GENERAL EXECUTIVE COMMITTEE REVIEW:HBO Divestiture Opportunity

October 7, 2009

-- Confidential -- p. 2

Executive Summary

Proposed Matter to be Deliberated

• SPE is formally submitting for consideration the sale of our 33.3% stake in HBO CE– SPE believes Time Warner’s desire to consolidate HBO CE makes this the right time to monetize– Time Warner is in final negotiations to acquire Disney’s 33.3% stake in HBO CE; SPE’s options are to exit,

maintain a minority position with less board leverage, or exercise our preemptive right to buy-up and maintain equal ownership with Time Warner

– Closing within FYE10 may require executed agreements in Oct due to regulatory approvals

• SPE is also requesting that CEO approval for the sale of all or a portion of its 29.4% stake in HBO Latin America be delegated to the CFO (Mr. Oneda)– Transaction will be made at a 100% market valuation of not less than $680MM and– SPE will sell its entire stake or, if SPE decides to hold a 10% interest, retain a board seat

Background

• SPE is revisiting its global channels portfolio and seeking to rebalance the mix towards channels that are majority controlled and consolidated

• Studio investments in HBO CE and HBO Latin America was driven by a shared need for a pay outlet in each market that has now been met; operating benefits to SPE’s broader portfolio are expected to be achievable contractually

-- Confidential -- p. 3

Overview of HBO Investments

Overview

Ownership

SPERelationship

• Programs, operates, and distributes HBO and Cinemax channels across Central Europe

• Programs, operates, and distributes HBO and Cinemax channels across Latin and South America

• 33.3% SPE• 33.3% Time Warner• 33.3% Disney

• 29.4% SPE• 58.8% Time Warner• 11.8% Ole Communications(note: Disney sold 29.4% stake to TW in 12/08)

• Distributes and provides services for SPE channels in region

• Licenses content from SPE

• Distributes and provides services for SPE channels in region

• Licenses content from SPE• SPE provides ad sales for HBO &

Cinemax channels in Brazil

-- Confidential -- p. 4

Overview of Time Warner / HBO

HBO Asia/South Asia

HBO Central Europe

HBO Latin America

• TW seeking to buy Disney and SPE stake and fully consolidate

• TW purchased Disney stake in 2008

• TW seeking to purchase SPE stake and fully consolidate

• TW purchased SPE stake in 2008

• TW purchased Universal share in 2008

Overview of Time Warner

• One of the world’s largest media and entertainment conglomerates

• Owns and operates significant channel, film, TV, publishing, and internet assets

• Wholly owns HBO in the U.S. with over 40MM paying subscribers

• Has equity interests in multiple HBO joint ventures around the world

Consolidation Activity / Rationale

• As a major channel operator with common interest in HBO brands across the globe, Time Warner is a likely eventual buyer

• Given that studios primarily invested in HBO channels to create an output for pay content in the regions, SPE, Disney and other content owners are ultimately likely sellers of their minority interests in HBO channels

• Time Warner has been and continues to seek opportunities to increase its ownership in HBO global channels with the goal of full consolidation

-- Confidential -- p. 5

HBO CE: Valuation Considerations

(1) DCF valuation based on 2010-2013 forecast; assumes 8X terminal multiple applied to 2013 EBITDA of $26.2MM and 10% discount rate.

Values in $MM

• SPE believes $234MM is an attractive valuation for 100% of HBO Central Europe and seeks to complete a sale of our 33.3% stake at this valuation– Multiples in Disney’s sale of its minority stake in HBO Latin America and SPE’s sale of

HBO Asia imply a valuation of $200MM for HBO CE– DCF before minority/illiquidity discount implies a 100% value of roughly $200MM; with a

minority/illiquidity discount, fair value could be as low as $120-$140MM

100% Value SPE's 33.3%PRECEDENT DEALS(Multiples based on 2008 Sale of Disney's HBO LAM Stake; 2008 Sale of SPE's HBO Asia Stake)

