SONY PICTURES ENTERTAINMENTFinancial overview – April 25, 2014
SPE Strategic Growth Priorities
• Maximize the value of SPE’s content library through growth opportunities
• Invest in SPE high margin and high growth businesses
• Maintain strict cost control and financial discipline
• Improve margins while maintaining a focus on absolute profitability and risk management
• Create incremental value that is only possible through One Sony
2
SPE is aggressively pursuing growth opportunities for its content library
3
Convert to 4KDistribute thru innovative film
windows
Produce formats for
internationalmarkets
License to internationalTV networks
License to digital networks
SPE has invested heavily into its high-growth, high margin businesses
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Source: Internal figures.(1) Investments in third-party acquisitions only.(2) Investments in development and new show deficits only.(3) Includes all production costs.(4) Includes all acquisition spending.
SPE FYE 2007 – 2013 Investment
$415
$960
$762
$1,000
$0
$200
$400
$600
$800
$1,000
$1,200
Media Networks Cable & Broadcast TV Production
Animation Worldwide Acquisit ions
(1)
(2)
(3)
(4)
($M)
SPE will continue to invest in its high-growth, high margin businesses going forward
5
MediaNetworks
Cable & Broadcast TV
Production
Animation
WorldwideAcquisitions
[TBU]
SPE is aggressively managing its overhead costs
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Source: Internal figures.
($M)
SPE FYE 2014 – 2016 Target Run-Rate Cost Reductions
$162
$100
$0
$30
$60
$90
$120
$150
$180
Overhead & Operat ional Efficiences
Procurement
SPE is also pursuing aggressive reductions in theatrical marketing costs
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Source: Internal figures.
Target Reductions in SPE Film Marketing Costs
($M)
$168
$152
$180 $170
$0
$25
$50
$75
$100
$125
$150
$175
$200
FYE14 FYE15 FYE16 FYE17
SPE leverages diversification and external partners to manage risk
• Maintain diversified and balanced portfolio of businesses
• Release diversified film slates
• Pursue external slate financing
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SPE Risk Management Strategies
Diversified Portfolio of Businesses
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Source: Internal figures.Note: Individual components may not sum to total shown due to rounding.
Theatrical, 21%
TV Licensing,
36%
Advertising, 8%
Affiliate Fees, 9%
Other, 4%
Home Entertainment,
22%Motion Pictures,
61%
TV Production,
22%
Media Networks,
17%
U.S. and Canada,
48%
EMEA, 27%
Asia, 17%
Latin America,
7%
By Business Line By Geography By Source
Diversified Portfolio of Labels
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Focused on larger-budget films for wide release
Primarily mid-budget films for wide release
Low to mid-budget genre films for wide release
Mid-budget films for wide release
Smaller-budget films for limited release
Smaller-budget films, primarily output deals or limited releases with the occasional wide release
Diversified FYE15 SPE Film Slate
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Action Comedy Drama
Horror Thriller Family
The Interview
Deliver Us From Evil
No Good Deed
SPE is poised to meet its aggressive MRP targets
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$223
$100 $200
$400
$369 $380 $373
$456
FYE13 FYE14 FYE15 FYE16
$563 $532
$712$808
FYE13 FYE14 FYE15 FYE16
Revenue Operating Income(1)
6% CAGR
13% CAGR
6.4% 6.0% 6.9% 7.7%OI Margin
Net Cash Flow(2)
7% CAGR
Net Cash Flow including strategic investment spends for MSM India, Game Show Network and Maa TV
$8,803 $8,917
$10,273 $10,467
FYE13 FYE14 FYE15 FYE16
(1) SPE FYE14 Budget reflects $176MM in theatrical marketing cost savings; SPE MRP reflects $180MM in run-rate cost savings achieved between FYE14 and FYE16 from overhead reductions and operational efficiencies.
(2) Top of bar numbers exclude strategic investment spend for MSM India, Game Show Network and Maa TV.
+44% +24%Growth overMRP Period
+19%
[TBU]
SPE is pursuing strategic One Sony opportunities
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Global Tentpoles
Product & Service
Marketing & Retail
Execution
• Z1 Entertainment Offer launched in 32 countries; already demonstrating successful uptake
• “Super Song Global Music Contest” for 2014 FIFA World Cup being run by SPT/SME/SEL
• Original series for PlayStation being developed by SPT for SNEI/SCE
• SPT channels to be included in SEN-TV offering run by SNEI
• SPHE/SNEI coordination to enhance Video Unlimited features for UV and 4K
• Unprecedented cross-Sony collaboration surrounding the release of The Amazing Spider-Man 2
− ASM2 content / assets to be leveraged at retail, online and in product worldwide
− ASM2 AR app and camera plug-in for Xperia Z1-2 phones showcased at Mobile World Congress (Feb 2014)
− SEL/SPHE developing unified approach for major retailers• Bond 24 collaboration soon to kick off