Industry Overview April 2012 Industry Overview

April 2012

MediaBridge Senior Team

2

Extensive investment banking, corporate executive and legal experience

Most recently drove Covington Associates’ expansion into the digital media and technology sectors

Avid Technology Senior Executive (EVP Corp Development/M&A,CLO, CFO) from ‘99 to ’06. Led the Company in its most significant period of growth. Managed 12 strategic acquisitions, doubling the Company’s revenue to $1B and growing market cap from $400M to $2.5B

20+ years of experience in traditional and new media tech and 10+ years in venture capital and high tech

Corporate development, finance, and legal background; BS and MBA from MIT and its Sloan School of Management; J.D., Georgetown University Law Center

Extensive investment banking, equity research and operational IT experience

Most recently led Covington Associates’ expansion into the digital media and technology sectors, representing both privately held and publicly traded companies

VP Equity Research at FAC Equities covering digital media technology, networking hardware and software, and enterprise software companies. Previously at Sybase, McDonnell Douglas, and Digital Equipment Corp.

Author of three significant industry research reports on media technology and CDN markets

10+ years of experience in traditional and new media technology, and 20+ years of IT Industry experience

BS Mechanical Engineering, Digital Systems concentration from University of New Hampshire;

MBA from Babson College

Our principals have advised on more than 30 mergers and acquisitions in the media sector worldwide, comprising an aggregate transaction value of over $1 billion. Led by Ethan Jacks and John Bowen, our team has 50+ years of experience in media technology with unmatched expertise in the film, video, audio, broadcast, Internet, and new media markets.

Ethan Jacks

John Bowen

Senior Advisors At NAB – CRX Partners

3

Courtney Spencer and Roland MacBeth serve the media technologies industries as strategic and business development consultants. Both have played key roles in the M&A efforts of media technology companies, held key executive positions with consumer electronics and pro audio/broadcast firms, and consulted for some of the best-known companies in the electronics business.

CRX and MediaBridge work to provide the best combination of strategic and transaction expertise to the professional and consumer audio/video markets

30+ years of executive experience in professional, broadcast and commercial audio Senior VP Business & Professional Group Americas (Allen & Heath, Calrec, D&M Pro), D&M

Holdings Full time consultant, D&M Holdings (M&A and post acquisition integration focus) VP/GM, Professional Audio, Sony Broadcast & Professional

30+ years of executive experience in consumer, pro, and commercial AV Past and present consulting clients include: Gold Peak, Phoenix Gold, D&M Holdings, Mitek,

Pioneer Electronics, Terk, Audiosource, KLH, DASH Navigation, XM Satellite Radio, Cerwin-Vega, Carver, Gibson

President - Phoenix Gold International Senior Vice President of KLH Audio and Vice Chairman KLH Europe Executive Director of Sales and Marketing - Cerwin-Vega

Courtney Spencer

Roland MacBeth

Senior Advisors At NAB – Broadcast and Film

4

20+ years in the entertainment industry including award-winning work as an editor, producer, and director

Director of Digital Media and Technology at the University of Southern California’s School of Cinematic Arts

Worked on numerous feature films including the Academy Award winning Harlan County, U.S.A. (1976), Arthur (1981), and Visions of Light (1992)

Graham Sharp

Meri Weingarten

25+ years executive management experience in the media industry Current board member of Media Asset Capital, a full-service media consultancy, and AV3, a web

distribution channel Former President and CEO of xtranormal Inc. Former EVP and GM of Avid’s Video division, a $470 million business with 1500 employees Executive management positions with Post Impressions, Discreet Logic, and Dynatech

Senior Advisors – New Media and Private Equity

5

Consultant in Private Equity and Hedge Fund industries In-house lawyer at Plymouth Rock Assurance in Boston, MA focusing on corporate acquisitions

and commercial real estate Lawyer at Sidley & Austin, focusing on debt-derivatives and secured lending transactions. Served on the Boards of a variety of nonprofits, providing strategic advice and guidance on

fundraising and development, financial, and governance matters A.B. from Princeton University and a J.D./M.S.F.S. magna cum laude from Georgetown University

