CONFIDENTIAL

Digital Services and DistributionAcquisition Strategy

DRAFT

page 2

Executive Summary

• SPE must continue to invest to address challenges created by the market’s transition to digital distribution

– Digital distribution increases pressure on traditional distribution economics, advertising sales, and theatrical marketing

– Grouper positions SPE to benefit from digital distribution, but its projected EBIT only partially addresses slowing growth and limited margin potential of SPE’s core businesses

• Grouper acquisition provided a solid foundation, but requires time and resources to succeed

– Grouper offers technology, infrastructure, management, and initial traction with customers

– Further investment in content, audience, marketing, and distribution is required

• Consolidation in digital video market increases need for scale and speed-to-market

– Consolidation is raising the threshold for minimum audience size and content offering

– Online video syndicators are building networks of loyal advertisers and distribution partners

• Targeted acquisitions would build on SPE’s current digital assets and accelerate execution of our digital services strategy

– Break and Heavy own high quality content and attract large audiences in a key demographic

– Roo combines a large base of aggregated content, syndication partners, and monetization

page 3

SPE Must Invest Further to Address Challenges to Core Businesses

• Sales increasingly cross-platform

• Budgets shifting away from traditional outlets

• “Grass roots” campaigns increasingly prevalent (social networks, viral ads)

• Market less forgiving of average to poor titles due to instantaneous availability of information online

• New forms of content competing for consumers’ time and money

• Traditional distribution channels’ economics under attack, pressuring studio margins

Theatrical MarketingTheatrical Marketing

Content Distribution Economics

Content Distribution Economics

Advertising SalesAdvertising Sales

Changing distribution landscape is contributing to SPE’s EBIT gap

Grouper’s incremental EBIT(1) will help, but further investment is required

Changing distribution landscape is contributing to SPE’s EBIT gap

Grouper’s incremental EBIT(1) will help, but further investment is required

(1) Current SPE EBIT gap is roughly $75MM; Grouper expected to contribute $10MM of EBIT in FY09, $28MM of EBIT in FY10

page 4

Grouper Provides a Solid Foundation, But Requires Time and Resources to Achieve Stated Goals

ContentContent

AudienceAudience

FunctionalityFunctionality

• Small base of UGV • Original digital content• Licensed content• Prosumer content

• Film and Television

Grouper SPE 1st Year Development

• Demonstrated traction with targeted audience

• Leverage SPE marketing and promotions

• Build distribution network

• N/A

• Differentiated user experience

• Robust infrastructure

• Enhance feature set• Improve embedded player

• N/A

page 5

Market Evolution is Raising Minimum Success Requirements

• Google’s acquisition of YouTube raised the bar for minimum base of content and users required to succeed

• Ongoing investments by new media (Yahoo!) and traditional media competitors (Viacom, NewsCorp) increases competition for content and audience

• Sites with a large base of targeted, high-quality content are building leading brands and capturing audience

• Online aggregators and syndicators are licensing content and building strong relationships with advertisers

page 6

ContentContent

AudienceAudience

FunctionalityFunctionality

Acquisitions Must Address Competition for Content and Audience

Market Inception

Develop or License

Acquisition Focus

• Wide range of sites, little content focus

• Multiple sites growing in lock-step, no critical mass

• Limited functionality

• Media companies pair studio content with UGV sites (Viacom/Atom; NewsCorp/MySpace)

• Sites with large base of owned content capture high value demographics (Break, Heavy)

• Functionality is increasing but is not the primary draw

• Acquisitions raise the bar for minimum audience size (Google/YouTube)

Market Consolidation

page 7

Content Pureplay

Audience Pureplay

Content With Audience

Acquisition Priorities

Description

Valuations

Speed

Priority

Moderate

Targeted / niche content with small

audience

Moderate

Content with large audience in high-value

demographics

FastGain traction quickly

SlowRequires multiple

acquisitions

High Medium Low

Expensive

Sites with audience but no differentiated

content

SlowRequires content

and deals to supplement

page 8

Functionality + Audience

PhotoBucket (12.0)

Six Apart (10.4)

Image Shack (9.3)

Xanga (5.5)

Reunion (4.7)

MetaCafe (3.1)

Digg (2.1)

Putfile (1.4)

Friendster (1.0)

Content + Audience

Roo Media (5.8)

BrightCove (N/A)

Break.com (3.3)

eBaum’s World (3.0)

Bolt.com (2.9)

Heavy.com (2.7)

May be Prohibitive

Content

College Humor (0.9)

