SPT Business Overview November 27 2012 1 Sony
SPT Business Overview November 27, 2012 1
Sony Pictures Television Business Overview Sony Pictures Television Production Distribution & Ad Sales Networks 2
SPT Organization Overview Steve Mosko President, Sony Pictures Television Andy Kaplan President, Worldwide Networks Corii Berg Sr. EVP, Production Business Affairs Keith Le. Goy President, Distribution Andrea Wong President, Int’l Production Harry Friedman Executive Producer Amy Carney President, Ad Sales, Strategy & Research Chris Elwell EVP, Distribution Business Operations John Weiser President, Distribution Michael Davies President, Embassy Row Zack Van Amburg President, Programming Jamie Erlicht President, Programming Paula Askanas EVP, SPT Communications Sheraton Kalouria EVP and Chief Marketing Officer 3
Organizational Change • Pursued opportunities to drive organizational change around strategy, structure, processes and culture that drive sustainable growth − − − − Merged Domestic and International TV into one Worldwide TV Business Eliminated regional matrix reporting structures Consolidated Business Affairs under one head (Corii Berg) Consolidated Marketing under one head (Sheraton Kalouria) Consolidated Research under one head (Mumford and now Amy Carney) Consolidated Contract Sales/Rights Admin under one head (Chris Elwell) Consolidated International Production Format Sales under International Distribution Reorganized and transformed a small start-up user generated dotcom (Grouper) into a multi-platform digital network projected to deliver a revenue contribution of $113 mm in FY 16 4
Talent Development • Leveraged our high performing/high potential internal talent to create organizational agility in responding to shifting business objectives and market conditions globally in addition to providing individual growth opportunities − − − − − Donna Cunningham – EVP Operations – International Production (moved from Culver City to Miami to London) Maria Smirnova – Managing Director International Production Russia & Ukraine Mike Wald – EVP Distribution EMEA (moved from Culver City to London) Jane Dockery – SVP Distribution Global Formats Ed Louwerse – SVP Production Management, Distribution Selina Nederhand – VP Distribution LATAM (moved from the Netherlands to Miami) James Farrell – SVP Distribution, Japan (moved from Canada to Japan) Simon Bathe – Executive Director Digital Distribution LATAM (moving from Germany to Miami ) Kylie Munnich – SVP Distribution LATAM (moved from Australia to the UK ) Mark Young – SVP Distribution Australia/NZ (moving from UK to Australia) Angel Orengo – EVP Distribution Asia (moved from Miami to Hong Kong) Superna Kalle – SVP Networks & GM Sony Movie Channel Kate Marsh – SVP Western Europe – Networks Lyle Stewart – SVP CEEMA – Networks Amy Carney – President Ad Sales, Strategy and Research (moving from NY to Culver City) Sheraton Kalouria – EVP and CMO Marketing Philip Martzolf – EVP Syndication Sales Flory Bramnick – EVP Cable Sales 5
Talent Acquisitions • Effectively increased organizational capability with key strategic hires − − − − − Andrea Wong – President International Production (Lifetime Networks) Wayne Garvie – EVP & Chief Creative Officer International Production (All 3 Media) Veronica Pimstein – SVP Creative International Production – Miami (Univision) Kevin Byles – SVP Distribution – Canada (AVTEL Media Communications Inc) Lucia Cottone – SVP Development & Current Programming – Networks (Lifetime Television) John Rossiter – General Manager AXN HU – Networks (HBO) James Smith – SVP Digital Ad Sales – Crackle (Disney Interactive Media Group) Rene Santaella – General Sales Manager – Crackle (Disney Interactive Media Group) Jeff Meier – SVP Programming Sony Movie Channel (Lionsgate Entertainment) 6
Television Business is Growing SPT EBIT projected to grow at a rate of 15% CAGR SPT Consolidated EBIT $MM Monetization 900 15% 800 700 600 500 CAGR Networks – Networks projected to have an EBIT CAGR of 23% across the plan, expected to break earnings records in each year. The growth comes from all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins • U. S. Production– EBIT projected to grow 21% over the plan from $290 MM to $351 MM driven by a pipeline of programming sold to SVOD and Off-net syndication • International Production – International Production projected to have an EBIT CAGR of 78% across the plan. Moderate organic growth from existing operating companies is supplemented by EBIT contributions from recent acquisitions Left Bank and Silver River as well as the inclusion of a hit format starting in FY 15 $859 $765 $625 $564 11 553 400 300 200 100 0 • FY 13 Frcst FY 14 Current FY 15 Current FY 16 Current 7