Ashley Stephenson

Mary Modahl

25+ years experience in Technology, Media, Education, and Healthcare Chief Marketing Officer at Health Dialog and QuantiaMD 10 years advising Universities and diverse healthcare industry players 15 years at Forrester Research in both Research and Marketing executive roles. Graduated from Harvard University with a degree in Economics

Strategic advisor specializing in the evolution of the global IT market. Co-founded or lead several technology companies as Chairman or CEO including Reva Systems

(acquired by ODIN) and Xedia Corporation (acquired by Lucent). Awarded “CEO of the Year” by Massachusetts Telecommunications Council Served on the Board of Directors for many venture-backed startups and industry consorita Graduate of Imperial College, London and an Associate of the Royal College of Science

Jenny Young du Pont

Transactions

6

Transaction Closed During Employment with: * Covington Associates; ** Silverwood Partners; *** Avid Technology

Wohler Acquires RadiantGrid

7

RadiantGrid was represented in the sale process by Ethan Jacks and John Bowen, principals at MediaBridge Capital Advisors, a digital media-focused investment bank. “We see this acquisition as a benchmark for the transformational change occurring in the broadcast and new media marketplace,” said Jacks. “Wohler and RadiantGrid together will help redefine the best practices for the industry.”

Wohler President and CEO Carl Dempsey called the move “the most significant

[for Wohler] in years. This has put the buzz back in it for us.” Calling RadiantGrid “the world’s best media transformation and integration platform,” Dempsey described the process that led to the acquisition and promised that while the combined organizations would function seamlessly, the RadiantGrid team would remain intact under the Wohler banner.

Kirk Marple, RadiantGrid president and chief software architect, characterized the union as an ideal match. “We’ve been looking for the right partner to accelerate our growth, both internationally and domestically, and it really seemed like the right fit.” “A key component of the RadiantGrid media platform is its faster-than-real-time processing, recently expanded to include standards conversion — an industry first.”

8

Company Award Winning Product Company Award Winning Product

AJA Ki Pro Quad Orad TD Control

Autodesk Smoke 2013 Panasonic BT-LH2170 LCD Production Monitor

Avid Avid Interplay Sphere Pixelmetrix OTT Meat Grinder (OMG)

Belden Belden 1776 Microphone Cable Quantel revolutionQ

Blackmagic Design Blackmagic Cinema Camera RadiantGrid New Media Automation Platform

Cameron Pace Group Shadow 5D Production Suite Redbyte Design/Decimator

MD-CROSS

Cobalt Digital LMNTS Ross Video Blackstorm Playout Server

Canon Canon EOS Series Sachtler ACE Tripod System

Chyron Engage Schneider Optics iPro Lens System

Dalet Galaxy Sierra Video Aspen 3232 Routing Switcher

Digital Broadcast Spot Commander Snell Momentum

Ericsson AVP-3000 Sony NEX-FS700 NXCAM

Evertz Dreamcatcher Telemetrics EPS Televator

Haivision KulaByte 4.0 TV Logic LQM-471W Monitor

Harmonic ChannelPort Utah Scientific UTAH-100/UDS

Harris Magellan NMS Wheatstone Sideboard Rack Audio Mixer

JVC GY-HM650 Mobile News Camera WideOrbit WO Master Control

Microwave Video Systems (MVS)

PortaQAM Microwave Modulator/Demodulator

Wohler iON Remote Monitoring Platform

Miranda iTX MC Xendata SX-10 Network Appliance

Multidyne SilverBACK II Zylight F8 Fresnel

NAB ‘12 Best of Show TV Technology Magazine

9

Company Award Winning Product Company Award Winning Product 1 Beyond Wrangler LTO-5 NetDrive Fujinon PL 19-90 Carbio

Adobe Creative Suite 6 GenArts Sapphire Edge

Aframe Cloud Video Production Platform HP Z1 Workstation

AJA Ki Pro Quad JVC GY-HMQ10

AJA T-Tap Libec SWIFT JIB50

ARRI L7-C Manfrotto Remote Controls for Canon HDSLRs

Autodesk Smoke 2013 Nikon D800

Avid Media Composer 6 Oconnor O-Focus Dual Mini

Blackmagic Blackmagic Cinema Camera Panasonic BT-LH1850

Blackmagic Teranex 2D and 3D Processors PRG TruColor TruColor HS

Canon Cinema EOS Series RED Scarlet

Carbon XL Carbon XL 10 Sachtler Ace Sachtler Ace

Convergent Design Gemini RAW Sony NEX-FS700

Edelkrone FocusPLUS+ and FocusONE TVLogic LVM-074W

Zylight F8 Fresnel

NAB ‘12 Best of Show Digital Video Magazine

Video Markets Overview

Date Target Name Value ($MM)

EV / LTM Revenue Acquirer Name

Jan-12 Trident Microsystems, Set Top Box Business 65 - Entropic Communications, Inc.

