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Deal Overview

October 19, 2012

Executive Summary

SPT Digital Networks has the opportunity to launch Flixela, the premier multiplatform digital network for women in Latin

America

• Features premium movies for women A18-44 and follows same business model as Crackle, free ad-supported video on demand

(AVOD) anywhere, anytime

• Exploit significant advertiser demand to reach female demographic; alongside Crackle’s male-skewing audience, opportunity to

broaden addressable market and provide all-encompassing solutions to advertisers

• Capitalize on window of opportunity to fill market gap and be an early mover for premium AVOD services in high growth Latin

America market, forecasted to experience significant increase in broadband penetration and online advertising

• Drive synergies by leveraging SPT’s ad sales capabilities and Crackle’s backend infrastructure, as well as cross-promotional

opportunities across SPT Network’s pay TV channels/websites in region (AXN, SET, SPIN)

• Launch Network in August 2013 in Brazil and LatAm across web, OTT (BIVL), and mobile (iOS/Android); 2.3mm

uniques/month in Y1 growing to 7.1mm in Y5, and $2.0mm of net revenue in Y1 growing to $16.3mm in Y5; by FY16 (Y3),

revenue forecasted to be 10%, 20%, and 8% of total online video advertising market in Brazil, Mexico, and Argentina

respectively, based on current estimates(1)

• From a SPT View, including licensing fees (considered incremental) and ad sales commission to SPT, investment forecasted to

generate a NPV of $9.1mm and IRR of 43% based on a $5.5mm DWM. From a stand-alone Channel View, investment forecasted

to generate a NPV of $2.5mm and IRR of 24% based on a $8.0mm DWM

• No FY13 EBIT/Cash impact; EBIT impact of ($4.0mm) and cash impact of ($4.0mm) in FY14

1 (1) By 2016, Flixela and Crackle combined video advertising market share is 32% in Brazil and 53% in Mexico

Source: PWC Media and Entertainment Outlook, 2012

Overview of Flixela

2

• Latin America’s premier digital network featuring movies for women

– Same business model as Crackle:

– Targets female audiences A18-44

– Features popular romantic comedies, dramas, thriller films with strong female leads

• Provide an enhanced movie experience that satisfies advertisers’ demands for a

female-focused network

– Capture highly attractive female demographic in Latin America. For women online

with an affinity to movies(1):

78% of Brazilians and 54% of Mexicans watch at least 5 movies per month

89% of Brazilians and 62% of Mexicans watch movies on their computer

70% of respondents prefer movies, TV series, or music videos over short-form

YouTube content

68% of respondents claim they would visit a female movie centric site 2-5x per

month

96% of respondents say they would likely recommend this service to a friend

– SPT receives approx. 50% of its online video RFPs targeting a female audience;

Crackle’s audience is ~35% female(2)

– Significant interest from consumer product companies including Dove, Pampers,

Rexona, Sedal, Bimbo, and Baileys

• Brand meaning: “Flix” means online movies, “ela” means “she” in Portuguese

(1) Crackle LatAm team conducted a survey to understand LatAm online female audiences’ attitudes, interest and behavior as it relates to online movie watching. Sample size

included 500 women from Brazil and 500 women from Mexico that came from a local database of female users with an affinity to movies. Results taken over a 7 day period in

October 2012. No incentive was provided for completing the survey in Brazil; reward points were awarded in Mexico. Sample size age range: 15-39 years old

(2) Source: ComScore.com April 2012

Free to consumer

Ad-supported

Long form content

On-demand

Multiplatform (OTT/mobile/web)

Strategic Benefits to SPT, SPE, and Sony

3

• Be first to market to establish the dominant female-branded digital network in Latin America; Crackle is currently #2 streaming

video service on BIVL

• Complements Crackle’s male-focused offering to fully exploit advertisers’ digital marketing demand across demos

• Build a bouquet of digital networks, creating synergies by leveraging:

– Existing ad sales infrastructure to enhance upfront and scatter offerings

– Crackle’s technology backend with minimal incremental investment

– Crackle’s management team to oversee operations

• Hedge constraints on Pay TV in Mexico and Brazil(1)

• Leverage SPT’s Pay TV Networks in region (SET, AXN, SPIN) to drive brand awareness and enhanced ad sales opportunities

– Establish ad barter relationship to drive large scale on-air messaging and cross promotion

– Create custom ad sales packages sold across SPT’s portfolio of digital and Pay TV networks

• Use key findings from Flixela Latin America launch to rollout brand in other regions (e.g., U.S., Canada)

• Exploit SPT’s library of female-oriented film content to generate incremental returns for SPT’s licensing team

• Utilize ad inventory to market SPE television and film products, as well as Sony consumer electronics

(1) New laws for international Pay TV networks in Mexico and Brazil restrict total number of advertising minutes per hour

Market Overview

4

• Broadband households are forecasted to grow at a 15% CAGR

from 2012 to 2016

• Total broadband penetration is expected to increase from 40% in

2012 to 67% in 2016

• Watching online video and downloading media are in the top 5

most popular “bandwidth” activities; 85% of broadband users in

LatAm watch video (comScore, April 2012)


• Digital video advertising is forecast to grow faster than

total internet advertising (excluding Search) at CAGR

of 36% from 2012 to 2016

• Total internet advertising (excluding Search) is

forecasted to grow at a 20% CAGR from 2012 to 2016

• By 2016, Flixela and Crackle combined video

advertising market share is 32% in Brazil and 53% in

Mexico

• Opportunity to “expand” the market for digital video

advertising and to gain a strong foothold in LatAm

• Advertisers seeking outlets to market on

premium long-form content but limited by

offerings in market

• Counter downside of internet piracy

Video Internet Advertising '12-'16 CAGR: 36%

Internet Advertising (Exec. Search) '12-'16 CAGR: 20%

$216$306

$375$493

$617

$751

$925

$1,124

$1,328

$1,547

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E

($ in

mil

lio

ns)

Total Internet Advertising (Excluding Search)

