Deal Overview August 2013

Transcription

1 Deal Overview August 2013

2 Executive Summary SPT Networks has an opportunity to acquire Chellomedia s (a subsidiary of Liberty Global) operating business unit in the Latin America region, Chello Latin America ( Chello LatAm ) Chellomedia ( Chello ) is currently running a sale process for the entire business with initial non-binding indications of interest due by July 18, 2013 We believe Chellomedia s valuation is in the range of $822mm to $998mm, representing a 8.9x to 10.8x CY2012A EBITDA multiple and 8.5x to 10.4x CY2013E EBITDA multiple While Chellomedia represents an attractive asset, Chello LatAm represents the best strategic fit into SPT Networks current portfolio Chello LatAm provides an opportunity for SPT Networks to expand its presence in the high-growth Latin American Pay TV and ad sales market and realize significant synergies Expand SPT Networks distribution and reach, through ownership of Chello LatAm s 10 portfolio channels with approximately 106mm subs in key countries in Latin America such as Brazil and Mexico Chello LatAm will enable us to recapture control of affiliate distribution from HBO, allowing us to better capitalize on the growing LatAm and Brazil Pay TV market Cross promote channels to drive viewership and ad sales Opportunities to utilize SPE s content library across Chello LatAm channels Capture significant cost synergies (staff, marketing, G&A, up-link, etc.) SPT Networks proposes to submit a preliminary and non-binding indication of interest, subject to due diligence, of $150mm for Chello LatAm, representing a 11.8x CY2012A EBITDA multiple and 9.6x CY2013E multiple Based on high level financial information and a proposed $150mm purchase price, the Chello LatAm acquisition has a deepwater mark of ($148)mm, NPV of $14mm and IRR of 20.8% before synergies With preliminary synergies assumed at 10% of cash flow, the Chello LatAm acquisition has a deepwater mark of ($148)mm, NPV of $31mm and IRR of 24.0% after synergies 1

3 Chellomedia Overview Business Description One of the largest producers and distributors of thematic Pay TV channels globally with a significant majority of revenues generated from subscriptions, and the remainder from advertising, ad space resale and services 65 (1) channels across six genres, 56 of which are 100% owned and 19 are joint ventures Distributes channels in 138 countries and in over 25 languages reaching approximately 394mm subscribers Content in popular genres of movies, entertainment, sports, children s, lifestyle and factual Revenue Breakdown (2) Revenue By Genre Revenue By Type Revenue By Country Factual 9% Others 5% Movies 27% Others 12% Others 16% Poland 19% Lifestyle 13% Advertising 10% Subscription 57% Czech 4% Netherlands 5% Children's 13% Sports 14% Entertainment 19% Ad Space Resale 21% UK 11% LatAm 13% Hungary 14% Iberia 18% 2 (1) As per Chello internal channel count; does not include channels held through associate investments (e.g. Disney XD-Poland, ShortsTV and OBN). (2) As of April 30, 2013 YTD.

4 Diversified International Business Units (US$ millions) Overview Offers a variety of programming including entertainment, factual, sports, movies, children's and lifestyle television Top-rated channels in film and children's with a total of 20 channels across genres Key markets include Hungary, Poland, Czech Republic and Romania Includes Ad Media, a wholesale advertising brokerage business Portfolio includes MGM Latin America, the popular El Gourmet food channel, and the lifestyle channel Cosmopolitan TV Digital Media Centre ("DMC") provides technical services, such as play-out and TV distribution Headquarters London Madrid Budapest & Warsaw Buenos Aires & Miami Amsterdam Key Regions UK, EMEA, Asia Spain, Portugal, Africa Central / Eastern Europe Latin America Western Europe / CEE # of Channels (Owned / JV) (1)(2) 10 / / 7 12 / 1 10 / - 1 / 1 Key JV Partners NA NA NA Subs (mm) (3) (6) Employees (4) (5) CY 2013E Revenue $112 $83 $85 $62 $39 CY 2013E EBITDA $26 $22 $18 $16 $9 % EBITDA Margin 24% 27% 22% 25% 23% 3 (1) As per Chello internal channel count; does not include channels held through associate investments (e.g., Disney XD-Poland, ShortsTV and OBN). (2) Owned channels defined as 100% owned as of April 30, (3) As of April 30, (4) Represent full-time employees and excludes employees in central role. Pro forma 2013E. (5) Subscribers relate to MGM Netherlands, Weer, and Verkeer (JV with MeteoConsult). (6) Includes employees related to Chello Central Europe At Media business.