JibJab (0.6)

Broadband Sports (0.1)

RocketBoom(0.04)

Revision3 (0.02)

Channel 101 (0.02)

Content + Functionality

Pure Video (0.9)

Castpost (0.2)

Now Public (0.09)

Bix (0.08)

Blip.tv (0.06)

Dave.tv (N/A)

Functionality

Meetup (0.7)

Piczo (0.5)

Text America (0.5)

Imeem (0.2)

VideoEgg (0.2)

eyeSpot (0.2)

MotionBox (0.2)

Famster (N/A)

Competitive Landscape and Acquisition Candidates

Tier 1 Candidates

Tier 2 CandidatesAudience

Putfile (1.4)

DailyMotion (0.8)

vMix (0.8)

vidiLife (0.8)

ManiaTV (0.6)

Revver (0.5)

Vimeo (0.5)

page 9

• Heavily male audience, mostly age 15-35

• Owns a large base of compelling content

• Strong advertiser relationships

3.3MM • $75MM-$125MM

• Based on early guidance from Montgomery

• Large, syndicated audience

• Relationships with content providers, advertisers, and web site partners

5.8MM • $50MM - $100MM

• Public but thinly traded, will want a premium

• Audience skews toward males age 15-35

• Owns all content including mix of video, animation, and games

2.7MM • $150 - $200MM

DescriptionDescription Valuation RangeValuation RangeUsers(1)Users(1)CompanyCompany

Leading Acquisition Candidates

(1) Monthly Unique Users per Nielsen Net Ratings except for Roo(2) Roo audience estimate is of unique streamers per ComScore

Tier 1

May beProhibitive

• Hosts photos and videos, enables linking to sites like MySpace and Blogger

12.0MM • $250-$450MM

• Based on rough guidance from Jeffries

• Content aggregation and distribution (competes with Roo)

• Strong content/advertiser relationships

N/A • $230 - $255

• Guidance is for venture round, acquisition price may be higher

Viable acquisition candidates combine content and an attractive audience at valuations below $150MM

PriorityPriority

Potential Cross-Sony Opportunity

page 10

Next Steps

• Initiate conversations with Tier 1 acquisition candidates

• Analyze and value acquisition targets

• Reconvene in two weeks to discuss potential acquisition offers

CONFIDENTIAL

APPENDIX

page 12

Market Leaders Consolidating to Expand Brand and Capture Audience

Deeper OfferingsInception Tipping Point Consolidation

• Multiple market entrants grow at similar rates

Market Dynamic

Minimum Requirements

to Compete

Areas of Differentiation

Examples

(2004 – 2005) (Early 2006) (Late ’06 / Early ‘07) (Late ’07 / Early ‘08)

• Content and features on-par with competitors

• Limited differentiation

• Dozens of pure-play UGV sites struggle to reach a million unique users

• Leaders break-out from the pack

• Single compelling characteristic

• Unique piece of content

• Ease-of-use

• YouTube explodes with “Lazy Sundays”

• MySpace users flock to improved community features

• Leaders invest to expand audience and address priority content segments

• Large audience• Large content base• Relationships with

advertisers

• Content that appeals to high-value customer segments

• Site syndication

• Google/YouTube• Yahoo/JumpCut/Bix• Viacom/Atom• NewsCorp/MySpace

• Leaders add niche content and features for heavy users

• Supplement broad offering with depth in specific verticals

• Growing audience for niche offerings

– Askaninja– Loneleygirl

• Large audience• Brand known for an

area of expertise

page 13

Break.com

Content OfferingContent Offering

• Online entertainment network and community powered by traditional user-generated content

• Content base skews heavily toward 15-35 year old male-oriented humor, sports and racy categories

• Majority of the content is original and created by users specifically for Break.com (Break owns much of its content. Takes an exclusive license to uploaded content it doesn’t own)

• Pays $250/ video for videos it wants to feature, incentivizing users to create high-quality videos (est. to spend ~$250K/ month buying user videos)

PartnershipsPartnerships

Strategic ProfileStrategic Profile

• Established in 1998 as Big-Boys.com, a video-sharing site

• Purchased in May 2004 by Keith Richman, co-founder of Billpoint, and changed name to Break.com

• 100% owned by Richman and a few business partners – has never taken any venture financing

• Generate revenue through custom advertising deals, PPC content plugs, banners and text links

• Based in Beverly Hills, CA with 33 employees

• Leverages AdBrite to sell its banner and text ads

• Established partnerhsip with Amp’d Mobile in Nov. 2005 to distribute videos through mobile, charging $2.99/ month for unlimited access

User MetricsUser Metrics

2.6 2.53.5

2.6 2.9 3.3

Jul-06 Aug-06 Sep-06

MM NR

Web page views (MM)

Time/ person(min.)