Video Internet Advertising, LatAm

Latin America will experience strong double digit growth in broadband households and internet advertising over the next

couple years

Broadband Households '12-'16 CAGR: 15%

Broadband Household Penetration '12-'16 CAGR: 13%

1522

2734

40

48

56

65

75

84

13%19%

24%29%

34%40%

47%54%

60%67%

0%

20%

40%

60%

80%

100%

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E

La

tAm

Bro

ad

ba

nd

Ho

use

hold

s

Pen

etr

ati

on

La

tAm

Bro

ad

ba

nd

Ho

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(mil

lio

ns)

Competitive Landscape

5

Opportunity to capitalize on limited premium AVOD content in online

market and fill void of a dedicated female-focused online network

• Strong competition in subscriptions (Netflix and NetMovies) and short

form content providers (YouTube and Vevo)

• Terra is primary competitor (offers AVOD , SVOD, TVOD content)

– 12mm unique users on Terra TV, with an average of 1.5bn

streams / year(1)

– By FY16, Flixela is projected to have 7.1mm uniques /

month and have an average of 21.6mm streams / year

• Some traditional media portals (e.g. Globo, Televisa) and video leaders

(e.g. YouTube, Vevo) retain users for an average of 3 to 9 minutes

• Crackle’s average stream is 26 minutes

• Historically limited female TV options due to the traditional

'machismo' roles men had in society

– Within the past 10 years, Argentina, Trinidad and Tobago,

Brazil, Chile, and Costa Rica have all elected female

presidents. According to the United Nations, women

doubled their presence to over 20% in the region's

legislatures between 1990 and 2009

(1) Source: South By South West

(2) Source: comScore April 2012, MRP Infographic

Key Competitors(2)

Operating Assumptions

6

DISTRIBUTION

• Launch in Brazil and LatAm: August 2013 (19 countries)

• Launch on Web & Bivl: August 2013, Android: September 2013, IOS: October 2013, Syndication Partner: November

2013

• 2.3mm uniques / month in FY14 growing to 7.1mm uniques / month in FY18

• 2.1 streams / unique in FY14 growing to 3.0 streams / unique in FY18 (average)

• $2.0mm of net revenue in FY14 growing to $16.3mm of net revenue in FY18

AD SALES

• Revenue mix: 85% premium, 15% sponsorship revenue in Year 1, Years 2-5: 90% premium, 6% ad network, 4 %

sponsorship revenue

• Premium CPMs: Year 1: $35/$30/$25 for OTT/Mobile/Web decreasing to $29/$24/$19 in Year 5

• Streams monitized Year 1: 75%/60%/75% for OTT/Mobile/Web. Years 2-5: 85%/70%/85%

• 2.9 ads / stream in FY14 growing to 3.5 ads / stream in FY18 (across all platforms)

CONTENT /

PROGRAMMING

• Content mix: All movies (no TV content is planned)

• 130 average monthly titles at launch growing to 173 in FY18

– Content mix at launch list AAA (4), AA (8), A (41), B/C (75), Drivers (2)

• Approx. 50% of content licensed from third parties across forecast period

• Crackle LatAm FY14: 151 movies / 605 TV episodes; Crackle Domestic FY14: 300 movies / ~1000 TV episodes

OPERATIONS

• Outsource product development to third party. Year 1: $680k, Years 2-5: $400k/year

• $100k - $200k annually for Shared Services to leverage Crackle’s core platform (CMS, API’s, etc.)

• Leverage existing management. Hire 15 new employees starting in April 2013 (including 5 ad sales) scaling to 27 in

FY18 (including 8 ad sales)

MARKETING

• $1.8mm of annual marketing support

• $500k of annual in-kind barter advertising on SPT LatAm cable channels (SET, AXN, SPIN)

• $1mm of annual in-kind marketing from Syndication and Device Partners

Financial Projections ($ in thousands)

7 Notes: FX rates used in the projections: 2.04 Brazilian reals / $1 US, 12.88 Mexican pesos / $1 US, $4.72 Argentine pesos / $1 US, 1,800 Colombian pesos / $1 US

Service launches in August 2013; Year 1 includes 8 months of results.

Launches August 2013

Year 1 Year 2 Year 3 Year 4 Year 5 CAGR

Channel View FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E FY'14-FY'18

Operating Stats (Monthly Averages):

Movie Titles 130 132 151 151 173 7%

Uniques 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149 33%

Streams / Unique 2.1x 2.3x 2.5x 2.8x 3.0x 10%

Streams 4,691,509 8,525,079 13,966,332 17,853,918 21,644,881 47%

Ad Opportunitites 13,516,952 25,824,759 44,595,390 60,151,222 76,768,144 54%

Ads / Stream 2.9x 3.0x 3.2x 3.4x 3.5x 5%

Revenue:

Brazil $1,092 $2,942 $4,785 $6,004 $7,006 59%

Mexico 753 2,276 3,708 4,962 6,329 70%

Pan Regional 345 774 1,222 1,664 2,114 57%

Argentina 0 181 460 622 795 NA

Colombia 0 171 362 493 628 NA

Other Countries 20 106 209 286 365 107%

Gross Revenue $2,211 $6,450 $10,747 $14,031 $17,239 67%

Brazil Sales Tax $156 $393 $639 $802 $936

Net Revenue $2,055 $6,058 $10,108 $13,230 $16,303 68%

Growth % -- 195% 67% 31% 23%

Programming Costs $1,006 $1,569 $1,981 $2,167 $2,633

Hosting / Bandwidth 90 279 510 728 979

Ad Sales Commissions 686 1,823 1,526 2,007 2,480

Agency Incentives 308 849 1,417 1,856 2,288

Partner Revenue Share 33 255 400 482 566

Product Dev. & Search 735 460 460 465 465

Marketing 2,142 2,157 2,273 2,395 2,688

Total Expenses $5,000 $7,392 $8,567 $10,099 $12,099 25%

Gross Profit ($2,945) ($1,334) $1,541 $3,131 $4,204

% Net Revenue (143%) (22%) 15% 24% 26%

Staff $750 $952 $1,180 $1,345 $1,405

Shared Services 200 103 106 209 216

G&A 116 141 164 176 180

Total Overhead $1,067 $1,197 $1,450 $1,730 $1,801 14%

EBIT ($4,012) ($2,530) $91 $1,400 $2,403

% Net Revenue (195%) (42%) 1% 11% 15%

Channel View Cash Flow ($4,010) ($3,230) ($727) $785 $1,796

Cumulative Channel Cash Flow ($4,010) ($7,241) ($7,968) ($7,182) ($5,387)

