Appendix
INVESTMENT IN
Deal Overview
October 19, 2012
Market Analysis ($ in millions)
1
• Flixela is first to market, no current competition
• Flixela and Crackle LatAm will provide SPT significant shares of double digit growth video advertising markets in Brazil,
Argentina, and Mexico
Note: Total Internet Advertising for each country excludes Search
Source: PWC Media and Entertainment Outlook, 2012
Market Analysis FY 2012 FY 2013E FY 2014E FY 2015E FY 2016E FY 2013E FY 2014E FY 2015E FY 2016E
All Countries in LatAm Brazil
Market - Video Advertising $32 $47 $67 $88 $109 Market - Video Advertising $23 $31 $40 $49
Growth % 47% 43% 31% 24% Growth % 35% 35% 29% 23%
Market - Total Internet Advertising $719 $878 $1,057 $1,240 $1,438 Market - Total Internet Advertising $460 $536 $618 $706
Growth % 22% 20% 17% 16% Growth % 17% 17% 15% 14%
Flixela Revenue - - $2.1 $6.1 $10.1 Flixela Revenue - $1.1 $2.9 $4.8
Growth % - - 195% 67% Growth % - - 169% 63%
% of Video Advertising Market - 3% 7% 9% % of Video Advertising Market - 4% 7% 10%
% of Total Internet Advertising - 0.2% 0.5% 0.7% % of Total Internet Advertising - 0.2% 0.5% 0.7%
Crackle LatAm Revenue $0.1 $3.4 $8.1 $16.4 $22.0 Crackle LatAm Revenue $1.5 $4.5 $8.4 $10.9
% of Video Advertising Market 7% 12% 19% 20% % of Video Advertising Market 6% 14% 21% 22%
Flixela & Crackle LatAm Revenue $0.1 $3.4 $10.1 $22.5 $32.1 Flixela & Crackle LatAm Revenue $1.5 $5.5 $11.3 $15.7
% of Video Advertising Market 0% 7% 15% 26% 29% % of Video Advertising Market 6% 18% 28% 32%
Argentina Mexico
Market - Video Advertising $2 $3 $4 $5 $6 Market - Video Advertising $9 $12 $15 $19
Growth % 50% 33% 25% 20% Growth % 50% 33% 25% 27%
Market - Total Internet Advertising $48 $56 $65 $74 $86 Market - Total Internet Advertising $167 $197 $228 $262
Growth % 17% 16% 14% 16% Growth % 22% 18% 16% 15%
Flixela Revenue - - - $0.2 $0.5 Flixela Revenue - $0.8 $2.3 $3.7
Growth % - - - 155% Growth % - - 202% 63%
% of Video Advertising Market - - 4% 8% % of Video Advertising Market - 6% 15% 20%
% of Total Internet Advertising - - 0.2% 0.5% % of Total Internet Advertising - 0.4% 1.0% 1.4%
Crackle LatAm Revenue - - $0.5 $1.1 Crackle LatAm Revenue $2 $3 $5 $6
% of Video Advertising Market 0% 0% 11% 18% % of Video Advertising Market 17% 22% 33% 33%
Flixela & Crackle LatAm Revenue - - $0.7 $1.6 Flixela & Crackle LatAm Revenue $1.6 $3.4 $7.2 $10.1
% of Video Advertising Market - - 14% 26% % of Video Advertising Market 17% 28% 48% 53%
KPI Comparison (in millions, except for multiples and titles)
