Investment OpportunityJune 2013
Confidential
Company Snapshot
� Liberty Global has retained Morgan Stanley to explore strategic alternatives for Chellomedia, including a potential sale of the business
� Chellomedia is a wholly owned subsidiary of Liberty Global, Inc.
– A leading producer and distributor of thematic Pay TV channels globally
– Significant majority of revenues generated from subscriptions (over 75% of channel business revenues)
– Strong portfolio of 65(1) television channels, reaching c. 391 million TV subscribers globally as at March 2013, and with revenues of c. €335 MM in 2012 (actual, not adjusted for acquisitions e.g. only includes 5 months of consolidated MGM LatAm business)
– Offers TV entertainment in the 6 popular genres: Sports, Movies, Entertainment, Lifestyle, Children’s and Factual Programming
– Active consolidator with track record of creating value through acquisitions and significant scope for future strategic actions
– Significant majority of revenue and profitability generated from a diversified, non-LGI customer base
– The company also provides digital services, such as broadcasting solutions, creative, and play-out services, and operates a wholesale advertising brokerage business
– Employs over 1,250 employees in over 25 locations, with main offices in London, Amsterdam, Madrid, Budapest, Miami and Buenos Aires, with further regional offices and agents in Central Europe, China and Singapore
� Chellomedia runs its business through five key operating companies and units: Chello Zone, Chello Multicanal, Chello Central Europe (including AtMedia, a wholesale advertising brokerage business), Chello Latin America and Chello DMC, which provides technical services to both Chellomedia internally as well as to external third party clients
Background and Overview
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Subscription55%
Advertising11%
Other34%
Revenue Breakdown (2)
By Type (Q1 2013A)
1. As per Chello internal channel count2. Pre eliminations3. Channels business revenues refers to group revenues exclusive of DMC and AtMedia
Chello Zone23%
Chello Multicanal
17%Chello Central
Europe37%
Chello LatAm13%
Chello DMC10%
By Business Unit (Q1 2013A)
>75% of total channel business
revenues (3)
Unique Independent Content Aggregator
With Global Scale
Global reach with presence in both established Euro pean markets as well as faster growing Latin American, Middle Eastern and African markets
3
Thematic Channels in 138 Countries and in Over 25 Languages
c. 391 MM TV Subscribers Reached Worldwide
Portfolio of 65 (1) Channels Across 6 Genres
1. As per Chello internal channel count
Key Investment Highlights
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Sizeable Structural Growth Markets with
Strong Underlying Fundamentals
Localized and Flexible Business Model
Largest International Independent Thematic Channels and Digital Services Business
Highly Valuable Network of Branded Channels
With Diversified Content and Customer Base
Strong Track Record of Organic and Strategic M&A Value
Creation
Unique Combination of Growth and Robust Cash
Flows Underpinned by Large and Visible
Subscription Revenues
1
2
3
4
5
6
Largest International Independent Thematic
Channels and Digital Services Provider
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65 Channels (1)
c.391 MM subscribers
1. As per Chello internal channel count2. Actual pre-eliminations, not adjusted for acquisitions e.g. only includes 5 months of consolidated MGM Latam business3. Excludes employees in central role, as per March 2013
Overview
• Leading international
broadcaster and creator of
TV channels
• Offer a variety of
programming including
entertainment, factual,
sports, movies, children’s
and lifestyle television
• Leading producer and
distributor of TV channels
in Iberia
• Top-rated channels in film
and children’s with a total
of 20 channels across
genres
• Leading thematic channels
provider across Central
Europe
• Key markets include
Hungary, Poland, Czech
Republic and Romania
• Includes AtMedia, a
wholesale advertising
brokerage business
• Producer and distributor of
TV channels in Latin
America
• Portfolio includes MGM
Latino, the popular El
Gourmet food channel and
the lifestyle channel
Cosmopolitan TV
• Digital Media Centre
(“DMC”) provides technical
services, such as playout
and TV distribution
Headquarters London Madrid Budapest & Warsaw Buenos Aires & Miami Amsterdam
Key Regions UK, EMEA, Asia Spain, Portugal, Africa Central / Eastern Europe Latin America Netherlands
Subs 188m 48m 46m 106m 3m
Number of Channels 21 20 12 10 2
Key Channels /
Partnersn.a.