Sony Pictures Television Revenue and EBIT – Today and Tomorrow ($MM) $ 8, 000 ($MM) Revenue $ 7, 000 $ 900 $ 6, 972 $ 5, 389 $ 5, 217 $ 500 $ 3, 648 $ 3, 000 $ 700 $ 600 $ 4, 000 $ 553 $ 400 $ 300 $ 2, 000 $ 200 $ 1, 000 $- $ 859 $ 800 $ 6, 000 $ 5, 000 EBIT $ 1, 000 $ 100 FYE 13 Gross FYE 13 Net FYE 16 Gross FYE 16 Net $FYE 13 Note: EBIT excludes monetization of $11 MM in FY 13 and 3 NET EBIT of ($6 MM) in FY 13 and ($2 MM) in FY 16. FYE 16 8
U. S. Production 9
What We Do Well, Where We Need Improvement. U. S. Production What we do really well • Receive consistently strong pilot orders, pilot to series conversions and series renewal rates • Launch and monetize cable dramas • Grow series on air on a modest development budget • Produce a broad range of diversified content, including for new media • Align production and financial goals • Combine business strategy with entrepreneurship and creativity • Position SPT as most entrepreneurial TV studio What we need to improve • Develop broadcast network hits • Keep a broadcast drama on the air • Collaborate better with International Production in development/exploitation of scripted and unscripted formats • Lead assertively in control of production costs and in improving series economics vis-à-vis network buyers 10
U. S. Production: Forecast Projected Earnings Growth ($MM) Revenue Current Series, Pilots & Development Costs 1, 600 1, 400 Wheel of Fortune, Jeopardy! & Daytime Dramas 120 113 100 1, 200 1, 000 78 68 80 800 600 1, 144 1, 289 1, 500 1, 352 60 40 20 200 FY 14 FY 15 8 80 7 70 60 5 6 6 5 40 76 30 83 120 100 250 402 4 2 33 FY 14 60 150 100 40 50 20 - FY 13 FY 14 FY 15 FY 16 Library 177 102 110 103 104 172 FY 15 FY 16 100 90 167 162 80 175 70 163 157 1 - 80 429 411 397 3 53 FY 13 140 8 7 50 10 9 160 300 FY 16 Embassy Row 90 144 180 167 155 350 FY 13 151 400 200 400 20 500 450 101 EBIT 160 163 60 50 152 40 FY 13 FY 14 FY 15 FY 16 11
U. S. Production: Organization Overview Steve Mosko President, Sony Pictures Television Jamie Erlicht President, U. S. Programming Zack Van Amburg President, U. S. Programming Holly Jacobs EVP, U. S. Reality & Syndication Programming Suzanne Patmore Gibbs EVP, U. S. Drama Development Glenn Adilman EVP, U. S. Comedy & Animation Dawn Steinberg EVP, U. S. Talent & Casting Helen Verno EVP, U. S. MOWs / Minis Steve Kent Sr. EVP, U. S. Format Production Kim Rozenfeld EVP, U. S. Current Programming Ed Lammi EVP, U. S. Production 12
SPT Timeline: 2005 – 2012 (excluding Wheel of Fortune, Jeopardy!, Days of Our Lives, Young & The Restless) • Community sold to SVOD and • Rules sold in syndication in 97% of U. S. • 7 shows on 2011 primetime fall schedule (most since 2002) • SPT has broadcast programming on 6 of 7 nights of the 2011 fall schedule Cable • SPT achieves 39 Emmy nominations • 4 new series premiering on all 4 major broadcast networks • Highest volume year in SPT history with 13 stand -alone profitable series • Three primetime broadcast reality series • SPT has more new broadcast comedy series than • Rules of Engagement becomes primetime’s #2 comedy • SPT becomes the #1 producer of scripted cable series • SPT achieves 29 Emmy nominations • Only studio to get a new series on each of the 5 broadcast networks 16 series Big Day Heist 11 series Kidnapped Rules of Engagement Runaway Book of Daniel Emily’s Reasons Til Death 10 Items or Less My Boys Judge Maria Lopez Greg Behrendt The Boondocks Huff King of Queens Rescue Me The Shield Judge Hatchett Love Monkey Beautiful People The Boondocks King of Queens Huff Rescue Me Strong Medicine The Shield Judge Hatchett 2006– 2007 2005– 2006 Pilots 16 16 Inv. Pool$(81)MM $(96)MM any other studio 24 series • The Shield becomes SPT’s first cable-tocable series sale; $32 MM 17 series Canterbury’s Law Cashmere Mafia Power of 10 Spider-Man