CONFIDENTIAL

CONFIDENTIAL

Grouper AcquisitionOverview and Strategic Rationale

page 2

CONFIDENTIALExecutive Summary

• SPE has tremendous opportunity through digital distribution and ad-supported online content

– Consumer time and advertising revenues are shifting online, threatening the ability for our core businesses to achieve growth and margin objectives

– Online infrastructure is nearly in place, with digital content at the outset of its growth curve

– SPE competitors are investing heavily, and filling a gap between studio content and user generated content

• At $65MM, a Grouper acquisition would accelerate entry into ad-supported content and could become a platform for other digital services online

– Grouper is the optimal acquisition target for SPE, due to its experienced management, market-leading technology and demonstrated traction with users

– Price in-line with comps and at a discount to recent competitor acquisitions

– Service will be further enhanced by SPE content, marketing and ad sales capabilities

page 3

CONFIDENTIALDigital Transition Will Increasingly Challenge SPE’s Businesses

• Sales increasingly cross-platform

• Budgets shifting away from traditional outlets

• “Grass roots” campaigns increasingly prevalent

– Character campaigns on social networks

– Viral distribution of ad messages

• Market less forgiving of average to poor titles due to instantaneous availability of information online.

• New forms of content competing for consumers’ time and money

• Traditional distribution channels’ economics under attack, pressuring studio margins

Theatrical MarketingTheatrical Marketing

Content Distribution Economics

Content Distribution Economics

Advertising SalesAdvertising Sales

Achieving and exceeding SPE revenue growth and margin targets will be enhanced via entry into adjacent businessesAchieving and exceeding SPE revenue growth and margin targets will be enhanced via entry into adjacent businesses

page 4

CONFIDENTIALCompetitors Are Investing in User Generated Video

User Generated Video Creates Value for Traditional Content Owners

User Generated Video Creates Value for Traditional Content Owners

Attracting large audiences and creating legitimate alternative distribution channels

Offering user-generated video and driving advertising revenue

Two-way medium with high degree of interactivity, customer engagement and feedback

Attracting large audiences and creating legitimate alternative distribution channels

Offering user-generated video and driving advertising revenue

Two-way medium with high degree of interactivity, customer engagement and feedback

• Acquired MySpace for $580MM

• Acquired IGN for $650MM and Scout for $170MM

• $900MM search advertising deal with Google

7/18/2005

9/09/2005

8/07/2006

• Acquired Lightningcast for online video ad insertion technology

• Launched free video portal with content from A&E, MTV, Warner

5/18/2006

• Acquired iVillage for $592MM

• Promoting new series on YouTube

3/06/2006

6/27/2006

• Acquired iFilm for $49MM

• Agreed to distribute MTV content over Google’s AdSense network

• Announced pending acquisition of Atom Entertainment for $200MM

10/13/2005

8/07/2006

8/09/2006

8/1/2006

page 5

CONFIDENTIALGrouper Stands-out Among Acquisition Candidates

Viable acquisition candidates limited to at least 1MM unique users to demonstrate potential scalability of operations

2.4

30.5

TargetTarget U.S. Unique Users (MM)U.S. Unique Users (MM) Acquisition ConsiderationsAcquisition Considerations

• Prohibitive valuation (rumored to be seeking over $1BN)

• Technology weaker than Grouper

• Owned by Viacom

1.7• Viacom acquisition pending as part of

Atom Entertainment deal

2.6• Secured $15MM in funding July 1, 2006• Believed to be off the market

3.0

• Performs well against acquisition criteria– Strong management– Differentiated technology– Demonstrated traction

page 6

CONFIDENTIALGrouper Overview

Service Summary

• SPE’s acquisition would include total consideration of $65MM

– $52.5MM at closing

– $12.5MM tied to performance metrics (revenue, streams, employee retention)

• Entered into exclusive negotiations with SPE through 8/18/2006

• Multi-platform Video Distribution Network focused on watching, sharing, and creating user generated video

• Experienced management team

• Syndicates video to other sites through one-click posting (MySpace, Friendster, Everyone’s Connected, WordPress, Blogger)

• Leverages P2P proprietary technology; increases video quality; decreases delivery costs

• Enables video portability to multiple devices (PSP, iPod)

• Widely distributes easy-to-use video editing tools (Proprietary client, Instant upload from cameras, camcorders, and webcams)

Differentiators

Deal Status

Demonstrated Traction

• #2 independent video community (Hitwise May report), with 7MM global unique users/month (3MM US)

• Reaches a young demographic that is 58% male

• Over 112,000 uploaded videos programmed across multiple genre-based channels

page 7

CONFIDENTIALGrouper Would Provide Opportunities for SPE and Sony

• Could help facilitate complementary services efforts– Enable users of Sony cameras and camcorders increased interactivity with content– PSBG eyeVi initiative selected Grouper to develop its service prototype

• Addresses the growing area of ad-supported user-generated content

• Enables SPE to participate in the growth of online advertising

• Management team has demonstrated required expertise in industry

• Company has developed differentiated technology and tools

• Existing business has demonstrated traction and strong growth

• Platform for SPE to market and distribute studio content online

• Leverages SPE’s ad sales relationships and provides cross-platform ad inventory

• Build software capabilities

• Address core business challenges in meeting growth objectives

Standalone Business Growth Opportunity

Standalone Business Growth Opportunity

Traditional SPEBusiness Opportunity

Traditional SPEBusiness Opportunity

Could Provide Value toSony Devices

Could Provide Value toSony Devices

page 8

CONFIDENTIALGrouper Service Highlights: Watch Videos

•Home page with “video wall” of user generated content (80% click-through)

•Content can be discovered through:–Rotation in video wall–Search–Channels

page 9

CONFIDENTIALGrouper Service Highlights: Share Videos

1. P2P client enables download of original, high quality files to desktop and portable devices

2. One click publishing to other sites

3. Instantaneously add video comments via web cam

4. E-mail to friends in users’ MSN, Hotmail, and Yahoo accounts

1.

