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Confidential

Starz Deal Overview of Benefits for Sony-owned Platforms January 9, 2009. Confidential. Starz Deal Overview. In exchange for substantial license fees, our previous Starz deal licensed exclusive rights to our films during the Pay window through 2013

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Confidential

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  1. Starz Deal Overview of Benefits for Sony-owned Platforms January 9, 2009 Confidential

  2. Starz Deal Overview • In exchange for substantial license fees, our previous Starz deal licensed exclusive rights to our films during the Pay window through 2013 • Like other Pay TV channels (HBO, Showtime) Starz’ exclusivity placed certain restrictions on the studio’s ability to offer on-demand services through traditional customers (MSOs, DBS) and owned platforms (BIVL, PSN) • Under our new deal through 2016, we have significantly improved our ability to offer on-demand services including some new rights specific to Sony-owned platforms • PPV / VOD / EST • Cable / broadband / IPTV -- Broadened our rights to offer PPV / VOD / EST for final 3 months Pay 1 and Pay 2 subject to minimum pricing • New media – Retained ability to offer PPV / VOD / EST over the internet at any time (including during Starz window) and clarified that we can offer PPV / VOD / EST on mobile and future media services at any time • PPV / VOD viewing period -- extended viewing period from 24 hours to 72 hours • Free on-demand -- Secured right to bundle 2 “free on demand” titles per year with Sony products >$100 at any time for up to 2 months • Starz Internet Service -- Secured MFN, ensuring Sony can offer the Starz linear Pay TV or subscription on-demand channel on Sony internet platforms with favorable terms • Pay TV over Mobile -- obtained right to exhibit 6 titles (<$50m DBO) per year on our mobile linear Pay TV channels during network window • EST -- Reduced EST pricing floor during Pay 2 • Open Market -- Clarified our right to offer digital locker re-delivery of PPV / VOD / EST

  3. Deal Terms Implications PPV / VOD / EST During Starz Window Previous Starz Deal New Starz Deal • Deal prohibited PPV / VOD / EST on cable, satellite, and IPTV platforms during Starz window • Permitted PPV / VOD / EST on internet services any time, including during Starz window • Secured rights to offer PPV / VOD / EST on cable, satellite, and IPTV platforms during last 3 months of Pay 1 and last 3 months of Pay 2 • Retains right to offer PPV / VOD / EST when delivered over the open internet (including BIVL and PSN when not as a closed system) and adds rights for mobile and any future media at any time, including during Starz window • If BIVL or PSN is delivered over the open internet (i.e., not a closed system) or operated as a web site service they could offer PPV / VOD / EST titles at any time, including during Starz window • If BIVL or PSN morphed into IPTV providers (effectively cable competitors) they were prohibited from offering PPV / VOD / EST titles during Starz window • If BIVL and PSN become closed systems, adds rights for PPV / VOD / EST to overlap with Starz windows during last 3 months of Pay 1 and last 3 months of Pay 2 • Adds mobile rights to PPV / VOD / EST to the same extent as rights over open internet

  4. Deal Terms Implications PPV / VOD Viewing Period Previous Starz Deal New Starz Deal • Sony’s PPV / VOD offerings (through MSOs, DBS, and owned platforms) was limited to a 24 hour viewing period • Sony’s PPV / VOD offerings (through MSOs, DBS, and owned platforms) extended to a 72 hour viewing period • Limited the value of potential VOD offerings on BIVL and PlayStation • Limited our ability to drive PPV / VOD revenue through 3rd parties • Significantly increases the value and appeal of PPV / VOD offerings on Sony platforms and 3rd party providers

  5. Deal Terms Implications Free On-demand and Implications for Sony Hardware/Service Bundles Previous Starz Deal New Starz Deal • Sony was not allowed to offer pictures on a free-on demand basis prior to the end of Pay 1 • Sony is allowed to exhibit 2 pictures per year on FOD basis at any time, including prior to end of Pay 1, if packaged with a Sony consumer electronics product or service priced > $100 in a single transaction and promotion is up to 2 months in length • No box office restriction (can offer our best titles) • No timing restrictions (can offer at any time after theatrical release) • “Hancock” was not able to be bundled “free” with the purchase of a BIVL • Going forward, Sony can bundle a free on-demand viewing of our two biggest titles each year with the purchase of a BIVL, PlayStation, or other Sony hardware or services so long as its priced > $100 in a single transaction

  6. Deal Terms Implications Subscription on-demand during Starz Window Previous Starz Deal New Starz Deal • Starz could make subscription on-demand offerings available on its own platforms (e.g., Vongo) or through third parties (e.g., Fancast for Comcast cable customers) without allowing Sony to offer Starz Play on our own platforms • Starz must make Starz Play available for Sony Internet platforms (e.g., PSN and BIVL) directly or through partners on no less favorable terms than those offered to third parties, provided however Sony must match all terms and conditions including technical implementation • MFN on service terms is in place through February 2012 • Created risk of Starz Play channel being available in multiple places online, yet not on PSN and BIVL • Provides BIVL and PlayStation leverage for favorable deal terms through February 2012

  7. Deal Terms Implications Mobile Previous Starz Deal New Starz Deal • Subscription on-demand was not allowed during the network window (between Pay 1 and Pay 2) • Obtained right to exhibit 6 titles (with under $50MM in domestic box) per year on Crackle / Pix mobile pay television channels during the network window • Crackle and Pix mobile could only have library titles on pay television (non-ad supported) channels • Enables Crackle and Pix to introduce quality titles into subscription mobile channels earlier

  8. Deal Terms Implications EST Pricing Floor During Pay 2 Previous Starz Deal New Starz Deal • EST was allowed during Starz windows but with pricing floors • Pricing floor during Pay 2 implied a minimum wholesale of $6.95 • Pricing floor during Pay 2 reduces minimum wholesale price to $3.48 • Pricing floor was unrealistically high for older (Pay 2) titles, limiting the EST business • More realistic pricing will help grow EST during the Pay 2 window

  9. Deal Terms Implications Digital Locker and the Open Market Philosophy Previous Starz Deal New Starz Deal • Prohibited an Open Market “digital locker” redelivery of a film purchased via the internet during the Starz windows • Allows an Open Market “digital locker” redelivery during the Starz windows • Titles purchased from BIVL and PSN could not later be re-delivered through other services (e.g., Cable STB or mobile carriers to cell phones) during the Starz windows • Restrictions limited the feasibility of the Open Market initiative and created a confusing consumer offering • Improves the value of EST on BIVL and PSN platforms • Provides benefits for the Open Market initiative

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