Viva Laughlin Breaking Bad Damages Judge David Young Rules of Engagement Til Death 10 Items or Less The Boondocks My Boys Rescue Me The Shield Judge Hatchett Judge Maria Lopez 2007– 2008 15 $(78)MM • SPT successfully launches Dr. Oz • Rescue Me sells into U. S. syndication and has an ultimate profit of $55 MM 17 series Sit Down, Shut Up The Unusuals The Beast Newlywed Game Judge Karen Rules of Engagement Spider-Man Til Death 10 Items or Less The Boondocks Breaking Bad Damages My Boys Rescue Me The Shield Judge David Young Judge Hatchett 2008– 2009 8 $(63)MM 17 series Brothers Community Shark Tank The Sing-Off Drop Dead Diva Hawthorne Justified Make My Day Dr. Oz Rules of Engagement Til Death The Boondocks Breaking Bad Damages My Boys Rescue Me Newlywed Game 2009– 2010 12 $(72)MM 22 series Happy Endings Mad Love Mr. Sunshine Breaking In Plain Jane The Big C Franklin & Bash Nate Berkus Community Rules of Engagement Shark Tank The Sing-Off The Boondocks Breaking Bad Damages Drop Dead Diva Hawthorne Justified My Boys Rescue Me Newlywed Game Dr. Oz 2010– 2011 14 $(85)MM Charlie’s Angels Pan Am Unforgettable Necessary Roughness Re-Modeled 25 series Mob Doctor Last Resort Made In Jersey Save Me The Job Men At Work Substitute Breaking In Franklin & Bash Happy Endings The Big C Nate Berkus Community Rules of Engagement Shark Tank The Sing-Off The Boondocks Breaking Bad Damages Drop Dead Diva Hawthorne Justified Rescue Me Dr. Oz Newlywed Game Masters of Sex Client List Pyramid Franklin & Bash Happy Endings The Big C Necessary Roughness Community Rules of Engagement Unforgettable Shark Tank The Boondocks Breaking Bad Damages Drop Dead Diva Justified Substitute Dr. Oz Newlywed Game 2011– 2012 14 $(86)MM 2012– 2013 9 $(80)MM 13
Current Series, Pilots & Development Costs: Challenges and Opportunities MRP Assumptions • Grow a steady pipeline of programming sold to SVOD and off-net syndication: Last Resort, Happy Endings, Justified • Premier 3 new broadcast network series every year with 1 returning every year for multiple seasons • Premier 2 new cable series each year with all returning for multiple seasons Challenges • • • Keep shows on network to reach syndication Compete to get shows commissioned, networks pressured to use their own studios Receive proper promotion from networks Produce programming that responds to the evolving consumer viewing habits Combat decline in broadcast network total output (26 this season vs. 30 last season) and new series pick-ups (-3) Broadcast networks struggle in the ratings and addition complications arise due to Live vs. Live + Delayed viewing (i. e. VOD, DVR) Opportunities • • • Invest in A-list writers, directors and producers for future drama / comedy / unscripted development Develop series with broad international appeal with globally marketable talent to sell in the US and abroad Grow international revenue through exploring co-production opportunities and maximizing tax credits Improve production cost controls Position SPT at the forefront of the burgeoning subscriptions VOD market (Netflix, Direc. TV) to sell and develop series Further identify and develop businesses around Shark Tank, Dr. Oz, and Queen Latifah 14
Wheel of Fortune, Jeopardy!, Daytime Dramas: Challenges and Opportunities MRP Assumptions Challenges Maintain viewership levels and high licensing fees for mature assets in the face of declining syndicated television viewing • Keep these 4 series on air through the MRP period with little change in economics over the period • • Renew with IGT in FY 16 • Maintain viewer loyalty when on-air talent retires • Continue to grow despite the lack of direct control over domestic and international sales organizations at CBS • Produce programming that responds to the evolving consumer viewing habits Opportunities • Extend brands into cable and digital through ancillary programs Sports Jeopardy!, Rock and Roll Jeopardy! and/or Kid's Wheel • Expand brands into other arenas including physical gaming devices (slot machines), branded lottery tickets and other technologies • Exploit digital rights in numerous categories online and on multiple devices • Establish an international gaming platform using the branded shows with the anticipation of legalization of digital gaming in the U. S. 15