2.

4.3.

page 10

CONFIDENTIALGrouper Service Highlights: Create Videos

•Real-time recording and upload from web cams

•Proprietary client with easy-to-use editing tools–Select video–Select photos and tracking / panning effects

–Select music

page 11

CONFIDENTIALComparable Company Analysis Supports a $80-$110MM Valuation

Recent FundingsRecent

Fundings

Recent Acquisitions

Recent Acquisitions

GrouperRound of Amount Unique EV / Unique Post Money Value Based On

($ mil) Date Funding Raised Users (mm) Users Valuation EV/UU Multiple*

Facebook 4/19/2006 2 $25.0 7.68 $11.16 $71.4 - $100.0 $33.5

Friendster** 11/6/2003 1 $13.0 1.70 $31.18 $53.0 $93.5

Metacafe 7/1/2005 2 $15.0 1.95 $26.40 $42.9 - $60.0 $79.2

Brightcove 11/22/2005 2 $16.2 0.20 $220.00 $44.0 NM

YouTube*** 3/31/2006 2 $8.0 6.00 $16.67 $100.0 $50.0

BitTorrent 9/27/2005 1 $8.8 0.38 $123.13 $35.0 - $58.3 NM

Veoh Networks 4/18/2006 1 $12.5 0.10 $250.00 $25.0 NM

Median $51.4 $64.6

Implied Acquisition Valuation (at 25% Premium) $64.3 $80.8

iVillage 3/3/2006 ACQ $600.0 14.0 $42.86 $600.0 $128.6

Intermix / MySpace 7/18/2005 ACQ $580.0 17.7 $32.77 $580.0 $98.3

thePlatform 6/1/2006 ACQ $80.0 -- -- $80.0 NM

Median $580.0 $113.4

Implied Acquisition Valuation NM $113.4

Source: Funding information provided by VentureSoruce.com. Unique user data from Nielsen NetRatings and ComScore MediaMetrix.* Grouper value based on EV/UU based on US unqiue users of 3.0 million.** Post money valuation for Friendster provided at $53.0 million.*** Pre money valuation for YouTube on latest round of funding from Sequoia Capital has been discussed at $100 mllion. Guidance has been provided by Montogomery & Co. and sources at Sequoia.

Comparable Company Statistics

Analysis excludes Viacom’s August 9 acquisition of Atom Films for $200MM

$80.8

$113.4

page 12

CONFIDENTIALSPE Projections – Base Case (lower than Management Case)

(1) EBIT reflects operating profit less estimated amortization of technology/software assets totaling $20MM over 7 years. Initial estimate requires third party review for final figures. Assumes transaction close at 9/30/2006.

(2) 4 year discounted pre-tax cash flow analysis (2006-2009) performed with a discount rate of 16.5% (in-line with SPE’s normal rate); terminal EBIT multiple of 8.0x.(3) Total consideration includes $52.5m at closing; $12.5m contingent on performance and paid over the course of 2007 through 2009. (4) Deepwater mark represents cumulative cash position.

(millions) FY 2006 FY2007 FY2008 FY2009

User Activity

End of Period Uniques 20.9 37.2 53.9 76.3

Page Views 899.7 3,385.2 7,621.5 12,506.4

Total Searches 171.5 798.0 1,941.8 3,251.7

Total Streams 1,534.9 5,967.7 12,003.4 17,543.6

P&L Performance

In-Stream 1.42$ 10.06$ 28.25$ 43.02$ Banner / Ad-words 1.18 5.66 12.80 20.99 Sponsored Search 0.46 2.87 10.46 19.51

Total Revenue 3.07$ 18.60$ 51.50$ 83.51$

Sales Commission 0.21$ 1.30$ 3.60$ 5.85$ Video Streaming 1.39 5.39 10.84 15.84 Page View Bandwidth 0.08 0.31 0.69 1.13

Total COGS 1.68$ 6.99$ 15.13$ 22.81$

Gross Profit 1.39$ 11.60$ 36.37$ 60.70$

Total Operating Expenses 10.23$ 18.82$ 23.28$ 29.80$

Operating Profit (8.85)$ (7.22)$ 13.09$ 30.91$

Amortization (1) (1.43)$ (2.86)$ (2.86)$ (2.86)$

EBIT (10.28)$ (10.08)$ 10.23$ 28.05$

Impact on SPE

DCF Value (2) 149.62$

Total Consideration (3) (65.00)$

NPV 88.99$

IRR 47%

Deepwater Mark (4) Mar-08 (76.36)$