Jan-12 Telestream, Inc. - - Thoma Bravo, LLC

Jan-12 Sezmi Corporation 52 KIT digital, Inc.

Jan-12 Zeebox Limited (10%) - - British Sky Broadcasting Ltd

Jan-12 Aspiro AB (73%) 32 - Schibsted ASA

Jan-12 Dolphin Television Ltd. - - Sony Entertainment Television UK

Feb-12 Roxio - - Corel Corporation

Feb-12 VCON Video Conferencing 4.5 - ClearOne Communications

Feb-12 IP Video Systems, Inc. - - Barco NV

Feb-12 NetLogic Microsystems 3,700 8.4 x Broadcom Corp.

Mar-12 Gennum Corporation 510 3.7 x Semtech Corp.

Mar-12 Cotendo, Inc. 268 9.0 x* Akamai Technologies, Inc.

Mar-12 NDS Group 5,022 5.0 x Cisco Systems

Mar-12 SeaChange, Broadcast Server and Storage Business - - Vantage Point Capital Partners

Apr-12 RadiantGrid Technologies - - Wohler

Apr-12 Cambotics Inc - - Ross Video

Pend. Hyro Australia 14 - Kit Digital

Pend. Technicolor SA, Broadcast Services Division 37 * - Ericsson

Pend. Radvision 163 * 2.1 x * Avaya

11

Source Capital IQ, Press Releases * Estimated Value

Video M&A 2012 Select Transactions

Date Target Name Value ($MM)

EV / LTM Revenue Acquirer Name

Jul-11 Rovi BD+ Technology 25 - Irdeto USA

Jul-11 GDC Technology Limited (80%) 73 1.2 x The Carlyle Group

Jul-11 Cloud.com, Inc. 164 - Citrix Systems, Inc.

Jul-11 Kulabyte Corporation - - HaiVision Systems, Inc.

Aug-11 Loquendo S.p.A. €53 - Nuance Communications, Inc.

Oct-11 Autonomy Corp. plc 12,033 11.1 x Hewlett-Packard Company

Sep-11 Iridas, Certain Assets - - Adobe Systems Inc.

Sep-11 Panvidea, Inc. - - Thought Equity Motion, Inc.

Oct-11 Qumu, Inc. 53 3.9 x Rimage Corp.

Nov-11 BigBand Networks, Inc. 162 - Arris Group Inc.

Nov-11 BNI Video 99 - Cisco Systems, Inc.

Oct-11 MOSAID Technologies 590 5.6 x Sterling Partners

Oct-11 PubliTronic B.V. - - Grass Valley, Inc.

Oct-11 Skype 8,600 10 x Microsoft Corporation

Nov-11 VideoSurf, Inc. 70 * 7.0 x * Microsoft Corporation

Dec-11 SetJam, Inc. - - Motorola Mobility Holdings, Inc.

Pend. Motorola Mobility 12,033 0.6 x Google Inc.

12

Video M&A 2011 Select Transactions - Q3-Q4

Source Capital IQ, Press Releases * Estimated Value

Date Target Name Value ($MM)

EV / LTM Revenue Acquirer Name

Jan-11 Kewego SA 32 3.0 x KIT digital, Inc.

Jan-11 KickApps Corporation 45 - KIT digital, Inc.

Jan-11 Kyte.tv 6 - KIT digital, Inc.

Jan-11 Grass Valley 80 0.2 x Francisco Partners

Mar-11 Inlet Technologies, Inc. 95 6.3 x Cisco Systems, Inc.

