Briefing Deck April 2008 – Confidential – PROJECT FIREBIRD.

Briefing DeckApril 2008

– Confidential –

PROJECT FIREBIRD

2– Confidential –

EXECUTIVE SUMMARY

• SPE is committed to building a leading light-entertainment business

– Acquisition of 2waytraffic provides strong international distribution

– Potential acquisition of Embassy Row expands the pipeline of formats

• MBP would bring critical mass to this business

– Brings creative strength based on a proven track record of developing hit shows

– Provides library value through its ownership stake in most shows (including Survivor and Apprentice)

– Generating roughly $60MM in annual EBITDA today

– However, much of MBP’s past and future success is tied to 2 franchise shows, Survivor and The Apprentice

• We recommend submitting a non-binding LOI to acquire 50% of MBP at 10x 2008 EBITDA (roughly $548MM total value; $274MM to SPE)

– MB seeking to sell 50%; structure ensures he has an ongoing incentive to perform

– Until further diligence is completed, propose 10x 2008 committed earnings at close plus “true-up” to 10x actual EBITDA at end of 2008

– Include an option to buy-out the remaining 50% at the lesser of an agreed multiple are market rate


MBP HAS A PROVEN TRACK-RECORD OF PRODUCING HIT SHOWS

• MB is one of the most successful creators and producer of unscripted programming

– 14 network series comprising 696 hours of programming aired-to-date

– Franchise shows include The Apprentice, Survivor, and The Contender

– 53 executive-produced TV seasons / cycles

• Strong historical performance with attractive economics

– Generated $448MM of net revenue and $273MM of EBITDA over last 5 years

– License fees generally exceed production costs

– Pioneered the product placement / sponsorship model and generally owns all int’l format rights

• Healthy slate of existing shows and pipeline of new projects

– 7 series on-air in 2007/2008 season

– Expanding internationally and diversifying programming types (game shows, internet, etc)

– $40MM in EBITDA commitments for 2008

Are You Smarter…., $17

The Contender, $12

Other Shows, $17

Rock Star, $36

Survivor, $78

The Apprentice, $114

2003-2007 EBITDA by Show

$281MM of Cume EBITDA*

* Does not reflect non-show allocable EBITDA of ($8MM)


MBP FIT, RISKS AND MITIGATIONS

• We have strong international distribution (particularly w/ acquisition of 2waytraffic) but require additional shows to fill the pipeline

• MBP would help SPT grow its reality business and is largely complimentary to existing assets

– SPT’s reality business is primarily focused on traditional game shows (WOF, Jeopardy)

– Potential acquisition of Michael Davies would enhance our traditional game show business (e.g., Power of 10)

– Potential acquisition of MBP would diversify our reality portfolio with story-driven, unscripted programming (e.g., Survivor, The Apprentice) and help fill the international pipeline

Risks

• Potential internal competition between ER and MBP

• Each will have independent budget plus mgmt visibility to minimize overlap

• May lose economic leverage once affiliate w/ major studio

• 50% ownership structure effectively keeps MBP independent

• Significant portion of value locked up with MB • Will confirm depth of mgmt extends beyond MB (e.g., as it did with Spelling Entertainment)

• Genre / MBP may be past peak • Strong track record, diverse portfolio of shows, and ’08 commitments

Mitigations

• Significant portion of value locked up with 2 key shows (Survivor & The Apprentice)

• Belief that MBP is a “hit maker” and can replace key shows or that they will continue (diligence)


MBP HISTORICAL PROFITABILITY

$61

$64

$82

$51

$17

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2003 2004 2005 2006 2007

2003 - 2007 EBITDA ($MM)

’04-’07 Avg. = $64MM

’03-’07 Avg.= $55MM

Survivor $14.7 $16.9 $15.3 $14.4 $16.5

Apprentice $1.6 $26.8 $47.8 $30.7 $7.1

Rock Star -- $1.4 $11.8 $20.9 $1.6

Are You…. -- -- -- -- $16.5

Total Other $0.9 $5.4 $6.6 ($2.5) $19


ESTIMATED MBP GO-FORWARD PROFITABILITY

$31$26

EBIT Impact

• On an EBIT basis, business is likely to be break-even or slightly better in the first year (due to initial amortization associated with committed earnings)

• Years 2 and beyond will see increased EBIT contribution as amortization decreases

Accounting for 50% Stake

• Equity accounting is more likely, SPE would reflect 50% of Net Income after amortization within SPE’s EBIT