SPE View Cash Flow ($3,526) ($1,942) $438 $2,253 $3,705

Cumulative SPE Cash Flow ($3,526) ($5,469) ($5,031) ($2,778) $927

Financial Impact to SPE ($ in thousands)

8

• Cash flow break even in Year 3

• Cumulative cash flow break even in Year 5

(1) Calculated based on the timing of Commissions to Ad Sales cash flow less taxes

(2) Calculated as expense only for Ad Sales staff less taxes

(3) Deemed as incremental revenue. Calculated as a percentage of programming, less 15% for talent residuals, less taxes

Channel View SPE View

NPV of Cash Flows ($1,677) $4,926

NPV of TV $4,202 $4,202

NPV Combined $2,525 $9,128

IRR 24% 43%

DWM ($7,968) ($5,469)

WACC 18% 18%

Year 1 Year 2 Year 3 Year 4 Year 5

FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E

Aggregate Benefit to SPE

Channel View Cash Flow ($4,010) ($3,230) ($727) $785 $1,796

Commission to Ad Sales(1)

431 1,185 1,063 1,348 1,673

Ad Sales Expenses(2)

(223) (360) (443) (483) (498)

Aggregate Cash Flow to SPT Networks ($3,802) ($2,405) ($107) $1,650 $2,971

Cumulative Cash Flow ($3,802) ($6,208) ($6,315) ($4,665) ($1,694)

Licensing Revenue to SPT(3)

$276 $463 $545 $602 $734

% Licensing Revenue of Programming 51% 52% 48% 48% 49%

Total SPE Impact ($3,526) ($1,942) $438 $2,253 $3,705

Cumulative Cash Flow ($3,526) ($5,469) ($5,031) ($2,778) $927

Risks & Mitigants

9

RISKS MITIGANTS

• Ad revenue market share projections are relatively high to market forecasts; Flixela

and Crackle LatAm projected to take 32% of video advertising marketing in Brazil

and 53% in Mexico by FY16(1)

• Conversations with advertisers indicate significant demand to reach female

demographic

• Nascent video advertising market

• Advertising revenue forecast is diversified; no industry represents more than 25%

of total revenue and no client represents more than 7% of total revenue

• Crackle LatAm outperformed advertising forecast in business plan (excluding FX

adjustments), demonstrating strength of ad sales capabilities and ability to enter

emerging market

• High organic market growth: LatAm internet advertising industry (excluding

search) projected to grow from $751mm in 2012 to $1.5bn in 2016, a 20%

CAGR(1)

• Programming investment in movies only (no TV product contemplated in plan) is

insufficient to drive forecasted streaming volume

• Growth in movie titles across forecast period; 130 average monthly titles at launch

growing to 173 in FY 2018

• High volume of new titles year-to-year (approx. 40-50%) will drive return users

• Opportunity to revisit TV strategy in future years should a movies-only strategy

underperform

• Ability to attract and retain users is less than forecasted

– Projected amount of organic uniques across all platforms grows from 12% of

total uniques or 286k uniques in FY14 to 44% or 3mm uniques in FY18

– Projected amount of retained uniques across all platforms grows from 9% of total

uniques or 212k uniques in FY14 to 31% or 2.2mm uniques in FY18(2)

– Unable to secure syndication deals as forecasted

• Est. $500k of annual in-kind barter advertising on SPT LatAm cable channels

(SET, AXN, SPIN)

• Est. $600k of annual in-kind marketing from established Device Partners

• Attractive programming offering drives repeat users and positive word of mouth

(see programming mitigations above)

• UOL, MSN, YouTube deals expected, though deals are not signed

• Relatively high number of monthly average movie streams on Flixela (3.6mm in

Y1) relative to current performance on Crackle LatAm (1.4mm monthly average

movie streams in 1H Y1). Note this excludes syndication partners

• Opportunity to increase revenue by adding second ad unit per break

• By the time of Flixela’s launch in August 2013, team will have improved

operational learnings from Crackle LatAm to drive better user acquisition and

engagement

• Uniques required to generate forecasted streams is a small portion of broadband

users

(1) Source: PWC Media and Entertainment Outlook, 2012

(2) Organic uniques may be included in Retained uniques. Please see Appendix for retention rates used in analysis

Next Steps

10

10/19 Present to Andy Kaplan

10/22 – 11/9 Update key SPE Management and secure investment approval

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September October November

Appendix

Market Analysis ($ in millions)

12

• Flixela is first to market, no current competition

• Flixela and Crackle LatAm will provide SPT significant shares of double digit growth video advertising markets in Brazil,

Argentina, and Mexico

Note: Total Internet Advertising for each country excludes Search


Market Analysis FY 2012 FY 2013E FY 2014E FY 2015E FY 2016E FY 2013E FY 2014E FY 2015E FY 2016E

All Countries in LatAm Brazil

Market - Video Advertising $32 $47 $67 $88 $109 Market - Video Advertising $23 $31 $40 $49

Growth % 47% 43% 31% 24% Growth % 35% 35% 29% 23%

Market - Total Internet Advertising $719 $878 $1,057 $1,240 $1,438 Market - Total Internet Advertising $460 $536 $618 $706

Growth % 22% 20% 17% 16% Growth % 17% 17% 15% 14%

Flixela Revenue - - $2.1 $6.1 $10.1 Flixela Revenue - $1.1 $2.9 $4.8

Growth % - - 195% 67% Growth % - - 169% 63%

% of Video Advertising Market - 3% 7% 9% % of Video Advertising Market - 4% 7% 10%

% of Total Internet Advertising - 0.2% 0.5% 0.7% % of Total Internet Advertising - 0.2% 0.5% 0.7%