2
FY 2013E FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E CAGR '13-'16 CAGR '14-'18
Uniques (Monthly Average)
Flixela - 2.3 3.7 5.5 6.4 7.1 33%
Crackle LatAm 3.1 5.3 9.0 10.8 - - 52%
Crackle U.S. 16.8 19.1 21.6 24.5 - - 13%
Streams / Unique
Flixela - 2.1x 2.3x 2.5x 2.8x 3.0x 10%
Crackle LatAm 2.1x 2.3x 2.6x 2.8x - - 10%
Crackle U.S. 2.7x 3.1x 3.2x 3.3x - - 7%
Streams (Monthly Average)
Flixela - 4.7 8.5 14.0 17.9 21.6 47%
Crackle LatAm 6.5 12.4 23.0 30.4 - - 67%
Crackle U.S. 45.6 59.8 69.7 81.5 - - 21%
Ads / Stream
Flixela - 2.9x 3.0x 3.2x 3.4x 3.5x 5%
Crackle LatAm 2.8x 3.0x 3.2x 3.4x - - 6%
Crackle U.S. 2.8x 4.3x 5.3x 6.6x 34%
Number of Ads Served (Monthly Average)
Flixela - 13.5 25.8 44.6 60.2 76.8 54%
Crackle LatAm 18.4 37.5 73.7 102.4 - - 77%
Crackle U.S. 125.8 256.1 368.0 535.8 - - 62%
Revenue (Annual)
Flixela - $2.1 $6.1 $10.1 $13.2 $16.3 68%
Crackle LatAm $3.6 $8.7 $17.6 $23.6 - - 87%
Crackle U.S. $20.1 $44.7 $67.2 $97.6 - - 69%
Movie Titles
Flixela - 130 132 151 151 173 7%
Crackle LatAm - 151 166 183 201 221 10%
Crackle U.S. 250 300 350 400 - -
TV Episodes
Flixela - - - - - -
Crackle LatAm - 605 666 732 805 886 10%
Crackle U.S. - 1000 1000 1000 1000 1000
Margin Comparison
3
Based on FY16 - Y5 of Plan Based on FY18 - Y5 of Plan
Crackle Flixela
2013 MRP 2013 MRP
Brazil Spanish Latam Brazil Mexico
Revenue 100% 100% 100% 100%
Sales Tax -14% 0% -14% 0%
Agency Incentive -15% -15% -15% -15%
Partner Rev Share -3% -3% -3% -3%
Ad Sales Commission -20% -20% -20% -20%
Subtotal 57% 66% 57% 66%
Bandwidth -10% -10% -6% -6%
Programming -19% -19% -16% -16%
Marketing -8% -8% -15% -15%
Variable Cost Margin 20% 29% 20% 29%
SSO / Product Development -15% -15% -4% -4%
SG&A/Overhead -17% -17% -9% -9%
EBIT Margin -12% -3% 7% 16%
Programming
4
• 21
• A Few Good Men
• A League of Their Own
• Across the Universe
• Almost Famous
• Blind Date
• Can't Hardly Wait
• Charlie's Angels
• Closer
• Da Vinci Code
• Exorcism of Emily Rose
• Flatliners
• Fun with Dick and Jane (2005)
• Groundhog Day
• Hitch
• Hook
• Jawbreaker
• Julie & Julia
• Kramer Vs Kramer
• Made of Honor
• Michael Jackson's This Is It
• Nick & Norah' Infinite Playlist
• Only You
• Panic Room
• Resident Evil
• RV
• Sex, Lies & Videotape
• Silent Hill
• Single White Female
• Sleepless in Seattle
• Spanglish
• Stomp the Yard
• The Big Chill
• The House Bunny
• The Messengers
• The Net
• The Prince of Tides
• The Quiet
• The Sweetest Thing
• The Ugly Truth
• To Die For
• Tootsie
• Underworld
• What Planet Are You
From?