• Consolidation is preferable (100% of Revenues, Costs, and EBIT are reflected on SPE’s books); however we only receive this treatment if our 50% provides effective control

$42 $42 $42

$26 $26 $26

$13 $16

$16

$31$39$6

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Committed Anticipated

FORECASTED EBITDA ($MM)

2008 2009 2010

Low Mgmt High Low Mgmt High Low Mgmt High

$49

$55$58

$42

$57

$65

$31

$57

$81

’04-’07 Avg. = $64MM


BID STRUCTURE AND IMPLIED VALUATION

50% x 10x

Cash at Close

At EOY CY08

50% x 10x

$206MM

$68MM

$274MMTotal Paid

$548MMImplied Total Value

Survivor Are You Smarter… Expedition Series

Apprentice On the Lot MTV Movie Awards

The Contender Pirate Master Wedding (P)

The Rock Star My Dad is…. Paranormal Ghost (P)Martha Amnesia

Are you Smarter… Bully Beat Down Wedding

Paranormal Ghost This is Your Life Shark Tank

Sting Contender UK/US Challenge

Live Like You are Dying

Jingles**

$41.1MM

$13.7MM*

2008 Committed

2008 Anticipated

• MBP has engaged Bear Stearns to sell 50% interest in company– Non-binding LOI likely due next Friday (4/25)– Preliminary valuation guidance was +$500MM

• Due to timing constraints and limited financial information, we recommend a “structured” bid– 10x of 2008 EBITDA; cash at close for Committed and EOY for Anticipated EBITDA– Offer to purchase remaining 50% share

*Includes $1.2MM of “Other” EBITDA; ** Just picked up by CBS for 8 episodes


POTENTIAL DEAL TIMING

Date Action Item / Milestone

April 17 – 22 • SPE Management Review (Mosko, Hendler, Lynton)

April 22 – 23 • Brief SCA (Weisenthal)

April 23 – 24 • Inform Tokyo of pending LOI

April 25 • Submit Non-Binding LOI

May 2 – 23 • Negotiate LOI (3 weeks)

May 27 • 3 Month Exclusivity Begins

June and July • Perform Due Diligence and Negotiate Contract

End of July• Substantive diligence complete; material deal

points agreed

Early August • Brief GEC

Mid August • Brief SJC Board

Mid August • Close and Fund

August 26 • Exclusivity Ends

M T W T F S S

1 2 3 4 5 67 8 9 10 11 12 1314 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30

M T W T F S S

1 2 3 45 6 7 8 9 10 1112 13 14 15 16 17 1819 20 21 22 23 24 2526 27 28 29 30 31

M T W T F S S

12 3 4 5 6 7 89 10 11 12 13 14 1516 17 18 19 20 21 2223 24 25 26 27 28 2930

M T W T F S S

1 2 3 4 5 67 8 9 10 11 12 1314 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30 31

M T W T F S S

1 2 34 5 6 7 8 9 1011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30 31

J une 2008

J uly 2008

AUGUST

May 2008

April 2008


Appendix


HISTORICAL REVENUES BY TYPE

Comments

• Generated $448MM in net revenues since 2003

• License Fees average 112% of Production Costs

• Sponsorships represent 25% of net revenue over past 5 years

• Average EBITDA margin of 39% (based on gross revenues)

• 2007 includes $10MM in “consulting” revenues - TBD

($MM) 2003 2004 2005 2006 2007 Total

License Fees (1)$0 $20 $41 $144 $81 $285

Less: Production Costs $0 ($20) ($38) ($123) ($73) ($254)

Show Savings (2)$0 $0 $3 $20 $8 $31

Exec. Prod, Distribution, Prod. Svcs $17 $29 $33 $26 $38 $143Ratings Bonus $0 $8 $5 $4 $0 $17Product Placement / Sponsorship $0 $14 $62 $32 $4 $111International Dist. $0 $16 $23 $19 $20 $78

K-1 Income (3)$2 $2 $11 $5 $0 $20

Other Revenue (4)$1 $5 $6 $12 $23 $47

Net Total $21 $73 $142 $119 $92 $448

EBITDA $17 $51 $82 $64 $61 $273

Gross Revenue $21 $94 $180 $243 $165 $702% EBITDA Margin 82% 54% 45% 26% 37% 39%

Notes

(3) Company's share of revenue generated by JV entitites that manage certain shows (Survivor, Contender, On the Lot ), for which Company does not consolidate revenue but records only share of K-1 income