Crackle LatAm Revenue $0.1 $3.4 $8.1 $16.4 $22.0 Crackle LatAm Revenue $1.5 $4.5 $8.4 $10.9

% of Video Advertising Market 7% 12% 19% 20% % of Video Advertising Market 6% 14% 21% 22%

Flixela & Crackle LatAm Revenue $0.1 $3.4 $10.1 $22.5 $32.1 Flixela & Crackle LatAm Revenue $1.5 $5.5 $11.3 $15.7

% of Video Advertising Market 0% 7% 15% 26% 29% % of Video Advertising Market 6% 18% 28% 32%

Argentina Mexico

Market - Video Advertising $2 $3 $4 $5 $6 Market - Video Advertising $9 $12 $15 $19

Growth % 50% 33% 25% 20% Growth % 50% 33% 25% 27%

Market - Total Internet Advertising $48 $56 $65 $74 $86 Market - Total Internet Advertising $167 $197 $228 $262

Growth % 17% 16% 14% 16% Growth % 22% 18% 16% 15%

Flixela Revenue - - - $0.2 $0.5 Flixela Revenue - $0.8 $2.3 $3.7

Growth % - - - 155% Growth % - - 202% 63%

% of Video Advertising Market - - 4% 8% % of Video Advertising Market - 6% 15% 20%

% of Total Internet Advertising - - 0.2% 0.5% % of Total Internet Advertising - 0.4% 1.0% 1.4%

Crackle LatAm Revenue - - $0.5 $1.1 Crackle LatAm Revenue $2 $3 $5 $6

% of Video Advertising Market 0% 0% 11% 18% % of Video Advertising Market 17% 22% 33% 33%

Flixela & Crackle LatAm Revenue - - $0.7 $1.6 Flixela & Crackle LatAm Revenue $1.6 $3.4 $7.2 $10.1

% of Video Advertising Market - - 14% 26% % of Video Advertising Market 17% 28% 48% 53%

KPI Comparison (in millions, except for multiples and titles)

13

FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E CAGR '13-'16 CAGR '14-'18

Uniques (Monthly Average)

Flixela - 2.3 3.7 5.5 6.4 7.1 33%

Crackle LatAm 3.1 5.3 9.0 10.8 - - 52%

Crackle U.S. 16.8 19.1 21.6 24.5 - - 13%

Streams / Unique

Flixela - 2.1x 2.3x 2.5x 2.8x 3.0x 10%

Crackle LatAm 2.1x 2.3x 2.6x 2.8x - - 10%

Crackle U.S. 2.7x 3.1x 3.2x 3.3x - - 7%

Streams (Monthly Average)

Flixela - 4.7 8.5 14.0 17.9 21.6 47%

Crackle LatAm 6.5 12.4 23.0 30.4 - - 67%

Crackle U.S. 45.6 59.8 69.7 81.5 - - 21%

Ads / Stream

Flixela - 2.9x 3.0x 3.2x 3.4x 3.5x 5%

Crackle LatAm 2.8x 3.0x 3.2x 3.4x - - 6%

Crackle U.S. 2.8x 4.3x 5.3x 6.6x 34%

Number of Ads Served (Monthly Average)

Flixela - 13.5 25.8 44.6 60.2 76.8 54%

Crackle LatAm 18.4 37.5 73.7 102.4 - - 77%

Crackle U.S. 125.8 256.1 368.0 535.8 - - 62%

Revenue (Annual)

Flixela - $2.1 $6.1 $10.1 $13.2 $16.3 68%

Crackle LatAm $3.6 $8.7 $17.6 $23.6 - - 87%

Crackle U.S. $20.1 $44.7 $67.2 $97.6 - - 69%

Movie Titles

Flixela - 130 132 151 151 173 7%

Crackle LatAm - 151 166 183 201 221 10%

Crackle U.S. 250 300 350 400 - -

TV Episodes

Flixela - - - - - -

Crackle LatAm - 605 666 732 805 886 10%

Crackle U.S. - 1000 1000 1000 1000 1000

Margin Comparison

14

Based on FY16 - Y5 of Plan Based on FY18 - Y5 of Plan

Crackle Flixela

2013 MRP 2013 MRP

Brazil Spanish Latam Brazil Mexico

Revenue 100% 100% 100% 100%

Sales Tax -14% 0% -14% 0%

Agency Incentive -15% -15% -15% -15%

Partner Rev Share -3% -3% -3% -3%

Ad Sales Commission -20% -20% -20% -20%

Subtotal 57% 66% 57% 66%

Bandwidth -10% -10% -6% -6%

Programming -19% -19% -16% -16%

Marketing -8% -8% -15% -15%

Variable Cost Margin 20% 29% 20% 29%

SSO / Product Development -15% -15% -4% -4%

SG&A/Overhead -17% -17% -9% -9%

EBIT Margin -12% -3% 7% 16%

Programming

15

• 21

• A Few Good Men

• A League of Their Own

• Across the Universe

• Almost Famous

• Blind Date

• Can't Hardly Wait

• Charlie's Angels

• Closer

• Da Vinci Code

• Exorcism of Emily Rose

• Flatliners

• Fun with Dick and Jane (2005)

• Groundhog Day

• Hitch

• Hook

• Jawbreaker

• Julie & Julia

• Kramer Vs Kramer

• Made of Honor

• Michael Jackson's This Is It

• Nick & Norah' Infinite Playlist

• Only You

• Panic Room

• Resident Evil

• RV

• Sex, Lies & Videotape

• Silent Hill

• Single White Female

• Sleepless in Seattle

• Spanglish

• Stomp the Yard

• The Big Chill

• The House Bunny

• The Messengers

• The Net

• The Prince of Tides

• The Quiet

• The Sweetest Thing

• The Ugly Truth

• To Die For

• Tootsie

• Underworld

• What Planet Are You

From?

