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CONFIDENTIAL

Spider-Man Merchandise Business Update

April 2010

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page 2

Key Questions and Working Hypotheses

QuestionsQuestions HypothesesHypotheses

• What impact will Disney ownership have on Spider-Man merchandise?

• Disney can and will drive further growth in Spider-Man

• Disney’s incentives do not encourage success of other Marvel characters to come at expense of Spider-Man

• What is the value of SPE’s interest independent of a deal?

• Roughly $300MM before Disney grows revenues

• Roughly $400MM with growth from Disney

• Will Disney/Marvel insist we ease protections and sell our full interest?

• If so, what are the risks of easing protections and can we secure a premium for doing so?

• Disney is likely to insist on adjustments to black-out and retail promotions

• Revising some protections can be done with limited risk and may be justified by a potential premium

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DRAFTDisney has significant incentives to continue to support the Spider-Man merchandise business

• With Marvel leading sales, Spider-Man has become an evergreen retail property, similar to Mickey Mouse

– Spider-Man is a consistent Top 5 overall merchandise brand and Top 3 boys merchandise brand

– Maintains relevancy and provides retail leverage for the entire portfolio

• Spider-Man is critical to Disney’s boys strategy

– Growth in boys demo is primary corporate objective for Disney CP

– Library of boys properties was primary strategic rationale for Marvel acquisition

– S-M is considered premier property in boys category

• Disney needs to support the Spider-Man business to justify the Marvel acquisition price

– Substantial piece of Marvel’s current business (62% of overall EBITDA, 69% of total licensing EBITDA)

– Marvel acquisition premium suggests aggressive growth targets

• Disney has the opportunity to extract substantial incremental value from the Spider-Man merchandise business through its CP engine, particularly in international regions

– 52/48 domestic/international split vs. 40/60 for Disney CP

– Eliminate 25% commissions through shift from international agents to Disney sales force

page 3

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($50)

$0

$50

$100

$150

$200

$250

$300

EB

ITD

A (

$M

)

page 4

The Spider-Man merchandise business accounts for a majority of both Marvel’s licensing and overall profits

Note: * S-M merchandise numbers based on SPE internal data. (1) MVL Total EBITDA defined as EBITDA less SPE’s share of film merchandise. MVL recognizes SPE share as minority

interest, whereas other studios' shares of license royalty income is recorded within SG&A expense.(2) Assumes S-M publishing is 50% of Total Publishing or $23.2MM.

2007-09 MVL Avg. EBITDA (1,2)2007-09 MVL Avg. EBITDA (1,2)

$260.9$260.9

MVL 2007-09 Avg. Licensing EBITDA MixMVL 2007-09 Avg. Licensing EBITDA Mix

MVL 2007-09 Avg. Total EBITDA Mix (2)MVL 2007-09 Avg. Total EBITDA Mix (2)

69% 31%S-M Merch. &

Film Participations

S-M Merch. & Film

Participations

Other Licensing

Other Licensing

62% 38%Total S-M BusinessTotal S-M Business OtherOther

S-M - MVL Share of S-M Merch. EBITDA Post Audit, $131.1

S-M - MVL Share of S-M Merch. EBITDA Post Audit, $131.1

S-M Publishing, $23.2S-M Publishing, $23.2

Other, ($26.8)Other, ($26.8)

S-M Film Participations,

$8.0

S-M Film Participations,

$8.0

Total S-M Licensing,

$139.1

Total S-M Licensing,

$139.1

Total S-M,

$162.3

Total S-M,

$162.3

Other Licensing, $62.9

Other Licensing, $62.9

Other Publishing, $23.2

Other Publishing, $23.2

Film Production, $39.2

Film Production, $39.2

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page 5

Disney is likely to drive upside in Spider-Man merchandise revenues

Base Case $40 M• Historical average, some increase for

audit claims, S-M4 in FY13, S-M5 in FY15, S-M6 in FY18

Downside ($4 M)• 10% decrease in overall merchandise if

S-M4 underperforms

Upside Potential - Disney

Growth from International $11 M• Expand from 52/48 international to

60/40 (in-line with Disney overall)

Growth from Disney Retail $1 M• Disney starts selling in Disney-owned

retail and theme parks

Eliminate Int’l Commissions $4 M • 25% commissions eliminated

Food + Other Categories Minimal• Limited value in freeing up food

categories given current regulatory environment

Source: MPG and CorpDev analysis.

Approximate Annual Revenue Forecast to

SPEAssumptions

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$285$317

$419$453

?

$0

$100

$200

$300

$400

$500

$600

Val

ue

($M

)

We need to determine whether a deal would include a

premium

A deal at $300-$400 M is inline with what we would receive without a deal and avoids

downside risk

SPE Share of Spider-Man Merchandise Rights Valuation

Source: SPCP and CorpDev analysis.Note: DCF based on perpetuity growth rate of 2.0%, discount rate of 9.0% 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 6

Scenarios Downside Base CaseDisney Int’l and Retail

Eliminate Int’l Commissions

Premium

-$32

+$102

+$34

?

