1 / 62

MID RANGE PLAN

CONFIDENTIAL DRAFT. MID RANGE PLAN. October 4, 2011. Agenda. Executive Summary SPE Divisional Details Motion Pictures Digital Productions Home Entertainment Television Financial Summary Closing Q&A. EXECUTIVE SUMMARY. Executive Summary.

olin
Download Presentation

MID RANGE PLAN

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CONFIDENTIAL DRAFT MID RANGE PLAN October 4, 2011

  2. Agenda • Executive Summary • SPE Divisional Details • Motion Pictures • Digital Productions • Home Entertainment • Television • Financial Summary • Closing • Q&A

  3. EXECUTIVE SUMMARY

  4. Executive Summary • The market trends SPE identified in prior MRPs will continue to unfold over the next three years • Transitions in home entertainment to lower-margin rental models will continue to put pressure on film economics and may only be partially offset by growth in digital • Films remain a key component of the studio business and maintaining their current profit contribution requires carefully adjusting slate mix • TV production and networks, both high-growth / high-margin businesses, are an increasing percentage of studios' profits • SPE has positioned itself to succeed in this market environment with a balanced approach to both film and television • Focusing on films that benefit from market trends (franchises, international appeal, family) • Continuing to generate television series with global appeal and investing for growth in networks • Emphasizing higher-margin distribution models in home entertainment • Leveraging corporate overhead between the film and television businesses • Carefully managing costs and cash flow • This balanced portfolio gives SPE the opportunity to respond to changes in the market and promptly shift resources to new areas of growth • The result of this strategy is strong profit and cash flow growth over the MRP period • EBIT growing from $365MM in FYE12 to $700MM in FYE15 • Net cash flow growing from $25MM in FYE12 to $400MM in FYE15 • No monetizations or challenges in FYE13 through FYE15

  5. Strong Growth for the Top and Bottom Lines Revenue ($MM) EBIT ($MM) 9% CAGR 24% CAGR

  6. Market Trends:Increased Consumption • Increased access to content through new devices drives incremental viewership, creates new revenue streams, and represents continued growth opportunities • The average consumer now views content on 3.5 devices • Total TV viewership per average consumer per week has grown from 31.2 hours in 2006 to 33.2 hours in 2010 and is projected to reach 34.3 hours by 2014(1) • Netflix is a new buyer for television content and streaming rights • The flood of new access models in the market has strengthened the link between devices and content • Content providers marketing their device-specific applicationsWatch Crackle on your tablet • Hardware providers marketing their content relationshipsYour Sony Blu-ray player is your gateway to Netflix and Hulu 1. Source: Veronis Suhler Stevenson.

  7. Market Trends: Shift in Economics • Home entertainment revenues are under pressure as physical sell-through gives way to physical rental options (Netflix, Redbox) perceived to have greater value and convenience • The growth of digital transactions has only partially offset the decline in physical sell-through; digital is anticipated to remain approximately 30% of HE contribution through FYE15 • Video on demand is growing and offers higher margins than subscription or kiosk rentals, however electronic sell-through has been slower to gain momentum • As a result of these market shifts, film economics have changed • International appeal is increasingly important to ensure a profitable slate • Franchise films and family content are less susceptible to the decline in home entertainment and offer greater international revenue potential • Third party financing sources are demanding more favorable terms to offset risk • Talent is willing to delay compensation until a film breaks even, but total talent compensation still remains high • The television market, including networks and production, continues strong growth • International networks are capitalizing on the increase in emerging market pay-TV households • The global ad market has generally rebounded despite a sluggish economy • New technologies have increased the number of buyers of TV content (e.g., Netflix) • Formats are travelling more internationally • Local television production is increasingly in demand

