Summary of Simon Cowell Partnership Opportunities May 2009

Summary of Simon Cowell Partnership Opportunities May 2009

NOTES FOR SPT INTERNAL DISCUSSION ONLY • Fall 2007 – Sony BMG began negotiations to form a JV with Simon Cowell, buying into his revenues streams (appearance fees and artist revenues) associated with American Idol, X-Factor, and other shows – At the time, SPE provided a high-level overview of opportunities to partner with Simon that could complement (but not drive) the Sony BMG deal, including: (1) TV Production, (2) Film Production, (3) Crackle, (4) GSN • Winter 2008 – We were asked to quantify the value of the TV/Crackle/GSN opportunities and estimated their value at $70 -$100 MM (see appendix A) – At this point, the TV production portion of the deal evolved from a small (e. g. , $1. 5 MM overall deal) to a full blown JV with funding for several pilots per year • June 2008 – R. Wiesenthal updated us in detail on a Sony BMG proposal that was being made to Simon without SPE (see appendix B) • Today – We have been asked to update our list of partnership opportunities with Simon – The next 4 pages outline these opportunities and have been modified from the Fall 2007 version: Ø Eliminated the opportunity to receive equity in GSN (given 65% Liberty ownership) Ø Excluding quantification of opportunities until negotiations are further fleshed out (in prior iterations we were concerned about being asked to over-commit here) CONFIDENTIAL 2

Preliminary Proposal for an Overall Television Deal Sony Pictures Television Business Overview SPT is the top independent studio for network and cable television Need to update these stats • Creator and distributor of top comedies, dramas, and game shows: – #1 comedy of all-time (Seinfeld) – #1 primetime comedy last season (Rules of Engagement) – #1 daytime drama (Young and the Restless) – #1 and #2 game shows of all time (Wheel of Fortune and Jeopardy!) – #1 producer of TV movies, won 3 Emmys for Broken Trail this year • Broad range of on-air shows, including 10 network shows, 8 cable shows, 5 syndicated shows, and 6 made-for-TV movies • Industry leader in television distribution with records for shows like Seinfeld and King of Queens • Large ad sales organization with over $200 MM in annual revenues Deal Overview • Establish a JV with Simon and Sony Pictures Television • Provide Simon access to SPT’s drama and comedy writers as well as our creative executives • Cover multiple genres as well as scripted and non-scripted formats • Provide Simon screen credits including Executive Producer, Logo Credit, and paid ads Simon will tap into Sony Picture Television’s resources, industry leadership, and expertise to expand the range of his television offerings CONFIDENTIAL 3

Preliminary Proposal for an Overall Feature Film Deal Sony Pictures Overview Sony Pictures is Hollywood’s leading studio Need to update these stats • #1 in openings (2006 & 2007) • #1 in market share (2006 & 2007) • #1 in opening day receipts / weekend receipts (Spider-Man 3) • 12 Best Picture Oscars Deal Overview • A multi-year first look deal with Columbia Pictures for all theatrical projects • Deal would cover Simon’s overhead and fringe • Deal would be non-exclusive for Simon with regards to production services / producer commitments • Pay-or-play for fixed compensation would be based on SPE’s election to proceed to production • Contingent consideration would be the same as existing deal at Columbia (“William Davies / Untitled Simon Cowell Project”) Simon will leverage Sony Pictures’ resources and feature film production expertise, providing Simon a vehicle to bring his theatrical projects to the screen CONFIDENTIAL 4

Preliminary Proposal for a Crackle-based Online Partnership Crackle Overview Crackle is a premier destination for online video, focused on high-quality short-form video • Crackle is elevating the quality of online video and attracting the best creators of short-form video • Crackle has attracted a large and loyal audience, making it the ideal destination to extend Simon’s brand online • Crackle’s model is an ideal fit for identifying talent, with a brand built on offering fame-based incentives to emerging talent Deal Specifics • Sony would grant equity in Crackle as part of the venture [Note: We should discuss. This was previously based on the assumption of Sony BMG funding a portion of EBIT losses] • Crackle would provide technology, infrastructure, and management team • Partnership would include marketing support and music video distribution • Simon would receive cash compensation for his services, including contribution of his expertise in developing the Network concept • Simon would contribute his name and likeness, public relations support, and on-going interaction with audience members [Note: Crackle partnership likely no longer about audience talent; less like Idol] With no cash investment, Simon would participate in creating the leading online destination for talent and extend his brand to a site that reflects his style of straight talk and celebrity CONFIDENTIAL 5