5 Chello LatAm Overview Overview (1) The overall Latin America Pay TV and ad spending market is projected to grow at a CAGR of 13% and 9%, respectively, from 2013 to 2017 Portfolio of 10 channels, including MGM Latin America, the popular El Gourmet food channel, Film&Arts, and the lifestyle Cosmopolitan TV channel Top 5 channels expected to account for over 80% of CY13E revenue Subscription revenues accounted for the 85% of the total revenues, followed by advertising, which accounted for 14% (2) $100 $75 $50 $25 $40 $30 $20 $10 $-- Summary Financials (US$mm) Revenue $80 $86 $93 $73 $51 $56 $62 $66 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E EBITDA $33 $28 $11 $13 $16 $19 $21 $25 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E 4 Projects subscription revenue growth CAGR of 8% from 2013 to 2018 Total of ~106 million subs as of April 2013, representing a 13% growth from CY11A Channels are distributed by all the major operators within the relevant regions and also has a small presence of ~400k subscribers in the US through its Spanish-language channel, Ella Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations. Entertainment 12% Revenue By Genre Others 7% Movies 38% Factual 1% Revenue Breakdown (1)(2) Sports 1% Lifestyle 41% Venezuela 5% Others 26% Chile 9% Revenue By Country Mexico 10% Colombia 12% Argentina 24% Brazil 14%

6 Chello LatAm Strategic Acquisition Rationale Distribution SPT Networks will have independent distribution and direct engagement with affiliates; reducing our reliance on 3 rd parties Opportunities to create greater value to broadcasters and SPT Networks by offering bundled options in distribution discussions (e.g., bundling Spin along with Chello channels) Expand our channel portfolio by offering content across 5 of the 6 major genres (1) Opportunities for SPT Networks to create channel bundles (i.e., movie) to bring compelling offerings to broadcasters and consumers Channel Portfolio Genre Entertainment Movies Lifestyle Sports Factual Children s Total (2) Sony Pictures Chello LatAm - 10 Combined Ad Sales Expand ad sales offering by building scale in the region Bundling of ad sales to create greater value for advertisers and SPT Networks across channels Local Production Utilize production facility to develop our own content to air on our channels Additional Opportunities Utilize Sony s extensive content library across Chello s portfolio of channels Capture significant cost synergies including overlap on staff, marketing, play-out, programming, G&A etc. 5 (1) Will examine selling off channel assets with limited strategic fit (e.g., Canal A ) (2) Assumes 3 distinct linear channels, SET, AXN and Spin, for SPT Networks. MGM has an HD feed which is not a simulcast but has a different programming schedule

7 Chello LatAm Channel Portfolio Strategy Channel 100% Owned Target Audience Subs (mm) (1) Interest MGM All Adults 26.2 High El Gourmet Adults High Casa Women 16.4 High Level Strategic Rationale Synergies and New Opportunities New channel genre for SPT portfolio Creation of movie bundle with other Chello channels New channel genre for SPT portfolio Creation of Food Network-type channel New channel genre for SPT portfolio Creation of female-focused channel Use programming acquisition expertise to rebrand channel to Cine Sony and improve movie content Offer movie package including 3 channels (MGM, Film&Arts and Europa Europa) Acquire titles in bundles for all 3 movie channels Continue to produce in Argentina Look to acquire content from Food Network and develop our own content Use El Gourmet studio to produce content for Casa; female lifestyle channel similar to Martha Stewart Film&Arts Adults High Same as MGM Same as MGM Cosmopolitan Women Medium Possible duplication with Casa and El Gourmet Needs further evaluation but potential fit as part of a larger bouquet Europa Europa Adults High Same as MGM Same as MGM America Sports Men Medium New channel genre for SPT portfolio Ability to target male demographic Expand sports offering in LatAm (e.g., Outdoor Channel, Outside Channel) Canal A Adults Medium Limited strategic fit Acquire and look to sell (H2 is a potential buyer) Reality TV Adults Low Limited strategic fit Ella Women 0.4 Medium US Hispanic growth potential Needs further evaluation but potential fit as part of a larger bouquet Add to SPT portfolio of US channels Continue feeding with product from El Gourmet and Casa Club Total (1) As of April 30, 2013.

8 Chello LatAm Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $129mm $152mm before synergies based on Chellomedia financial projections and by equally weighting the DCF and trading multiples valuation methodologies The valuation implies 9.6x 11.3x FY13 EBITDA and 7.9x 9.3x FY14 EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections Preliminary estimate of synergies of 10% of cash flow increases the upper range to an average of $169mm We recommend extending a non-binding offer of $150mm for Chello LatAm, representing 11.8x CY2012 EBITDA and 9.6x CY2013 EBITDA METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $129 High View: $169 DCF - Exit Multiple $130 $165 $185 WACC Range: 17.0% % Terminal Multiple: 6.0x - 8.0x DCF - Perpetuity Growth $136 $162 $180 WACC Range: 17.0% % Perpetuity Growth: 6.5% - 7.5% Trading Multiples - FY14E EBITDA $131 $147 $162 Trading Multiple of FY14E EBITDA Range: 8.0x - 9.0x including a 25% Equity Control Premium Trading Multiples - FY13A EBITDA $121 $135 $148 Trading Multiple of FY13A EBITDA Range: 9.0x x including a 25% Equity Control Premium $80 $100 $120 $140 $160 $180 $200 7 Enterprise Value Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year. Also note that the low view is based on the preliminary valuation prior to synergies and the high view is based on the preliminary valuation with synergies. Incremental value from synergies

