Starz Netflix Considerations FOR SONY INTERNAL USE ONLY

Starz / Netflix Considerations FOR SONY INTERNAL USE ONLY December 1, 2008 ATTORNEY / CLIENT PRIVILEGED Confidential Draft

Executive Summary • We have made progress towards an extension and a framework for Starz’ approach to internet SOD • By delaying the XBOX launch to December 15, we delayed our need to file a TRO until December 12. Our goal is to close a deal beforehand • The terms currently being discussed would: – Extend the output deal through 2016 (currently expires in 2013) – Adjust rate card while retaining an annual bonus; generating $160 MM-$225 MM in annual revenue during the extension – Introduce title caps; but maintain flexibility with regard to slate / title mix – Provide additional benefits (extend PPV/VOD to 72 hours, decrease EST price floor in Pay 2) – Address internet SOD, requiring premium pricing and branding with some financial upside opportunity for SPE Attorney / Client Privileged and Confidential 1

Overall Deal Parameters Comments Terms Extension • 3 year extension • Extends beyond current deal, which expires 2013 • Provides Sony security of Pay TV deal through 2016 Value • Annual value in 2014 -2016 of $160 MM - $225 MM • Above market • Specific annual fees depend on slate • $40 MM bonus + 35% rate reduction translates to a roughly 30% decrease in annual revenues Above Market Deal Terms • 50 title cap • $40 MM annual bonus 2014 -2016 • All studios have title caps; ours would be the highest and is distinct from a cap on absolute dollar fees • Sony maintains the only studio bonus in the industry Other Benefits • 72 hour PPV/VOD viewing Internet SOD • Premium pricing / access Concessions • Increases Sony value in pre-Pay. TV windows • Reduce Pay 2 EST Floor to $3. 50 • Premium branding • Structure is in the spirit of traditional Pay TV flat fee model; but provides clear definition for “Pay TV on the internet” • Modest incremental fees • Potential additional upside for Sony • Volume cap • Cap on titles and near-term reduction are non-negotiable for Starz • 12. 5% reduction in rate card 2012 -- 2013 • Expand Pay 1 window (market is 18 months) Attorney / Client Privileged and Confidential 2

Projected Annual Revenues for Extension (2014 – 2016) $224 $160 Comments • Compares to last 3 years average under current deal of $230 MM (1) – $182. 6 MM fees – $47. 5 MM bonus Footnotes: 1) Fees from output deal only. Attorney / Client Privileged and Confidential 3

Starz will Remain a Premium Branded Service • Today, Starz is bundled with premium TV services from Cable, Satellite and IPTV providers – Packages with Starz are priced approximately 40% above entry-level prices – Starz brand is generally called-out as one of the main value drivers of the upgraded package – Premium marketing approach has led to Starz reaching 17 MM cable / satellite / fiber households • The method for making Starz available digitally will be subject to a similar approach – Packages that include Starz would be above entry-level broadband or subject to a $7. 99 a la carte charge Ø For broadband providers, “above entry level” means one tier above the lowest broadband offer Ø For websites, “above entry level” means bundled with a $13. 99 monthly subscription – Starz brand would be specifically called-out as one of the main value drivers of the upgraded package – To ensure Starz Play remains a premium offering, Starz would accept a limit of 30 MM subscribers tethered to broadband access / web services (e. g. , subs tethered to Verizon DSL service and web services like Netflix, Amazon, Hulu, Facebook, and ESPN. com) – There is no cap on Starz Play subscribers tethered to a TV service (e. g. , basic cable/cable broadband, satellite/DSL bundled with satellite, IPTV/broadband from IPTV providers) or websites that transition to offer services comparable to traditional TV Attorney / Client Privileged and Confidential 4

Pricing Starz as a Premium Service Basic Package Est. Current Basic Price Least Expensive Package with Starz Cable TV (Comcast) “Enhanced Cable” $38. 98 “On Demand Silver” $55. 95 $16. 97 44% Satellite TV (Direc. TV) “Family Package” $29. 99 “Choice Extra” $34. 99 -$57. 99 (2) $5 -$28 17%-93% DSL (Verizon) (1) “Starter Plan” 1 Mbps $19. 99 “Power Plan” 3 Mbps $29. 99 $10 50% $19. 99 DSL Plus $7. 99 ALC or bundle with $13. 99 website subscription $27. 98 -$33. 98 $7. 99 -$13. 99 40%-70% Area Websites (on top of broadband) Lowest Cost 1 Mbps Broadband Est. Lowest Price with Starz Est. Minimum Add-on Cost for Bundles w/Starz Premium Over Basic Price Footnotes: 1) Structured as 1 tier above the 1 MB package. 2) Note, $34. 99 is for first 12 months only. Attorney / Client Privileged and Confidential 5

Subscribers included in Caps and Rate Card Total Digital Subscriber Cap d IPTV (Fios) Attorney / Client Privileged and Confidential Cable Satellite IPTV (Fios) DSL Open internet on a service that feels like cable ed ud Satellite l c Ex cl Cable All other digital delivery subscribers (including DSL bundle) are subject to 30 MM Cap e ud In ed ud cl Ex cl In d e d u Subscribers Subject to Rate Card All other digital delivery (Amazon, Facebook, Hulu) subscribers are subject to a per-sub rate card 6

Digital Rate Card Proposal • Starz Proposal: Sample Potential Economics – $2. 0 MM per year over the next 3 years for the Netflix deal – Per sub fee on all “included” subs – Incremental fees are structured as follows: – Cap of $14. 6 MM per year Footnotes: 1) Deals completed or near completion. Netflix subs do not count towards rate card until after 3 year settlement. 2) Currently in discussions with Starz. 3) Not yet in discussions with Starz. 4) Estimated internet enabled Ti. Vo (2 nd and 3 rd generation) boxes. Attorney / Client Privileged and Confidential 7

APPENDIX Attorney / Client Privileged and Confidential 8

Timeline of Current and Proposed Windows Pay 1 Triggers Theatrical Release Early Window/ VOD DVD / VOD Day & Date PPV / VOD Standard Pay 1 Window: 15 Mos. + 30 d Black Period (18 months) Home Theater 4 weeks 12 months from theaters (10 months) 8 months from VOD – facilitates early window (3½ months; only with home theater modification) 6 months from DVD (4½ months) Key: Existing (Under Discussion) Attorney / Client Privileged and Confidential 6 months from PPV (3½ months) 9