Flixela Sample Programming List
• The women’s movie category is smaller and more targeted than
the general audience for Crackle
• Experience from Crackle LatAm suggests targeted
programming offering could drive significant streaming
volume. For Crackle LatAm, ~40% of content drives 80% of ad
starts
• ~50% of content is from third parties across the projection
period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5
FY2014E FY2015E FY2016E FY2017E FY2018E FY2014E FY2015E FY2016E FY2017E FY2018E
Annual and Monthly Titles
Titles per Year Average Monthly Titles
AAA 15 23 27 27 29 AAA 4 6 7 7 7
AA 14 21 26 26 28 AA 8 11 13 13 14
A 41 39 43 43 47 A 41 39 43 43 47
B/C 75 75 87 87 103 B/C 75 75 87 87 103
Drivers 15 23 24 24 25 Drivers 2 2 2 2 2
Total 160 181 206 206 231 Total 130 132 151 151 173
Flixela and Crackle LatAm Title Comparison
Flixela Crackle LatAm
Movie Titles 130 132 151 151 173 Movie Titles 151 166 183 201 221
Growth - 2% 14% 0% 15% Growth - 10% 10% 10% 10%
TV Episodes - - - - - TV Episodes 605 666 732 805 886
Growth - - - - - Growth - 10% 10% 10% 10%
Total 130 132 151 151 173 Total 756 832 915 1,006 1,107
Revenue
5 Notes: FX rates used in the projections: 2.04 Brazilian reals / $1 US, 12.88 Mexican pesos / $1 US, $4.72 Argentine pesos / $1 US, 1,800 Colombian pesos / $1 US
% Growth
Year 1 Year 2 Year 3 Year 4 Year 5 Year 2 Year 3 Year 4 Year 5 CAGR
FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E FY 2015E FY 2016E FY 2017E FY 2018E FY'14-FY'18
Uniques (Monthly Average)
OTT 27,250 184,473 431,118 702,219 941,309 577% 134% 63% 34% 142%
Mobile 159,735 224,373 349,285 603,827 971,487 40% 56% 73% 61% 57%
Web 2,087,516 3,310,633 4,733,667 5,120,297 5,225,354 59% 43% 8% 2% 26%
Total 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149 64% 48% 17% 11% 33%
Streams / Unique
OTT 2.5x 2.8x 3.0x 3.3x 3.7x 10% 10% 10% 10%
Mobile 1.5x 1.7x 1.8x 2.0x 2.2x 10% 10% 10% 10%
Web 2.1x 2.3x 2.5x 2.8x 3.1x 10% 10% 10% 10%
Total 2.1x 2.3x 2.5x 2.8x 3.0x 11% 11% 10% 9%
Content Streams (Monthly Average)
OTT 68,124 507,300 1,304,132 2,336,634 3,445,425 645% 157% 79% 47% 167%
Mobile 239,603 370,216 633,953 1,205,541 2,133,531 55% 71% 90% 77% 73%
Web 4,383,783 7,647,563 12,028,248 14,311,743 16,065,925 74% 57% 19% 12% 38%
Total 4,691,509 8,525,079 13,966,332 17,853,918 21,644,881 82% 64% 28% 21% 47%
Ad Streams (Monthly Average)
OTT 204,371 1,597,995 4,313,415 8,114,839 12,563,808 682% 170% 88% 55%
Mobile 718,808 1,166,179 2,096,799 4,186,692 7,779,960 62% 80% 100% 86%
Web 12,593,772 23,060,585 38,185,176 47,849,691 56,424,375 83% 66% 25% 18%
Total 13,516,952 25,824,759 44,595,390 60,151,222 76,768,144 91% 73% 35% 28%
Ads / Stream
OTT 3.0x 3.2x 3.3x 3.5x 3.6x 5% 5% 5% 5%
Mobile 3.0x 3.2x 3.3x 3.5x 3.6x 5% 5% 5% 5%
Web 2.9x 3.0x 3.2x 3.3x 3.5x 5% 5% 5% 5%
Total 2.9x 3.0x 3.2x 3.4x 3.5x 5% 5% 6% 5%
Revenue (Annual)
OTT $44,504 $538,212 $1,377,122 $2,460,937 $3,624,824 1,109% 156% 79% 47% 200%
Mobile 87,207 277,103 472,295 895,766 1,581,900 218% 70% 90% 77% 106%
Web 1,758,513 5,387,377 8,475,484 10,109,246 11,328,421 206% 57% 19% 12% 59%
Display/Sponsorships 320,460 247,504 421,846 565,384 703,799 (23%) 70% 34% 24% 22%
Total $2,210,683 $6,450,197 $10,746,747 $14,031,332 $17,238,945 192% 67% 31% 23% 67%