9 Chello LatAm Returns Analysis (without Synergies) (US$ in millions) Fiscal Year End March 31, Q4 2014E 2015E 2016E 2017E 2018E 2019E Revenue $15.7 $67.8 $74.6 $81.3 $87.9 $94.8 EBITDA $4.1 $19.2 $22.2 $25.7 $29.7 $33.8 Plus: Synergies EBITDA (incl. Synergies) $4.1 $19.2 $22.2 $25.7 $29.7 $33.8 Less: Depreciation and Amortization (1) (0.2) (0.7) (0.7) (0.8) (0.9) (0.9) EBIT (before PPA) $3.9 $18.6 $21.5 $24.9 $28.8 $32.9 Less: PPA (3.3) (12.3) (9.2) (6.9) (4.2) (4.2) EBIT (after PPA) $0.6 $6.3 $12.3 $18.0 $24.6 $28.7 Less: Taxes (0.2) (1.5) (3.1) (5.3) (7.2) (8.2) EBIT after Taxes $0.4 $4.8 $9.2 $12.7 $17.4 $20.5 Less: Change in Working Capital (1.3) (2.8) (3.3) (2.4) (1.9) (1.8) Less: Capital Expenditures (0.7) (4.3) (1.2) (1.2) (1.4) (1.2) Plus: Depreciation and Amortization Plus: PPA SPT Networks Free Cash Flows $1.9 $10.6 $14.7 $16.7 $19.2 $22.6 Cumulative SPT Networks Cash Flows SPT Networks Investment (150.0) Terminal Value (7.0x EBITDA) SPT Networks Cash Flow (incl. Terminal Value) (148.1) SPT Networks Cumulative Cash Flow (incl. Terminal Value) (148.1) (137.5) (122.8) (106.1) (86.9) EBIT to SPT Networks before PPA $3.9 $18.6 $21.5 $24.9 $28.8 $32.9 Less: PPA (2) (3.3) (12.3) (9.2) (6.9) (4.2) (4.2) EBIT to SPT Networks after PPA $0.6 $6.3 $12.3 $18.0 $24.6 $28.7 Low Offer High Purchase Price $129.5 $150.0 $152.1 NPV of SPT Networks Cash Flows $53.0 $54.1 $54.2 SPT Networks Investment (129.5) (150.0) (152.1) NPV of Terminal Value Total NPV $33.5 $14.1 $12.1 IRR 25.3% 20.8% 20.4% DWM ($127.7) ($148.1) ($150.2) WACC 17.5% 17.5% 17.5% 8 Note: Figures assume exchange rate of 1.3x to USD. Assumes transaction as of 12/31/13. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year. (1) Assumes depreciation & amortization is 1% of revenue. (2) Assumes 40% of the purchase price attributed to intangibles. 70% of the intangibles value is attributed to affiliate relationships and amortized over 10 years (straight-line), 20% is attributed to programming and amortized over 3 years (50%/30%/20%) and 10% is attributed to advertiser relationships and amortized over 3 years (50%/30%/20%).

10 Chello LatAm Returns Analysis (w/ Synergies) (US$ in millions) Assumes 10% synergies to cash flow Fiscal Year End March 31, Q4 2014E 2015E 2016E 2017E 2018E 2019E Revenue $15.7 $67.8 $74.6 $81.3 $87.9 $94.8 EBITDA $4.1 $19.2 $22.2 $25.7 $29.7 $33.8 Plus: Synergies EBITDA (incl. Synergies) $4.5 $21.2 $24.4 $28.2 $32.6 $37.2 Less: Depreciation and Amortization (1) (0.2) (0.7) (0.7) (0.8) (0.9) (0.9) EBIT (before PPA) $4.3 $20.5 $23.7 $27.4 $31.8 $36.2 Less: PPA (3.3) (12.3) (9.2) (6.9) (4.2) (4.2) EBIT (after PPA) $1.0 $8.2 $14.5 $20.5 $27.6 $32.0 Less: Taxes (0.3) (1.9) (3.6) (6.0) (8.1) (9.1) EBIT after Taxes $0.7 $6.2 $10.9 $14.5 $19.5 $22.9 Less: Change in Working Capital (1.3) (2.8) (3.3) (2.4) (1.9) (1.8) Less: Capital Expenditures (0.7) (4.3) (1.2) (1.2) (1.4) (1.2) Plus: Depreciation and Amortization Plus: PPA SPT Networks Free Cash Flows $2.2 $12.1 $16.3 $18.5 $21.3 $25.1 Cumulative SPT Networks Cash Flows SPT Networks Investment (150.0) Terminal Value (7.0x EBITDA) SPT Networks Cash Flow (incl. Terminal Value) (147.8) SPT Networks Cumulative Cash Flow (incl. Terminal Value) (147.8) (135.7) (119.4) (100.8) (79.5) EBIT to SPT Networks before PPA $4.3 $20.5 $23.7 $27.4 $31.8 $36.2 Less: PPA (2) (3.3) (12.3) (9.2) (6.9) (4.2) (4.2) EBIT to SPT Networks after PPA $1.0 $8.2 $14.5 $20.5 $27.6 $32.0 Low Offer High Purchase Price $144.2 $150.0 $168.7 NPV of SPT Networks Cash Flows $60.1 $60.4 $61.3 SPT Networks Investment (144.2) (150.0) (168.7) NPV of Terminal Value Total NPV $36.8 $31.4 $13.7 IRR 25.2% 24.0% 20.5% DWM ($142.1) ($147.8) ($166.4) WACC 17.5% 17.5% 17.5% 9 Note: Figures assume exchange rate of 1.3x to USD. Assumes transaction as of 12/31/13. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year. (1) Assumes depreciation & amortization is 1% of revenue. (2) Assumes 40% of the purchase price attributed to intangibles. 70% of the intangibles value is attributed to affiliate relationships and amortized over 10 years (straight-line), 20% is attributed to programming and amortized over 3 years (50%/30%/20%) and 10% is attributed to advertiser relationships and amortized over 3 years (50%/30%/20%).