Flixela Sample Programming List

• The women’s movie category is smaller and more targeted than

the general audience for Crackle

• Experience from Crackle LatAm suggests targeted

programming offering could drive significant streaming

volume. For Crackle LatAm, ~40% of content drives 80% of ad

starts

• ~50% of content is from third parties across the projection

period

Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

FY2014E FY2015E FY2016E FY2017E FY2018E FY2014E FY2015E FY2016E FY2017E FY2018E

Annual and Monthly Titles

Titles per Year Average Monthly Titles

AAA 15 23 27 27 29 AAA 4 6 7 7 7

AA 14 21 26 26 28 AA 8 11 13 13 14

A 41 39 43 43 47 A 41 39 43 43 47

B/C 75 75 87 87 103 B/C 75 75 87 87 103

Drivers 15 23 24 24 25 Drivers 2 2 2 2 2

Total 160 181 206 206 231 Total 130 132 151 151 173

Flixela and Crackle LatAm Title Comparison

Flixela Crackle LatAm

Movie Titles 130 132 151 151 173 Movie Titles 151 166 183 201 221

Growth - 2% 14% 0% 15% Growth - 10% 10% 10% 10%

TV Episodes - - - - - TV Episodes 605 666 732 805 886

Growth - - - - - Growth - 10% 10% 10% 10%

Total 130 132 151 151 173 Total 756 832 915 1,006 1,107

Revenue

16 Notes: FX rates used in the projections: 2.04 Brazilian reals / $1 US, 12.88 Mexican pesos / $1 US, $4.72 Argentine pesos / $1 US, 1,800 Colombian pesos / $1 US

% Growth

Year 1 Year 2 Year 3 Year 4 Year 5 Year 2 Year 3 Year 4 Year 5 CAGR

FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E FY 2015E FY 2016E FY 2017E FY 2018E FY'14-FY'18

Uniques (Monthly Average)

OTT 27,250 184,473 431,118 702,219 941,309 577% 134% 63% 34% 142%

Mobile 159,735 224,373 349,285 603,827 971,487 40% 56% 73% 61% 57%

Web 2,087,516 3,310,633 4,733,667 5,120,297 5,225,354 59% 43% 8% 2% 26%

Total 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149 64% 48% 17% 11% 33%

Streams / Unique

OTT 2.5x 2.8x 3.0x 3.3x 3.7x 10% 10% 10% 10%

Mobile 1.5x 1.7x 1.8x 2.0x 2.2x 10% 10% 10% 10%

Web 2.1x 2.3x 2.5x 2.8x 3.1x 10% 10% 10% 10%

Total 2.1x 2.3x 2.5x 2.8x 3.0x 11% 11% 10% 9%

Content Streams (Monthly Average)

OTT 68,124 507,300 1,304,132 2,336,634 3,445,425 645% 157% 79% 47% 167%

Mobile 239,603 370,216 633,953 1,205,541 2,133,531 55% 71% 90% 77% 73%

Web 4,383,783 7,647,563 12,028,248 14,311,743 16,065,925 74% 57% 19% 12% 38%

Total 4,691,509 8,525,079 13,966,332 17,853,918 21,644,881 82% 64% 28% 21% 47%

Ad Streams (Monthly Average)

OTT 204,371 1,597,995 4,313,415 8,114,839 12,563,808 682% 170% 88% 55%

Mobile 718,808 1,166,179 2,096,799 4,186,692 7,779,960 62% 80% 100% 86%

Web 12,593,772 23,060,585 38,185,176 47,849,691 56,424,375 83% 66% 25% 18%

Total 13,516,952 25,824,759 44,595,390 60,151,222 76,768,144 91% 73% 35% 28%

Ads / Stream

OTT 3.0x 3.2x 3.3x 3.5x 3.6x 5% 5% 5% 5%

Mobile 3.0x 3.2x 3.3x 3.5x 3.6x 5% 5% 5% 5%

Web 2.9x 3.0x 3.2x 3.3x 3.5x 5% 5% 5% 5%

Total 2.9x 3.0x 3.2x 3.4x 3.5x 5% 5% 6% 5%

Revenue (Annual)

OTT $44,504 $538,212 $1,377,122 $2,460,937 $3,624,824 1,109% 156% 79% 47% 200%

Mobile 87,207 277,103 472,295 895,766 1,581,900 218% 70% 90% 77% 106%

Web 1,758,513 5,387,377 8,475,484 10,109,246 11,328,421 206% 57% 19% 12% 59%

Display/Sponsorships 320,460 247,504 421,846 565,384 703,799 (23%) 70% 34% 24% 22%

Total $2,210,683 $6,450,197 $10,746,747 $14,031,332 $17,238,945 192% 67% 31% 23% 67%

Revenue by Country

Brazil $1,092,222 $2,942,071 $4,784,847 $6,004,376 $7,006,430 169% 63% 25% 17% 59%

Mexico 753,462 2,275,814 3,708,117 4,962,298 6,329,477 202% 63% 34% 28% 70%

Pan Regional 345,000 773,881 1,222,142 1,663,799 2,114,108 124% 58% 36% 27% 57%

Argentina 0 180,659 459,951 622,291 795,415 N/A 155% 35% 28% N/A

Colombia 0 171,404 362,211 492,943 628,303 N/A 111% 36% 27% N/A

Other Countries 20,000 106,368 209,479 285,626 365,213 432% 97% 36% 28% 107%

Total $2,210,683 $6,450,197 $10,746,747 $14,031,332 $17,238,945 192% 67% 31% 23% 67%

Brazil Sales Tax (14.25%) $155,642 $392,513 $638,618 $801,770 $935,747

Net Revenue $2,055,042 $6,057,684 $10,108,129 $13,229,563 $16,303,198 195% 67% 31% 23% 68%

Growth % - 195% 67% 31% 23%

Marketing and Retention (in thousands)

17 (1) Traffic sources include Organic, Social Media, Agency, Production (Creative), Public Relations, Other (CRM, Customer Service)

• In Y5, 47% of traffic comes from marketing efforts

and organic traffic across all platforms(1)

• SEM Paid accounts for paid web traffic

• Retention rates assumptions:

– Growth of 37% year over year for each month

– Additional month of retention for each year

– Y1 is based on current US Crackle retention

rates as of October 2012

• Uniques generated from In-kind Marketing are in

“Other” and “Other Retained” in the Uniques

Summary

• Uniques generated from Other are in “Other” and

“Other Retained” in the Uniques Summary

FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E

Marketing Budget

SEM Paid $1,053 $959 $972 $972 $1,056

Other 589 548 561 560 629

B2B/Trade 250 200 200 215 225

Total $1,892 $1,707 $1,733 $1,747 $1,910

In-kind Marketing

Syndication & Device Partners $541 $1,125 $1,181 $1,240 $1,302

SPT Pay TV Channels Cross Promote 180 375 394 413 434

Subtotal $721 $1,500 $1,575 $1,654 $1,736

Total Including In-Kind $2,613 $3,207 $3,308 $3,400 $3,647

Uniques Summary FY2014E FY2015E FY2016E FY2017E FY2018E

SEM Paid 1,662,500 1,403,646 1,421,875 1,421,875 1,545,833

SEM Retained 167,635 225,566 327,257 462,561 704,414

Other(1)

399,558 1,835,645 3,116,259 3,445,569 3,369,507

Other Retained(1)

44,807 254,622 648,679 1,096,338 1,518,395

Total Uniques 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149

% Total Uniques

SEM Paid 73% 38% 26% 22% 22%

SEM Retained 7% 6% 6% 7% 10%

Other(1)

18% 49% 57% 54% 47%

Other Retained(1)

2% 7% 12% 17% 21%

Total 100% 100% 100% 100% 100%

Total Retained Uniques 9% 13% 18% 24% 31%

Retention Rates for SEM Retained and Other Retained

Month 2 7% 10% 13% 18% 25%

Month 3 2% 3% 4% 5% 7%

Month 4 1% 1% 2% 3% 4%

Month 5 1% 1% 2% 3% 4%

Month 6 0% 1% 1% 2% 3%

Month 7 0% 0% 1% 1% 2%

Month 8 0% 0% 0% 1% 1%

Month 9 0% 0% 0% 0% 1%

Month 10 0% 0% 0% 0% 0%

Month 11 0% 0% 0% 0% 0%

Month 12 0% 0% 0% 0% 0%

Headcount

18

Headcount Summary


FY'2014 FY'2015 FY'2016 FY'2017 FY'2018

Brazil 1 2 2 2 2

Los Angeles 3 3 3 3 3

Mexico 0 2 2 2 2

Miami 4 6 8 8 8

Women's Channel Headcount 8 13 15 15 15


Mexico 2 2 2 3 3

New York 2 3 4 4 4

Ad Sales Headcount 5 6 7 8 8


Shared Services Headcount 1 1 1 2 2

Miami 1 1 1 2 2

Finance Headcount 1 1 1 2 2

Total Headcount 15 21 24 27 27

Note: Difference in headcount total are the two finance heads which are allocations

Headcount Summary by Position FY'15 (YEAR 2)

Title Location Start Date FY14 Salary

1 Community Manager Miami 04/01/13 $60

2 Marketing Manager Miami 04/01/13 70

3 Video Ops Specialist Los Angeles 04/01/13 70

4 Graphic Designer Los Angeles 04/01/13 75

5 Web Producer Los Angeles 04/01/13 70

6 Editor-In-Chief Miami 04/01/13 90

7 Editorial Specialist Brazil 04/01/13 55

8 Programming Specialist Miami 04/01/13 55

9 Community Specialist Brazil 04/01/14 0

10 Community Specialist Mexico 04/01/14 0

11 Editorial Specialist Mexico 04/01/14 0

12 Programming Specialist Miami 04/01/15 0

13 Marketing Manager Miami 04/01/15 0

14 Community Specialist Miami 04/01/16 0

15 Editorial Specialist Miami 04/01/16 0

16 Digital Sales Planner Mexico 07/01/13 20

17 Account Executive Mexico 05/01/13 52

18 Tech Ops Specialist Los Angeles 07/01/13 56

19 Ad Ops Specialist New York 07/01/13 56




23 Digital Sales Planner Mexico 04/01/16 0

24 Account Analyst Miami 06/01/13 46

25 Account Analyst Miami 04/01/16 0

Total $831

Total including Fringe Benefits $1,056

LatAm Target Female Demographic

19 Source: TGI.net Y2010 Wave2 (2011), MRP Infographic

Online Video Female Demographic Data (Watchers in millions)

20 Source: ComScore Video Matrix, August 2012

Males Females Males % Females %

United States

Video Online Watchers 95 98 49% 51%

Videos/Viewer 313 180 63% 37%

Minutes/Viewer 1,846 820 69% 31%

Minutes/Video 6 5

Brazil



Minutes/Viewer 787 408 66% 34%

Minutes/Video 5 4

Mexico



Minutes/Viewer 1,153 603 66% 34%

Minutes/Video 6 5

Cost of Equity ($ in millions)

21

Company HQ

Levered

Beta Market Cap

Total

Debt

Debt to

Total

Capital

Debt

to

Equity

Marginal

Tax

Rate

Unlevered

Beta

Blanco y Negro S.A. Chile 0.28 $63 $0 0% 0% 17% 0.28

Blinkx USA 0.49 356 0 0% 0% 40% 0.49

Coinstar USA 0.90 1,429 373 21% 26% 40% 0.78

Grupo Clarín S.A. Argentina 1.01 432 745 63% 173% 35% 0.48

Grupo Radio Centro, S.A.B. de C.V. Mexico 1.18 147 5 3% 4% 28% 1.15

Netflix USA 0.70 3,209 400 11% 12% 40% 0.65

Average 0.76 0.64

Median 0.80 0.57

Assumptions

Unlevered Beta 0.57 Peer group median. (CapIQ)

Calculated Levered Beta 0.57 Levered Beta = Unlevered Beta * (1+[(1-Tax Rate) * Target Debt / Equity Value])

Risk-free rate 1.7% Yield of 10 year US Treasury Bond (WSJ, 10/16/12)

Market Premium 6.6% Long-horizon expected equity risk premium (Ibbotson's)

Company Size Premium 9.8% Decile 10b for companies with market caps between $1 million - $128 million (Ibbotson's)