Revenue by Country
Brazil $1,092,222 $2,942,071 $4,784,847 $6,004,376 $7,006,430 169% 63% 25% 17% 59%
Mexico 753,462 2,275,814 3,708,117 4,962,298 6,329,477 202% 63% 34% 28% 70%
Pan Regional 345,000 773,881 1,222,142 1,663,799 2,114,108 124% 58% 36% 27% 57%
Argentina 0 180,659 459,951 622,291 795,415 N/A 155% 35% 28% N/A
Colombia 0 171,404 362,211 492,943 628,303 N/A 111% 36% 27% N/A
Other Countries 20,000 106,368 209,479 285,626 365,213 432% 97% 36% 28% 107%
Total $2,210,683 $6,450,197 $10,746,747 $14,031,332 $17,238,945 192% 67% 31% 23% 67%
Brazil Sales Tax (14.25%) $155,642 $392,513 $638,618 $801,770 $935,747
Net Revenue $2,055,042 $6,057,684 $10,108,129 $13,229,563 $16,303,198 195% 67% 31% 23% 68%
Growth % - 195% 67% 31% 23%
Marketing and Retention (in thousands)
6 (1) Traffic sources include Organic, Social Media, Agency, Production (Creative), Public Relations, Other (CRM, Customer Service)
• In Y5, 47% of traffic comes from marketing efforts
and organic traffic across all platforms(1)
• SEM Paid accounts for paid web traffic
• Retention rates assumptions:
– Growth of 37% year over year for each month
– Additional month of retention for each year
– Y1 is based on current US Crackle retention
rates as of October 2012
• Uniques generated from In-kind Marketing are in
“Other” and “Other Retained” in the Uniques
Summary
• Uniques generated from Other are in “Other” and
“Other Retained” in the Uniques Summary
FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E
Marketing Budget
SEM Paid $1,053 $959 $972 $972 $1,056
Other 589 548 561 560 629
B2B/Trade 250 200 200 215 225
Total $1,892 $1,707 $1,733 $1,747 $1,910
In-kind Marketing
Syndication & Device Partners $541 $1,125 $1,181 $1,240 $1,302
SPT Pay TV Channels Cross Promote 180 375 394 413 434
Subtotal $721 $1,500 $1,575 $1,654 $1,736
Total Including In-Kind $2,613 $3,207 $3,308 $3,400 $3,647
Uniques Summary FY2014E FY2015E FY2016E FY2017E FY2018E
SEM Paid 1,662,500 1,403,646 1,421,875 1,421,875 1,545,833
SEM Retained 167,635 225,566 327,257 462,561 704,414
Other(1)
399,558 1,835,645 3,116,259 3,445,569 3,369,507
Other Retained(1)
44,807 254,622 648,679 1,096,338 1,518,395
Total Uniques 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149
% Total Uniques
SEM Paid 73% 38% 26% 22% 22%
SEM Retained 7% 6% 6% 7% 10%
Other(1)
18% 49% 57% 54% 47%
Other Retained(1)
2% 7% 12% 17% 21%
Total 100% 100% 100% 100% 100%
Total Retained Uniques 9% 13% 18% 24% 31%
Retention Rates for SEM Retained and Other Retained
Month 2 7% 10% 13% 18% 25%
Month 3 2% 3% 4% 5% 7%
Month 4 1% 1% 2% 3% 4%
Month 5 1% 1% 2% 3% 4%
Month 6 0% 1% 1% 2% 3%
Month 7 0% 0% 1% 1% 2%
Month 8 0% 0% 0% 1% 1%
Month 9 0% 0% 0% 0% 1%
Month 10 0% 0% 0% 0% 0%
Month 11 0% 0% 0% 0% 0%
Month 12 0% 0% 0% 0% 0%
Headcount
7
Headcount Summary
Year 1 Year 2 Year 3 Year 4 Year 5
FY'2014 FY'2015 FY'2016 FY'2017 FY'2018
Brazil 1 2 2 2 2
Los Angeles 3 3 3 3 3
Mexico 0 2 2 2 2
Miami 4 6 8 8 8
Women's Channel Headcount 8 13 15 15 15
Los Angeles 1 1 1 1 1
Mexico 2 2 2 3 3
New York 2 3 4 4 4
Ad Sales Headcount 5 6 7 8 8
Los Angeles 1 1 1 2 2
Shared Services Headcount 1 1 1 2 2
Miami 1 1 1 2 2
Finance Headcount 1 1 1 2 2
Total Headcount 15 21 24 27 27
