CONFIDENTIAL

Grouper Acquisition Overview

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Executive 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

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Digital 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

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Competitors 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

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Grouper 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

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Grouper 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

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Grouper 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

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Grouper 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

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Grouper 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.

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Grouper 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

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Conclusions

• Represents a compelling standalone business opportunity

• Provides SPE opportunity from the growth of online advertising

• Provides upside opportunity as Grouper leverages SPE’s content and advertising sales, and SPE’s traditional businesses work with Grouper

• Offers potential support for other Sony businesses and additional digital services

CONFIDENTIAL

Grouper MRP Highlights

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Grouper Strategy Overview

• Bolster baseline User-Generated Video (UGV) with premium and exclusive content

• Facilitate UGV based on interaction of users with premium content

• Enhance feature set for Grouper users• Expand functionality of embedded player for

potential distribution partners• Integrate deeply with Sony devices

• Build robust distribution network

• Partner with vertical content sites enabling Grouper functionality

ContentContent

Product / ServiceProduct / Service

DistributionDistribution

Marketing/PromotionMarketing/Promotion

• Leverage marketing muscle and promotional events of SPE

• Execute aggressive PR

MonetizationMonetization• Monetize content via advertising, sponsored

placement, and ad-supported search

Differentiate service

Build audience

Generate revenue

Goals

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Four-pronged Content Strategy to Build the Grouper Audience

• Produce original, low-cost short form video

– G-Studios

– SPE Digital Studios

• Acquire or license premium, niche video to fill out portfolio (e.g., Speed Racer)

• Incubate user creativity with studio-supplied content and call to action promotions

• Distribute professional content

– Movies and television

– Short-form video from SPE divisions

– Sports and music

• Existing User-Generated Video (UGV)

Video Expansion Strategy

Baseline Video

ExpandGrouper Audience

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Grouper Will Bolster Current UGV With a Spectrum of Quality Video

Prosumer ProfessionalShort-form

User-generated G-StudiosStudio-seeded

UGVTelevision& Movies

• Professionally produced short form (e.g., “Stooped Monkey”, SPT 360)

• Minisodes

• DVD extras

• “Magic Moments”

• Music videos

• Sports clips

Today Future

• Incubated stories from aspiring independent talent

• thebacklot.tv

• Low-cost short form video produced in-house (e.g., “Puppet Jesus”)

• Library and direct-to-video feature films

• Catalog TV series• Busted TV pilots

• Baseline UGV• Mash-ups

• Passionate branded communities around studio content

• Hosted mash-ups integrating studio assets

• UGV based on branded properties, e.g., Sports Leagues

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• Syndicate content broadly via embedded player and 1-click publishing

• Capture broad distribution through prioritized partnerships with select websites– High-traffic: Online portals– Demographic-relevant: Social networks– Popular verticals: Sports, Music– Other: TV-affiliates, Radio stations, News– Mobile: Third-party D2C websites, Carrier websites

• Create and syndicate Grouper Branded Channel across Internet and mobile platforms

• Leverage Sony hardware brands and reach through embed deals– Sony Electronics (e.g., cameras, VAIO)– PlayStation

• Centralize distribution of original SPE-produced video from all divisions

Grouper will Distribute Its Content Across a Broad Network Comprised of Grouper, Partner and Sony Assets

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Overview of Grouper Revenue Strategy

Video adsVideo ads

Sponsored placementSponsored placement

SearchSearch

Banner adsBanner ads• Traditional banner and rich media

graphical ads driven by page views, banner CPM, and inventory sales rate

Leverage SPT and SPTI ad sales • Incorporate with offerings to traditional

customer base• Expand to new clients• Dedicated new media sales force• Leverage ad agency relationships

Revenue drivers Description Operational Approach

Leverage distribution relationships• Strike partnership deals with major

internet portals (e.g., Google)

• In-stream pre and post roll ads placed in 1/4 to 1/3 of videos driven by number of ad-supported streams, ad duration, video CPM, and inventory sales rate

• Premium advertising, placement, and promotion bundles customized for select major advertisers

• Contextual video ads delivered during the search process

Ad Revenues Commencing Early CY 2007

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Marketing and Promotion Strategy Will Fully Capitalize On SPE Ownership

• Build brand awareness through Grouper hosting of Splash pages for SPE films– E.g., Open Season page at www.grouper.com/OpenSeason

• Leverage major upcoming SPE theatrical releases via UGV promotions and contests – “Pursuit of Happyness”: win an internship based on video job interviews– “The Holiday”: win a dream vacation – “Spider-Man 3”/Target: studio-seeded UGV contest

• Aggressively publicize unique new content offerings that utilize Sony assets and talent – “Magic Moments”– Grouper Short Film festival – “Grouper Groupies”

CONFIDENTIAL

Appendix

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Challenges and Mitigating Factors

Mitigating FactorsChallenges

• Customer retention / increased competition • Differentiated technology provides a better user experience than competitors

• Syndication of content to other sites (less dependent on “fads” in user taste)

• Integration challenges • Structure retention incentives for acquired management

• Potential lack of interest by advertisers • Grouper’s first deal is in place with MTV• Google/My Space deal demonstrates advertiser

interest in social networks/user generated content

• Potential for infringing or indecent content on site

• Grouper removes infringing content• Grouper bans users and /or terminates

accounts of users who post such content• Separate branding from Sony

• IP-related issues • Base Case assumes reserve for potential license of patented IP

• Full Inventory of potential patentable Grouper IP to be completed post acquisition

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Comparable 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

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SPE 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)$

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Broad Digital Video Network

Social networks

Online portals

Hardware / Embed deals

Verticals Other