mid range plan presentation fiscal year 2009-2011 october 2007 [draft 09.19.07]
TRANSCRIPT
2
Agenda
• Executive Summary
• Core Assets
• Programming
• Digital Networks
• Distribution
• Ad Sales
• Financial Appendix
4
Digital Networks Financials
$2.0
$6.0
$8.0
$4.0
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
FY07 FY08 FY09 FY10
($ in MM)
$10.0
$20.0
$25.0
$15.0
$0
$5
$10
$15
$20
$25
$30
FY07 FY08 FY09 FY10
($ in MM)
EBIT Revenue
[Placeholder Numbers]
6
Market Update and Strategy Overview
• The marketplace has evolved past traditional delivery platforms, creating new opportunities for SPT
– Non-traditional competitors (Comcast, Google, Verizon) are buying content and rights for emerging platforms (VOD/Internet/Mobile)
– To remain competitive, established platforms are expanding their rights offerings
• As more companies buy more content and rights; SPT is well positioned to sell to all of them
– Offering “all rights under one roof”, including broadcast, cable, IPTV, satellite, Internet and mobile
– Unlocking rights that are unavailable in many studios
– Intelligently tailoring each rights and product offering to a customer’s business activities and objectives
– Driving the market towards a proactively consumer-focused media experience
– Leading advertisers to richer opportunities to connect with the public
• As a result, we are distributing shows from more sources now than ever before:
– Off broadcast (Rules of Engagement, Power of 10)
– Off cable (Rescue Me, Damages)
– 1st run (Judge David Young)
– Internet developed shows (The 9)
– 3rd party acquisitions (G.B.B., Just for Laughs)
– New library strategies (Minisode network, digital cable and satellite sales)
7
Distribution Sales – Total Revenues
$50 $50 $50 $50
$850 $850 $850 $850
$210$800$800 $800
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
FY08 FY09 FY10 FY11
($ in MM) TV Customers Online / Mobile Customers
Budget/ Prior MRP
$846 $663
Variance $21 $32
$631
$123
SPT will generate over [$X] million in total current and library sales for SPE
[Placeholder Numbers Only]
8
Free / Basic TV
Market Dynamic MRP Initiatives
• Cable networks’ growing appetite for original programming is coming at the expense of acquisition budgets
• For movies and TV shows, SPT is employing new strategic initiatives and licensing new rights
– New internal ratings systems– Shorter and dual windowing– Inclusion of barter– Repurposing– Multiplatform simulcasting and
multiplexing– Network VOD/SVOD– Network-branded MSO VOD– EST
• Increase revenue by 2 to 3% by increasing sales of non-linear digital rights across platforms
• Increase library film sales by 5% by utilizing newly-developed ratings and competitive database
• Increase library film sales by 2-3% by converting “event” movie buyers into ongoing buyers (e.g., Hallmark, G4, and E!)
• Increase library sales by 1-2% by converting non-buyers (e.g., TV Land, Nick @ Nite, and SoapNet) into at least occasional buyers
9
Free / Basic TV – Revenues
$377
$190
$286
$210
$370
$171$152
$0
$50
$100
$150
$200
$250
$300
$350
$400
FY07 FY08 FY09 FY10
Q2/MRP Budget/Prior MRP
[Placeholder Numbers Only]
10
Syndication
Market Dynamic MRP Initiatives
• Consolidation of buyers has created the need to partner and co-develop first-run programming, increasing the likelihood of shows being picked-up
• Off net programming continues to be a highly desired product that commands premiums
• For library sales, new clients are emerging through Spanish language channels and digital second channel owners
• Local stations and cable networks are seeking rights to stream episodes on their web sites
• Aggressive sales efforts of library & new shows– King of Queens 2nd cycle– 4th cycle renewal of Seinfeld– Upgrades and renewals for Judge Maria
Lopez and Judge David Young– New first run syndication shows (The 9;
Power of 10)– Steve Harvey as an ad-supported strip in
2008• Stream products on local TV station/cable
network sites• Secure additional 3rd party products• Add new clients from digital second channel
owners (GTN) and ION Television and Spanish Language channels (Telemundo, etc.)