Mar-11 The Foundry Visionmongers 100 5.0 x The Carlyle Group

Mar-11 TXT Polymedia S.p.A. 34 1.6 x KIT digital, Inc.

Mar-11 Accordent Technologies 50 5.6 x Polycom, Inc.

Jun-11 Evolving Systems, Inc., Numbering Solutions Assets 46 3.2 x NeuStar, Inc.

May-11 Stereo D - - Deluxe Entertainment

Jun-11 SageTV - - Google Inc.

13

Video M&A 2011 Select Transactions - Q1-Q2

Source Capital IQ, Press Releases * Estimated Value

14

Growth Capital 2012 Select Video Transactions

$0-10m

$10-20m

$25m $45m $200m $20.5m

Source Capital IQ, Press Releases, Public Filings

15

Growth Capital 2011 Select Video Transactions

$5-10m

$10-20m

$20-50m

$50m+

[est.]

$0-5m

Source Capital IQ, Press Releases, Public Filings

1. Disruptive Technology Heightened: The conversion to standard IT solutions is nascent in its transition. As digital technologies enable performance, flexibility and cost efficiencies, cloud-based initiatives will go one step further, ranging from utility applications through full network-based solutions.

2. Multiplatform Consumption will Accelerate: Growth in mobile and web-based consumption cannot be under estimated. The iPad and other various OTT options are driving mass adoption of non-mainstream media consumption and certain forward thinking operators have embraced new consumption models. Generational behavioral shifts are accelerating change, with two screens becoming the norm. Addressing scale, device format and synchronization, demand variability and bandwidth availability are key.

3. Network Connected, File-Based Workflows are Critical: There is a growing need for efficient file-based creation and distribution of media that augment and integrate with existing systems (e.g., linear automation, trafficking, rights management, business process management). File-based systems will become more intelligent, orchestrate processes in parallel, and improve multiplatform workflow efficiency, while dramatically reducing costs.

4. Advertising: Ad dollar spending will shift to mirror consumer viewing habits, and context will be critical driven by analytics. Total online display ad spending in the U.S. are expected to double from 2011 to $27B in 2016, but its growth rate will slow once ad spending and consumer viewing habits near equilibrium. Video advertisements will experience the most robust growth annually of online display ads – estimated to rise to 35% of online ad spending to $9.3B in 2016 from 16% in 2011.

16

Four Trends to Watch Video 2012

The following five slides profile a series of publicly traded media technology, distribution, and content companies. Many of the companies who are succeeding have addressed the message from Frost and Sullivan below.

“The digital content experience revolution is here to stay, and the level of fragmentation in both live and file-based content will get a lot worse before it starts to get better. Consumers are demanding access to their content anytime, anywhere and on any device – and service providers who do not consistently and innovatively meet the growing demands of ubiquitous video will fade and perish.” - Frost and Sullivan Achieving Operational Freedom in Digital Media Workflows April, 2012

17

Survey of Publicly Traded Companies in the Media Marketplace

18

$7,077

$21,016

$11,512

$16,645

$166

$5,065

$3,389

$6,509

$1,763

$8,863

$3,874

$9,197

$92,312

$133,283

$101,914

$108,042

$12,942

$69,429

$33,904

$31,621

$372

$4,527

$7,547

$21,333

$26,882

$71,426

$27,693

$19,148

$46,662

$67,100

$26,358

$18,954

Values In $MM

Adobe Akamai Autodesk Cisco Ericsson Naspers Panasonic Sony

Adobe Akamai Autodesk Cisco Ericsson Naspers Panasonic Sony

Cash $2,766 $849 $1,411 $46,742 $12,096 $1,001 $8,800 $17,524

Debt $1,512 $0 $0 $16,904 $4,888 $2,305 $19,914 $13,490

Enterprise Value (EV) $15,391 $5,660 $7,785 $78,223 $24,734 $22,870 $31,051 $20,437

