Investment Committee Application No Title HBO Central Europe
Investment Committee Application No. Title HBO Central Europe Investment Destination U. S. Attendees Hidehiko Nagata on behalf of Sony Pictures Entertainment Investment Amount Latest plan Schedule Investment Committee Presenter (Division) Budget See “Profitability” below Date: Sony Pictures Entertainment Mid range plan See “Profitability” below Gp Exec Committee or Elec Mgt Committee 10/01/2009 Date: See “Profitability” below Equipment order placement 10/07/2009 Date: / / / Purpose SPE is recommending a sale of its 33. 3% stake in HBO Central Europe (CE). Definitive documents are expected to be signed in October 2009. Pending regulatory approval, HBO CE sale is anticipated to close no later than February or March 2010. SPE is also in earlier stage negotiations for the sale of all or a portion of its 29. 4% stake in HBO Latin America. A preview of the potential HBO Latin America sale will also be provided during the October 1 st Investment Committee meeting. Investment Summary HBO CE is the leading premium movie service in the region, operating multiple HBO and Cinemax channels in 12 countries with over 2 MM paying subscribers. HBO CE was initially launched as a multistudio joint venture among Time Warner, Disney, and SPE. Time Warner, which owns the HBO and Cinemax brands in the U. S. and other markets around the world, seeks to consolidate its ownership of HBO CE by purchasing SPE’s and Disney’s stakes. Time Warner is expected to acquire Disney’s 33. 3% stake in HBO CE simultaneous with its acquisition of SPE’s stake. Profitability The sale of our 33. 3% stake in HBO CE is expected to generate a gain of approximately $39 MM in SPE FYE 2010. The transaction will also generate cash proceeds of $78 MM (based on 33. 3% at a $234 MM valuation). HBO CE is expected to be EBIT and cash-flow positive in SPE FYE 2010. Without the transaction, the SPE FYE 2010 budget included $3. 1 MM of EBIT for our share of HBO CE net income. With the transaction, we now estimate FYE 2010 SPE EBIT of $5 MM for our share of net income (an increase to budget) plus a gain of approximately $39 MM. Our prior MRP included SPE FYE 2011 and SPE FYE 2012 EBIT for our share of HBO CE net income of $3. 8 MM and $4. 5 MM, respectively. After the sale SPE will forgo this FYE 2011 and FYE 2012 EBIT. Name: John Calkins Contacts Tel 310 -244 -2929 Division: Sony Pictures Entertainment Fax 310 -244 -0484 Name: Jim Underwood Tel 310 -244 -3987 e-mail john_calkins@spe. sony. com Division: Sony Pictures Entertainment Fax 310 -244 -0437 e-mail Contact: Investment Committee Secretariat Tel. +81 -3 -6748 -2307 (Ext. 9 -308 -2307) e-mail. gh-keiki-toushi@jp. sony. com jim_underwood@spe. sony. com
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