(1) Gross license fees

(4) Excludes ($4MM) and $4MM (i.e., offsetting amounts) in 2005 and 2006, respectively, recorded at JMBP, Inc., relating to 44MM earned in 2005 but held as a reserver at Contender Partners, LLC to provide advance funding for Contender's second season, subsequently paid to JMBP in 2006

(2) License fees less Production Costs


HISTORICAL EBITDA RECONCILIATION BY SHOW

($MM) 2003 2004 2005 2006 2007 Total

Show-Allocable Contribution (1),(2)

Survivor $14.7 $16.9 $15.3 $14.4 $16.5 $77.8The Restaurant $0.7 $0.5 $0.0 $0.0 $0.0 $1.2The Apprentice $1.6 $26.8 $47.8 $30.7 $7.1 $114.0The Casino $0.0 $3.8 $0.1 $0.0 ($0.1) $3.8The Contender $0.0 $1.2 $7.8 $0.2 $2.8 $12.0The Rock Star $0.0 $1.4 $11.8 $20.9 $1.6 $35.7Martha $0.0 ($0.1) ($0.1) $1.7 $1.1 $2.6Gold Rush $0.0 $0.0 $0.0 $0.9 $1.9 $2.8Are You Smarter… $0.0 $0.0 $0.0 $0.0 $16.5 $16.5On The Lot $0.0 $0.0 $0.0 ($0.1) $6.0 $5.9Pirate Master $0.0 $0.0 $0.0 $0.0 $8.3 $8.3Amnesia $0.0 $0.0 $0.0 $0.0 $0.8 $0.8

Total Show-Allocable $17.0 $50.5 $82.7 $68.8 $62.4 $281.4

Non Show-Allocable Contribution

Revenues (3)$1.4 $3.4 $3.8 $5.6 $17.3 $31.5

Expeneses (4)($1.2) ($3.5) ($5.7) ($12.7) ($20.9) ($44.0)

Other Non-Operating Revenues $0.0 $0.1 $0.7 $1.8 $1.9 $4.5

Total Non-Show Allocable $0.2 $0.0 ($1.2) ($5.3) ($1.7) ($8.0)

EBITDA $17.2 $50.5 $81.5 $63.5 $60.7 $273.4

Notes

(1) Does not include Eco-Challenge Fiji (last cycle) and Boarding House: North Shore. For the former, funding and physical production happened in 2002, and the only income for 2003 is represented by a show savings of ~$11.8K recorded at a separate entity, Eco-Challenges Lifestyle. The latter was produced by MB and the company received only a reimbursement of $30.6K (as recorded at Eco-Challenges Lifestyle) from WB for post-production services.(2) Contribution represents Net Revenues less COGS, participations, commissions, and development costs.

(3) Excludes ($4MM) and $4MM (i.e., offsetting amounts) in 2005 and 2006, respectively, recorded at JMBP, Inc., relating to 44MM earned in 2005 but held as a reserve at Contender Partners, LLC to provide advance funding for Contender's second season, subsequently paid to JMBP in 2006.(4) Excludes Officer salaries (i.e., Income to MB)


FINANCIAL SENSITIVITIES

($MM) 2007 (A) 2008 2009

Currently On-AirSurvivor $16.5 $15.0 $7.5The Apprentice $7.1 $9.3 $7.5The Contender $2.8 $0.7 $0.0The Rock Star $1.6 $0.1 $0.0Martha $1.1 $1.2 $0.0Are You Smarter… $16.5 $10.3 $11.0On The Lot $6.0 $0.4 $0.0Pirate Master $8.3 $1.0 $0.0My Dad… $0.0 $0.4 $0.0Amnesia $0.8 $1.0 $0.0

Total $60.7 $39.4 $26.0

New ProjectsExpedition Series (THC) $0.0 $1.0 $0.0MTV Movie Awards (MTV) $0.0 $0.6 $0.0Paranormal Ghost Pilot (Fox) $0.0 $0.2 $0.0Wedding Pilot (TNT) $0.0 $0.0 $0.0

Total $0.0 $1.8 $0.0

Other ($1.7) $1.2 $0.0

Total Committed / Actual $59.0 $42.4 $26.0

($MM) 2008 2009 2010 Average

Total EBITDALow Case $48.5 $41.6 $31.2 $40.4Mgmt Case $54.8 $57.1 $57.1 $56.3High Case $57.9 $64.9 $81.1 $67.9