11 Appendix

12 Chellomedia Preliminary Valuation Summary (US$ millions) Based on a sum-of-the-parts analysis, we believe Chellomedia will be valued in the range of $822mm to $998mm The valuation implies 8.9x 10.8x CY2012 EBITDA and 8.5x 10.4x CY2013 EBITDA The valuation is pre-diligence, assumes no synergies and gives full credit to Chellomedia s projections Segment Low View (3) % of Total High View (3) % of Total $129 16% $152 15% % % % % (Networks) % % (At Media) 12 2% 16 2% 70 9% 80 8% Total Valuation $ % $ % CY2012 EBITDA Multiple 8.9x 10.8x CY2013 EBITDA Multiple 8.5x 10.4x 11 Note: Figures assume exchange rate of 1.3x to USD. (1) CY2012 EBITDA of $92.3mm. (2) CY2013 EBITDA of $96.2mm. (3) Does not include synergies.

13 Chello Zone

14 Chello Zone Overview Overview (1) Portfolio of 20 channels comprising of: 10 owned channels including well-known brands such as Jim Jam, Extreme Sports, MGM and Horror Channel 10 channels with JV partners including 8 channels with CBS Content covers entertainment, movies, children s, sports and lifestyle Total of 189 million subs as of April 2013, representing a 8% growth from CYE 2011 $155 $130 $105 $80 $40 $30 $20 $10 Summary Financials (US$mm) Revenue $119 $126 $131 $136 $142 $110 $108 $112 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E EBITDA $26 $28 $30 $32 $34 $35 $22 $19 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E 13 Subscription and advertising comprise of 60% and 30% of total revenues, respectively Overall, the top 5 countries account for more than 60% of total revenues Channels are distributed widely across EMEA with carriage on over 1,000 operators Top 5 carriage operators accounted for 28% of total revenues Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations. Sports 12% Children's 17% Revenue By Genre Others 10% Lifestyle 2% Movies 18% Revenue Breakdown (1)(2) Entertainment 41% Others 42% Revenue By Country Netherlands 4% Italy 5% Poland 16% UK 33%

15 Chello Zone Strategic Rationale Overall, Chello Zone channels have strong brand fit with the SPT Networks portfolio and we see some meaningful opportunities in rolling-up the Chello Zone channels into existing SPT Networks brands (AXN Black/ White/ Spin or Movie properties) Particular interest in MGM, as well as channels jointly-owned by CBS EMEA and CBS UK Expected benefits include: Improved market position with increased reach which can be leveraged for future ad sales representation negotiations Potential opportunity to create local market feeds to access local advertising Greater content buying power across the region Access to CBS franchises that can be leveraged across the portfolio Improve economics by launching OTT catch-up services (CBS Action, Reality, Drama), SVOD services complementary to Animax (Horror Channel SVOD) and premium VOD Potential cost synergies (e.g. rolling Russian and African feeds into existing operating units, fold into SPT Networks London hub to deliver operational synergies) 14

16 Chello Zone Channel Portfolio Strategy Channel 100% Owned Target Audience Subs (mm) (1) Interest Level Strategic Rationale Synergies and New Opportunities Extreme Sports Men Medium Compliments existing channels and strong distribution Could easily roll into most existing operations Jim Jam Children Medium MGM All Adults 17.9 High Horror Channel All Adults 4.4 Medium 78:22 JV (Outdoor) Compliments existing channels, strong distribution, and would complete end to end demographic portfolio A cost effectively-run channel that launched in Italy and has been developed into a pan-regional feed Strong opportunity to get SMC into two markets we've had limited success in (i.e., Turkey and Middle East) Complimentary brand fit to existing AXN portfolio targeting young men; strong cross-over with both AXN and AXN Sci Fi in terms of audience and programming Could easily roll into most existing operations Potential opportunity to create local market feeds to access local advertising Look at synergies in rolling Russia and Africa feeds into the existing operating units and could likely run Turkey, ME ops from same group(s) Consolidate with SPT broadcast operations; leverage programming assets across consolidated portfolio Subject to terms of Sky carriage agreement, roll out SVOD service (similar to Animax SVOD approach targeting niche audience) Outdoor Men Low Crosses over with other, more established brands Same as others but with smaller footprint 70:30 JV (CBS EMEA) CBS Reality All Adults 26.0 High Reality is strong genre and a dedicated channel would be good addition Roll into existing ops and easy to leverage programming buying from distributors CBS Drama All Adults 10.0 Medium Good platform to rebrand SET in places it doesn't exist TBD CBS Action All Adults 4.1 High Good strategic fit for distribution AXN Black expansion opportunities CBS Europa All Adults 3.3 High Potential Movies or White distribution enhancer This brand would be converted to AXN White or Movies 51:49 JV (CBS UK) CBS Reality All Adults 23.6 High Horror Channel All Adults 23.6 High CBS Action All Adults 13.9 High CBS Drama All Adults 10.9 High Total Diversifies SPT's series/movies driven portfolio with factual entertainment/reality offering Targets niche audience that compliments broader SPT movie/series focused channel offerings Series-based channel very similar to AXN, compliments Movies4Men male audience Only male-targeted action channel in the UK apart from ITV4 Delivers older-skewing female audience that compliments younger female-skewed SET channel Launch on Freeview (gap in Freeview lineup for male skewing reality/fact ent channel) and OTT catch-up service Launch premium VOD service for Horror Channel (more niche audience similar to Animax approach) Launch OTT catch-up service for CBS Action, Reality and Drama Launch OTT catch-up service for CBS Action, Reality and Drama 15 (1) As of April 30, 2013.

