Spider-Man Merchandising Business Update April 2010

1. CONFIDENTIAL Spider-Man Merchandising Business Update April 2010

2. Executive Summary • Strategic Considerations • Deal Structure • Valuation • Negotiating Strategy page 1

3. Executive Summary Deal must work from a financial/valuation standpoint and not jeopardize the promotional value merchandising provides our films Without a deal, the cash flows we derive from Spider-Man merchandising include both upside participation and risk We will participate in international growth driven by Disney We will bear risk inherent in a reboot of the Spider-Man film franchise A sale could allow us to be paid for upside today and participate in a control of the control premium Disney was willing to pay for Marvel, but only if we cede key controls and, potentially sell our full share Ceding controls to drive valuations creates some risk to promotional value, but we believe Disney has strong incentives to continue to drive Spider-Man merchandising page 2

4. Executive Summary • Strategic Considerations • Deal Structure • Valuation • Negotiating Strategy page 3

5. Sony Control Points Today Sony derives significant promotional benefits from Spider-Man merchandising today While Marvel controls the majority of merchandising sales and activities, we do have protections and controls that Marvel would value, including Black-out window Retail controls Prohibitions on licensing deals in certain food categories Providing Disney increased control creates some risks Disney succeeds with competing Marvel Characters and emphasized them at the expense of Spider-Man Sony release dates conflict with Disney properties and Disney tries to manage the market  (licensee and retailer) to their economic and or long term benefit Other Disney entertainment, e.g. Television product, diminishes the value of the theatrical or video release Disney develops a new look for Spiderman that conflicts with the movie art direction Disney abuses the blackout periods page 4

6. Value Drivers Without a deal, Sony’s cash flow will be driven by Steady-state cash flows for roughly $40MM to $50MM per year Participation in the international revenue growth likely to be driven by Disney Decreases in the event that Spider-Man 4 under-performs With a deal, additional value would be driven by Growth in cash flow driven by Elimination of 3rd party comissions (although we will argue we are already entitled to this today; it becomes certain with a deal) Prohibitions on licensing deals in certain food categories As they did with their Marvel acquisition, Disney may ascribe a control premium for intangible benefits that may not increase overall cash flow but benefit Disney, including Retail management – gives them greater leverage with retailers Black-outs lifted – Less administrative burden. Eliminate risk to Marvel that we abuse the provision page 5

7. Risks to Consider Providing Disney increased control creates some risks Disney succeeds with competing Marvel Characters and emphasized them at the expense of Spider-Man Sony release dates conflict with Disney properties and Disney tries to manage the market  (licensee and retailer) to their economic and or long term benefit Other Disney entertainment, e.g. Television product, diminishes the value of the theatrical or video release Disney develops a new look for Spiderman that conflicts with the movie art direction Disney abuses the blackout periods Determining whether to cede these controls depends on our confidence that Disney has strong incentives to continue to expand Spider-Man merchandising than page 6

8. Spider-Man is one of the few evergreen classic properties, similar to Mickey Mouse, that produce year to year benefits and advantage the overall portfolio Maintains relevancy Generates profit annuity Provides retail leverage for the entire portfolio Disney needs to support the Spider-Man merchandise business to justify the Marvel acquisition price Substantial piece of Marvel’s current business (TBD% of overall EBITDA, TBD% of CP) Marvel acquisition premium suggests aggressive growth targets Growth targets unlikely to be achieved without sustaining S-M merchandise business With untapped international potential, S-M merchandise business is primary target to support growth objectives Spider-Man is critical to Disney’s boys strategy Growth in boys demo is primary corporate objective for Disney CP No meaningful boys property in current Disney CP portfolio Library of boys properties was primary strategic rationale for Marvel acquisition S-M is considered premier property in boys category with Mickey Mouse-like clout Disney has the opportunity to extract substantial incremental value from the Spider-Man merchandise business through its CP engine, particularly in international regions 50/50 domestic/international split vs. 40/60 for Disney CP 25% uplift through shift from international agents to Disney sales force Disney has significant incentives to continue to support the Spider-Man merchandise business page 7

9. The Spider-Man merchandising business accounts for a majority of both Marvel’s licensing and overall profits 2007-09 MVL Avg. Revenue (1) 2007-09 MVL Avg. EBITDA (2) $557.7 $229.3 MVL Share of S-M Merch. EBITDA is76.9% of Licensing EBITDA Total EBITDA$229.3 Total Revenue$557.7 Total Licensing EBITDA$170.4 MVL Share of S-M Merch. EBITDA is 57.2% of Total MVL EBITDA S-M Merch. Revenue is 31.3% of Total MVL Revenue Total CP Revenue$262.9 S-M Merch. Revenue is66.5% of Total CP Revenue Source: SEC filings and SPE CorpDev analysis. Note: * S-M Merchandising numbers based on SPE internal data. (1) MVL recognizes 100% of S-M merchandising revenue. (2) MVL Total EBITDA calculated as EBITDA per filings less $43.7MM of SPE’s share of merch. revenue. MVL recognizes SPE share as minority interest, whereas other studios' shares of license royalty income is recorded within SG&A expense. page 8

10. Executive Summary • Strategic Considerations • Deal Structure • Valuation • Negotiating Strategy page 9

11. NOTE TO DRAFT Need to update the groupings / progression to show: DCFs As is without risk: Historical flows, plus Participate in international lift and Disney stores / parks As is with risk Above does not happen, revenues decline 10% due to S-M4 risk “Deal DCF” As is, without risk plus Cash based -- Eliminate commissions; open food categories Intangible -- Premium for retail control and black-out window Comparables Disney’s own multiple Other licensing businesses [Paul, ideas besides Toy Co’s] Disney Marvel Deal Marvel without Premium Disney/Marvel original bid Disney/Marvel closing multiple page 10