Embassy Row: Challenges and Opportunities MRP Assumptions Challenges • Develop docu-reality series, talent • -based, and real-life competitions Opportunities Produce programming that responds to the evolving consumer viewing habits • Capture additional opportunities for unscripted programming on certain networks • Grow international revenue through exploring opportunities and maximizing tax credits • Develop broad appeal series / minimize work-for-hire • • • Shift product mix towards IP / owned series which grow from 6 to 10 over the MRP period Utilize capacity (work-for-hire projects have lower margins) Build a West Coast based unscripted development brand • Grow IP / owned series production with limited development fund 16
Library: Challenges and Opportunities MRP Assumptions • Grow distribution revenue Challenges • Receive premium pricing on aging assets • Appeal to changing consumer preferences and viewing habits Opportunities • Expand integration / collaboration with International Distribution for maximum global impact of U. S. product • Monetize library through expanded distribution into new platforms (SVOD, FOD) • Continue to identify new distribution windows/opportunities through robust sales planning 17
International Production 18
What We Do Well, Where We Need Improvement. International Production What we do really well • Expand footprint of international production businesses • Enter growth markets (e. g. , Russia, LATAM) • Streamline production administration and collaboration within and across territories What we need to improve • Develop global hit format • Achieve scale and pipeline in major format generating territories (UK, Netherlands, Scandinavia) • Foster a more creative culture across the organization • Collaborate better with U. S. Production in the development/exploitation of scripted and unscripted formats 19
International Production: Forecast Int’l Production Projected Revenue and EBIT Revenue ($MM) EBIT ($MM) 700 40 34 600 30 28 500 35 25 400 20 300 13 530 573 433 200 294 15 10 6 100 5 - FY 13 FY 14 FY 15 FY 16 Note: EBIT excludes FY 13 monetization of $11 MM 20
International Production: Organization Overview Steve Mosko President, Sony Pictures Television Andrea Wong President, Int’l Production Wayne Garvie Chief Creative Officer Donna Cunningham EVP Operations Open SVP & GM – Latin America / U. S. Hispanic Astrid Quentill SVP & MD – Germany Maria Smirnova MD Production – Russia and Lean M Mary Chan VP Production – Asia Jeff Lerner SVP, Scripted Dev & Production Nathalie Civrais SVP Production – France Ziad Kebbi President, SPT Arabia 21
International Production: Challenges and Opportunities MRP Assumptions • Achieve moderate growth from existing operating companies supplemented by EBIT contributions from recent acquisitions Left Bank and Silver River • Assume a hit format starting in FY 15 • Assume $50 MM annual investment fund for FY 14 -FY 16 Challenges • Excel in an increasingly competitive marketplace • Operate in a challenging economic climate in key markets Opportunities • Continue to exploit Millionaire, develop a stable base of other successful formats • Make more focused and sustained investment in development, executives, producers, production companies, and new content especially in the UK • Foster a more creative culture to develop intellectual property by: − Realigning the organization, including a new President and a creative head − Combining the print sales and format sales teams to better serve our buyers − Creating a strategically centralized development fund − Implementing a competitive incentive plan • Simplify admin, operational process • Explore opportunities in emerging 22 markets
U. S. Distribution and Ad Sales 23
What We Do Well, Where We Need Improvement. U. S. Distribution and Ad Sales What we do really well • Distribute TV and movies using a productcentered approach: customized release plans and windowing across platforms for different types of TV series and features • Manage sales planning, forecasting, analytics and business affairs • Collaborate across SPT groups and SPE divisions − Ensure that Distribution deals support and coordinate with Networks carriage deals − Leverage TV deals for home video deals where clients are in both businesses − Rep inventory for Play. Station • Position SPT as a syndication and ad sales leader outperforming others in market • Leverage traditional TV ad sales along with digital inventories/platforms (Fear. Net, Play. Station) What we need to improve • Improve coordination with Networks and Finance • Improve coordination between ad sales and syndication sales 24