  8. Market Trends: Comparison to Music • The market forces putting pressure on home entertainment revenues are distinct from those challenging music revenues • Home entertainment has been primarily impacted by a shift from physical sell-through to new models for physical rental (Netflix, Redbox), rather than a shift from physical to digital • Filmed entertainment is partially insulated from the challenges the music industry faces with digital distribution • Unbundling: Music went from album sales ($10+) to digital singles ($0.99); films cannot be unbundled • Piracy: Music's unencrypted CDs made file sharing easier and fostered the view that ripped and shared music is acceptable; film faces piracy, however encryption on DVDs/BDs makes consumers more aware film piracy is illegal and larger file sizes make downloading harder • Going forward, film's windowing model offers more flexibility to capitalize on the growth in digital • Windowed distribution provides multiple opportunities for a transaction, each with a distinct value proposition and price point • Digital offers increased pricing flexibility • Digital offerings are generally at a higher margin than their direct physical counterparts • Studio economics also benefit from TV Production and Networks revenue streams which are not dependent on Home Entertainment

  9. Implications for SPE • SPE will benefit from the careful structuring of its film slate which focuses on more profitable genres while simultaneously managing costs • The new distribution models SPE is currently exploring will be critical to success in the changing home entertainment market • SPE’s cost reduction initiatives better shape the business for the current market environment • SPE’s mix of film and television assets takes advantage of synergies between the two and enables SPE to continually iterate on the balance between them • SPE expects to maintain Film at its current scale and level of profitability, while benefiting from growth in Television Production and Networks

  10. SPE’s Unique Positioning Success Factors SPE’s Positioning • Ability to capitalize on relationships between hardware and content • SPE is the only studio owned by a leading consumer electronics company, allowing for: • Sony branding on Indian television networks that reach approximately 250MM households • Product bundling and joint promotions across product lines • Featuring Sony products in SPE films and television shows • Continued production of 3D films to facilitate the sale of 3D electronics • Union of film and televisionbusinesses within the studio • SPE has a balanced portfolio of assets across film and television • Partially offsetting effects of fluctuations in the ad market (advertising is revenue for networks, a cost for films) • Television dramas help drive international film sales while film franchises help drive television sales • Television networks consume content and are output platforms for film product

  11. Divisional details Motion Pictures

  12. Motion Pictures Executive Summary SPE will benefit from the careful structuring of its film slate which focuses on more profitable genres while simultaneously managing costs • Giving film slate more international appeal and greater sell-through potential • Growing family business (The Smurfs, Arthur Christmas, The Pirates! Band of Misfits, Hotel Transylvania) • Increasing focus on franchises including Spider-Man, Bond, Men in Black, Stieg Larsson films /The Girl With the Dragon Tattoo, Total Recall, Ghostbusters, The Smurfs • Pursuing low cost faith-based acquisitions (Jumping The Broom, Courageous) • Improving economics of existing businesses • Reducing production and marketing costs • Pursuing film co-financing and tax-based incentives • Adding fee based titles from outside producers (e.g., Film District deals) • Focusing on genre and production cost mix • Columbia - Tentpoles with global appeal and low budget films with upside • Screen Gems - Genres films (e.g., thriller, comedy, action) at low cost • Fostering key relationships to ensure product flow (talent, Aardman, distribution deals) • Benefiting from at-cost production support from Imageworks

  13. Motion Pictures Franchise Films Increasing our focus on franchise films to succeed in a changing environment • Numerous titles are in negotiation, active development or production with an eye toward release in the next few years • Amazing Spider-Man sequel is planned for FYE15, two years after the reboot • Bond 23 and Bond 24 have been added • Resources are being focused on licensing/developing video game titles such as PlayStation brands (Metal Gear Solid, Gran Turismo)