Upside Potential

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8.7x

11.3x

14.7x15.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

Va

lua

tio

n M

ult

iple

sPremium Included in Disney’s Acquisition of Marvel

Source: SEC filings and CorpDev analysis.Note: * Multiples based off LTM EBITDA for entertainment, CP, licensing, and publishing comparables

** Multiples based off trailing 3-yr. avg. Marvel EBITDA ($273.1MM) less trailing 3-yr. avg. SPE share of film merchandise ($12.2MM) or $260.9MM page 7

Comparable Company Multiples*

Marvel Pre-Deal Trading Multiple**

Disney/MarvelBid Multiple**

Disney/Marvel Acquisition Multiple**

+31%

+30%

+8.1%

Driver of PremiumDisney control +

synergiesDisney stock price

run-up

Superior growth prospects for all

Marvel properties

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DRAFTSPE may only be able to argue for a portion of the control premium Disney paid for Marvel

page 8

Disney Rationales for Marvel Acquisition

SPE Should Participate in

Premium?Comments

• Drive international growth, particularly for Marvel licensing business

Yes

• Substantial international growth potential at 52%/48% domestic vs. international split vs. 40%/60% for Disney CP

• Spider-Man represents major share of Marvel international growth potential

• Produce content featuring other Marvel characters

Possibly• Argument requires SPE to provide increased retail flexibility that

would allow other Marvel characters to draft off Spider-Man’s retail strength

• Extend and grow Marvel properties on new media (video games, Internet, mobile content)

Possibly• SPE only participates to the extent Disney’s new media

extensions boost Spider-Man merchandise

• Take Marvel film distribution in-house upon expiration of distribution deal with Paramount in 2012

No • Not relevant for Spider-Man

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Potential Sources of Premium

Potential Sources of Premium

• Sale of 100% of our S-M merchandise participation

• Increase Marvel participation in retail promotion for Film merchandise

• Ease Classic “black-out” window

• Ease or lift certain food category constraints

page 9

Disney is likely to insist on adjustments to SPE retail protections, which we would consider if they are exchanged for a premium and we are comfortable with the impact

SPE AsksSPE Asks Off the TableOff the Table

• Payment for audit

• Payment for value of growth drivers

– International growth

– Disney retail growth

– Eliminate commissions

• Premium

• Restrictions on ability for SPE to promote film (independent of merchandise at retail)

• Increased SPE commitment to release new films (already committed to release to retain rights)

• Increase Marvel participation in Spider-Man films

Negotiating DynamicsNegotiating Dynamics

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• Easing the “Black-out” will not work for either party if the outcome is a significant reduction of Film merchandise at retail

• Easing the “Black-out” may be workable for both parties if

– Disney / Marvel is satisfied

• Provide administrative and financial benefit by allowing Classic characters to maintain shelf presence; (particularly helpful for small licensees that cannot afford cost of Film merchandise)

• Allow introduction of non-Film merchandise with new looks to further expand the franchise and seed product; increase continuity during non-Film years

• Allow Disney/Marvel to allow new Spider-Man merchandise types drag along on Film promotion

– SPE is protected

• A minimum percentage of retail presences that is dedicated to Film merchandise

• On a practical basis, SPE has made exceptions allowing Classic merchandise in the past and Disney/Marvel have strong incentives to satisfy retailer and customer demand for Film merchandise

Potential Path Forward on the Classic Merchandise “Black-out”

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• Increasing Marvel’s role in retail promotion for Film merchandise will not work for either party if it divorces retail promotion from Film creative

• Increasing Marvel’s role may be workable for both parties if

– Disney / Marvel is satisfied

• Move Disney/Marvel to a leadership position in discussions with retailers about retail merchandise promotional campaigns and elements

• Allow Disney/Marvel to better coordinate discussions with retails about Spider-Man promotion and other character promotion

– SPE is protected

• Promotional elements relate specifically to Spider-Man films; no co-mingling of other characters and no co-mingling of Classic merchandise (effectively a creative “black-out)

• SPE retains control of creative direction (style guide) and creative execution

• SPE retains the right to be in the room for discussions with retailers

Potential Path Forward on Promotion of Film Merchandise

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Key Dates Negotiating Milestones

May 7, 2010 • Iron Man 2 released

May 14, 2010 • Both parties exchange audit reports

Jul 13, 2010• Each side responds to the other side’s audit

report

Aug 24, 2010 • End of audit report negotiation period

~Sep 30, 2010 (1) • Disney fiscal year end

TBD 2010• Hearing date for audit claims (at least 30-

days after Aug 24; could occur on Oct 2011 or later)

Mar 31, 2011 • SPE fiscal year end

Jun 20, 2011• Estimated date for hearing on non-audit

claims

Negotiating Milestones

• Commence discussion late May

• Agree on common base of financials in June

• Trade on key terms (Jul, Aug, Sep)

• Commence discussion late May

• Agree on common base of financials in June

• Trade on key terms (Jul, Aug, Sep)

• Target completion prior to arbitration ruling (Sep/Oct+; may depend on whether Disney desires to complete in their fiscal year end)

• Target completion prior to arbitration ruling (Sep/Oct+; may depend on whether Disney desires to complete in their fiscal year end)

Source: SPE Legal.Note: (1) Disney’s fiscal year ended on October 3 in 2009, September 27 in 2008, and September 29 in 2007.

page 12

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• Initial Contact

– Interplay between Ike Perlmutter and Bob Iger

• Tone of Initial Conversation

– Driven by current animosity and implication that Marvel appears to want SPE out

– Start with the premise that we seek to better monetize for both

• Ongoing Negotiations

– Is Disney willing to pay a premium for our protections

– Ike will clearly be involved, need to monitor his motivations

• Personal desire to “fix” the last deal vs. opportunity to utilize “Disney’s money” to secure what he wants

• Should be less sensitive to price than when he was Marvel’s owner or than if he had an earn-out

– Disney corporate used as a counter-point for SPE Corporate Development to ensure “rational” negotiations

– What role does Andy Mooney play in negotiations

Negotiating Considerations

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Next Steps

page 14

• Preview findings with key constituents

• Determine in more detail if key controls can be modified rather than eliminated (with G. Leon and R. Toll)

• Refine approach to negotiating strategy (based on today’s discussion)

• Broader meeting on April 27, 2010