• Exploit the relationship with WGN+ for new library sales
• Pursue co-development deals with NBC, Tribune and other station groups
11
Syndication – Revenues
$164
$113 $113$122
$149
$103 $106
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
FY07 FY08 FY09 FY10
Q2/MRP Budget/Prior MRP
[Placeholder Numbers Only]
12
Pay Per View / VOD
Cable Market MRP Initiatives
Satellite Market MRP Initiatives
• Cable cos. continue to focus on the triple play; committed to being the single provider of TV, voice and data into the home
–Eager to improve the traditional PPV/VOD offerings
–Seeking earlier windows and HD rights–Focus on content to increase sales of
broadband services
• Primary product is traditional PPV/VOD rights–Locked a 3 year extension output deal for
PPV/VOD rights (expires Dec 31, 2010)–Leveraging interest in PPV / VOD for better
placement, higher prices, better splits• Expanding licensing discussions to on-line
rental VOD and EST based on MSO focus on broadband services
• Satellite cos. are trying to catch-up with cable on VOD and broadband
–Creating new products for their home customers to compete with the triple play
–DIRECTV and EchoStar are building out push VOD and closed IP delivered products to the home
• Leveraging satellite's need to provide VOD, SPT is in negotiations for PPV/VOD output deals with both DIRECTV and EchoStar
–Securing commitment from DIRECTV for SPT FOD product
–Securing commitment from EchoStar to carry The Minisode Network and direct-to-video product
13
Pay Per View / VOD – Revenues
$110 $107
$91
$78
$110
$91
$75
$0
$20
$40
$60
$80
$100
$120
FY07 FY08 FY09 FY10
Q2/MRP Budget/Prior MRP
[Placeholder Numbers Only]
14
Pay TV – Strategy
Market Dynamic MRP Initiatives
• Starz remaining a critical partner in Pay TV
• Pay partners, including Starz, are seeking cross-platform rights
• Multiple customers have demonstrated interest in a mix of library and newer/short-form content
• Exercise the Starz option. Once exercised, the deal will expire December 31, 2013
• Secure an additional long-term Pay TV extension with Starz
• Address key “asks” including:
–Caps on Sony's theatrically released product
–Expansion of on-demand rights
–Reductions in overall license fees
–Earlier windows to Pay TV
• Leverage Starz’ desire for digital content for VONGO and cross-platform plays
• SPT has closed a rental on-line VOD deal. SPT is negotiating EST, The Minisode Network and SPT on-line channels
• Close library deals with Showtime and HBO
15
Pay TV – Revenues
$216
$285$264
$318
$217
$298 $298
$0
$50
$100
$150
$200
$250
$300
$350
FY07 FY08 FY09 FY10
Q2/MRP Budget/Prior MRP
[Placeholder Numbers Only]
16
Title PPV Pay TV Free TV Title PPV Pay TV Free TV Title PPV Pay TV Free TV
SPIDER-MAN 3 $8,500 $22,500 $50,000 VACANCY $2,500 $9,510 $6,500 PERFECT STRANGER $3,000 $0 $0SUPERBAD $3,000 $10,350 $6,500 RESIDENT EVIL 3 $2,160 $9,510 $4,000 ARE WE DONE YET? $4,880 $0 $0VANTAGE POINT $2,950 $13,450 $11,380 BONE DEEP $2,380 $7,830 $4,880 BROTHERS SOLOMON $1,130 $0 $030 DAYS OF NIGHT $2,160 $9,290 $4,000 UNTRACEABLE $2,500 $9,510 $6,500 NEXT $3,025 $0 $0THE OTHER BOLEYN GIRL $2,500 $9,510 $6,500 THIS CHRISTMAS $1,890 $8,850 $3,060 ACROSS THE UNIVERSE $3,000 $0 $0WALK HARD $3,750 $11,130 $8,130 UNDERWORLD 3 $2,250 $10,460 $7,310 WATERHORSE $3,750 $0 $0
STEP FATHER $2,350 $7,830 $4,880
TOTAL $22,860 $76,230 $86,510 TOTAL $16,030 $63,500 $37,130 TOTAL $18,785 $0 $0
Title PPV Pay TV Free TV Title PPV Pay TV Free TV Title PPV Pay TV Free TV
SURF'S UP $5,000 $18,890 $19,500 TBD#1-2008 $10 $90 $300 A HOPE $700 $2,830 $780TBD#2-2008 $800 $2,560 $300 LUST, CAUTION $300 $1,300 $500
TOTAL $5,000 $18,890 $19,500 TBD#3-2008 $10 $290 $170TBD#4-2008 $5 $190 $80 TOTAL $1,000 $4,130 $1,280
TBD#5-2008 $10 $380 $150TBD#6-2008 $20 $440 $220TBD#7-2008 $800 $2,560 $300TBD#8-2008 $10 $580 $150TBD#9-2008 $10 $90 $190 Title PPV Pay TV Free TV
TBD#10-2008 $10 $290 $170 TBDTBD#11-2008 $5 $190 $80TBD#12-2008 $10 $380 $180TBD#14-2008 $455 $2,340 $250TBD#15-2008 $10 $380 $450TBD#16-2008 $10 $380 $150TBD#17-2008 $10 $180 $190TBD#18-2008 $10 $750 $290TBD#19-2008 $5 $190 $80
