Confidential Draft

Embassy Row Acquisition Overview

February 2008

2

Executive Summary

• The game / reality format business is a critical growth area for SPE

– Reality shows represent nearly half of the top 20 shows and demand continues to grow

– These shows lend themselves to recurring revenues through domestic syndication and international formatting

• An acquisition of Michael Davies’ company, Embassy Row (ER), would serve as the cornerstone for our game / reality format business

– Davies has a proven track record, including creating the Power of 10 with SPT– An acquisition provides the foundation for growth, builds enterprise value, and better

aligns Davies incentives with our own

• We submitted an offer to acquire ER for up to $48MM, however a final deal may require up to $100MM of total consideration

– LOI, submitted [January 29, 2008], included $20MM of initial consideration plus up to $28MM of performance-based earn-outs

– Davies has expressed a strong desire to receive up to $100MM of total consideration in scenarios where he drives significant EBITDA growth

– In all cases, earn-outs would be tied to growth in SPE profits and the creation of successful new formats

3

Current SPE RelationshipHistory of Success

Embassy Row Highlights

Value Considerations

• Creator of numerous successful game and reality shows including:

–The Power of 10 on CBS

–The 9, online with Yahoo!

–Buzz Session with Yahoo!

–World Series of Pop Culture on VH1

–Grand Slam on GSN

–Chain Reaction GSN

–Boy Meets Grill on Food Network

• SPE’s existing deal Davies/ER runs through Jan 2, 2009

• During this term SPE:–Funds $1.2MM of Embassy

Row overhead–Recoups up to $600K in EP

Fees–Receives all copyright to

shows created by ER

• ER derives its profits from –Executive Producer fees–Mark-up on overhead

charged to shows–Ongoing profit participation

• An acquisition captures value for SPE by

–Acquiring ER’s existing profit streams

–Extending the relationship beyond the current term

–Shifting Davies profit focus to the creation of new formats

• Embassy Row 2007E profit of $3.4MM implies a value of $20MM - $40MM

–$20MM (1) is DCF value with no growth

–$40MM (2) is value based on comps

• With successful new shows, value would be significantly higher

Note: (1) DCF of $3.4MM in perpetuity at a 16.5% discount rate

(2) Based on a marekt multiple of 11.7x EBITDA of $3.4M

4

Go-forward Operations

Distribution with2waytraffic

Management and Reporting

Format Development and Acquisition

• Existing ER slate will be extended into syndication and formats sold abroad

• New formats will be based on SPE library product, new U.S.-based development, and acquired international formats

• Limited incremental investment will be required to expand the team, including 3 people acquiring international formats and 3 people developing additional show concepts in-house

• The business will be managed as an independent unit within SPT with a dedicated P&L

• ER will leverage 2waytraffic’s existing sales force to sell ER developed formats internationally

• ER will hire 3 additional sales people to sell ER formats worldwide

Distribution without2waytraffic

5

• $20.0MM up-front payment

• Up to $28.0 MM of earn-outs tied to exceeding EBITDA thresholds and generating recurring profits

– Available earn-out = (EBITDA Above Threshold) x 66%; subject to a cap each year

– 50% of available earn-out paid regardless of earnings quality

– 50% of available earn-out multiplied by: (recurring profits (2) /target)

• 4 year employment contract, after which:

– If Davies chooses not to stay; he is subject to a 2 year non-compete

– If Davies wants to stay; SPT may retain him for 2 years

– If Davies wants to stay and SPT doesn’t retain him; he is not subject to a 2 year non-compete

Current Deal Structure

Max Total Consideration: $48.0 MM

PV(1) of Max Total Consideration: $35.7MM

Note: (1) PV of up-front payment and maximum earn-outs at 16.5% discount rate

(2) Syndication Profits + International Format Fees

FY09 FY10 FY11 FY12 FY13 Total

Maximum Earn-Out Cap $0.0 $4.0 $6.0 $8.0 $10.0 $28.0

Threshold EBITDA $0.0 $5.0 $7.0 $10.0 $15.0 $37.0

Minimum EBITDA to Fully Earn-out $0.0 $11.1 $16.1 $22.1 $30.2 $79.4

Recurring Profit Target N/A $5.0 $10.0 $15.0 $25.0

6

Additional Earn-outs May be Required to Close the Deal

Max Total Consideration: $98.0MM

PV(1) of Max Total Consideration: $63.2MM

Note: (1) PV of up-front payment and maximum earn-outs at 16.5% discount rate

• $20.0MM upfront payment (per current deal structure on p.4)

• $28.0MM earn-outs (per current deal structure on p.4)

• $50.0MM of additional earn-outs tied to exceeding “Upside EBITDA Threshold”