17 Chello Zone Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $235mm-$275mm based on Chellomedia financial projections and on a target IRR of at least ~20% on the low view and a positive NPV on the high view The valuation implies 11.3x 13.3x FY13 Adj. EBITDA and 9.8x 11.4x FY14 Adj. EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections, but excludes synergies to SPT Networks METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $235 High View: $275 DCF - Exit Multiple $265 $295 WACC Range: 13.5% % Terminal Multiple: 9.5x x DCF - Perpetuity Growth $256 $303 WACC Range: 13.5% % Perpetuity Growth: 3.5% - 4.5% Trading Multiples - FY14E EBITDA $253 $277 Trading Multiple of FY14E EBITDA Range: 10.5x x including a 25% Equity Control Premium Trading Multiples - FY13A EBITDA $249 $269 Trading Multiple of FY13A EBITDA Range: 12.0x x including a 25% Equity Control Premium Transaction Comparables - LTM EBITDA (FY13A) $249 $269 Transaction Comparables Multiple of LTM EBITDA (FY13A) Range: 12.0x x $225 $250 $275 $300 $325 Enterprise Value 16 Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year.

18 Chello Multicanal

19 Chello Multicanal Overview Overview (1) Chello Multicanal is the biggest producer of thematic channels in Spain and Portugal, with a growing presence in Africa Portfolio of 20 channels comprising of: 13 owned channels including some of Chellomedia s strongest offerings, such as Canal Hollywood, Odisea and Canal Cocina 7 channels with joint venture partners Top 10 channels (excl. The History Channel Iberia) represent 60% of subscribers and 72% of revenues $100 $90 $80 $40 $30 $20 $10 Summary Financials (US$mm) Revenue $98 $95 $92 $89 $85 $85 $86 $83 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E EBITDA $22 $23 $22 $24 $26 $27 $28 $30 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E Total of ~49 million subs as of April 2013 with an average of 35 million paying subs ~80% of revenues generated from subscription-based revenue Advertising revenues and services to JV channels make up ~10% each of revenues Carriage agreements with a wide variety of operators, including all the major players in Spanish and Portuguese markets Lifestyle 8% Entertainment 10% Children's 16% Revenue By Genre Others 2% Revenue Breakdown (1)(2) Movies 44% Portugal 37% Revenue By Country Others 1% Spain 62% 18 Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations. Factual 20%

20 Chello Multicanal Strategic Rationale While several of the Chello Multicanal channels are a strong complement to the SPT Networks portfolio, many of the others hold niche positions in their respective markets, with limited distribution and brand equity Strong position in Portugal with channels such as Canal Hollywood and Panda Largely niche channels in Spain where Chello Multicanal has limited leverage with the top three operators (i.e., Sogecable, ONO and Telefonica), along with sluggish ad sales Agreements with key operators are due to expire in the near future and renegotiations are expected to be challenging In the event of an acquisition, we expect that many of the lower-rated low distribution channels will need to be shut down Odisea, Canal Hollywood, and the movie and children s channels jointly owned with Dreamia would be of greatest interest, and can be useful in reinforcing the AXN portfolio, particularly in Portugal and Angola Strong JV channels Historia and Bio have heavy original content and allow for OTT and SVOD expansion Chello Multicanal s strengths lie in low-cost original production, mainly in the lifestyle genre, which can be leveraged across the SPT Networks portfolio 19