  14. Motion Pictures FYE13 Release Slate APRILMAYJUNEJULY I Hate You Dad $90 Amazing Spider-Man [3D] $250 Men in Black [3D] $230 Think Like a Man $40 AUGUSTSEPTEMBEROCTOBERNOVEMBER Bond 23 $180 Kathryn Bigelow Project $45 Hotel Transylvania [3D] $120 Resident Evil 5 [3D] $55 Looper $40 Total Recall $150 Planet B-Boy [3D] $40 Sparkle $35 DECEMBERJANUARYFEBRUARYMARCH Great Hope Springs $70 Django Unchained (Int’l only - $125) Captain Phillips $85 Here Comes the Boom $80 TBD #1 Rom Com $35 TBD #1 Comedy $80 Elysium $125 By Dom Box Office $90MM + = 8 Films $70MM - $85MM = 4 Films $45MM - $65MM = 2 Films $0MM - $40MM = 5 Films Screen Gems (4 films) Columbia (12 films) 3 TBD Acquisition titles not shown above SPA (1 film) Acquisitions (5 films)

  15. Franchise/Tentpole films All other films Motion Pictures Production Spending Motion Picture production spending in FYE13 through FYE15 is heavily focused on franchise films Production Spending ($MM) * MRP Assumptions $1,331 $1,249 $1,198 • FYE11 and FYE12 production spending is lower due to smaller slates and delays of franchise films (e.g., Ghostbusters) to later years • Slate financing less available due to uncertainty in financial markets • Production savings achieved with tax-based incentives, utilizing technology to gain time and reduce costs, maintaining script integrity (cost overruns under 2% in last four years) $1,113 $898 $786 15 * Excludes Film Financing Benefit

  16. Project Spending Term Deals Motion Pictures Development Spending Investing in major franchise films without increasing overall development spend Development Spending ($MM) Controlling both commitments and spending based on slate needs $72 $72 $68 $68 • Limiting new projects • Signing one-step deals or reducing rates where possible • Eliminating non-productive term deals

  17. Motion Pictures Reduce Production Costs • Negotiating post break back-end deals, reducing upfront fees for talent, and/or causing talent to accept a “hiatus” • The six internally developed FYE13 titles have post cash-break deals or have talent “hiatus” • Have successfully reduced upfront compensation and renegotiated back-end deals prior to starting principal photography • Monitoring global incentives to capitalize on the opportunities to lower production cost • Shoot in countries where costs are low • Shoot in California where travel and other costs are minimized • Exploiting tax-based incentives on a worldwide basis will save approximately $55MM on FYE12 releases and $106MM on FYE13 releases • Recently closed $100MM co-financing deal with Hemisphere

  18. Over the last six years, SPE has kept theatrical marketing and distribution costs down or flat relative to prior years This was accomplished through a variety of initiatives including less TV and Newspaper and increased utilization of digital FYE12 has seen a significant rebound in the US ad market TV upfront marketplace was over $20 billion – highest ever Dollar volume up 6.5% over prior year Rate of change (inflation) in high single to mid double digits across the board This strong US ad market will make it increasingly difficult to keep marketing costs flat, however if the market dips again, SPE will take advantage of lower ad rates SPE will continue to pursue cost savings opportunities including the use of in-show promotional time Motion Pictures Managing Marketing and Distribution Spend

  19. Motion PicturesDigital Cinema 85% of all screens will be digital by the end of 2013 • Growth in digital cinema drives a more robust market for 3D and emerging theatrical technologies; this ultimately keeps the cinema a unique and compelling experience • Recent SPE 3D releases: The Green Hornet, Priest and The Smurfs • Upcoming SPE 3D releases: Arthur Christmas and The Adventures of Tintin (Int’l only), The Amazing Spider-Man and MIB3; additional 3D titles slated for FYE12 • Distribution savings relative to historic print costs will be modest until VPFs expire (2019 through 2022 in North America) • However, digital enables near-term savings opportunities by streamlining distribution processes, specifically, production of fewer trailers for the same screen coverage and delivery of content via satellite or fiber 19 Source: Sony Pictures Releasing. All YTD data as of September 2011.