– Available earn-out = (EBITDA Above Threshold) x 25%; subject to a cap each year

Maximum “Upside” Earn-Out $0.0 $5.0 $10.0 $15.0 $20.0 $50.0

Upside EBITDA Threshold $0.0 $11.1 $16.1 $22.1 $30.2 $79.4

Minimum EBITDA to Fully Earn-out $0.0 $31.1 $56.1 $82.1 $110.2 $279.4

FY09 FY10 FY11 FY12 FY13 Total

Any additional earn-outs would be tied to significant EBITDA upside

7

FY09 FY10 FY11 FY12 FY13 Total

EBIT (after earn-out) ($2.4) $0.5 $2.7 $7.4 $12.9 $21.1

Earn-out $0.0 $0.0 $0.0 $1.6 $2.4 $4.0

SPE NPV (1)

$1.5

FY09 FY10 FY11 FY12 FY13 Total

EBIT (after earn-out) ($2.4) $0.5 $2.8 $7.5 $13.0 $21.4

Earn-out $0.0 $0.0 $0.0 $1.7 $2.6 $4.3

SPE NPV (1)

$3.3

FY09 FY10 FY11 FY12 FY13 Total

EBIT (after earn-out) ($2.0) $1.3 $3.6 Chars $13.8 $16.7

Earn-out $0.0 $0.0 $0.2 $2.7 $3.9 $6.8

SPE NPV (1)

$15.0

Note: (1) NPV at 16.5% = PV of Acquired EBITDA + PV of Exit at 10x – PV of Consideration

Current Deal Structure Maximum Earn-out

Low

Medium

High

Maximum Earn-outs Require Davies to Create Greater Value for SPE

FY09 FY10 FY11 FY12 FY13 Total

EBIT (after earn-out) ($3.5) $3.6 $6.6 $10.6 $16.7 $34.0

Earn-out $0.0 $4.0 $6.0 $8.0 $10.0 $28.0

SPE NPV (1)

$61.8

FY09 FY10 FY11 FY12 FY13 Total

EBIT (after earn-out) ($3.5) $18.6 $36.6 $55.6 $76.7 $183.9

Earn-out $0.0 $9.0 $16.0 $23.0 $30.0 $78.0

SPE NPV (1)

$517.0

Current Proposal

Potential “Upside” Proposal

8

– Appendix –

9

Assumptions

• Earn-out Cap: $10.0M

• Threshold EBITDA: $15.0M

• EBITDA Achieved: $19.1M

• Recurring Profit Target: $25.0M

• Recurring Profit Achieved: $22.3M

Example Earn-out Calculation (Mid-case FY13)

Calculation

• EBITDA Above Threshold = ($19.1-$15=$4.1)

• Available Earn-out = (66% x $4.1 = $2.7)

–50% of Available Earn-out paid

automatically = (50% x $2.7 = $1.35)

–50% of Available Earn-out subject to

Ratio = (89% x $1.35 = $1.2)

(Ratio = $22.3/$25.0 = 89%)

Total Earn-out Paid $2.55M

10

Key Assumptions – Current Deal Structure

Low Case Mid Case High Case

Model Assumptions

• Chargeback: 0%

• Interactive Growth: 0%

• Chargeback: 0%

• Interactive Growth: 5%

• Chargeback: 5%

• Interactive Growth: 10%

Model Assumptions Model Assumptions

Acquired EBITDA (1): $5.3

Value of Exit (2): $18.2

Total Consideration: ($21.9)

Net Present Value: $1.5

Consideration / 2007 EBITDA (3): 6.3x

Notes: Assumes a risk adjusted discount rate of 16.5% for all NPV calculations (1) Includes value of new shows and excludes value of shows created under current contract (i.e., excludes P10 from incremental value calculation) (2) Includes exit at 10x multiple in 2013 (3) Assumes $3.5M in EBITDA for 2007

Acquired EBITDA (1): $5.7

Value of Exit (2): $19.7

Total Consideration: ($22.1)

Net Present Value: $3.3

Consideration / 2007 EBITDA (3): 6.3x

Acquired EBITDA (1): $9.1

Value of Exit (2): $29.3

Total Consideration: ($23.4)

Net Present Value: $15.0

Consideration / 2007 EBITDA (3): 6.7x

Net Present Value Net Present Value Net Present Value

EBIT EBIT EBIT

Recurring Profits Recurring Profits Recurring Profits

FY09 FY10 FY11 FY12 FY13

Status Quo - P10 EBITDA ($0.1) $2.9 $5.9 $9.6 $14.9

Incremental EBITDA $1.2 $1.1 $0.3 $2.8 $3.9

Total EBITDA $1.1 $4.0 $6.2 $12.5 $18.8

Amortization ($3.5) ($3.5) ($3.5) ($3.5) ($3.5)