21 Chello Multicanal Channel Portfolio Strategy Channel 100% Owned Odisea Odisseia Target Audience Subs (mm) (1) Interest Male High Sol Musica Adult Low Canal Cocina Women Medium Decasa Women Medium Canal Hollywood Families 2.4 High Panda Children Low Canal MGM Adult Medium Somos Adult Low XTRM Male Medium Natura Male Low Same as XTRM Cinematk Adult Low Buzz Adult Low Level Strategic Rationale Synergies and New Opportunities Solid asset as good channel with strong awareness and wide distribution Low-value asset with only local clips of Spanish and LatAm music One of the main channels of Chello High awareness and wide distribution Solid experience in original production Great concept but weak results performance Lot of repeats and low interest Western shows Better with local original content (limited due to production cost) The most important asset as leader in Portugal and Spain Solid awareness & huge distribution Low ad sales due to the lack of ad breaks Very strong in Portugal where it competes with Disney, but very weak in Spain An over-promising channel Great brand but low content and low distribution A low quality channel produced exclusively for ONO Low awareness, distribution and value Low distribution and lack of awareness Only present in Spain Only distributed on extended movie packages Niche, only in Spain, low value Chello's Animax but low value Minimum distribution and interest Good complement to reinforce portfolio in Spain, Portugal & Angola Excellent for OTT and digital exploitation Candidate to shut down as low synergies and doesn t offer anything different than YouTube clips Excellent for OTT and interactive initiatives Good know-how in low-cost production Fox Kitchen has occupied its space in Portugal Very local concept, needs local production Lack of options in Portugal JV with a local lifestyle women's magazine to be considered An excellent complement to reinforce AXN portfolio in both Spain & Portugal and to expand into OTT and SVOD Good option to exploit Sony s movie library Low chance to survive in Spain due to the competition of children's channels on free DTT Exploit the brand by merging with other movie channels (e.g., Somos, Cinematk, XTRM) to reinforce the quality of content Shut down and merge with MGM Could become AXN Black or merged with Buzz to reinforce content and reduce cost Shut down/ merge with Odisea No need for 2nd documentary channel Shut down/ merge with MGM to build a solid movie channel with meaningful OTT and SVOD opportunities Shut down/ some content could be transferred to XTRM to reinforce that brand 20 (1) As of April 30, 2013.

22 Chello Multicanal Channel Portfolio Strategy (Cont d) Channel 50:50 JV (History) Target Audience Subs (mm) (1) Interest Historia Men High Level Strategic Rationale Synergies and New Opportunities Probably the 2nd biggest asset, must-have high awareness, prestige and wide distribution Great asset to include in our portfolio Lots of original content and excellent franchise for OTT and SVOD Bio Adult High Crimen & Investigacion 50:50 JV (Dreamia) Women Low Canal Hollywood Families 3.9 High MOV Men High Panda Children High BIGGS Children High Total 49.1 Not as strong as Historia but solid asset Distributed in all 3 territories Low awareness and low distribution Trying to compete with AXN and Fox Crime but lacks good content Leading pay TV channel in Portugal Wide distribution and high awareness Low ad sales potential (difficulty in managing ad breaks) Good channel but with poor performance Was positioned as a premium channel but is suffering from competition (TV Series from Zon) Traditionally the #1 children's channel, a classic in Portugal, now in competition with Disney Very strong brand and huge distribution 1 of the big 3 assets of Chello JV with Zon helping with ad sales Launched to exploit the franchise of Panda and compete with Disney XD Wide distribution and good performance Excellent complement for an outstanding documentaries package (Odisea, Historia and Bio) Great value for OTT and SVOD expansion Shut down Some content could be transferred to XTRM An excellent option to reinforce AXN portfolio in both Portugal & Angola and to expand into OTT and SVOD Good option to exploit Sony s movie library Rebrand as AXN Premium Good option to expand AXN s portfolio and exploit wider ad sales Jointly with Biggs is and excellent option to expand our portfolio of channels in Portugal & Angola Great opportunity to develop SVOD, improve ad sales Jointly with Panda is and excellent option to expand our portfolio of channels in Portugal & Angola Great opportunity to develop SVOD, improve ad sales 21 (1) As of April 30, 2013.

23 Chello Multicanal Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $220mm-$275mm based on Chellomedia financial projections and on a target IRR of at least ~20% on the low view and a positive NPV on the high view The valuation implies 9.4x 11.8x FY13 Adj. EBITDA and 9.2x 11.5x FY14 Adj. EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections, but excludes synergies to SPT Networks METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $220 High View: $275 DCF - Exit Multiple $250 $275 WACC Range: 11.5% % Terminal Multiple: 9.5x x DCF - Perpetuity Growth $250 $305 WACC Range: 11.5% % Perpetuity Growth: 2.5% - 3.5% Trading Multiples - FY14E EBITDA $251 $274 Trading Multiple of CY14E EBITDA Range: 10.5x x including a 25% Equity Control Premium Trading Multiples - FY13E EBITDA $280 $303 Trading Multiple of CY13E EBITDA Range: 12.0x x including a 25% Equity Control Premium Transaction Comparables - LTM EBITDA (FY13E) $268 $291 Transaction Comparables Multiple of LTM EBITDA (FY13E) Range: 11.5x x $175 $225 $275 $325 $375 Enterprise Value 22 Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year.