EV / Rev 3.64 x 4.89 x 3.51 x 1.74 x 0.74 x 5.05 x 0.20 x 0.16 x

EBITDA Margin 34.8% 42.8% 20.8% 25.6% 14.4% 19.6% 5.4% 4.6%

Publicly Traded Media Technology Companies Market Capitalization – Large Cap

April 2003

April 2006

April 2009

April 2012

Source Capital IQ

19

$2,198

$3,935

$4,072

$946

$1,022

$66

$747

$441

$682

$1,876

$7,295

$823

$3,224

$651

$564

$1,138

$1,742

$3,227

$303

$617

$708

$1,381

$3,446

$5,300

$2,372

$1,917

Values In $MM Dolby Evertz EVS Harman RealD Rovi Tivo Yamaha

Dolby Evertz EVS Harman RealD Rovi Tivo Yamaha

Cash $1,022 $191 $42 $770 $29 $420 $619 $661

Debt $0 $2 $2 $389 $25 $995 $173 $222

Enterprise Value (EV) $3,072 $834 $657 $2,843 $649 $3,802 $935 $1,515

EV / Rev 3.25 x 2.92 x 4.85 x 0.68 x 2.54 x 5.50 x 3.93 x 0.34 x

EBITDA Margin 49.6% 33.1% 44.9% 8.9% 31.3% 34.3% -44.9% 5.6%

Publicly Traded Media Technology Companies Market Capitalization – Mid Cap

April 2003

April 2006

April 2009

April 2012

Source Capital IQ

20

$611

$1,831

$352

$329 $486

$344

$398

$497

$207

$472

$643

$577

$406

$576

$33

$41

$348

$439

$115

$283

$34

$87

$75

$98

$222

$169

$280

Value In $MM Avid Brightcove DTS Harmonic JVC Kit Digital Miranda SRS VIZRT

Avid Brightcove DTS Harmonic JVC Kit Digital Miranda SRS VIZRT

Cash $33 $17 $86 $162 $745 $48 $31 $34 $72

Debt $0 $7 $0 $0 $1,136 $21 $0 $0 $0

Enterprise Value (EV) $296 $476 $411 $415 $974 $321 $252 $65 $205

EV / Rev 0.44 x 7.50 x 4.24 x 0.76 x 0.24 x 1.50 x 1.38 x 1.97 x 1.58 x

EBITDA Margin 2.9% -22.1% 36.1% 10.3% 7.9% 13.7% 19.9% 5.3% 19.7%

Publicly Traded Media Technology Companies Market Capitalization – Small Cap

April 2003

April 2006

April 2009

April 2012

Source Capital IQ

21

$6,137

$64,306

$55,833

$39,434

$80,012

$1,367

$2,367

$434

$1,605

$2,516

$5,778 $1,481

$656

$7,040

$1,330

$8,562

$48,913

$75,637

$24,765

$34,797

$98,885

$99,688

$88,665

$106,474

Values In $MM

Charter Comcast Echostar Netflix Pandora Sirius Time Warner Verizon

Charter Comcast Echostar Netflix Pandora Sirius Time Warner Verizon

Cash $2 $1,674 $1,696 $798 $91 $774 $3,476 $13,954

Debt $12,921 $39,309 $2,534 $434 $0 $3,014 $19,524 $55,152

Enterprise Value (EV) $19,056 $134,042 $3,214 $5,414 $1,391 $10,802 $50,842 $197,610

EV / Rev 2.65 x 2.40 x 1.16 x 1.69 x 5.07 x 3.58 x 1.75 x 1.78 x

EBITDA Margin 36.6% 33.2% 18.1% 13.4% -0.2% 31.3% 24.1% 31.9%

Publicly Traded Media Distribution Companies Market Capitalization

April 2003

April 2006

April 2009

April 2012

Source Capital IQ

22

$18,528

$2,639

$20,909

$6,971

$19,483

$82

$1,056

$598

$1,751

$54,122

$19,037

$47,454

$3,868

$7,294

$28,351

$11,115

$25,613

$34,945

$53,717

$34,881

$75,548

Values In $MM CBS Discovery Lions Gate News Corp Scripps Viacom Walt Disney

CBS Discovery Lions Gate News Corp Scripps Viacom Walt Disney

Cash $660 $1,124 $53 $9,432 $760 $1,147 $3,766

Debt $5,982 $4,245 $948 $15,454 $1,384 $7,790 $14,386

Enterprise Value (EV) $26,231 $22,606 $2,646 $54,558 $8,336 $32,393 $88,334

EV / Rev 1.84 x 5.34 x 2.01 x 0.00 x 4.02 x 2.15 x 2.16 x

EBITDA Margin 21.9% 44.1% 7.7% 19.7% 47.5% 27.2% 24.3%

Publicly Traded Content Owner Companies Market Capitalization

April 2003

April 2006

April 2009

April 2012

Source Capital IQ

Audio Markets Overview

Date Target Name Value ($MM) Acquirer Name

Jan-12 PlayOn - EMI Music France S.A.