EBIT b/f Earn-out ($2.4) $0.5 $2.7 $9.0 $15.3

Total Earn-Out $0.0 $0.0 $0.0 ($1.6) ($2.4)

EBIT ($2.4) $0.5 $2.7 $7.4 $12.9

EO / EBIT b/f EO 0% 0% 0% 17% 15%

FY09 FY10 FY11 FY12 FY13

Recurring Profits $0.9 $4.0 $6.8 $13.9 $22.3

FY09 FY10 FY11 FY12 FY13

Status Quo - P10 EBITDA ($0.1) $2.9 $5.9 $9.6 $14.9

Incremental EBITDA $1.2 $1.1 $0.4 $3.1 $4.2

Total EBITDA $1.1 $4.0 $6.3 $12.7 $19.1

Amortization ($3.5) ($3.5) ($3.5) ($3.5) ($3.5)

EBIT b/f Earn-out ($2.4) $0.5 $2.8 $9.2 $15.6

Total Earn-Out $0.0 $0.0 $0.0 ($1.7) ($2.6)

EBIT ($2.4) $0.5 $2.8 $7.5 $13.0

EO / EBIT b/f EO 0% 0% 0% 19% 16%

FY09 FY10 FY11 FY12 FY13

Recurring Profits $0.9 $4.0 $6.8 $13.9 $22.3

FY09 FY10 FY11 FY12 FY13

Status Quo - P10 EBITDA ($0.1) $2.9 $5.9 $9.6 $14.9

Incremental EBITDA $1.6 $1.9 $1.4 $4.6 $6.3

Total EBITDA $1.5 $4.8 $7.3 $14.2 $21.2

Amortization ($3.5) ($3.5) ($3.5) ($3.5) ($3.5)

EBIT b/f Earn-out ($2.0) $1.3 $3.8 $10.7 $17.7

Total Earn-Out $0.0 $0.0 ($0.2) ($2.7) ($3.9)

EBIT ($2.0) $1.3 $3.6 $8.0 $13.8

EO / EBIT b/f EO 0% 0% 5% 25% 22%

FY09 FY10 FY11 FY12 FY13

Recurring Profits $0.9 $4.0 $6.8 $13.9 $22.3

11

Current Structure: Max Earn-out

Model Assumptions

• EBITDA fixed at Format target

levels

Notes: Assumes a risk adjusted discount rate of 16.5% for all NPV calculations (1) Includes value of new shows and excludes value of shows created under current contract (i.e., excludes P10 from incremental value calculation) (2) Includes exit at 10x multiple in 2013 (3) Assumes $3.5M in EBITDA for 2007

Potential Structure: Max Earn-out

Model Assumptions

• EBITDA fixed at Format target

levels

Acquired EBITDA (1): $136.3

Value of Exit (2): $443.9

Total Consideration: ($63.2)

Net Present Value: $517.0

Consideration / 2007 EBITDA (3): 18.1x

Net Present Value Net Present Value

EBIT EBIT

Recurring Profits Recurring Profits

Comparison of Max Earn-out Cases

Acquired EBITDA (1): $26.4

Value of Exit (2): $71.1

Total Consideration: ($35.7)

Net Present Value: $61.8

Consideration / 2007 EBITDA (3): 10.2x

FY09 FY10 FY11 FY12 FY13

Status Quo - P10 EBITDA ($0.1) $2.9 $5.9 $9.6 $14.9

Incremental EBITDA $0.1 $8.2 $10.2 $12.5 $15.3

Total EBITDA $0.0 $11.1 $16.1 $22.1 $30.2

Amortization ($3.5) ($3.5) ($3.5) ($3.5) ($3.5)

EBIT b/f Earn-out ($3.5) $7.6 $12.6 $18.6 $26.7

Total Earn-Out $0.0 ($4.0) ($6.0) ($8.0) ($10.0)

EBIT ($3.5) $3.6 $6.6 $10.6 $16.7

EO / EBIT b/f EO 0% 53% 48% 43% 38%

FY09 FY10 FY11 FY12 FY13

Recurring Profits N/A $5.0 $10.0 $15.0 $25.0

FY09 FY10 FY11 FY12 FY13

Status Quo - P10 EBITDA ($0.1) $2.9 $5.9 $9.6 $14.9

Incremental EBITDA $0.1 $28.2 $50.2 $72.5 $95.3

Total EBITDA $0.0 $31.1 $56.1 $82.1 $110.2

Amortization ($3.5) ($3.5) ($3.5) ($3.5) ($3.5)

EBIT b/f Earn-out ($3.5) $27.6 $52.6 $78.6 $106.7

Total Earn-Out $0.0 ($9.0) ($16.0) ($23.0) ($30.0)