Preliminary Proposal for a GSN-based Game Partnership GSN Overview Collaborate with Simon to build a game-based business around his brand • With the backing of Sony Pictures, Liberty Media, and new management, GSN is redefining its brand • GSN is building on its position as a leader in TV game shows (reaching 66 MM households) to expand into online and casual games • GSN’s affiliation with Fun Technologies uniquely positions it to be the leader in games across platforms Deal Specifics • GSN would guarantee exclusive carriage for a defined number of Simon’s game shows each year (number of shows / format would be negotiated) • Simon would have a dedicated programming block one night per week • Simon, GSN, and FUN Technologies would collaborate in developing online skill-based games • Deal would build on Sony’s partnership with IGT and history of introducing the most successful gaming machines of all time to offer slot machines based on Simon’s game shows Leverage GSN and FUN Technologies to extend Simon Cowell’s brand into both television game shows and skill-based casual video games CONFIDENTIAL 6

Appendix A – Back-up from Fall 2007 / Winter 2008 CONFIDENTIAL 7

Estimated Value Ranges (As of Winter 2008) Deal Component Sony Pictures Television JV Entity Value $45 MM $100 MM % to Simon / SBMG 50% Implied Value Entity Value Basis $22 MM $50 MM • 2 successful shows w/ network, sponsors, and syndication • Funding for pilots required to yield 2 shows • OH funding • Based on % of development and OH funding provided Need to revisit Simon / SBMG Equity Basis $62. 5 MM 22. 5% 30% $15 MM $20 MM • Acquisition price $600 MM $700 MM Crackle • 5% at close for cash • 15. 5% based on EBIT funding • 7. 5% based on financial milestones 5% $30 MM $35 MM • Negotiated value between Sony and Liberty Media • Warrants • Based on financial milestones Need to revisit GSN Likely off the table Partnership opportunities with SPE would provide $70 -100 MM in equity plus additional income to Simon / Sony BMG CONFIDENTIAL 8

TV Production Company Overview (As of Winter 2008) • • Content Focus Business Model Reality Shows (e. g. , America’s Got Talent, Cupid) Game Shows (e. g. , Power of 10) • $7 MM annually required for development budget, 6 pilots (50% license fees covered by networks), and overhead in Year 1; growing to $12 MM by Year 5 Only network shows assumed without need for deficit financing (i. e. , no cable shows modeled) Reality shows assumed to generate incremental revenue from sponsorship and format sales Game shows assumed to generate incremental revenue from First Run Syndication, Advertising (syndication barter), and international format sales • • • Organizational Structure Key Success Factors JV headed by Simon Cowell with 10 professionals in the first year growing to 20 professionals by Year 5 Wholly owned by SCA and Sy. Co (50/50 JV) • • Pilot pickup rate throughout the plan period in line with industry averages (33%) Successful first run syndication of best game shows (e. g. , Who Wants to be a Millionaire) Reality formats attract significant sponsorship ($20 MM/Year by Year 3) New. Co earns all EP fees at 10% of production budget (60 -85% of PV) PV of production company cash flows ranges from $45 MM to $100 MM driven by Simon’s ability to continue to create exciting television content CONFIDENTIAL 9

Slate Assumptions (As of Winter 2008) General Assumptions • 6 pilots per year with a 33% pick-up rate for both reality and game shows • Mix of successful (3+ seasons, syndication and format sales) and under performing (average 1 -2 seasons, limited sponsorship, no syndication) game show and reality programming • 100% network shows with license fees equal to production budgets • Successful shows reach steady state economics in Year 3 Case Specific Assumptions Success Rates Aggressive Case Base Case Overall Programming Mix* Industry Average Show Type Aggressive Case Base Case Year 1 to 2 60% 30% 27% Reality Success 2 2 Year 2 to 3 50% 67% 61% Reality Underperform 3 2 Year 3 to 4 67% 50% 67% Game Show Success 2 3 Game Show Underperform 3 3 *Numbers represent picked-up shows 10