+

=

Committed EBITDA by Show Case Build-Up

($MM) 2008 2009 2010 Average

Committed EBITDA $42.4 $26.0 $0.00 $22.8

Notes

(1) Anticipated EBITDA is calculated as follows

Low Case: 2008-2009 = 50% of Mgmt Case Anticipated EBITDA; 2010 is 75% of Low Case 2009 Total EBITDA

Mgmt Case: 2008-2009 provided by Mgmt; 2010 is 100% of 2009 Mgmt Case Total EBITDA

High Case: 2008-2009 = 125% of Mgmt Case Anticipated EBITDA; 2010 is 125% of 2009 High Case Total EBITDA

($MM) 2008 2009 2010 Average

Anticipated EBITDA (1)

Low Case $6.2 $15.6 $31.2 $17.6Mgmt Case $12.5 $31.1 $57.1 $33.6High Case $15.6 $38.9 $81.1 $45.2


COMPARABLE TRANSACTIONS

Last FY multiples

Date Target AcquirorTransaction value

(m) (100%) EV / Sales EV / EBITDA EV / EBIT

Dec-07 Reveille Shine $155 2.0x n/a 12.0xDec-07 12 Yard Productions ITV £35.0 3.0x 14.8x naNov-07 Wall to Wall Shed Media £25.0 1.3x 12.5x naSep-07 Metronome Film and Television Schibstead £31.4 0.4x na 18.8xSep-07 Twenty Twenty Productions Shed Media £18.00 1.9x 8.6x naAug-07 Sparrowhawk Media NBC Universal £175.0 1.8x na naAug-07 Objective Productions All3Media £50.0 2.2x na naJul-07 Marathon Group De Agostini € 250.0 3.6x na naJul-07 Prospect Pictures DCD Media £7.1 0.9x na 3.9xJul-07 September Holdings DCD Media £9.1 1.2x na 12.9xJul-07 West Park Pictures DCD Media £3.0 2.7x na nmMay-07 Endemol Investor group incl. John de Mol € 3,396.8 3.0x 19.2x 21.2xJan-07 Princess Productions Shine £20.0 na 8.5x 8.6xJan-07 Endemol France Endemol NV € 450.0 2.6x na naDec-06 WWTBAM & Cellador 2waytraffic £111.5 3.8x 7.3x naDec-06 Kudos Shine £35.0 na 11.0x 11.3xAug-06 All3Media Secondary buy-out (Permira) (UK) £320.0 1.4x 11.5x 12.3xMay-06 Tiger Aspect Holdings IMG Media (TWI) £27.0 0.4x 12.1x 15.1xApr-06 Darlow Smithson Productions IMG Media (TWI) £20.0 1.0x na naApr-06 Odeon Film (GER) GFP Vermögensverwaltungs (GER) £15.6 0.4x 4.3x 4.5xMar-06 Hurricane (GER) Spütz (GER) na na na naDec-05 IWC (UK) RDF (UK) £14.0 0.8x 17.5x 19.5xNov-05 Ricochet (UK) Shed (UK) £30.0 2.0x na 14.1xOct-05 TV Corp (UK) Tinopolis (UK) £27.7 0.6x 21.2x naAug-05 Touchpaper Television (UK) RDF (UK) £4.2 0.9x 11.9x na

3rd Quartile 2.5x 14.8x 16.0xMedian 1.6x 11.9x 12.6xMean 1.7x 12.3x 12.8x1st Quartile 0.9x 8.6x 10.6x


MBP VALUATION BASED ON REVEUNE AND EBITDA MULTIPLE COMPS

($MM) 2008 Est. Gross Revenue 2008 Est. EBITDA

MBP Financials $140.6 $54.8

Multiple Implied Value Multiple Implied Value

TV Production M&A Comps3rd Quartile 2.5x $351.5 16.0x $877.5Mean Multiple 1.7x $242.6 12.8x $703.41st Quartile .9x $126.5 10.6x $581.8

Media M&A Comps3rd Quartile 2.7x $382 15.3x $835.6Mean Multiple 2.3x $324 12.5x $684.51st Quartile 1.3x $188 8.9x $485.9

Briefing Deck April 2008 – Confidential – PROJECT FIREBIRD.

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Transcript of Briefing Deck April 2008 – Confidential – PROJECT FIREBIRD.