U. S. Distribution & Ad Sales: Forecast U. S. Ad Sales Projected Revenue and Profit Contribution U. S. Distribution Projected Revenue and Profit Contribution WWAG ($MM) MPG TV Profit Contribution 900 400 700 350 285 270 400 256 323 365 298 $ 103 100 $ 61 250 80 368 $ 392 $ 34 281 150 347 100 - 120 200 352 453 140 $ 128 300 367 500 300 Profit Contribution 450 800 600 Revenue ($MM) 100 $ 260 40 $ 184 20 50 40 46 33 29 FY 13 FY 14 FY 15 FY 16 60 $ 330 - FY 13 FY 14 FY 15 FY 16 25
U. S. Distribution and Ad Sales: Organization Overview Steve Mosko President, Sony Pictures Television John Weiser President, U. S. Distribution Amy Carney President, Ad Sales, Strategy & Research Thanda Belker EVP, U. S. Pay & TV Sales Flory Bramnick EVP, U. S. Cable Stuart Zimmerman EVP, Ad Sales Richard Burris EVP, Strategic Planning & Analysis Phil Martzolf EVP, U. S. Syndication Sales Alan Daniels SVP, Distribution Planning Travis Howe SVP, Digital Ad Sales Chris Kiriakatis SVP, Digital Ad Sales David Mumford EVP, Planning & Research 26
U. S. Distribution: Challenges and Opportunities MRP Assumptions • Increase feature library sales through I. Strategic use of driver inventory to leverage broad package sales II. Hyper-targeted offerings with premium pricing III. Multiple nonexclusive buyers and bulk buys to drive low-rated product • Leverage SVOD licensing and strategic product planning for U. S. channel carriage • Project revenue and corresponding profit contribution swings based on release timing, size of theatrical slate and timing of off-net syndication avails (e. g. , Rules of Engagement, Community, Happy Endings) Challenges Opportunities • Maintain Starz relationship after spin-off and deal with uncertainty regarding Starz’s original programming strategy • Renegotiate Starz output deal • Achieve substantial library targets in a challenging marketplace • Split library windows, license multiple rights, structure nonexclusive deals • Sell library film and TV series into non-exclusive subscription deals • Sell slate carve-out windows utilizing more aggressive inventory tracking and planning • Develop consistent flow of firstrun product with top talent 27
Ad Sales: Challenges and Opportunities MRP Assumptions Challenges • Drive additional revenue for first run through pricing increases and advertiser integrations • Grow within the limits of available shows • Increase share in TV market upfront • Compete for limited opportunities for 3 rd party ad sales representation • Achieve projected pricing despite volatility in U. S. ad market and aging series • Expand list of advertisers for 30 s / 10 s • Sell at levels of 70% or higher in upfront and sell remaining inventory at premium CPMs Opportunities • Diffuse volatility in TV ad revenue market by growing a strong digital base • Drive additional revenue for first run through advertiser integrations • Expand current base of advertisers for : 30 s and : 10 to off-nets • Find new 3 rd party representation opportunities • Continue to support cable / network properties through Branded Entertainment • Develop and pioneer high value -rich media placements on connected devices 28
International Distribution 29
What We Do Well, Where We Need Improvement. International Distribution What we do really well What we need to improve • Execute strong output agreements for film and TV • Improve and streamline marketing, business affairs, planning and admin support • Align with U. S. production better than competition • Integrate format and program sales • Leverage across media/lines of business with large consolidated buyers on behalf of transactional, SVOD and traditional TV • Collaborate on transactional businesses with SPHE 30
International Distribution: Forecast Strong and consistent growth Int’l Distribution Projected Revenue and Profit Contribution WWAG ($MM) MPG TV Profit Contribution 2, 000 800 1, 800 634 1, 600 1, 400 510 685 662 653 567 634 707 1, 000 400 800 960 975 963 1, 008 300 200 400 100 200 - 600 500 1, 200 600 700 160 175 180 FY 13 FY 14 FY 15 FY 16 - 31