  20. Acquisitions Maximize Financial Contributions Maintaining strong margins despite greater competition and difficult conditions in the Home Entertainment market Acquisitions EBIT ($MM) MRP Assumptions • Direct-to-Video (DTV) productions will be focused on sequels of recently released theatrical or successful DTV product • Increase volume of theatrically released product from distribution fee only deals • Continue to focus on Faith based product and pursue high-profile International all-rights acquisitions • FYE15 EBIT reflects lower fees on output deals due to increased competition and a greater number of theatrical releases (i.e., more P&A in the year) Year FYE12 FYE13 FYE14 FYE15 Margin 18% 14% 17% 17%

  21. Divisional details Digital Productions

  22. Digital ProductionsKey Strategies • Develop high-margin, family-friendly franchises • Create diverse slate featuring high-end CG-animated films and live-action hybrids with strong franchise potential that lend themselves to either theatrical or DTV sequels • Maximize ancillary revenue streams to enhance film’s core profitability • Maintain Imageworks’ quality while continuing to reduce overall costs • Continue to focus on quality for Columbia and SPA films and to secure large third-party projects, which also lowers costs: • Disney’s decision to award their 2013 tentpole Oz: The Great and Powerful to Imageworks was a direct outcome of the financial and creative success of Alice in Wonderland($1B in WWBO; Oscar nom for VFX) • Expand facility in Vancouver to take advantage of 58.4% tax credit for labor • Serve as a resource for Sony Corporation • SPA continues to create characters used in Sony Electronics’ marketing/promotions • Provide 3D and VFX production expertise to SPE and Sony Corporation 22

  23. Digital Productions SPA – Developing Profitable Franchises SPA is executing on its objective of producing financially successful films with franchise potential Open Season 3 (Direct-to-Video) 1/25/11 Open Season 2 (Direct-to-video) 1/27/09 Open Season 9/29/06 23 18% Margin 15% 9%

  24. Digital Productions SPA – Developing Profitable Franchises • Released The Smurfs to major box office success; on track to gross over $525MM worldwide and has a higher international gross than any live-action hybrid family film, such as FOX’s Alvin & The Chipmunks and Disney’s G-Force • Produced 22 minute The Smurfs: Christmas Carol (CG and hand drawn animation hybrid) as part of the home entertainment release for the film to augment its sell-through • Focused on production for CG-animated Hotel Transylvania, with Adam Sandler in the lead role as Dracula. Arthur Christmas and The Pirates! Band of Misfits (Aardman) are both in post-production • Actively developing theatrical sequel scripts based on The Smurfs and 2009’s Cloudy with a Chance of Meatballs. The Smurfs 2 is slated for release in August 2013 • Projects in priority development are based on well-known brands or have strong franchise potential, including Popeye, based on the iconic property; Familiars, based on the book published by Harper Collins; and Muncle Trogg, also based on an award-winning book Note: As of Sept 20, 2011

  25. Digital Productions Imageworks – Maintain Leadership in Quality while Lowering Costs Imageworks has dramatically improved its performance by re-sizing the business, increasing efficiency, growing its lower cost satellites in Vancouver and India, and focusing on fewer, larger projects • Serve SPA and Columbia as dependable source of high-quality digital animation and VFX expertise at lower cost: • Currently in production on Columbia 2012 tentpoles The Amazing Spider-Man and Men in Black 3 • Awarded Disney’s 2013 tentpoleOz: The Great and Powerful • Secure larger budget third-party work (Warner Bros’ Green Lantern and now Disney’s Oz) as a means to reduce SPA and Columbia production cost (shared overhead, shared R&D, stronger talent pool) • Continue to shift artists to the Vancouver facility, leveraging 58.4% tax credit on labor to continue to lower costs Imageworks EBIT ($MM) 25

  26. Divisional details Home Entertainment

  27. Home Entertainment Executive Summary The new distribution models SPE is currently exploring will be critical to success in the changing home entertainment market • Driving consumer uptake of higher-margin models (Blu-ray, VOD, EST) • Targeting convenience and value proposition in new models • Developing new product features, marketing strategies and releasing tactics • Creating compelling consumer offerings through Sony United initiatives • Product bundling with SEL (e.g., 3D Blu-ray/Bravia) • Joint promotions across product lines (e.g., PS3/BD ads, 3D TV/3D BD ads, etc.) • Closely managing profitability across each phase of the product lifecycle while reducing risk • Getting economies of scale through the creation of joint ventures in key territories • Right-sizing the US sales team