Country Risk Premium 2.8% Weighted average risk premium based on revenue for key markets (Damodaran)

Tax EBIT at tax rate of 31.4% Weighted average risk premium based on revenue for key markets (Damodaran)

Equity as a Percentage of Total Capital 100.0%

Debt as a Percentage of Total Capital 0.0%

Cost of Equity 18.1%

Source: Capital IQ

Preliminary Valuation Overview ($ in millions)

22

Notes: Appendix includes detailed calculations

SPT View includes add-backs of after tax Commission to Ad Sales expense, Ad Sales staff expense less taxes, and incremental Licensing Revenue less 15% for talent residuals and

less taxes

METHODOLOGY IMPLIED VALUATION COMMENTS

DCF Channel View

(Exit Multiple)

■

■

WACC range: 17.1% - 19.1%

Conservative 9.0x - 11.0x terminal multiple

DCF Channel View

(Perpetuity Growth)

■

■

WACC range: 17.1% - 19.1%

Perpetuity growth: 2.0% - 4.0%

DCF SPT View

(Exit Multiple)

■

■

WACC range: 17.1% - 19.1%

Conservative 9.0x - 11.0x terminal multiple

DCF SPT View

(Perpetuity Growth)

■

■

WACC range: 17.1% - 19.1%

Perpetuity growth: 2.0% - 4.0%$7.9

$10.4

$1.5

$4.1

$10.7

$13.9

$3.8

$7.0

$0 $3 $6 $9 $12 $15

Enterprise Value

Discounted Cash Flow Analysis: Channel View ($ in thousands)

23

Valuation Summary

WACC 18.1%


FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E FY2019E FY2020E FY2021E FY 2022E FY 2023E

Unlevered Free Cash Flow ($4,010) ($3,230) ($727) $785 $1,796 $2,237 $1,896 $2,370 $2,844 $3,271

PV of Free Cash Flow ($3,395) ($2,315) ($441) $403 $780 $823 $590 $625 $634 $618

Terminal Value Method

NPV of Cash Flows ($4,967) NPV

Terminal Year EBIT (FY 2018E) $2,403 Exit Multiple

Terminal Multiple 10.0x $5,477 8.0x 9.0x 10.0x 11.0x 12.0x

Terminal Value $24,032 16.1% $4,069 $5,206 $6,343 $7,481 $8,618

Present Value of Terminal Value $10,443 17.1% 3,718 4,808 5,898 6,987 8,077

% of Enterprise Value 190.7% 18.1% 3,388 4,432 5,477 6,521 7,565

NPV Combined $5,477 19.1% 3,076 4,077 5,078 6,079 7,081

IRR 42% 20.1% 2,781 3,741 4,701 5,662 6,622

NPV Combined as a Multiple of 2014E Revenue 2.7x


Implied Perpetuity Growth Rate 9.9%

Perpetuity Growth Method


Terminal Year FCF (FY 2023E) $3,271 Perpetuity Growth Rate

Perpetuity Growth Rate 3.0% $2,525 1.0% 2.0% 3.0% 4.0% 5.0%

Terminal Value $22,252 16.1% $3,622 $4,020 $4,478 $5,011 $5,640



NPV Combined $2,525 19.1% 1,305 1,523 1,767 2,044 2,360

IRR 24% 20.1% 737 918 1,119 1,346 1,603



Implied Terminal EBIT Multiple 4.0x

WA

CC

WA

CC

Discounted Cash Flow Analysis: SPT View ($ in thousands)

24

Valuation Summary

WACC 18.1%


FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E FY2019E FY2020E FY2021E FY 2022E FY 2023E

Unlevered Free Cash Flow ($3,526) ($1,942) $438 $2,253 $3,705 $4,717 $5,151 $6,372 $2,844 $3,271

PV of Free Cash Flow ($2,985) ($1,392) $266 $1,156 $1,610 $1,735 $1,604 $1,679 $634 $618

Terminal Value Method


Terminal Year EBIT (FY 2018E) $2,403 Exit Multiple

Terminal Multiple 10.0x $12,079 8.0x 9.0x 10.0x 11.0x 12.0x

Terminal Value $24,032 16.1% $11,256 $12,393 $13,531 $14,668 $15,806



PV of SPE Cash Flows (2019E-2021E) 2,980 19.1% 9,411 10,412 11,413 12,414 13,416

NPV Combined $12,079 20.1% 8,863 9,824 10,784 11,744 12,704

IRR 67%



Implied Perpetuity Growth Rate 2.4%

Perpetuity Growth Method

NPV of Cash Flows $4,926 NPV

Terminal Year FCF (FY 2023E) $3,271 Perpetuity Growth Rate

Perpetuity Growth Rate 3.0% $9,128 1.0% 2.0% 3.0% 4.0% 5.0%

Terminal Value $22,252 16.1% $10,810 $11,207 $11,665 $12,198 $12,828



NPV Combined $9,128 19.1% 7,640 7,858 8,102 8,379 8,695

IRR 43% 20.1% 6,820 7,000 7,202 7,429 7,686



Implied Terminal EBIT Multiple 4.0x

WA

CC

WA

CC

Scenario Analysis ($ in thousands)

25


FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E Total

Case: Base

Total Uniques 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149 25,072,543

Net Revenue $2,055 $6,058 $10,108 $13,230 $16,303 $47,754

EBIT ($4,012) ($2,530) $91 $1,400 $2,403 ($2,647)

Case: Uniques Decrease 5% Each Year

Total Uniques 2,160,775 3,533,505 5,238,367 6,105,026 6,781,242 23,818,915

Decrease in Number of Total Uniques (113,725) (185,974) (275,704) (321,317) (356,907) (1,253,627)

Net Revenue $1,952 $5,755 $9,603 $12,568 $15,488 $45,366

Cumulative Revenue Miss ($2,388)

EBIT ($4,059) ($2,673) ($222) $993 $1,904 ($4,057)


Total Uniques 2,047,050 3,347,531 4,962,663 5,783,709 6,424,334 22,565,288

Decrease in Number of Total Uniques (227,450) (371,948) (551,407) (642,634) (713,815) (2,507,254)