Note: Difference in headcount total are the two finance heads which are allocations
Headcount Summary by Position FY'15 (YEAR 2)
Title Location Start Date FY14 Salary
1 Community Manager Miami 04/01/13 $60
2 Marketing Manager Miami 04/01/13 70
3 Video Ops Specialist Los Angeles 04/01/13 70
4 Graphic Designer Los Angeles 04/01/13 75
5 Web Producer Los Angeles 04/01/13 70
6 Editor-In-Chief Miami 04/01/13 90
7 Editorial Specialist Brazil 04/01/13 55
8 Programming Specialist Miami 04/01/13 55
9 Community Specialist Brazil 04/01/14 0
10 Community Specialist Mexico 04/01/14 0
11 Editorial Specialist Mexico 04/01/14 0
12 Programming Specialist Miami 04/01/15 0
13 Marketing Manager Miami 04/01/15 0
14 Community Specialist Miami 04/01/16 0
15 Editorial Specialist Miami 04/01/16 0
16 Digital Sales Planner Mexico 07/01/13 20
17 Account Executive Mexico 05/01/13 52
18 Tech Ops Specialist Los Angeles 07/01/13 56
19 Ad Ops Specialist New York 07/01/13 56
20 Ad Ops Specialist New York 07/01/13 56
21 Ad Ops Specialist New York 04/01/14 0
22 Ad Ops Specialist New York 04/01/15 0
23 Digital Sales Planner Mexico 04/01/16 0
24 Account Analyst Miami 06/01/13 46
25 Account Analyst Miami 04/01/16 0
Total $831
Total including Fringe Benefits $1,056
LatAm Target Female Demographic
8 Source: TGI.net Y2010 Wave2 (2011), MRP Infographic
Online Video Female Demographic Data (Watchers in millions)
9 Source: ComScore Video Matrix, August 2012
Males Females Males % Females %
United States
Video Online Watchers 95 98 49% 51%
Videos/Viewer 313 180 63% 37%
Minutes/Viewer 1,846 820 69% 31%
Minutes/Video 6 5
Brazil
Video Online Watchers 22 22 50% 50%
Videos/Viewer 157 93 63% 37%
Minutes/Viewer 787 408 66% 34%
Minutes/Video 5 4
Mexico
Video Online Watchers 11 10 52% 48%
Videos/Viewer 204 121 63% 37%
Minutes/Viewer 1,153 603 66% 34%
Minutes/Video 6 5
Cost of Equity ($ in millions)
10
Company HQ
Levered
Beta Market Cap
Total
Debt
Debt to
Total
Capital
Debt
to
Equity
Marginal
Tax
Rate
Unlevered
Beta
Blanco y Negro S.A. Chile 0.28 $63 $0 0% 0% 17% 0.28
Blinkx USA 0.49 356 0 0% 0% 40% 0.49
Coinstar USA 0.90 1,429 373 21% 26% 40% 0.78
Grupo Clarín S.A. Argentina 1.01 432 745 63% 173% 35% 0.48
Grupo Radio Centro, S.A.B. de C.V. Mexico 1.18 147 5 3% 4% 28% 1.15
Netflix USA 0.70 3,209 400 11% 12% 40% 0.65
Average 0.76 0.64
Median 0.80 0.57
Assumptions
Unlevered Beta 0.57 Peer group median. (CapIQ)
Calculated Levered Beta 0.57 Levered Beta = Unlevered Beta * (1+[(1-Tax Rate) * Target Debt / Equity Value])
Risk-free rate 1.7% Yield of 10 year US Treasury Bond (WSJ, 10/16/12)
Market Premium 6.6% Long-horizon expected equity risk premium (Ibbotson's)
Company Size Premium 9.8% Decile 10b for companies with market caps between $1 million - $128 million (Ibbotson's)
Country Risk Premium 2.8% Weighted average risk premium based on revenue for key markets (Damodaran)
Tax EBIT at tax rate of 31.4% Weighted average risk premium based on revenue for key markets (Damodaran)
Equity as a Percentage of Total Capital 100.0%
Debt as a Percentage of Total Capital 0.0%
Cost of Equity 18.1%
Source: Capital IQ
Preliminary Valuation Overview ($ in millions)
11
Notes: Appendix includes detailed calculations