24 Chello Central Europe

25 Chello Central Europe Overview Overview (1) Summary Financials (excl. At Media) (US$mm) Chello Central Europe, based in Budapest, includes a channels business as well as an ad space resale business, At Media $100 Revenue $86 $86 $85 $87 $90 $96 $95 $96 Portfolio of 13 channels, comprising: $ owned channels, including leading sports, children s, factual, movie and lifestyle channels 1 MGM-branded joint venture channel (55% owned) with NC+ in Poland Total of ~46 million subs as of April 2013, representing a 12% growth from CYE 11 Top 5 channels account for more than 75% of the segment s revenues with Sport1, Sport2, Spektrum, Minimax and TV Paprika the key drivers of performance Excluding At Media, 90% of Chello Central Europe revenues are generated from subscriptions, with advertising and other revenues making up the remaining 10% The At Media business provides advertising agency services to both Chellomedia channels as well as external clients Accounts for ~50% of total Chello Central Europe revenues with Poland as accounting for 75% of total At Media sales Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations. $50 $30 $20 $10 Factual 14% Movies 15% CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E $15 Revenue By Genre Lifestyle 10% $17 $18 $18 $19 Revenue Breakdown (1)(2) $21 $22 $23 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E Others 2% Children's 17% Sports 42% EBITDA Romania 12% Slovakia 11% Czech Republic 13% Revenue By Country (Channel Business) Others 6% Hungary 58%

26 Chello Central Europe Strategic Rationale Chello Central Europe acquisition could help SPT Networks build out a very deep and wide channel portfolio - particularly in SPT Networks main markets of Poland, Hungary and Romania - that would have enough reach to build significant scale in ad sales and leverage over content sellers Movie-focused channels (MGM, Film Café, Film Mania), and the kids property, Minimax, would be of greatest interest. The strategic fit with Chello Central Europe s sport channels is less clear, given the unknown element of costs of rights and operations The overarching strategy post-acquisition would be to keep the kids and lifestyle brands as they are, but convert most of the other existing brands into AXN Black/ White/ Spin/ Movies properties, maximizing distribution of all AXN brands and building a much cleaner, clearer brand portfolio In terms of the sports channels, there is some opportunity to build a pan-regional sports business that could acquire rights for the region at competitive valuations thanks to economies of scale In creating distribution width by providing a wide portfolio of channels that becomes a must-have for platforms, SPT Networks could secure higher long-term rates and carriage for SPT Networks channels If sufficient market share is built, SPT Networks could consider an independent ad sales play in Poland, Hungary and Romania to further increase our leverage with strategic ad sales partners in the region 25

27 Chello Central Europe Channel Portfolio Strategy Channel 100% Owned Target Audience Subs (mm) (1) Interest Sport 1 Adults Medium Level Strategic Rationale Synergies and New Opportunities Opportunity to venture into Sports as SPT currently has limited exposure to this genre Sport 2 Adults Medium Same as Sport 1 Same as Sport 1 Viable opportunity given the revenue and an option to create a regional sports channel however unknown element of costs of rights and operations SportM Adults Medium Same as Sport 1 Same as Sport 1 Minimax Children High Very well-distributed children's channel with strong brand identity TV Paprika Adults Medium Well-distributed documentary/lifestyle channel Would be interesting to include into our portfolio where we would branch out into children's' market Leave as it is due excellent distribution, and use to drive female audience Film Café Women 5.2 High Well-distributed movie channel Good candidate for an AXN White conversion MGM Adults High Well-distributed opportunity for movies in CE Movies conversion target Spektrum Adults Medium Good lifestyle channel with strong brand; could be used to enter the documentary space Keep as is and use brands to enter documentary space Spektrum Home Adults Low Limited strategic fit Lacks sufficient scale to build a good ad sales business Megamax Children Low Spin potential Lacks sufficient scale to build a good ad sales business 26 Film Mania Adults High AXN Black potential 55:45 JV (MGM) MGM Adults Medium Interesting for a movies conversion in Poland Total 46.2 (1) As of April 30, Limited scale to build a good ad sales business, but good commercial returns and growth and would complement existing brands Vehicle for widening movies after end of Polsat exclusivity in Poland

28 Chello Central Europe (excl. At Media) Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $155mm-$200mm based on Chellomedia financial projections and on a target IRR of at least ~20% on the low view and a positive NPV on the high view The valuation implies 8.8x 11.4x FY13 Adj. EBITDA and 8.2x 10.6x FY14 Adj. EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections, but excludes synergies to SPT Networks METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $155 High View: $200 DCF - Exit Multiple $180 $200 WACC Range: 11.5% % Terminal Multiple: 9.5x x DCF - Perpetuity Growth $175 $210 WACC Range: 11.5% % Perpetuity Growth: 2.5% - 3.5% Trading Multiples - FY14E EBITDA $198 $217 Trading Multiple of FY14E EBITDA Range: 10.5x x including a 25% Equity Control Premium Trading Multiples - FY13E EBITDA $211 $229 Trading Multiple of FY13E EBITDA Range: 12.0x x including a 25% Equity Control Premium Transaction Comparables - LTM EBITDA (FY13E) $203 $220 Transaction Comparables Multiple of LTM EBITDA (FY13E) Range: 11.5x x $100 $125 $150 $175 $200 $225 $250 $275 $300 Enterprise Value 27 Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year.

