions to on-line rental VOD and EST based on MSO focus on broadband services Satellite Market MRP Initiatives • Satellite Cos. are trying to catch-up with cable on VOD and broadband • Creating new products for their home customers to compete with the triple play • DIRECTV and EchoStar are building out a closed IP delivered products to the home • Leveraging satellite's need to provide VOD, SPT is in negotiations for PPV/VOD output deals with both DIRECTV and EchoStar • Securing commitment from DIRECTV SPT FOD product • Securing commitment from EchoStar to carry The Minisode Network
Pay Per View / VOD – Revenues [Last Year’s Numbers]
Exercise the Starz option. Once exercised, the deal will expire December 31, 2013. Secure an additional long-term Pay TV extension with Starz. Anticipate and analyze the issues that will be raised in such discussions, including but not limited to: Caps on Sony's theatrically released product Expansion of on demand rights Reductions in overall license fees Earlier windows to Pay TV Starz is committed to establishing an on-line presence through VONGO. SPT's strategy is to provide a full bouquet of Sony content across all Starz distributed products. SPT has closed a rental on-line VOD deal. SPT is negotiating EST, The Minisode Network and SPT on-line channels. Close library deals with Showtime and HBO Pay TV – Strategy
Pay TV – Revenues [Last Year’s Numbers]
Distribution Sales – FY08 Slate SPT will generate over $389 million in sales from the FY08 slate [Update / Reformat]
The consistent licensing of our library product is evolving with new business models and applications Library Sales – Market Trends • Dual windowing (Just Shoot Me – cable and broadcast) • 3rd party distribution (RTN – premium guarantees) • Repacking library products (Minisodes)
Library Sales Targets by Market In-House $103MM Budget $65MM • 3 year annual average of $106MM in FY07-FY09, and $90MM in FY08-FY10 • 4 year annual average of $105MM Last Year’s Numbers]
Library Revenue by Division ($ in MM) MPG TV SPHE In-House $103MM In-House $77MM In-House $62MM In-House $31MM Q2/BDGT. MRP/PRIOR MRP/PRIOR MRP NOTE: Assumes a consistent volume and quality of SPHE acquired product. [Placeholder Numbers]
Digital Distribution Landscape: Growing Demand • Spending on paid and ad-supported content is forecasted to grow at double-digit rates well into the next decade U.S. Consumer /Advertiser Spending ($M) • Studios are continuing to make an increasing amount of premium content available for digital distribution • Primetime TV, movies, and original content • Content owners are leveraging wide distribution networks, rather than exclusivity, to drive demand • NBCU and Fox to launch JV “Hulu” in Q4 as well as distributing through Yahoo! and MSN • TV and movie content is fully cross platform utilizing a variety of business models • Ad supported streams on ABC.com and DST on iTunes • DST and VOD on XBox360 • Ad supported and subscription TV and movies on Verizon Wireless and Sprint $7,775 $5,942 $4,238 $2,765 $1,663 Source: eMarketer; *includes DST and rental
Digital Distribution SPT Strategy & Financials • Aggressively build the distribution network • Strike partnerships across the complete spectrum of traditional and on-line players • Continue to expand the overall content offering • Broaden selection of film and TV product • Introduce the most compelling short-form/original content into the offering • Continue to lead the market in innovating the digital product offering and usage models • Focus on Digital Sell-Through as foundational/core product • Build a strong, retail-focused organization • Create innovative marketing and promotional programs • Continue to lead the industry with respect to asset delivery and digital operations Total Revenue
Taken responsibility for game development from SPDE and coordinating greenlights with SPTI Slating 8 games per year Now directly responsible for personalization products focusing on Tones/graphics based on film/TV properties Packages based on compelling brands/themes Market approach Close carrier relationships and marketing support Consistent product development Reinvigorate the library Mobile Overview SPT Strategy & Financials EBIT Total Revenue Q2/MRP Budget/Prior MRP [Placeholder Numbers]