2012A Revenues (€ MM)(2) 59 65 159 36 30
FTEs(3) 218 168 477 207 160
Poland20%
Iberia19%
Hungary 14%
LatAm13%
UK9%
Netherlands5%
Czech4%
Other16%
Highly Valuable Network of Branded Channels
With Diversified Content and Customer Base
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Truly Diversified Global Platform of Scale with Att ractive Exposure to High-Growth Emerging Markets
Well-Diversified Revenue Split By Genre
Movies26%
Entertainment19%
Sports15%
Childrens14%
Lifestyle13%
Factual9%
Other4%
Broad Portfolio of Multi-Genre Content Appealing to a Wide Audience
Movies
Sports
Lifestyle
Entertainment
Children’s
Factual
Revenue (Q1 2013A)
Revenue (Q1 2013A) (1)
1. Excludes revenues from DMC and AtMedia, shown pre-eliminations
106.9
74.6
40.2
113.488.1
58.7
0
50
100
150
200
Western Europe CEE Latam
2012 2016
Sizeable Structural Growth Markets
with Strong Underlying Fundamentals
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Increasing Pay-TV Penetration (Especially in Emergi ng Markets) Drives Greater Demand for Differentiate d Content
Continued Audience Fragmentation from Flagship FTA Channels is Increasingly Shifting Advertising Dolla rs to Multichannel Properties
Source: Screen Digest
TV Advertising Growth (2012A-2016E)
Source: Screen Digest
16.4%26.5%
71.1%
3.1% 7.6%
21.0%
0%
50%
100%
Western Europe CEE Latam
Multichannel TV FTA TV
‘12-’16 Pay TV Subscriptions Growth
6.1% 18.0% 46.1%
• High Pay TV subscriber growth:
– New distribution platforms
– Increased attractiveness / affordability of premium pay content
– Growing spending power in emerging markets
– Improved infrastructure
• Increasing competition among pay-TV platforms driving growing
demand for content as platform differentiator
• TV remains the most effective mass advertising medium
– TV to maintain significant share of ad spend
– High growth of multichannel ad spend versus FTA
– Multichannel’s share of Total TV ad market expected to increase by 2-5 percentage points between 2012 – 2016 across the regions
• Viewership on flagship FTA channels continues to decline as audiences have greater choice to seek more specific, relevant content
• Niche thematic channels best positioned to deliver targeted commercial impacts on specific, profitable audience segments
Pay-TV Subscriptions (MM) (2012A – 2016E)
’12-’16 Total TV Ad Market Growth
5.9% 10.9% 27.7%
1. Western Europe includes: Germany, France, Netherlands, Spain, UK and Portugal; CEE includes: Czech Republic, Hungary, Poland, Romania, and Slovakia; LatAm Includes: Argentina, Chile and Mexico
(1) (1) (1)
UK
EMEA
Strong Track Record of Organic and
Strategic M&A Value Creation
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Successfully Acquired and Integrated Significant Nu mber of Acquisitions in Recent Years and Entered in to Successful JV Partnerships
2007 2008 2009 2010 2011 2012
Global Content Providers As Joint Venture Partners and Associates
MGM• August 2012• Acquisition of MGM Networks Inc. and remaining
50% of MGM Latin America and Central Europe
CBS EMEA• October 2012• JV with Chellozone for enhanced programming
A+E• October 1998• JV between Chello Multicanal and A+E
Dreamia• November 2009• JV between Chello Multicanal and Zon
Multimedia
Cosmopolitan• September 2012• Full consolidation of Chello Latin America and
flexibility created for future growth
Key
JV
s
For
mer
JV
s R
ecen
tly
Acq
uire
d
ShortsTV• JV with founder (individual)• Carriage agreement on UPC NL
Disney XD –Poland
• JV with Disney• Disney provides content
Ass
ocia
tes
CBS UK• October 2009• JV with Chellozone combining distribution
breadth with strategic content
1. 87.5% of Zone acquired in January 20052. Re-branded to Film Mania in July 20123. Minority buyout, holding Company of Cosmo and Pramer
(1)
JVs
2013
(3)
(2)
Key Contacts
Key Contacts
Max HerrnsteinGlobal Co-Head Media & Telecoms
Managing DirectorMedia Investment Banking
Phone: +1 212 [email protected]
Burkhard KoepManaging Director
Media Investment Banking
Phone: +44 20 7425-7755Email: [email protected]
• Under no circumstances should contact be made directly or indirectly with any executive or employee of Chellomedia or its affiliates on any matter relating to this process. All commentaries regarding your potential interest in this process should be directed to one of the following individuals at Morgan Stanley:
Nuno MachadoManaging Director
Media & Telecoms M&AInvestment Banking
Phone: +44 20 [email protected]
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Disclaimer
Morgan Stanley & Co. International Plc. (“Morgan Stanley”) of 25 Cabot Square, Canary Wharf, London, E14 4QA has been authorised by Liberty Global Inc. (the “Client”) to issue this Teaser on its behalf in connection with the Client’s proposed sale of Chellomedia B.V. (the “Target” and the “Transaction”).
This Teaser and the information contained in it is confidential and the property of the Client and the Client reserves the right to require its return (together with any copies or extracts thereof) at any time. This Teaser is delivered on the condition that it is held in strict confidence by you, your directors, officers and employees. Save as expressly permitted in writing by Morgan Stanley, this
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