  28. Home Entertainment Market Trends The number and variety of entertainment devices is increasing rapidly North America and Western Europe: Total TV Sets and Connectable Devices Installed (in MMs) 8% CAGR • TV Sets • PCs • Smartphones • Connectable Games Consoles • TV Sets (Excl. Connectable TV Sets) • PCs • Smartphones • Connectable Games Consoles • Hybrid Set-Tops • Connectable TV Sets • Tablets • Connectable Blu-Rays Source: Screen Digest. Note: Excludes IP streamers.

  29. Home Entertainment Market Summary New physical models are driving steady growth in total HE transactions but represent lower-margin models (e.g., Netflix and Redbox disc offerings) Dollars(Billions) US Home Entertainment Market(Consumer Revenues1,2) Trx(Billions) US Home Entertainment Market(Transactions1) Sell-Through Sell-Through Rental Rental % Rental 71% 71% 72% 74% 76% 78% 80% 80% 81% 37% 37% 38% 41% 42% 45% 48% 50% 52% Source: Screen DigestNotes: 1. Does not include Netflix streaming 2. Beyond decline in consumer sell-through revenues, studio economics are being further pressured on underlying wholesale margins

  30. Home Entertainment – Market Update US New Release Sell-Through performance continues to decline – now approximately 47% below 2006 levels 2006-2011 Sell-Through Performance Against Box Office Across All Major Studios Quarter-on-Quarter % Change from CY2006 2006 to 2007 2006 to 2008 2006 to 2009 2006 to 2010 2006 to 2011 Sources: Nielsen Home Scan, title-level analysis, major studios include Fox, Lionsgate, Paramount, SPHE, Universal, Warner, and Disney (includes distributed lines); box office adjusted for inflation and 3-D admissions Note: For titles that have fewer than 8 weeks of POS data as of July 3, 2011, 8-week POS has been projected.

  31. Home Entertainment – Market Update For SPHE, rental now matches sell-through in driving contribution SPHE New Release Contribution Mix – CY07 vs. CY10 % of Contribution from Sell-Through versus Rental CY07(24 films) CY10(21 films) Rental 23% 1 Sell-Through Rental Vs. 49% 51%2 Sell-Through 77% • Excludes New Media and CST VOD contribution – approximately $50M (in SPT) • Approximately $110M of CY10 Rental contribution from theatrical slate is from New Media and CST VOD

  32. Home Entertainment – Market Update Opportunity for some recovery via rise of emerging models SPHE New Release $ Margin per Transaction • Transition to digital is creating new opportunities for higher-margin transactions • New models • New windows • SPE is driving toward higher-margin opportunities • EST through support of UltraViolet and trialing early EST releases (Bad Teacher first early EST on October 4th) • Making VOD a more compelling rental option than subscription and kiosk with longer rental periods, day & date offers and HD • SPE is also managing lower-margin transactions by optimizing our terms with Netflix and Redbox SELL-THROUGH RENTAL

  33. Home Entertainment – Market UpdateMotion Picture Film Slate: Sell-Through vs. Rental Skewing Titles Rental Skewing Genre Sell-Through Skewing Genre Over the MRP period, SPHE is slated to release titles that skew more heavily toward sell-through (i.e., more Action and Family titles are in the release slates) Sources: Nielsen Home Scan; title-level analysis; SPHE Commercial Planning & Innovation Note: Above-average Sell-Through genres are defined as: Action, Adventure, Animated and Family