TOTAL $2,200 $12,260 $3,700
SPT will generate over $389 million in sales from the FY08 slate
[Update / Reformat]
Distribution Sales – FY08 Slate
17
Library Sales – Market Trends
The consistent licensing of our library product is evolving with new business models and applications
• Dual windowing (Just Shoot Me – cable and broadcast)
• 3rd party distribution (RTN – premium guarantees)
• Re-packaging library products for cross-platform distribution (Minisodes)
• “Long Tail” new media sales (Netflix online, Funnybone, AXN)
18
$73 $77$66
$77
$20
$17
$8
$90
$77
$102
$5
$5
$60
$5
$6
Forecast $150 +
$0
$20
$40
$60
$80
$100
$120
$140
$160
FY07 FY08 FY09 FY10
($ in MM) Free/Basic Pay TV PPV/VOD
Library Sales Targets by Market
• 3 year annual average of $106MM in FY07-FY09, and $90MM in FY08-FY10
• 4 year annual average of $105MM
In-House $103MM
Budget $65MM
[Numbers to be Updated by Friday]
19
Library Revenue by Division
$76
$33
$52
$27
$44
$46
$48
$28
$34
$26
$26
$18
$11
$36$33
$75
$42 $40
$32 $30
$16
$0
$20
$40
$60
$80
$100
$120
$140
$160
FY07 FY08 FY09 FY10
$133
$111
$81
$124
$77
$101
$146
Q2/BDGT. MRP/PRIOR MRP/PRIOR MRP
TV SPHEMPG
In-House
$103MM
In-House $62MM
In-House $77MM
In-House $31MM
NOTE: Assumes a consistent volume and quality of SPHE acquired product.
($ in MM)
[Numbers to be Updated by Friday]
20
Digital Video Market Growth
1,170
1,691
2,191
2,629
447
651
846
1,3502,100
3,100
4,300
775
774
2007 2008 2009 2010 2011
Ads TV Downloads* MovieDownloads*
U.S. Consumer /Advertiser Spending ($M)
$1,663$1,663
$2,765$2,765
$7,775$7,775
$4,238$4,238
$5,942$5,942
Source: eMarketer; *includes DST and rental
• Spending on paid and ad-supported content is forecasted to grow at double-digit rates well into the next decade
• Studios are continuing to make an increasing amount of premium content available for digital distribution
– Primetime TV, movies, and original content
• Historically game-based, mobile is also proving viable for video distribution
– Adoption of 3G handsets continues to grow and is improving viewing experience
– Carriers are seeking video content to attract and retain customers
[Confirm #’s include mobile videoClarify this in footnote]
21
Digital Distribution
Market Dynamic MRP Initiatives
• Content owners are leveraging wide distribution networks, rather than exclusivity, to drive demand
– NBCU and Fox to launch JV “Hulu” in Q4 as well as distributing through Yahoo! and MSN
• TV and movie content is fully cross platform utilizing a variety of business models
– Ad supported streams on ABC.com and DST on iTunes
– DST and VOD on XBox360– Ad supported and subscription TV and
movies on Verizon Wireless and Sprint
• Aggressively build the distribution network
–Strike partnerships across the complete spectrum of traditional and on-line players
• Continue to expand the overall content offering
–Broaden selection of film and TV product
–Introduce the most compelling short-form/original content into the offering
• Continue to lead the market in innovating the digital product offering and usage models
–Focus on Digital Sell-Through as foundational/core product
• Build a strong, retail-focused organization
–Create innovative marketing and promotional programs
–Continue to lead the industry with respect to asset delivery and digital operations
22
Digital – Revenues
$10 $10 $10 $10$10 $10 $10
$0
$2
$4
$6
$8
$10
$12
FY07 FY08 FY09 FY10
Q2/MRP Budget/Prior MRP
[Placeholder Numbers]
23
Mobile Games and Personalization
Market Dynamic MRP Initiatives
• Mobile comments to come…
• Taken responsibility for game development from SPDE and coordinating greenlights with SPTI
–Slating 8 games per year
• Now directly responsible for personalization products focusing on
–Tones/graphics based on film/TV properties–Packages based on compelling
brands/themes
• Market approach–Close carrier relationships and marketing
support–Consistent product development–Reinvigorate the library
[Mobile comments to come]