SPT View includes add-backs of after tax Commission to Ad Sales expense, Ad Sales staff expense less taxes, and incremental Licensing Revenue less 15% for talent residuals and
less taxes
METHODOLOGY IMPLIED VALUATION COMMENTS
DCF Channel View
(Exit Multiple)
■
■
WACC range: 17.1% - 19.1%
Conservative 9.0x - 11.0x terminal multiple
DCF Channel View
(Perpetuity Growth)
■
■
WACC range: 17.1% - 19.1%
Perpetuity growth: 2.0% - 4.0%
DCF SPT View
(Exit Multiple)
■
■
WACC range: 17.1% - 19.1%
Conservative 9.0x - 11.0x terminal multiple
DCF SPT View
(Perpetuity Growth)
■
■
WACC range: 17.1% - 19.1%
Perpetuity growth: 2.0% - 4.0%$7.9
$10.4
$1.5
$4.1
$10.7
$13.9
$3.8
$7.0
$0 $3 $6 $9 $12 $15
Enterprise Value
Discounted Cash Flow Analysis: Channel View ($ in thousands)
12
Valuation Summary
WACC 18.1%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E FY2019E FY2020E FY2021E FY 2022E FY 2023E
Unlevered Free Cash Flow ($4,010) ($3,230) ($727) $785 $1,796 $2,237 $1,896 $2,370 $2,844 $3,271
PV of Free Cash Flow ($3,395) ($2,315) ($441) $403 $780 $823 $590 $625 $634 $618
Terminal Value Method
NPV of Cash Flows ($4,967) NPV
Terminal Year EBIT (FY 2018E) $2,403 Exit Multiple
Terminal Multiple 10.0x $5,477 8.0x 9.0x 10.0x 11.0x 12.0x
Terminal Value $24,032 16.1% $4,069 $5,206 $6,343 $7,481 $8,618
Present Value of Terminal Value $10,443 17.1% 3,718 4,808 5,898 6,987 8,077
% of Enterprise Value 190.7% 18.1% 3,388 4,432 5,477 6,521 7,565
NPV Combined $5,477 19.1% 3,076 4,077 5,078 6,079 7,081
IRR 42% 20.1% 2,781 3,741 4,701 5,662 6,622
NPV Combined as a Multiple of 2014E Revenue 2.7x
NPV Combined as a Multiple of 2015E Revenue 0.9x
Implied Perpetuity Growth Rate 9.9%
Perpetuity Growth Method
NPV of Cash Flows ($1,677) NPV
Terminal Year FCF (FY 2023E) $3,271 Perpetuity Growth Rate
Perpetuity Growth Rate 3.0% $2,525 1.0% 2.0% 3.0% 4.0% 5.0%
Terminal Value $22,252 16.1% $3,622 $4,020 $4,478 $5,011 $5,640
Present Value of Terminal Value $4,202 17.1% 2,727 3,050 3,418 3,842 4,335
% of Enterprise Value 166.4% 18.1% 1,963 2,226 2,525 2,866 3,259
NPV Combined $2,525 19.1% 1,305 1,523 1,767 2,044 2,360
IRR 24% 20.1% 737 918 1,119 1,346 1,603
NPV Combined as a Multiple of 2014E Revenue 1.2x
NPV Combined as a Multiple of 2015E Revenue 0.4x
Implied Terminal EBIT Multiple 4.0x
WA
CC
WA
CC
Discounted Cash Flow Analysis: SPT View ($ in thousands)
13
Valuation Summary
WACC 18.1%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E FY2019E FY2020E FY2021E FY 2022E FY 2023E
Unlevered Free Cash Flow ($3,526) ($1,942) $438 $2,253 $3,705 $4,717 $5,151 $6,372 $2,844 $3,271
PV of Free Cash Flow ($2,985) ($1,392) $266 $1,156 $1,610 $1,735 $1,604 $1,679 $634 $618
Terminal Value Method
NPV of Cash Flows ($1,344) NPV
Terminal Year EBIT (FY 2018E) $2,403 Exit Multiple
Terminal Multiple 10.0x $12,079 8.0x 9.0x 10.0x 11.0x 12.0x
Terminal Value $24,032 16.1% $11,256 $12,393 $13,531 $14,668 $15,806
Present Value of Terminal Value $10,443 17.1% 10,605 11,695 12,784 13,874 14,963
% of Enterprise Value 86.5% 18.1% 9,991 11,035 12,079 13,124 14,168
PV of SPE Cash Flows (2019E-2021E) 2,980 19.1% 9,411 10,412 11,413 12,414 13,416
NPV Combined $12,079 20.1% 8,863 9,824 10,784 11,744 12,704
IRR 67%
NPV Combined as a Multiple of 2014E Revenue 5.9x
NPV Combined as a Multiple of 2015E Revenue 2.0x
Implied Perpetuity Growth Rate 2.4%