29 At Media

30 At Media Overview Overview (1) At Media is the leading advertising sales house in Central Europe, representing leading TV channels in Poland, Hungary and Czech Republic Established in Poland in 1998 and grew significantly whilst also expanding into Czech Republic (2008) and Hungary (2010) Currently represents 101 international channels Services provided to Chellomedia channels account for less than 10% of total At media revenues and gross profit Whilst At Media s core business is acting as a broker selling advertising time on TV as well as on internet and VOD, it also provides channel income optimization services to the channels it represents including sponsorship & promotion, consultancy on channel positioning, etc. Selected Represented Channels $150 $100 $50 $15 $10 $5 $-- Summary Financials (US$mm) Revenue $107 $114 $111 $113 $119 $124 $129 $134 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E $7 $7 $5 EBITDA $3 $3 $3 $4 $4 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E Revenue Breakdown by Country (1)(2) Hungary 17% Czech Republic 8% Poland 75% 29 Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations.

31 At Media Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $12mm-$16mm based on Chellomedia financial projections and by equally weighting the DCF methodologies and trading multiples The valuation implies 4.5x 5.9x FY15 EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections, but excludes synergies to SPT Networks METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $12 High View: $16 DCF - Exit Multiple $13 $19 WACC Range: 11.5% % Terminal Multiple: 9.5x x DCF - Perpetuity Growth $11 $14 WACC Range: 11.5% % Perpetuity Growth: 2.5% - 3.5% Trading Multiples - FY15E EBITDA $14 $16 Trading Multiple of FY15E EBITDA Range: 5.0x - 6.0x including a 25% Equity Control Premium $0 $5 $10 $15 $20 $25 Enterprise Value 30 Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year.

32 Chello DMC

33 Chello DMC Overview Overview (1) Chello DMC provides advanced play-out and content management solutions to local and worldwide clients seeking to maximize the value of their content Acts as in-house engineering and broadcast operations centre of excellence for Chellomedia Services include play-out, VOD services, content management, and connectivity Currently transmits over 100 feeds across Europe, Middle East, Asia and South Africa Content delivery for VOD and OTT platforms with over 22,000 titles across 13 different regional platforms Also provides technical services that support UPC Direct, a DTH satellite TV platform, across Central Europe It operates an advanced and highly integrated mediahandling and play-out system, using modern server technology $50 $25 $-- $20 $15 $10 $5 $-- Summary Financials (US$mm) Chellomedia & Liberty Global Services Revenue $38 $39 $39 $40 $42 $44 $45 $47 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E $8 EBITDA $10 $9 $10 $11 $12 $13 $13 CY11A CY12A CY13E CY14E CY15E CY16E CY17E CY18E Select Customers Third-Party Services Services offered to Chellomedia channels, Liberty Global and external third-party clients 32 Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations.

34 Chello DMC Strategic Rationale DMC has limited strategic fit with SPT Networks future plan for distribution infrastructure DMC s headquarters is not ideal as SPT Networks has vetted Amsterdam in detail when exploring possible locations for our own MediaCentre and found that it was deficient in several areas as compared to other regions in EMEA The facility, workflow and operations are built around legacy technology while SPT Networks current strategy is to move operations to the cloud, ultimately making centralized network services facilities and infrastructures redundant SPT Networks has recently renegotiated and extended contracts until the start of FY18 with another network service provider in London for an additional 4 years, at highly competitive prices, while we architect the cloud solution However, DMC would likely be considered a valuable asset to other network services competitors (e.g., GlobeCast, RRSat, Encompass Digital Media), and could be a good source of monetization were we to sell it off post acquisition Potential conflict of interest with SPT Networks as the facility owner/operator as the majority of DMC s customers are SPT Networks direct competitors, which will likely be problematic for service renewals A large portion of DMC s business, ~56% of CY2012 revenue comes from related parties (i.e., Chello channels and Liberty) If we were to buy DMC from Liberty, we would have to secure long term service agreements Matters can be further complicated if we were to sell the business to a third party Relatively low projected growth suggests that we may not be able to replace current related parties if they were to discontinue the relationship with DMC once contracts end 33

35 Chello DMC Preliminary Valuation (US$ in millions) SPT Networks estimates a preliminary enterprise value range of $70mm-$80mm based on Chellomedia financial projections and on a target IRR of at least ~20% on the low view and a positive NPV on the high view The valuation implies 7.5x 8.5x FY14 EBITDA and 6.6x 7.6x FY15 EBITDA The valuation is pre-diligence and gives full credit to Chellomedia s projections, but excludes synergies to SPT Networks METHODOLOGY IMPLIED ENTERPRISE VALUE COMMENTS Low View: $70 High View: $80 DCF - Exit Multiple $75 $85 WACC Range: 13.0% % Terminal Multiple: 7.5x - 8.5x Trading Multiples - FY15E EBITDA $85 $95 Trading Multiple of FY15E EBITDA Range: 8.0x - 9.0x including a 25% Equity Control Premium Trading Multiples - FY14E EBITDA $85 $94 Trading Multiple of FY14E EBITDA Range: 9.0x x including a 25% Equity Control Premium $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 Enterprise Value 34 Note: Figures assume exchange rate of 1.3x to USD. Fiscal year financials assume 75% of prior calendar year and 25% of current calendar year.