Jan-12 AWAL UK Limited - Kobalt Music Group Ltd.

Feb-12 SoniVox - Numark

Mar-12 R2M Music (Certain Assets) - BMG RIGHTS MANAGEMENT GmbH

Mar-12 A-Line Acoustics - Atlas Sound LP

Mar-12 Setlist.fm - Live Nation Entertainment

Mar-12 Imagine Research - iZotope

24

Audio M&A 2012

$50m

$50m*

$19.7m

Undisclosed

Undisclosed

Audio Growth Capital - 2012

Source Capital IQ, Press Releases, Public Filings * Denotes announced

Date Target Name Value ($MM) Acquirer Name

Jul-11 MWM Acoustics, LLC $137 Harman International Industries Inc.

Jul-11 Yellow Tools (Assets) - MAGIX AG

Aug-11 Naim Audio Ltd. - Focal-JMlab S.A. (nka:Focal & Co.)

Aug-11 Kungsbacka 57 AB $19 Skullcandy, Inc.

Sep-11 Dynamic Hearing Pty $5 Wolfson Microelectronics

Sep-11 Free Field Technologies - MSC Software Corporation

Sep-11 Coffey Sound Trew Audio

Sep-11 Workplace AV Systems Division - AVI Systems

Nov-11 Loewe AG - LaCie SA

Dec-11 The Stanton Group - Gibson Guitar Corp.

Dec-11 DiGiCo UK Limited $78 ISIS Equity Partners

Dec-11 BigChampagne - Live Nation Entertainment

Anc EMI Music Publishing $2,200

Sony/ATV Music Publishing LLC; Mubadala Development Company; GSO Capital Partners LP; Jynwel Capital

Anc Beats Electronics (51%) $309 HTC America

Anc FAB Enterprise $15 Wizzard Software Corporation

25

Audio M&A 2011 Q3-Q4 Select Transactions

Kungsbacka 57

Workplace AV Systems

Source Capital IQ, Press Releases, Public Filings

Audio M&A 2011 Q1-Q2 Select Transactions

Date Target Name Value ($MM) Acquirer Name

Jan-11 The Reamp company - Radial Engineering Ltd

Feb-11 Informationsteknik - Shure Incorporated

Feb-11 3dB Research $3 Harman International

Feb-11 SAE Institute $293 Navitas Limited

Feb-11 Pelika Business Music Oy $10 Mood Media Corporation

Apr-11 Summit Audio Inc. - Blue Microphones, Inc.

Apr-11 BlueHaze - XIX Entertainment

Apr-11 Astro Gaming, Inc. $11 Skullcandy, Inc.

Apr-11 Rockustics, Inc. - MSE Audio Group

Apr-11 Nippon Record Center Co., - TL Logicom Co. Ltd.

May-11 Native Instruments - Management Buyout

Jun-11 DEI Holdings, Inc. $114 Charlesbank Capital Partners, LLC

Jun-11 MySpace, Inc. $35 Specific Media, Inc.

Jun-11 Shinwa International Holdings - JVC KENWOOD Holdings, Inc.

Jun-11 Intelix - Liberty AV Solutions

26

Source Capital IQ, Press Releases, Public Filings

Audio Growth Capital 2011 Select VC/PE Transactions

27

$0-10m

$10-20m

$20-50m

$50m+

IPO

Source Capital IQ, Press Releases, Public Filings

Many companies were founded in the 1950’s – 1970’s The majority of MI and Pro Audio companies are closely held individual or family owned businesses. Owners of more than 70% of these are at or nearing retirement age with a need to achieve liquidity or transition

to new ownership. The larger companies in the industry (e.g., Sony, Yamaha, Dolby, Harman, Apple, Avid, JVC) are well capitalized

and acquisitions are their only way to produce strategic growth.