Perpetuity Growth Method
NPV of Cash Flows $4,926 NPV
Terminal Year FCF (FY 2023E) $3,271 Perpetuity Growth Rate
Perpetuity Growth Rate 3.0% $9,128 1.0% 2.0% 3.0% 4.0% 5.0%
Terminal Value $22,252 16.1% $10,810 $11,207 $11,665 $12,198 $12,828
Present Value of Terminal Value $4,202 17.1% 9,614 9,936 10,304 10,728 11,222
% of Enterprise Value 46.0% 18.1% 8,565 8,829 9,128 9,469 9,861
NPV Combined $9,128 19.1% 7,640 7,858 8,102 8,379 8,695
IRR 43% 20.1% 6,820 7,000 7,202 7,429 7,686
NPV Combined as a Multiple of 2014E Revenue 4.4x
NPV Combined as a Multiple of 2015E Revenue 1.5x
Implied Terminal EBIT Multiple 4.0x
WA
CC
WA
CC
Scenario Analysis ($ in thousands)
14
Year 1 Year 2 Year 3 Year 4 Year 5
FY'2014E FY'2015E FY'2016E FY'2017E FY'2018E Total
Case: Base
Total Uniques 2,274,500 3,719,479 5,514,070 6,426,343 7,138,149 25,072,543
Net Revenue $2,055 $6,058 $10,108 $13,230 $16,303 $47,754
EBIT ($4,012) ($2,530) $91 $1,400 $2,403 ($2,647)
Case: Uniques Decrease 5% Each Year
Total Uniques 2,160,775 3,533,505 5,238,367 6,105,026 6,781,242 23,818,915
Decrease in Number of Total Uniques (113,725) (185,974) (275,704) (321,317) (356,907) (1,253,627)
Net Revenue $1,952 $5,755 $9,603 $12,568 $15,488 $45,366
Cumulative Revenue Miss ($2,388)
EBIT ($4,059) ($2,673) ($222) $993 $1,904 ($4,057)
Case: Uniques Decrease 10% Each Year
Total Uniques 2,047,050 3,347,531 4,962,663 5,783,709 6,424,334 22,565,288
Decrease in Number of Total Uniques (227,450) (371,948) (551,407) (642,634) (713,815) (2,507,254)
Net Revenue $1,850 $5,452 $9,097 $11,907 $14,673 $42,978
Cumulative Revenue Miss ($4,775)
EBIT ($4,106) ($2,816) ($534) $585 $1,404 ($5,467)
Case: Uniques Decrease 15% Each Year
Total Uniques 1,933,325 3,161,557 4,686,960 5,462,392 6,067,427 21,311,661
Decrease in Number of Total Uniques (341,175) (557,922) (827,111) (963,952) (1,070,722) (3,760,881)
Net Revenue $1,747 $5,149 $8,592 $11,245 $13,858 $40,591
Cumulative Revenue Miss ($7,163)
EBIT ($4,153) ($2,958) ($847) $177 $905 ($6,876)
Case: Uniques Decrease 20% Each Year
Total Uniques 1,819,600 2,975,583 4,411,256 5,141,075 5,710,520 20,058,034
Decrease in Number of Total Uniques (454,900) (743,896) (1,102,814) (1,285,269) (1,427,630) (5,014,509)
Net Revenue $1,644 $4,846 $8,087 $10,584 $13,043 $38,203
Cumulative Revenue Miss ($9,551)
EBIT ($4,200) ($3,101) ($1,160) ($231) $405 ($8,286)
Net Revenue Miss by:
DCF Perpetuity Growth Method Scenario Analysis Base Case (5% ) (10% ) (15% ) (20% )
NPV of Cash Flows ($1,677) ($3,087) ($4,523) ($6,014) ($7,805)
NPV of TV $4,202 $2,954 $1,706 $458 ($275)
NPV Combined $2,525 ($133) ($2,817) ($5,555) ($8,080)
IRR 24% 18% 9% (6%) NA
DWM ($7,968) ($8,374) ($8,780) ($9,528) ($10,378)
NPV of Cash Flows $4,926 $3,212 $1,775 ($320) ($2,415)
NPV of TV $4,202 $2,954 $1,989 $458 ($275)
NPV Combined $9,128 $6,166 $3,764 $138 ($2,690)
IRR 43% 37% 29% 19% 2%
DWM ($5,469) ($5,686) ($6,111) ($6,651) ($7,191)
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Precedent Media Transactions Analysis ($ in millions)
15
PRECEDENT MEDIA TRANSACTIONS ANALYSIS
Enterprise Value /
Announced Target BuyerTarget
HeadquartersTarget Business Description
Enterpise
ValueRevenue EBIT
06/04/12 Grupo Clarín S.A. GS Unidos, L.L.C. Argentina
