CONFIDENTIAL

SPE Monetization Opportunities

April 2010

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Executive Summary

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• SPE has identified several monetization opportunities (in addition to those identified by SPT) of strategic and non-strategic assets across multiple divisions

• Sale of SPE’s interest in Spider-Man merchandising is currently being reviewed for divestiture– Valuations included here are before a deal premium, which may require us to cede some protections

back to Disney / Marvel– Sale of our entire stake could yield $300 to $400MM in cash and a gain of $266 to TBD– Sale of half our stake could yield $150 to $200MM in cash and a gain of $127 to TBD, but deal is less

likely to be of interest to Disney/Marvel

• We have had in-bound interest for the purchase of Imageworks and Sony Pictures Animation, however we need to determine whether the financial benefits merit the strategic risk of selling these assets

– Both assets were valued in 2007; valuations need to be updated in more detail but are assumed to have declined at least as much as the overall market

– A sale of Imageworks could yield $51 to $66MM in cash and a gain of $46 to $66MM– A sale of SPA could yield $213 to $268MM in cash and a gain of $75 to $130MM

• We are also revisiting a monetization of our Music Publishing library, which was reviewed previously– Analysis to date is preliminary as we have not engaged legal or music publishing teams, which had

concerns when the sale was last reviewed in 2005– Sony/ATV may be interested in the asset, which may not achieve a gain on a consolidated Sony Group

basis– Rough valuation implies sale worth $125MM to $150MM and yield a gain of roughly $95 to $115MM

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Potential Valuations

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Revenue EBIT EBIT Cash

SPE full exit NA $266 - TBD $300 - TBD

SPE partial exit NA $127 - TBD $150 - TBD

Imageworks 100% $182 $9 $51 - $66 SPE full exit $6 $46 to $61 $51 - $66

Sony Pictures Animation 100% $212 ($30) $218 - $273 SPE full exit $138 $75 - $130 $213 - $268

Music Publishing 100% $17 $14 $126 - $154 SPE full exit NA $95 - $116 $126 - $154

Potential SPE Financial Benefit

25% of merch net revenue

$31 $31 $300 - $400

FY10 - SPE Financial

ImpactSPE Interest

Rough Valuation of SPE Stake

Spider-Man Merchandise

OpportunityPotential

TransactionBook Value

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Spider-Man Merchandise Revenue

SPE Participation in S-M Merchandise Revenue

Description SPE 25% share in Spider-Man merchandise revenue

FY08E FY09E FY10E FY11P FY12P

SPE EBIT* $50.4MM $50.2MM $31.2MM $30.0MM $36.8MM

Key Considerations

• Sale makes sense if valuation captures expected SPE participation and promo value not impacted

• Expected SPE participation has int’l uplift potential from shift to Disney control and downturn risk from S-M4 delay and reboot

• Sale of expected SPE participation plus SPE retail controls could capture shares of both Disney int’l uplift plus premium paid for Marvel acquisition

• Sale of controls presents minor risk to promo value but Disney has strong incentives to maintain support

• Completed episodes of S-M animated series could be added to deal to close or potentially extract minor increase in valuation

Valuation Basis

• Low case assumes future cash flows in-line with historical average, excluding Disney uplift

• High case assumes future cash flows include uplift from Disney Int’l sales and other outlets and elimination of 3rd party agency fees

Sale Value ($ mil) $150 $175 $200 $300 $350 $400

FY GP $127 $150 TBD $266 $315 TBD

Amortization Rate 15.6% 14.5% TBD 11.1% 10.0% TBD

Full Sale Partial Sale

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page 51) 3-yr forward average includes FY11, FY12 and FY132) Assumes SPE's basis is after deducting $1.8MM for Frameflow's 25% non-controlling interest in Imageworks India.  Need to validate that

Frameflow's stake would remain intact as part of the sale and not be liquidated

Imageworks

Key Considerations

• Imageworks is the sole, low cost supplier of FX and animation to SPA and Columbia

• However, the visual effects business is low margin, highly competitive, and labor intensive, and Imageworks is only breakeven on standalone basis

Valuation Basis

• Adjusted 2007 HL valuation down in 2 ways:

o Adjusted mkt multiples down 21% for S&P 500 decline since July 2007

o Adjusted 3-yr forward avg EBITDA down from $11.7 mil to $10.9 mil for slight decline in Imageworks performance since 2007