  34. Home Entertainment Contribution from Flow/Library Product The total contribution from Flow/Library Product is declining; it’s anticipated that over the MRP period, contribution will be approximately 48% less than realized in FYE06 ($MM) Margin: • Physical contribution is expected to decline at a (4%) CAGR from $86MM in FY12 to $76MM in FY15 • Digital contribution is expected to grow at a 12% CAGR from $32MM in FY12 to $45MM in FY15 34

  35. Home Entertainment Contribution by Format Home Entertainment contribution from physical transactions (DVD and Blu-ray) still represents 74% of the total contribution in FYE15 Worldwide MRP Contribution ($MM)* $1,519 $1,445 $1,326 $1,206 Digital 26% 27% Physical 74% 73% * Contribution includes WW New Media and Traditional VOD 35

  36. Home Entertainment Contribution by Product Motion Pictures franchise and tent-pole films drive the overall growth of Home Entertainment Contribution during the MRP period Worldwide HE Contribution ($MM) • The increase in New & Recent in FYE13 is driven by titles such as: Total Recall, Men in Black 3, and The AmazingSpider-Man. New & Recent in FYE14 is driven by 4 additional titles including: Elysium, Singularity, and 1000 A.E. • The decrease in Acquisitions from FYE12 to FYE13 is driven by a smaller mix of theatrical releases, along with fewer titles with International rights $1,519 $1,445 $1,326 $1,206 36

  37. Divisional details Television

  38. Television Executive Summary SPE’S investments in television production and networks leave it well positioned to benefit from the global growth in those businesses • Strengthening economics of existing businesses • Keeping SPT’s slate of original TV series on the air and generating substantial syndication profits • Continuing to invest in ad and affiliate sales infrastructure within the channel business • Exploring ways to leverage studio relationship with GSN • Pursuing growth opportunities • Building on syndication success (The Dr. Oz Show, The Nate Berkus Show) to expand into the daytime market with A-list talent • Capitalizing on opportunities with emerging SVOD players (e.g., Netflix, Amazon) to drive incremental value for new/library film and television product • Expanding in key markets with our branded networks, local and international TV series development and production ventures, and distribution sales operations • Resolving issues with partners and pursuing regional opportunities in India • Pursuing Sony United collaboration • Working to become the primary ad sales organization across Sony brand and platforms • Utilizing development, production and programming expertise to create content for Sony’s Networked devices • Building the Sony entertainment brand through Sony-branded international networks

  39. U.S. ProductionCurrent Series • Significant growth in returning series: 75% of 2011/2012 US TV slate is returning series • Highest volume of primetime series in a decade; #1 producer of returning scripted cable series • Rules sold in syndication in 97% of U.S. • 7 shows on 2011 primetime fall schedule • Broadcast programming on 6 of 7 nights of the 2011 fall schedule New Series • Highest volume year in SPT history with 13 stand-alone profitable series • More new comedy series than any other studio Returning Series • Secures partnership with Harpo and successfully launches The Dr. Oz Show 24 22 17 17 17 16 11 39

  40. U.S. ProductionCurrent Series, Pilots & Development Significant Contribution from current series as series enter off-network syndication EBIT from Current Series, Pilots & Development: MRP Assumptions ($MMs) • Increased broadcast network production volume to match FYE12 and build on success • Rules of Engagement is sold in 97% of the US for off-network syndication and will premiere in fall of ’12. Community soon to be sold • Continuing success in syndication with The Dr. Oz Show plus 2 new series • New Series Investment & Development decreases by 14% over the MRP period 40

  41. U.S. Production Library, Game Shows and Daytime Series Maximizing the contribution to EBIT from our Core Programs ($MMs) MRP Assumptions • Wheel of Fortune and Jeopardy! are renewed through 13/14 season • Days of Our Lives and Young and the Restless renewed through 12/13 season • Production cost control and reduction efforts continue on all programs • Library decline primarily due to ratings decline for aging product and shift in HE physical sell-through market away from library titles 41