Operates a cable TV network that offers basic pay TV, premium video, pay per view, HD, as well as
broadband Internet services. Additional segments include Digital Content segment produces content
for the Internet and mobile digital platforms, Broadcasting and Programming $75.0 0.7x 4.2x
04/19/12 New Video Group Vistachiara Productions, Inc. USA
Operates as a distributor of independent films, documentaries, and television sports and kids
programming through DVD, Blu-ray, downloads, streaming platforms 20 1.6x -
01/31/11 LOVEFiLM Amazon.com UK Online Retail, Online Video 115 - -
01/25/11 Dailymotion SA France Telecom France Media technologies / Content delivery / Streaming media 80 6.7x -
01/07/11 Qik Skype USA Online Video, VoIP 150 - -
12/23/10 Sonic Solutions Rovi Corporation USA Online Video, Production Tools - Media 763 7.0x -
10/12/10 Ngmoco DeNa USA Mobility / Mobile content / Entertainment 400 13.3x -
09/28/10 5min Inc. AOL, Inc. USA Internet content & commerce / Video 65 - -
09/19/10 Locaweb Serviços de Internet S.A. Silver Lake Partners Brazil
Offers Internet solutions that include infrastructure for audio and video streaming, Web hosting,
domain registration 68 4.5x -
01/22/10 Dori Media Central Studios S.A. - Argentina
Operates as a television production company which offers production services and owns production
facilities and TV studios 19 0.4x 12.0x
12/04/09 La La Media Apple USA Media technologies / Content delivery / Streaming media 65 - -
10/30/09 The Orchard Enterprises, Inc. Dimensional Associates LLC USA Distributes digital music and video products 15 0.25 -
High $763 4.5x 12.0x
75th Percentile $124 1.6x 10.0x
Median $72 0.7x 8.1x
Mean $153 1.5x 8.1x
25th Percentile $54 0.4x 6.1x
Low $15 0.3x 4.2x
Latin America Public Media Comparables Analysis ($ in millions)
16
PUBLIC MEDIA COMPARABLES ANALYSIS
Enterprise Value as a Multiple of:
Market Enterprise Revenue EBITDA EBIT
Company Name Headquarters Description Value Value LTM LTM LTM
Blanco y Negro S.A. Chile
Engages in the organization, production, participation, and marketing of shows, and professional activities of
entertainment and leisure sporting activities $63 $68 2.4x 9.7x NA
Blinkx USA Provides video search and advertising services on the Internet worldwide 356 317 2.8x 24.7x 49.5x
Coinstar USA Provides automated retail solutions. Owns and operates Redbox Kiosks - expanding into OTT 1,429 1,480 0.7x 3.4x 5.5x
Grupo Clarín S.A. Argentina
Operates a cable TV network that offers basic pay TV, premium video, pay per view, HD, as well as
broadband Internet services. Additional segments include Digital Content segment produces content for the
Internet and mobile digital platforms, Broadcasting and Programming 432 1,203 0.5x 2.1x 3.2x
Grupo Radio Centro, S.A.B. de C.V. Mexico Engages in the production and broadcasting of music, entertainment, news, and special event programs 147 147 1.9x 8.4x 9.4x
Netflix USA Operates an Internet subscription services for TV shows and movies 3,209 2,796 0.8x 12.3x 15.4x
High $3,209 $2,796 2.8x 24.7x 49.5x
75th Percentile $1,179 $1,411 2.2x 11.6x 15.4x
Median $394 $760 1.3x 9.1x 9.4x
Mean $939 $1,002 1.5x 10.1x 16.6x
25th Percentile $199 $189 0.7x 4.7x 5.5x
Low $63 $68 0.5x 2.1x 3.2x