Spider-Man Merchandise

Transcription

1 Potential SPT Monetization Opportunities Draft - April, 2010 Entity SPE Ownership Stake Revenue FY10/C at 10 Spider-Man Merchandise 25% of merchandise net revenue 31 20% SPE 56.3% E. Murdoch 23.7% Other 469 Wheel of Fortune Games of Chance 100% SPE 25 Music Publishing 100% SPE 17

2 35% SPE 65% DirecTV % SPE 50% Disney % SPE 80% HBO 11.8% Ole % SPE % SPE 212 (a) Entity figures may differ from SPE figures due to fiscalization of a

3 ( CY09 Rough 00% (a) Enterprise Valuation EBIT (100%) 31 ~ (value for SPE's entire 25% stake) 41 ~450 (less net debt, equity value~300) ~

4 52 ~780 3 ~ ~51-66 amounts ($30) NA

5 ($ in Millions) Potential Transaction Book Value SPE full exit NA SPE full exit 53 Sell rights in perpetuity to IGT; Potentially low likliehood that IGT would be in position (or agree) to buy 0 SPE full exit NA

6 SPE full exit 74 SPE full exit 8.2 Excerise option on remaining stake 24 SPE full exit 6 SPA slate financing - partner to finance 50% current SPA titles NA

7 Potential SPE Financial Benefit EBIT Cash ~ ~ ~ MM note ~ ~

8 ~200 ~ ~2-4 ~ ~46-61 ~51-66 NA Up to 130

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11 Partial Sale Full Sale Sale Value ($ mil) $150 $175 $200 $225 $300 $350 $400 FY11 Amort FY GP $127 $150 TBD TBD $266 $315 TBD Amortization Rate 16% 15% TBD TBD 11% 10% TBD

12 SPA Valuation - Corp Dev FY11 EV/EBITDA FY11 (Projected) EBITDA 1 Multiple range 2,3 Indicated EV $ x 9.0x 10.0x $52 $59 $65 Discount period 1 Discount rate 15% Discount factor 0.87 Net Present EV $45 $51 $57 Revised Net Present EV for S&P 500 decline -22% $35 $40 $44 FY11 (Projected) EBITDA 1 $ x 16.0x 17.0x $98 $104 $111 Net Present EV $85 $90 $96 VALUATION Enterprise Value $85 $90 $96 Debt $5 $5 $5 Equity Value $79 $85 $91 SPE% 100% 100% 100% Cash to SPE $79 $85 $91 SPE Basis $138 $138 $138 EBIT/ Gain (Loss) -$58 -$52 -$47 1) FY11 projected EBITDA per SPE Corporate Finance 1) FY11 projected EBItDA per SPE Corporate Finance 1) FY11 projected EBItDA per SPE Corporate Finance SPA Valuation - Corp Dev EV/Revenue (3-Yr Trailing Average) Multiple range 1 Indicated EV Revenue (3-Yr Trailing Average) $ x 0.76x 0.84x $135 $152 $169 VALUATION Enterprise Value $135 $152 $169 Debt $5 $5 $5 Equity Value $130 $147 $163 SPE% 100% 100% 100% Cash to SPE $130 $147 $163 SPE Basis $138 $138 $138 EBIT/ Gain (Loss) -$8 $9 $26 1) Multiple range based on HL 2007 valuation work in 2007 and further reduced by 21% for the S&P 500's decline since that point FY08 FY09 FY10 Average FY08 FY09 FY10 Revenue FY11 FY12 FY13 Average Revenue

13 Worldwide Box Office Gross Surf's up Open Season Cloudy Hotel T Cumulative Gross % implied multiple 1.2x 1.0x 1.2x 1.0x Valuation S&P Decline 21.64% Multiplier discount 78.36% 0.8x 0.9x 1.0x HL Valuation $268 $302 $335 Cumulative Valuation $631 $709 $788 Recent Box (Cloudy and Hotel T) $363 $408 $453 NFY EV/Revenue DWA 3.87 DIS Kids 1.54 Avergage Market discount 21.64% Revised multiples