  42. FYE12 FYE13 FYE14 FYE15 International Production Financial Summary EBIT grows at 57% CAGR over the MRP period ($MMs) MRP Assumptions $895 $772 $493 • Strong projected organic growth driven by strong light entertainment and scripted remakes pipeline • Includes assumption of a “hit” light entertainment format assumed to gain traction beginning FYE13 • Strengthen production presence in major European markets and expand to emerging territories (UK top priority) $313 $78 $58 $34 $20 EBIT Margin 11.9% 9.9% 6.9% 6.3% EBIT Revenues 42

  43. TV DistributionContinue to Grow Distribution Sales Generate approximately $2.4B in gross revenue by FYE15 of which 58% is from Motion Picture product Distribution Gross Revenue MRP Assumptions ($MMs) • Securing long-term deals in key markets over the plan • Capitalize on opportunities with emerging SVOD players • Does not assume incremental payments from Starz raising Netflix cap; Starz currently weighing options 43

  44. NetworksNetwork Brands 550+ Million HH 155+ Countries 120+ Feeds 22 Languages Drama/Action Youth/Anime Digital Movies General Entertainment Other Investments 44

  45. Networks Continued Earnings Growth • Networks EBIT grows by approximately $250MM over the MRP period • Based on market multiples, networks could contribute approximately $3B of value to Sony Corp. today and grow to over $5B by FYE15 Networks Revenue Networks EBIT Networks EBIT 14% CAGR 30% CAGR 16.9% 21.0% 19.0% 14.0% EBIT Margin* 45 *Margin excludes GSN PPA to normalize year-on-year progression

  46. Networks Strategic Priorities Continue to expand the business • Continue to launch channels in new and existing territories to increase scale and increase sales leverage and program buying power • Expand ad and affiliate sales infrastructure (Dolphin, AXN Central Europe, Russia Channels, Crackle Latin America) • Continue to secure programming supply through studio output deals and investment in original programming (The Firm). Increase 3rd party acquisitions for US businesses • Expand US channels (CineSony, FEARnet buy up) and increase US channels’ contribution to portfolio throughout the MRP period • Maximize value in Crackle US and expand internationally (Latin America, Brazil, Canada) • Expand SPTL Asia facility to service EMEA channels

  47. Television Growth through Additional Investment SPT is exploring investments beyond those included in the MRP and will seek continued support to pursue these growth initiatives • Opportunities to Strengthen Existing Assets • Resolve partnership issue with MSM to drive growth and allow efficient participation in Sony United initiatives • Opportunities to Expand in Key Strategic Markets • Establish a local production presence in the UK through acquisition • Acquisition of an Indian Regional broadcaster to complement the Hindi language MSM suite of channels • Drive Growth in Emerging Markets Through Acquisition or Start Up • Further expand in emerging and growth markets in both the networks and production businesses • Increase the scale of existing operations in emerging markets (e.g., India, Korea, Russia) • Acquire or start up operations in new markets (e.g., Turkey, Greece, Adria)

  48. Financial summary

  49. Financial Summary Consolidated Revenues & EBIT SPE Revenues ($MMs) SPE EBIT ($MMs) 9% CAGR 24% CAGR EBIT Margin: 4.3% 5.3% 6.0% 6.4% 49

  50. Financial Summary Overview • Revenues increase from $8.5B in FYE12 to $10.9B in FYE15 • Growth is a 9% CAGR over the MRP period • EBIT increases from $365MM in FYE12 to $700MM in FYE15 • Growth is a 24% CAGR over the MRP period • No monetizations or overall SPE challenges assumed in FYE13 - FYE15 • However, no film reserve in any year of the MRP • EBIT margin improves to 6.4% by FYE15 • Positive Net Cash Flow in all years of the MRP reaching $400MM in FYE15 • General and administrative expenses grow by only a 3.8% CAGR over the four year period from FYE12 through FYE15 • Excluding two areas of strategic growth, TV Networks and Int’l TV Production, total G&A expenses grow by only 2.6% from FYE12 to FYE15 as a result of the Cost Reduction efforts undertaken over the last two years

More Related