141.2 189.2 135.4

16.1 21.5 15.3

Internal Break.com sources estimate uniques of approx 14.7MM.

Unique Users (MM)Note:

estimated to generate ~100MM streams/ month

Source: Nielsen//NetRating used for page view, time data, AdBrite; BambiBlogs.com; Break.com; Multichannel News; Amp’d Mobile; PureVideo; ComScore Video Matrix

page 14

Break.com

Advertising:

• Banner ads – no pre-rolls or text

Content

• User-generated

• Share it with friends (viae-mail)

• Embed & blog it

Interactivity:

• Promote to home page

• Rate It

• Recommend

• Comment

page 15

ROO Group, Inc. (NASDAQ: RGRP)

Technology and Service OverviewTechnology and Service Overview

Core Services provided include:

• ROO Video Solutions - Customized video solutions for specific customers or industry segments; platform has been designed to be flexible in accommodating various opportunities for activating video for broadcast over the Internet and accommodating emerging technologies such as wireless devices (i.e., mobile phones and PDAs) and set top boxes

• ROO Syndication of Licensed Video Content - Provide a turnkey solution for customers located throughout the world to activate licensed topical video content on their web sites;

• Current customers for this service include Verizon in the United States, Bulldog Broadband in the United Kingdom and News Interactive a subsidiary of News Corp

• ROO’s Online Advertising Network - Through syndication clients, ROO has developed a network of web sites across which the company can sell advertising inventory

• The advertising includes traditional banner ads and television-style 15 second and 30 second commercials, which can be programmed to play before and after topical video clips that are most likely to be viewed by the advertisers' chosen demographic

• Syndication clients can receive a percentage of the advertising revenue generated on their websites

• Recent advertisers utilizing in-stream advertising have included Microsoft, Apple, Honda, Hyundai, Target, Proctor & Gamble and Pfizer

page 16

ROO Group Business Overview

Content Partners Sites

Advertisers

Entertainment

News

Lifestyle and Family

Partners

Owned and Managed

Ingestion Engine

Ad Network and Insertion

Program Channels

Video Player

Licensing fees, payment-per-stream

and ad revenue share

page 17

ROO Group Video Stream Comparison

Roo Group Inc. 5,841 186 31.3

page 18

8.3 7.5 6.8

3.0 3.5 2.7

Jul-06 Aug-06 Sep-06

MM NR

Heavy.com

Content OfferingContent Offering

• Broadband entertainment network focused on providing high-quality content

• Content base skews toward 18-34 year old male-oriented humor and racy categories

• Takes full and exclusive ownership of a range of content (mix of video, animation, and games) created by Heavy and/or its partners, e.g., NBC delivered through distinct channels

• Generates revenue through banner ads, pre-rolls, and branded production, e.g., Burger King videos

PartnershipsPartnerships

Strategic ProfileStrategic Profile

• Established in 1999 as a P2P digital content sharing site by Simon Asaad & David Carson

• Polaris venture capital holds a 25% stake in Heavy; Polaris lead a $10MM round in January 2006

• Expected to generate ~$20MM adv. revenues in 2006, a 300% increase over 2005 (recently valued at ~$200MM – source: paidContent.org)

• Ad sales and marketing conducted internally

• Based in New York, NY with 20 employees

• Recently announced partnership with TiVo to provide content for TiVo’s VoD service

• Established partnership with Verizon Wireless in April 2006 and created a channel on V-Cast subscription mobile offering

• Parnter with Sony PSP, video iPod, and Virgin Mobile to distribute non-wireless mobile content

User MetricsUser Metrics

Web page views (MM)

Time/ person(min.)

9.3 10.4 6.6

1.5 1.2 1.0

Unique Users (MM)Note:

estimated to

generate 80-90MM streams/ month

Source: Nielsen//NetRating used for page view, time data, Heavy.com; Multichannel News; PureVideo; ComScore Video Matrix; paidContent.org; FT.com; VCMike’s Blog

page 19

Heavy.com

Advertising:

• Banner ads

• Pre-rolls

Content sharing:

• Heavy/ partner produced channels

• Share it with friends (via e-mail)

• Blog it

Interactivity:

• Rate It

• Comment