Appendix B – Last Sony BMG Proposal to Simon Cowell (June 2008) CONFIDENTIAL 11

Simon Cowell / SONY BMG London Meeting June 3, 2008

Syco 3. 0 Unique Advantages of Partnership With SONY BMG Begins Now! …Not In 2011 Immediate Profit Share In Syco and Ronagold Assets SONY BMG Committed to Invest Required Funds to Achieve JV Goals Exchange Opportunities With All U. S. Labels and Key Territories Continuity of Established SONY BMG Relationships Around the World U. S. Canada UK/Ireland France Germany Belgium Netherlands Italy Spain Switzerland Sweden Austria Denmark Norway Finland Greece Portugal Czech Republic Poland Hungary Turkey Russia South Africa Australia New Zealand Japan China Taiwan Korea Hong Kong Indonesia India Singapore Thailand Malaysia Philippines Mexico Central America U. S. Latin Brazil Argentina Chile Colombia Ecuador Venezuela Important Relationships With SONY BMG Parent Companies 13 13

Syco 3. 0 – New Improved Proposal § JV Beginning Now! …Not In 2011 § Effective January 1, 2008, SONY BMG contributes ~$200 M of Syco and Ronagold assets and Pop Idol override § 50% of asset value given to SC, now and ongoing § SONY BMG makes $200 M flat payment to SC § $100 M on signing § $34 M in 2010 § $66 M in 2015 (or earlier if thresholds are met) Forecast SC income: Flat payments $200 M + Est’d profit $296 M Total $496 M § 50% share of JV profits from January 1, 2008 thru 2015, worth est’d $296 M § Additionally, SONY BMG to fund all JV productions and investments 14 Note: all other terms as before 14

New Improved Proposal Vs. Prior Offer § Additional $66 M On Signing § Was $34 M, now $100 M § Interest benefit to SC est’d at $10 M Improvements § Additional $18 M Profit Share § 50% Profit Share In 2008 & 2009 (Was 25%) § Additional $28 M in post-tax profits to SC § Accelerate Final Flat Payment and Profit Share When Threshold Achieved Vs. All In 2015 15 15

Income Projections: New Improved Proposal SC* SONY BMG Worldwide Income Pre Tax Income ($ In Millions) Post Tax Income ($ In Millions) 16 * Includes $200 M Flat Payment 16

SC Pre Tax Income Projections ($ In Millions) SC Pre Tax Income SONY BMG Opportunities Are Far Greater Than Any Competitive Offer $619 M $600 50% Participation In Valuable Asset Portfolio $557 M $500 $400 with $496 M $400 M Understanding of Competitive Offer 100% 125% 150% Forecasted Income: % of Base Case Our Unprecedented Success to Date Is the Foundation to Build A $1 Billion Media Empire 17 17

Shared Ambition to Build A $1 Billion Media Company § Add Resources to Coordinate Global TV Activities Refocus SONY BMG Organization to Maximize Exploitation of Syco Assets Grow Current TV and Recorded Music Business § Appoint Dedicated SBMG Global Brand Executive Focused On Syco Business – Responsibilities Include Endorsements, Branding, Sponsorship, Online, Games, Film, Music Publishing, Etc § Create International Structure to Focus On Local Territory Syco Exploitation § Assemble Biannual Meeting of Key Global SBMG/Syco Executives to Brainstorm Opportunities, Develop Plans for Execution § Establish LA Presence With Necessary Resources In TV and A&R § Expand In-House TV Producer Team to Deploy On Key Productions § Increase Global Marketing and A&R Resources Accordingly Expand Into New Business Areas § Aggressively Pursue New Business Opportunities § Commit to Provide Funding for Diversification Into New Media Sectors 18 18

Simon Cowell / SONY BMG London Meeting June 3, 2008

SONY BMG Assets Created Together Il Divo The X Factor Shayne Ward Jordin Sparks Will Young Daughtry Westlife Leona Lewis Carrie Underwood Gareth Gates Christophe Willem Kelly Clarkson Got Talent Anthony Callea Taylor Hicks David Cook Six Clay Aiken Five Damien Leith Robson & Jerome Guy Sebastian Elliot Yamin Mark Medlock Amel Bent Kellie Pickler Paul Potts Michelle Mc. Manus Shannon Noll Fantasia Barrino Ruben Studdard American Inventor 20 20

