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Project Rainbow - Update 29 October 2013

Project Rainbow - Update 29 October 2013. Valuation Structure Proposed in June 2012. Enterprise value determined in 2012 was INR 1,060 crs ($193M)* SPE to acquire 52.28% of Maa TV for a total purchase price of INR 554 crs ($101M)* with:

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Project Rainbow - Update 29 October 2013

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  1. Project Rainbow - Update 29 October 2013

  2. Valuation Structure Proposed in June 2012 • Enterprise value determined in 2012 was INR 1,060 crs ($193M)* • SPE to acquire 52.28% of Maa TV for a total purchase price of INR 554 crs ($101M)* with: • SPE will acquire 51% of fully-diluted equity at close for INR 540 crs ($98.3M)* • Additional 1.28% to be purchased in FYE14 from employee stock option holders for INR 13 crs (~$2.4M) • Purchase price derived as 22x reported FYE12 Adjusted EBITDA of INR 48.2 crs ($8.8M)*. • SPE will have a call option on the 47.72% minority position beginning in FYE18 • Call option will be for fair market value, determined by mutual agreement, or by independent valuation if agreement cannot be reached Overperformance by Maa TV against performance projected in 2012 * Depreciation in USD-INR exchange rate from INR 55 in June 2012 to INR 61.4 in Oct 2013 • 1

  3. Changing Landscape: Increase in subscription revenue due to partial digitization… Pre Digitisation Post Digitisation Share of subscription revenues Very low subscriber revenues accruing to broadcasters & MSOs; Under-reporting at the LCO stage As per TRAI recommendations for pay channels • Channel carrying capacity for digital cable enhanced to 1,000 – 1,500 standard definition (SD) channels compared to 90 channels in the analog regime • Increase in capacity to reduce carriage costs for broadcasters – MSOs have witnessed a 15-20% reduction in carriage over the past year Reduction in carriage • Consolidation among distributors to gain bargaining power with MSOs • Zee Turner and Star Den merged their distribution businesses in mid 2011 • IndiaCast and Disney UTV formed distribution JV company in Jan 2013 • Only 3 major players in the distribution space: Media Pro, The One Alliance and IndiaCast • This will result in higher realisation for broadcasters for their content from MSOs Consolidation among distributors Source: FICCI-KPMG Report 2013; EY estimates

  4. Digitization reflects in financial performance upstick and higher valuation for comparable companies… Broadcasting companies commanding a higher premium in valuation multiples (TTM EBITDA multiples) SUN TV EV/EBITDA ZEEL EV/EBITDA Zee: 24.3x Sun: 14.9x Zee: 19.5x Sun: 11.2x Uptick in Financial Performance

  5. Trading & Transaction Comparables – EBITDA Multiple range: 19x – 22x Transaction Comparables * FY13 EBITDA and PAT for TV Today adjusted to reflect sustainable FY13 Q3 and Q4 numbers

  6. Purchase Price Scenarios – EV range USD 230M – USD 270M (in INR crores) * Depreciation in USD-INR exchange rate from INR 55 in June 2012 to INR 61.4 in Oct 2013

  7. Financial Impact to SPE – Accretive / Dilutive Analysis EBIT Impact (a) (in INR crores) (a) Goodwill will be tested for impairment on a yearly basis * USD-INR exchange rate - 1USD equates to INR 61.4 (Oct 2013)

  8. Scenario Summary (in INR crores) * Depreciation in USD-INR exchange rate from INR 55 in June 2012 to INR 61.4 in Oct 2013

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