Net Revenue $1,850 $5,452 $9,097 $11,907 $14,673 $42,978


EBIT ($4,106) ($2,816) ($534) $585 $1,404 ($5,467)


Total Uniques 1,933,325 3,161,557 4,686,960 5,462,392 6,067,427 21,311,661

Decrease in Number of Total Uniques (341,175) (557,922) (827,111) (963,952) (1,070,722) (3,760,881)

Net Revenue $1,747 $5,149 $8,592 $11,245 $13,858 $40,591


EBIT ($4,153) ($2,958) ($847) $177 $905 ($6,876)


Total Uniques 1,819,600 2,975,583 4,411,256 5,141,075 5,710,520 20,058,034

Decrease in Number of Total Uniques (454,900) (743,896) (1,102,814) (1,285,269) (1,427,630) (5,014,509)

Net Revenue $1,644 $4,846 $8,087 $10,584 $13,043 $38,203


EBIT ($4,200) ($3,101) ($1,160) ($231) $405 ($8,286)

Net Revenue Miss by:

DCF Perpetuity Growth Method Scenario Analysis Base Case (5% ) (10% ) (15% ) (20% )

NPV of Cash Flows ($1,677) ($3,087) ($4,523) ($6,014) ($7,805)

NPV of TV $4,202 $2,954 $1,706 $458 ($275)

NPV Combined $2,525 ($133) ($2,817) ($5,555) ($8,080)

IRR 24% 18% 9% (6%) NA

DWM ($7,968) ($8,374) ($8,780) ($9,528) ($10,378)

NPV of Cash Flows $4,926 $3,212 $1,775 ($320) ($2,415)

NPV of TV $4,202 $2,954 $1,989 $458 ($275)

NPV Combined $9,128 $6,166 $3,764 $138 ($2,690)

IRR 43% 37% 29% 19% 2%

DWM ($5,469) ($5,686) ($6,111) ($6,651) ($7,191)

Ch

an

nel

Vie

w

SP

T

Vie

w

Precedent Media Transactions Analysis ($ in millions)

26

PRECEDENT MEDIA TRANSACTIONS ANALYSIS

Enterprise Value /

Announced Target BuyerTarget

HeadquartersTarget Business Description

Enterpise

ValueRevenue EBIT

06/04/12 Grupo Clarín S.A. GS Unidos, L.L.C. Argentina

Operates a cable TV network that offers basic pay TV, premium video, pay per view, HD, as well as

broadband Internet services. Additional segments include Digital Content segment produces content

for the Internet and mobile digital platforms, Broadcasting and Programming $75.0 0.7x 4.2x

04/19/12 New Video Group Vistachiara Productions, Inc. USA

Operates as a distributor of independent films, documentaries, and television sports and kids

programming through DVD, Blu-ray, downloads, streaming platforms 20 1.6x -

01/31/11 LOVEFiLM Amazon.com UK Online Retail, Online Video 115 - -

01/25/11 Dailymotion SA France Telecom France Media technologies / Content delivery / Streaming media 80 6.7x -

01/07/11 Qik Skype USA Online Video, VoIP 150 - -

12/23/10 Sonic Solutions Rovi Corporation USA Online Video, Production Tools - Media 763 7.0x -

10/12/10 Ngmoco DeNa USA Mobility / Mobile content / Entertainment 400 13.3x -

09/28/10 5min Inc. AOL, Inc. USA Internet content & commerce / Video 65 - -

09/19/10 Locaweb Serviços de Internet S.A. Silver Lake Partners Brazil

Offers Internet solutions that include infrastructure for audio and video streaming, Web hosting,

domain registration 68 4.5x -

01/22/10 Dori Media Central Studios S.A. - Argentina

Operates as a television production company which offers production services and owns production

facilities and TV studios 19 0.4x 12.0x

12/04/09 La La Media Apple USA Media technologies / Content delivery / Streaming media 65 - -

10/30/09 The Orchard Enterprises, Inc. Dimensional Associates LLC USA Distributes digital music and video products 15 0.25 -

High $763 4.5x 12.0x

75th Percentile $124 1.6x 10.0x

Median $72 0.7x 8.1x

Mean $153 1.5x 8.1x

25th Percentile $54 0.4x 6.1x

Low $15 0.3x 4.2x

Latin America Public Media Comparables Analysis ($ in millions)

27

PUBLIC MEDIA COMPARABLES ANALYSIS

Enterprise Value as a Multiple of:

Market Enterprise Revenue EBITDA EBIT

Company Name Headquarters Description Value Value LTM LTM LTM

Blanco y Negro S.A. Chile

Engages in the organization, production, participation, and marketing of shows, and professional activities of

entertainment and leisure sporting activities $63 $68 2.4x 9.7x NA

Blinkx USA Provides video search and advertising services on the Internet worldwide 356 317 2.8x 24.7x 49.5x

Coinstar USA Provides automated retail solutions. Owns and operates Redbox Kiosks - expanding into OTT 1,429 1,480 0.7x 3.4x 5.5x

Grupo Clarín S.A. Argentina

Operates a cable TV network that offers basic pay TV, premium video, pay per view, HD, as well as

broadband Internet services. Additional segments include Digital Content segment produces content for the

Internet and mobile digital platforms, Broadcasting and Programming 432 1,203 0.5x 2.1x 3.2x

Grupo Radio Centro, S.A.B. de C.V. Mexico Engages in the production and broadcasting of music, entertainment, news, and special event programs 147 147 1.9x 8.4x 9.4x

Netflix USA Operates an Internet subscription services for TV shows and movies 3,209 2,796 0.8x 12.3x 15.4x

High $3,209 $2,796 2.8x 24.7x 49.5x

75th Percentile $1,179 $1,411 2.2x 11.6x 15.4x

Median $394 $760 1.3x 9.1x 9.4x

Mean $939 $1,002 1.5x 10.1x 16.6x

25th Percentile $199 $189 0.7x 4.7x 5.5x

Low $63 $68 0.5x 2.1x 3.2x

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