• Results in ~$50-$65 mil valuation vs. ~$70- $90 mil HL valuation in 2007

Imageworks

DescriptionState-of-the-art visual effects and character animation company majority owned and operated by SPE

Equity Ownership 100% SPE

FY09A FY10E FY11E FY12E

Revenue(100%) $137MM $182MM $155MM $155MM

EBIT (100%) ($40MM) $9MM $1MM $0MM

EBITDA (100%) ($26MM) $21MM $13MM $10MM

SPE EBIT ($38MM) $8MM $1MM $0MM

Low Med HighEBITDA (3-yr Forward Average)1 $10.9 $10.9 $10.9Multiple 4.7x 5.4x 6.1xEnterprise Value $51 $59 $66

Debt $0.0 $0.0 $0.0Equity Value $51 $59 $66SPE % 100% 100% 100%Cash to SPE $51 $59 $66SPE Basis2 $6 $6 $6EBIT/Gain (Loss) $46 $53 $61

Imageworks

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Sony Pictures Animation

Key Considerations

• SPE’s presence in critical family segment

• Recent success at the box office with Cloudy

• However, forecasted to be significantly unprofitable over the MRP period

Valuation Basis

• 2007 HL valuation estimated a range of $280 mil to $350 mil, but is clearly outdated

• HL projected FY10 EBITDA profit; FY10 was actually a loss

• Current 3-yr forward avg EBITDA is also a loss

• Preliminary adjustments for competing factors implies value is likely down

• Cloudy and Hotel T are estimated to have a 35% greater box office performance then Open Season and Surf’s up

• S&P 500 down 22% since July 2007

• Animation previously forecasted to be EBITDA positive (July 2007), while it is currently expected to be EBITDA negative

Sony Pictures Animation

DescriptionWholly owned animation studio with synergistic ties to Imageworks and Columbia Pictures

Equity Ownership 100% SPE

FY09A FY10E FY11E FY12E

Revenue(100%) $104MM $212MM $89MM $451MM

EBIT (100%) $12MM ($30MM) $7MM ($84MM)

SPE EBIT $12MM ($30MM) $7MM ($84MM)

Low Med High2007 HL Enterprise Value $280 $315 $350Less: S&P 500 Market Decline (22%)1 ($62) ($69) ($77)Revised Enterprise Value $218 $246 $273

Debt $5 $5 $5Equity Value $213 $241 $268SPE % 100% 100% 100%Cash to SPE $213 $241 $268SPE Basis $138 $138 $138EBIT/Gain (Loss) $75 $103 $130

SPA

1) S&P 500 declined 22% from July 2007 to April 10, 2010

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Music Publishing

Background

• Transaction was last reviewed in detail in 2005; will need to

engage with Legal to more accurately update the current state-

of-play

• As of 2005, Library included over 300,000 music cues and

9,000 songs

• SPE had a worldwide publishing administration agreement with Sony/ATV Music Publishing which was set to expire at the end of 2006 but we believe was renewed

Concerns as of 2005

• Legal expressed concerns relating to risk that buyer restricts SPE's future access to the content for our own productions and does not provide accurate accountings (jeopardizing relationships with profit participants)

• Sony ATV may have concerns if the asset is sold to a 3rd party

Valuation Basis

• Limited comparable data is available, but assuming a 10x multiple, a transaction would yield between $95MM and $115MM

• Industry multiples as of 2005-2006 have approached 15x, but we adjust downward for the 20+% decrease in the overall market

• When Columbia last sold its music library, the buyer paid a multiple of 10.5x, although this is a very dated comp (1988)

Music Publishing

DescriptionWholly owned music publishing entity with music rights to current and previous SPE television and film properties

Equity Ownership 100% SPE

FY07 FY08 FY09 FY10

Revenue (100%) $17MM $18MM $17MM $17MM

Less: Participations ($3MM) ($3MM) ($3MM) ($3MM)

SPE EBIT* $14MM $14MM $14MM $14MM

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Low Med HighRevenue (5-yr Historical Average) $17 $17 $17Less: Participations (20%) ($3) ($3) ($3)Operating Income $14 $14 $14

Multiple 9.0x 10.0x 11.0xEnterprise Value $126 $140 $154

Less: Amortization (20 - 30%) ($32) ($35) ($39)EBIT/ Gain (Loss)* $95 $105 $116

Music Publishing

* Numbers may not foot due to rounding