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Korea Distribution Partnership Opportunity February 2010

This confidential executive summary outlines the opportunity for a distribution partnership with Korea's Lotte Entertainment to distribute SPE films in Korea and Vietnam. The proposal includes securing theatrical rights in both territories and video rights in Korea only, while retaining all TV rights. The terms offered by Lotte represent a guaranteed profit stream above historical averages, providing an opportunity to negotiate an upward guarantee. Additional releases and box office from SPE titles could drive value in the TV market. Other opportunities may exist with other Korean distributors, such as CJ. The Lotte Group is a large conglomerate, and Lotte Entertainment is one of Korea's largest exhibitors. Their experience in distributing Hollywood titles, along with their market share growth, makes them a promising partner.

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Korea Distribution Partnership Opportunity February 2010

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  1. Korea Distribution Partnership Opportunity February 2010 CONFIDENTIAL

  2. Executive Summary • SPE has been approached by Korea’s Lotte Entertainment to distribute SPE films in Korea and Vietnam • Seeking theatrical rights in Korea and Vietnam, video rights in Korea only • SPE would retain all TV rights • While Korea is a growth market, significant competitive barriers exist • Majority of market is controlled by large, vertical monopolies • Local film quotas have led to a strong local film production market, with Korean films often accounting for 50% or more of the box office in a given year • Terms offered by Lotte represent an opportunity to secure a guaranteed profit stream in Korea above historical averages • Lotte’s unegotiated offer exceeds our 4-year average and we would seek to negotiate the guarantee upward toward a guarantee that exceeds performance in our best years • Guaranteed even in years without a Spider-Man or 2012 to drive territory performance • Many smaller SPE titles are not theatrically released. Additional releases and box office from SPE titles could drive value in TV market, which is retained by SPE • Opportunities may exist with other Korean distributors, such as CJ

  3. Lotte Entertainment Overview • The Lotte Group is a large platform of consumer oriented businesses • One of Korea’s largest conglomerates, with 2009E group revenues of $42B+ • Multiple brands across shopping, tourism, restaurants, and theme parks • Lotte Entertainment is one of Korea’s largest exhibitors • 2nd largest exhibitor, with a 23% share of screens in Korea (all digital multiplexes) • 54 sites / 411 screens in Korea (projected to grow to 68 sites / 514 screens in 2010) • 3 sites / 17 screens in Vietnam • Lotte continues to grow and has experience with market-leading films • 3 of the top 10 films in 2009 • Market share increased from 8.4% in 2008 to 20% in 1H 2009 • Experienced in distributing Hollywood titles, with successful releases of Terminator: Salvation, The Golden Compass and Journey to the Center of the Earth (3D)

  4. SPE Economics in Korea

  5. Lotte’s Proposed Terms of Output Deal

  6. Next Steps • SPE senior management agreement to proceed or pass • Assuming interest: • Agree on key terms to include in counter • Increased annual guarantee • Up-front payment structured to allow immediate gain recognition (requires input from technical accounting) • Define a subset of films Lotte must take (eg, number of puts or triggers for automatic acceptance) • Ability to license/sub-distribute any rejected films, or non-theatrical product • Alert David Bishop, Steve Mosko, and Keith LeGoy that we plan to engage formally • Express interest to Lotte and provide counter • Initiate discussions with CJ as an alternative • TV has relationship with CJ, Korea’s largest distributor • CJ has recently done an all-markets deal with Paramount and is rumored to be interested in further Studio deals

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