Deal Overview Appendix July 2013

Transcription

1 Deal Overview Appendix July 2013

2 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 1 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.

3 Chello Zone

4 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 3 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%

5 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) 4

6 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 5 (1) As of April 30, 2013.

7 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 6 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.

8 Chello Multicanal

9 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% 8 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%

10 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 9

11 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 10 (1) As of April 30, 2013.

12 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 11 (1) As of April 30, 2013.

13 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 12 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.

14 Chello Central Europe

15 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%

16 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 15

17 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 Film Mania Adults High AXN Black potential 55:45 JV (MGM) MGM Adults Medium Interesting for a movies conversion in Poland Total 46.2 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 16 (1) As of April 30, 2013.

18 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 17 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.

19 At Media

20 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% 19 Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations.

21 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, trading multiples and transaction comparables valuation methodologies The valuation implies 4.5x 5.8X 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 20 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.

22 Chello DMC

23 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 22 Note: Figures assume exchange rate of 1.3x to USD. (1) All data as of or for April 2013A YTD. (2) Pre eliminations.

24 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 23

25 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 24 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.