EBIT ($3.5) $18.6 $36.6 $55.6 $76.7

EO / EBIT b/f EO 0% 33% 30% 29% 28%

FY09 FY10 FY11 FY12 FY13

Recurring Profits N/A $5.0 $10.0 $15.0 $25.0

12(1) Source: Jeffries

Comparable M&A Multiples Support Proposed Valuation

Median Multiple

ER Figures

(MM)

Implied Value (MM)

Sales 1.6x $28.6 $45.8

EBITDA 11.7x $3.4 $39.8

EBIT 12.9x $3.4 $43.9

Average Implied Value (MM)

$43.1

na14.8x3.0x£351ITV12 Yard ProductionsDec-07

18.8xna0.4x£31.4SchibstedMetronome Film & Television Sep-07

na8.6x1.9x£18.0Shed MediaTwenty TwentyProductionsSep-07

nana1.8x£175.0NBC UniversalSparrowhawk MediaAug-07

8.6x8.5xna£20.0ShinePrincess ProductionsJan-0721.2x19.2x3.0x€3,396.8Investor group incl. John de Mol EndemolMay-07

nana3.6x€250.0De AgostiniMarathon GroupJul-07

na7.3x3.8x£111.532waytrafficWWTBAM & CelladorDec-06

nmna2.7x£3.0DCD MediaWest Park PicturesJul-07

nana2.2x£50.02All3MediaObjective ProductionsAug-07

3.9xna0.9x£7.1DCD MediaProspect PicturesJul-0712.9xna1.2x£9.1DCD MediaSeptember HoldingsJul-07

nana2.6x€450.0Endemol NVEndemol FranceJan-07

11.3x11.0xna£35.0ShineKudosDec-0612.3x11.5x1.4x£320.0Secondary buy-out (Permira)All3MediaAug-06

nana1.0x£20.03IMG MediaDarlow Smithson ProductionsApr-06

15.1x12.1x0.4x£27.03IMG Media Tiger Aspect HoldingsMay-06

4.5x4.3x0.4x£15.64GFP VermögensverwaltungsOdeon Film Apr-06nananaNaSpützHurricane Mar-06

14.1xna2.0x£30.03ShedRicochet Nov-05

12.9x11.7x1.6xMedian

12.9x12.3x1.7xAverage

19.5x17.5x0.8x£14.03RDF IWCDec-05

na21.2x0.6x£27.7Tinopolis TV Corp Oct-05

na11.9x0.9x£4.2RDFTouchpaper TelevisionAug-05

Transaction Value /

Last FY

Sales

Last FY

EBITDA

Last FY

EBIT

Transaction Value (m)

(100%)AcquirorTargetDate

na14.8x3.0x£351ITV12 Yard ProductionsDec-07

18.8xna0.4x£31.4SchibstedMetronome Film & Television Sep-07

na8.6x1.9x£18.0Shed MediaTwenty TwentyProductionsSep-07

nana1.8x£175.0NBC UniversalSparrowhawk MediaAug-07

8.6x8.5xna£20.0ShinePrincess ProductionsJan-0721.2x19.2x3.0x€3,396.8Investor group incl. John de Mol EndemolMay-07

nana3.6x€250.0De AgostiniMarathon GroupJul-07

na7.3x3.8x£111.532waytrafficWWTBAM & CelladorDec-06

nmna2.7x£3.0DCD MediaWest Park PicturesJul-07

nana2.2x£50.02All3MediaObjective ProductionsAug-07

3.9xna0.9x£7.1DCD MediaProspect PicturesJul-0712.9xna1.2x£9.1DCD MediaSeptember HoldingsJul-07

nana2.6x€450.0Endemol NVEndemol FranceJan-07

11.3x11.0xna£35.0ShineKudosDec-0612.3x11.5x1.4x£320.0Secondary buy-out (Permira)All3MediaAug-06

nana1.0x£20.03IMG MediaDarlow Smithson ProductionsApr-06

15.1x12.1x0.4x£27.03IMG Media Tiger Aspect HoldingsMay-06

4.5x4.3x0.4x£15.64GFP VermögensverwaltungsOdeon Film Apr-06nananaNaSpützHurricane Mar-06

14.1xna2.0x£30.03ShedRicochet Nov-05

12.9x11.7x1.6xMedian

12.9x12.3x1.7xAverage

19.5x17.5x0.8x£14.03RDF IWCDec-05

na21.2x0.6x£27.7Tinopolis TV Corp Oct-05

na11.9x0.9x£4.2RDFTouchpaper TelevisionAug-05

Transaction Value /

Last FY

Sales

Last FY

EBITDA

Last FY

EBIT

Transaction Value (m)

(100%)AcquirorTargetDate