12. As its initial negotiation position, SPE will argue that it should participate in the control premium that Disney paid for Marvel Valuation Summary Likely Negotiating Range SPE Initial Negotiating Position DIS Acq. Closing Multiple (12/31/09) 18.1x DIS Acq. Bid Multiple (8/31/09) 16.8x 12.9x MVL Pre-Acq. Multiple (8/28/09) DCF incl Disney Uplift*11.4x – 12.2x ** Need to streamline / narrow range DCF excl Disney Uplift * 7.0x – 7.6x ** 10.1x Disney Trading Multiple (4/2/10) SPE Merch Before Audit - $36.9SPE Merch After Audit - $43.7 7.5x Comparable Co. Multiple (4/2/10) Source: SEC filings and SPE CorpDev analysis. Note: * DCF range based on perpetuity growth rate from 2.0% to 3.0%, discount rate of 9.0% and Disney’s effective tax rate of 36.2%. ** Based on SPE’s 3-year average trailing merch revenue of $44.3 M (after audit). page 11

13. Spider-Man Merch Rights Valuation: Key Assumptions Revenue Projections excluding Disney Quantifiable Uplift General Assumptions • Revenues projections equal SPE current base case assuming: • S-M 4 performs on par • Disney does not get distracted even as Marvel has other properties Revenue Projections including Disney Quantifiable Uplift General Assumptions • Revenues projections equal SPE current base case + Disney uplift assuming: • Domestic vs. international mix shifts from 52/48 to 40/60 (implies 62.5% international growth) • International commissions savings: 25% of international gross revenue • Incremental revenues from lifting exclusive rights in certain food categories: $250k / year • Disney sells S-M merch in Disney parks & resorts: $186k / year • Disney sells S-M merch in Disney stores: $160k / year • Online sales: $153k / year Value of Intangible SPE Control Rights DCF Assumptions • Assumes Disney pays a premium (10% of base revenue) to gain control of retail and Classic merch blackout periods DCF Assumptions DCF Assumptions • Disney WACC of 9.0% • Disney effective tax rate of 36.2% • Perpetuity growth rate ranges from 2.0% - 3.0% • Terminal year revenue = 5-year average of Spider-Man Film and Classic merch (FY16-FY20) plus other increases Source: SPE Consumer Products and SPE CorpDev estimates. page 12

14. Proposed Value: Disney Uplift Value Assuming Disney Takes Increased Control and Spider-Man Films Perform Well ($ in millions) Intangibles Source: SPE Consumer Products and SPE CorpDev estimates. Note: Value based on 2% perpetuity growth rate, 9% discount rate and Disney’s effective tax rate of 36.2%. * Other increases include Disney selling S-M merch in Disney parks & resorts, in Disney stores, and online sales. page 13

15. Proposed Value: Downside Scenario Value Assume Disney Takes Increased Control but Spider-Man Films Perform Poorly ($ in millions) Intangibles Revenues decline 10% Source: SPE Consumer Products and SPE CorpDev estimates. Note: Value based on 2% perpetuity growth rate, 9% discount rate and Disney’s effective tax rate of 36.2%. * Other increases include Disney selling S-M merch in Disney parks & resorts, in Disney stores, and online sales. page 14

16. SPE can argue for a significant portion of control premium Disney paid for Marvel, as the S-M merchandise business represents a major share of international growth potential page 15

17. Need to agree on this and add narrative • Executive Summary • Strategic Considerations • Deal Structure • Valuation • Negotiating Strategy Change Order, Move this After Valuation page 16

18. Disney is Likely to Seek Sources of value Beyond SPE’s share of merchandising revenue Potential Source of Value Risks to Sony Impact on Revenues Importance to Disney page 17

19. Deal Can be Structured to Provide Key Value Drivers While Protecting Sony page 18

20. Executive Summary • Strategic Considerations • Deal Structure • Valuation • Negotiating Strategy page 19

21. Negotiating Strategy and Next Steps • Paul – Let’s discuss • Initial discussion • When (post Iron Man on the assumption sell through is so-so) • Who approaches whom initially (Michael with Bob) • Stated rationale (“your actions imply you want us out”) • Headline terms • 100% exit (implies we’ll give up key controls; but don’t state which early) • Some ongoing upside participation • Key inputs into retail promotions but not retail control • “Full” valuation (unlikely to quote number initially, but likely anchor with “at least” the value implied in the Marvel deal) • Resolve open Audit issues • Ongoing discussions • Expect Disney will have whom lead (Ike problematic) page 20

22. APPENDIX CONFIDENTIAL

23. Disney’s acquisition valuation would require significant growth targets to meet typical return expectations Marvel Acquisition Valuations $4,153.0 $3,841.0 $2,953.0 Requires 9.5% growth in perpetuity to achieve 15% IRR Requires 9.0% growth in perpetuity to achieve 15% IRR Requires 7.2% growth in perpetuity to achieve 15% IRR EV/EBITDA Multiple (1) 12.9x 16.8x 18.1x Source: SEC filings and SPE CorpDev analysis. Note: (1) All multiples calculated using a trailing 3-year average Marvel EBITDA of $229.3MM page 22

24. Valuation of SPE Share of Merchandising Business ($ in millions except where otherwise indicated) Source: SEC filings and SPE CorpDev analysis. page 23

25. Valuation of SPE Share of Merchandising Business (cont.) ($ in millions except where otherwise indicated) Source: SEC filings and SPE CorpDev analysis. page 24

26. Valuation of SPE Share of Merchandising Business – Comparable Company Analysis Comparable Company Analysis Source: SEC filings and Wall Street research. page 25