The digitization of many products creates the opportunity for product interoperation, integration, and combination

Digital signal processing is becoming ubiquitous in the audio signal chain, blurring the distinction between traditional product segments (EQ, Dynamics, FX, mixing, etc.)

To be competitive in the larger market, companies need to acquire technologies, branding, and experience to expand into adjacent and emerging market segments.

This product synergy could not exist in the analog world.

Given the impact of the recession, there is pent up demand for M&A Strong demand exists on both the buy-side (primarily among strategic buyers) and sell-side (especially companies

looking for a stronger platform or firms ready for transition). Digital Media M&A activity is projected to shift from recovery to growth in 2012 as greater stability, large cash

balances, and liquidity in the credit markets will aid strategic buyers seeking growth opportunities.

28

M&A Outlook Audio Industry

2011 was an extremely active year in M&A for the audio sector. Deal categories include consolidation, buyout, and strategic partnering. Our outlook is that 2012 will remain very active.

1. Mobile & Apps: Mobile devices and applications, including the iPad, are now mainstream commercial goods. Companies are creating synergistic products for these platforms, which are long term, viable competition to the desktop studio. High-end markets like pro audio will continue to leverage new consumer technologies as they emerge and offer increasing power. Mobile apps are now used to generate up-sell opportunities for brand leaders.

2. Integration: Tighter integration of software and purpose-built hardware are already common, and examples continue to evolve.

These include broadcast and live digital mixing consoles (Calrec, SSL, etc.), project studio products (PreSonus, SSL, Pro Tools HDX), DJ products (NI’s Maschine), and many others.

3. Diversification: The emergence of high growth companies offering a range of complementary hardware and software product

lines, such as Presonus and iZotope.

4. SaaS & Cloud: Next generation of mobile will increasingly be hosted, cloud based applications. Licensing models will transition

to subscription.

5. Recording: nearly exclusive focus on home/project studios. Continued fascination with vintage gear, including tube electronics

(and plug-in emulations), early condenser microphones, etc. Trend towards boutique companies together with a small number of large manufacturers.

6. Social Media: VC funding increasingly requires a social media story; companies are creating products as a means to build a social

network, especially for the consumer music industry.

29

6 Trends to Watch Music and Audio 2012

World Markets

30

Global M&A

45% 44% 44% 44% 43%

$3.6T

$2.24T $1.84T

$2.3T $2.5T

0

10,000

20,000

30,000

40,000

50,000

2007 2008 2009 2010 2011

Tota

l Tra

nsa

ctio

ns

Pe

r Y

ear # of Deals Closed Without

Transaction Info

# of Deals Closed withTransaction Information

Capital Invested

1. Both Capital Invested and Completed Transactions are growing on a global scale. 2. Attributed, in part, to favorable economic conditions. 3. Of the Deals Closed with released Transaction Values: Deals with values between $0-$100m

historically account for upwards of 80% of all deal flow, regardless of economic condition.

Source Capital IQ

31

Global PE/Growth Equity

1. Completed Transactions have grown regardless of economic condition 2. Increasingly popular method of funding due to favorable returns. The number of PE funds are

increasing as well as the size of funds.

82% 81% 87% 86% 84%

$121b $149b

$208b

$311b

$256b

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011

# of Deals Closed WithoutTransaction Info

# of Deals Closed withTransaction Information

Capital Invested

Source Capital IQ

32

Global Venture Capital

1. Both Capital Invested and Completed Transactions have resumed growth on a global scale. 2. As early exit strategy options have decreased, VCs are investing larger sums in more funding

rounds, to both protect their investments and benefit from a larger stake. 3. Of the Deals Closed with released Transaction Values:

1. ~70% of all deals are investments between $0-10m.

76% 75% 78% 76% 76%

$65b

$83b $86b $89b

$102b

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2007 2008 2009 2010 2011

# of Deals ClosedWithout Transaction Info

# of Deals Closed withTransaction Information

Capital Invested

Source Capital IQ

33

34

Global Reach, Vertical Depth

Ethan E. Jacks John C. Bowen Managing Partner Managing Partner ethan@mediabridgecap.com john@mediabridgecap.com 617.592.2739 (m) 617.921.0075 (m)