14 Imageworks Low Med High EBITDA (3-yr Forward Average) 1 $10.9 $10.9 $10.9 Multiple 4.7x 5.4x 6.1x Enterprise Value $51 $59 $66 Debt $0.0 $0.0 $0.0 Equity Value $51.1 $58.8 $66.5 SPE % 94% 94% 94% Cash to SPE $48.1 $55.2 $62.5 SPE Basis 2 $5.6 $5.6 $5.6 EBIT/Gain (Loss) $42.5 $49.6 $56.9

15 Imageworks (in 000s) Fcst Budget MRP MRP FY04 F05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Revenues 143, , , , , , , , , ,000 EBITDA 20, ,617 20,473 (16,221) (26,300) 20,608 12,617 10,209 9,820 Depreciation/Amort (7,583) (7,875) (10,555) (12,523) (14,276) (13,915) (11,608) (11,367) (10,209) (9,820) EBIT 12,957 (7,400) 14,062 7,950 (30,497) (40,215) 9,000 1, (figures in millions) Projected 3/31/2004 3/31/2005 3/31/2006 3/31/2007 3/31/2008 3/31/2009 3/31/2010 3/31/2011 3/31/2012 3/31/2013 FY04 F05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Revenues $ $ $ $ $ $ $ $ $ $ % Growth -16.6% 80.0% -5.6% -27.8% -6.1% 32.9% -15.2% 0.0% 0.0% EBIT $ ($7.400) $ $7.950 ($30.497) ($40.215) $9.000 $ D&A $7.583 $7.875 $ $ $ $ $ $ $ $9.820 EBITDA $ $0.475 $ $ ($16.221) ($26.300) $ $ $ $9.820 % Growth -97.7% % -16.8% % 62.1% % -38.8% -19.1% -3.8% % Margin 0.4% 11.5% 10.1% -11.1% -19.1% 11.3% 8.1% 6.6% 6.3% 3-Yr Avg EBITDA $10.9

16 Music Publishing Average Total Revenue $16 $17 $18 $17 $17 $17 $1,000,000 SPE EBITDA $13 $14 $14 $14 $14 $ S&P 1/1/ S&P 4/12/ % S&P 7/6/ S&P 4/12/ % Transaction Comps Decline in market

17 Capital IQ Transaction Screening Report Screening Criteria 1) Industry Classifications (Target/Issuer): Music Publishing (Primary) 2) Transaction Types: Merger/Acquisition Announced/Initial Filing Date (Including Bids and Letters of Intent) Total Transaction Value ($USDmm, Target/Issuer Historical rate) Buyers/Investors Implied Enterprise Value/EBITDA 06/14/2006 EMI Group plc 5, Warner Music Group Corp. (NYSE:WMG) /16/2006 Reader's Digest Association Inc. 2, Ripplewood Holdings, L.L.C.; GoldenTree Asset Management, LP; Magnetar Capital, LLC; J. Rothschild Group of Companies; GSO Capital Partners LP; Merrill Lynch Capital, Investment Arm 04/11/2008 Boosey & Hawkes plc Imagem Music Group CV /06/2006 BMG Music Publishing Ltd. - Universal Music Group, Inc *Denotes proprietary information

18 Opportunity SPE Interest FY10 - SPE Financial Impact Revenue EBIT Rough Valuation of SPE Stake Potential Transaction Book Value 25% of merch Spider-Man Merchandise $31 $31 $300 - $400 net revenue SPE full exit SPE partial exit NA NA Imageworks 100% $182 $9 $51 - $66 SPE full exit $6 Sony Pictures Animation 100% $212 ($30) $218 - $273 SPE full exit $138 Sony Lot NA TBD TBD TBD Sale/Leaseback TBD Music Publishing 100% $17 $14 TBD SPE full exit TBD Gaia Online 1.5% None $130 - $300 SPE full exit $2

19 Potential SPE Financial Benefit EBIT Cash $266 - TBD $300 - TBD $127 - TBD $150 - TBD $46 to $61 $51 - $66 $75 - $130 $213 - $268 TBD TBD TBD TBD $0 - $2.6 $0 - $2.6

20 Investment $1,000,000 Pre-money valuation $130,000, ,000, ,000,000 Equity Ownership 0.77% Number of shares 200,000 Warrant Coverage $200,000 Total S/O 26,000,000 Price /Share $5 Strike price per share $5 SPE Ownership Fully C 1.54% 1.54% 1.54% Value of SPE Position $2,000,000 $3,307,692 $4,615,385 Less: Cost to exercise $1,000,000 $0 $0