International Distribution: Organization Overview Steve Mosko President, Sony Pictures Television Keith Le. Goy President, Int’l Distribution Ed Louwerse SVP, Product Management Paul Littman SVP, Global Sales Mike Wald EVP, Distribution EMEA Alex Marin SVP, Distribution, Latin America Angel Orengo EVP, Distribution, Asia/Pacific Kevin Byles SVP, Distribution, Canada 32
International Distribution: Challenges and Opportunities MRP Assumptions • Drive TV product revenue growth through sustained delivery of network dramas • Invest in International Distribution • Drive revenue pipeline through new market entrants • Establish stronger relationships in key markets Challenges Opportunities • Handle shifts in feature film slate • Broaden scope of broadcaster relationships to explore English language, European content, coproduction opportunities • Ensure we keep rights to key revenue-driving feature film franchises • Access to breakout / hit drama • Exploit opportunities for distribution into new platforms (SVOD, FOD) • Close long-term deals in key markets • Focus on select emerging markets to expand SPT’s presence and better capitalize on opportunities (Netherlands, Scandinavia, Poland, Hungary, South Africa) • Broaden scope of broadcaster relationships to explore English language, European content and co-production opportunities 33
Networks 34
What We Do Well, Where We Need Improvement. Networks What we do really well What we need to improve • Launch new channels, move early in growth markets • Strengthen network brands and programming identities for existing channels • Grow revenue and EBIT • Build a bouquet of digital networks • Establish Crackle as a market leader in its category • Focus on hit shows, especially for mature networks (e. g. GSN, SET Brazil/LATAM) 35
Networks: Forecast Projected Earnings Growth As a result of recent investments, North America and Europe projected to grow as a percentage of Networks’ EBIT from 24% in FY 13 to 36% in FY 16 EBIT projected to reach over $500 million in FY 16, projected to grow at a 23% CAGR over the MRP period FY 13 EBIT by Region ($MM) Revenue EBIT $ 3, 000 North America, Rest of 17% Asia/Australia, 16% 600 503 $ 2, 500 410 $ 2, 000 328 $ 1, 500 268 $ 1, 000 $1, 536 400 $2, 580 200 $ 500 Rest of Asia/Australia, North America, 23% 12% FYE 13 EBIT Margin: FY 16 EBIT by Region 100 $- 17. 4% FYE 14 FYE 15 FYE 16 16. 7% 18. 2% 19. 5% Latin America, 21% 300 $2, 258 $1, 961 India, 39% Europe, 7% India, 36% Europe, 13% Latin America, 16% 36
Networks: Organization Overview Steve Mosko President, Sony Pictures Television Andy Kaplan President, Worldwide Networks Eric Berger EVP, Digital Networks Marie Jacobson EVP, Programming & Production Masao Takiyama SVP, Japan George Chien SVP, Networks, Asia Superna Kalle SVP, GM, Sony Movie Channel & Cine Sony Bob Billeci EVP, Technical Operations T. C. Schultz EVP & MD, Latin America Ricky Ow EVP, Singapore Kate Marsh SVP, Western Europe Lyle Stewart SVP, Central EMEA 37
Networks: Challenges and Opportunities MRP Assumptions Challenges • Grow in all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins • Grow ad revenues despite the global pressure on ad sales driven by macro economy • Focus next 18 months on maximizing efficiencies in existing operations • Develop growth strategies for smaller up-and-coming territories • Increase investment in Crackle U. S. advertising and technical infrastructure • Operate under economic volatility and political uncertainty in Latin America • Keep content costs in line Opportunities • Launch channels in new and existing territories • Increase investment in Crackle U. S. ad and technical infrastructure • Maximize value in Crackle US and expand internationally (Latin America, UK, Canada) • Expand SPTL Asia facility to service EMEA channels • Consider portfolio synergies with GSN • Grow digital through new or addon acquisitions 38
Closing 39
Other Ideas for Change • SPHE • Management of the Lot • Outside financing • AMC • Expand Embassy Row west coast • Ad Sales synergies • Airline sales 40
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