Leona Lewis: Most Recent Syco/SONY BMG Global Success Debut Album Already Gold or Platinum in 17 Territories; 4 M Units Spirit • Fastest selling UK debut album ever (375, 000 copies in first week) • Entered US Billboard 200 at #1 - first British solo artist to achieve this with debut release Bleeding Love • Best selling UK single of 2007 • First #1 US single by UK female in over 20 years • Only the second single to ever fall out and return to the number one position on the Hot 100 twice #1 Top Selling Global Album In 2008 21 21

Tax Appendix 22 22 22

Major New Tax Development § Create New English Limited Liability Partnership (LLP) § SC Will Be Partner In LLP and Furnish Services As A Partner New Tax Structure § 100% Capital Gain Benefit to SC § Partial Tax Benefit to SONY BMG § $200 M Flat Payment – 18% Tax Rate for SC Vs. Significant Risk of 41% Rate In Option 3 § SC Profit Share – 40% Personal Tax Rate Vs. 46% Corporate Rate § Lower National Insurance Costs for JV § Significantly Less Risk of Tax Audit for SC 23 See Tax Appendix for Further Details 23

Current Status Royalty Free License SBME - UK SIMCO Simon Current Employment Contract Royalty Free License Ronagold Simon Cowell (SC) Assets Including Intellectual Property and Goodwill 24 24

Preliminary Step • Ronagold and SIMCO Give Notice to SBME-UK to Terminate Current Royalty-Free License Adjusted License SBME - UK SIMCO Simon Current Employment Contract Adjusted License Ronagold SC Assets Including Intellectual Property and Goodwill 25 25

Venture Formation • SBME-UK and SC Incorporate A 50/50 English Limited Liability Partnership (LLP) and Make Nominal Capital Contributions (£ 50 K) – Initially LLP Could Be Formed Internally Within SBME-UK • SBME-UK and LLP Enter Into Secondment Agreement Under Which SBME-UK Employee Seconded to LLP On A Part-Time Basis (Employee Will Report to SBMEUK and SC) and Employee Would Invest Capital In Short-Term Interest Bearing Intra -Group Loans • SBME-UK, SC and LLP Enter Into Joint Venture Agreement Pursuant to Which: – SBME-UK Contributes Its Shares In Ronagold and SIMCO to the LLP As A Gift – SBME-UK Contributes to the LLP As A Gift Up to $200 Million In Three Tranches (i. e. , $67 Million Day 1, $67 Million 2010 and Up to $66 Million In 2015 If Earn-Out Conditions Are Met) – SC Sells His Intellectual Property For Up to $200 Million (i. e. , $67 Million Payable Day 1, $67 Million 2010, and Up to $66 Million In 2015 If Earn-Out Conditions Are Met) – SBME-UK and SC Agree to Adapt A New LLP Agreement Containing the Terms On Which the LLP Will Be Managed by SBME-UK and SC and Under Which SC Agrees to Devote Substantially All of His Time to A&R On Behalf of the LLP On An Exclusive Basis Until 2015 – SC and SIMCO Agree to Terminate SC’s Current Employment Contract 26 26

Venture Formation SBME - UK $200 Million 50% L i c e s n s e Simon Cowell LLP 100% SIMCO Ronagold IP 27 27

Structure Tax Advantages • SBME-UK Should Be Directly Entitled to Amortize 50% of the Cost to the LLP of the Intellectual Property and Goodwill Acquired by the LLP From SC • Simon's Ability to Claim 18% Tax Rate On the Receipt of $137 Million Plus the Net Present Value of $66 Million Substantially Improves As Compared to Simon's Current Maidmetal Proposal – As A Matter of English Law, SC Should Be Deemed A Partner and Not An Employee • SBME-UK Saves Stamp Duty Costs ($1 Million) Since It Is Not Required to Acquire SC’s Shares In Maidmetal 28 28