Multiple HBO LAM MetricAverage Trailing Revenue Multiple 1.9x $109 CY09 Revenue $202Average Forward Revenue Multiple 1.8x $121 CY10 Revenue $217Average Trailing EBITDA Multiple 8.3x $22.5 CY09 EBITDA $186Average Forward EBITDA Multiple 8.8x $22.7 CY10 EBITDA $200

Average Implied Value Based on Precedent Transactions $201 $59

DCFDCF of Management Forecast (1) $197

Minority / Illiquidity Discount 30%-40%

DCF Value Including Illiquidity Discount $118-$137 $35-$40

-- Confidential -- p. 6

HBO CE: Gain, Cash, and Ongoing EBIT Impact

Summary Impact Gain & Cash Consideration

EBIT Impact

(1) Excludes potential benefit of special dividend; HBO CE will dividend excess cash of ~$10-20MM ($3-7MM to SPE) prior to close(2) FYE09 EBIT includes $26.6MM in income from the sale of Spektrum(3) FYE10 EBIT impact assumes a December 31, 2009 close(4) Excludes profits from HBO licensing of SPE content

($MM) HBO CE

Minimum Valuation $234.0

SPE Interest Sold 33.3%

Proceeds from Sale $78.0

Book Value of Amount Sold (1) $38.8 as of 12/31/09

Gain $39.2

($MM) FYE09 (2) FYE10 (3) FYE11 FYE12

No SaleSPE Share of HBO Net Income (4) $37.9 $6.0 $5.6 $5.8

If SoldSPE Share of HBO Net Income (4) $37.9 $5.0 $0.0 $0.0Sale Proceeds (1) $0.0 $39.2 $0.0 $0.0

Total $37.9 $44.2 $0.0 $0.0

Variance $0.0 $38.1 ($5.6) ($5.8)

Based on Current Company Forecast

• With a 100% valuation of $234MM for HBO CE, a transaction would:– Generate proceeds of $78MM– Create a gain of $39MM– Require SPE to forgo $5-$6MM EBIT annually as we

would no longer recognize 33.3% of HBO CE net income as EBIT

-- Confidential -- p. 7

HBO CE Sale: Risks and Mitigations

Risks Mitigations

• Ownership in HBO CE has provided a key platform for growing SPE’s owned and operated channels

• Contracts must be structured to avoid risks to ongoing relationships after the sale of our stake– HBO CE will continue to distribute SPE

channels– SPE will continue to seek licensing revenues

from HBO CE (currently ~$8-9MM annually)

• Deal may not close in FYE10 due to time required for regulatory approvals– TW counsel believes approvals may require

up to 6 months (SPE independently verifying timing)

– Timing is not in SPE’s control

• Distribution and licensing relationships will be protected through long-term contracts– Deal extends our distribution services

agreement to 3/31/12 (currently expires 12/31/09) and provides SPE options to extend by up to 8 years

– Deal extends our existing license agreement to 12/31/13 (currently expires 12/31/11) and provides SPE a 4 year option to extend

• October close targeted to allow 5+ months within FYE10 for regulatory approvals

-- Confidential -- p. 8

HBO Latin America: Valuation Considerations

Values in $MM

(1) DCF valuation assumes 10% disc rate; 8X terminal multiple applied to 2014 EBITDA (Mgmt Case: $182.5MM; Adjusted Mgmt Case $143.5MM).(2) EBITDA multiples on recent and pending 100% sales (Travel Channel, Weather Channel, C More, Claxson) range from 11.3 – 13.9x

• SPE believes $680MM is an appropriate minimum valuation for 100% of HBO Latin America– Disney’s 2008 sale of 29.4% was on a $680MM valuation, negotiated in advance of public market declines– Multiples in Disney’s sale of its minority stake in HBO Latin America and SPE’s sale of HBO Asia provide a

basis for SPE to seek a valuation of up to $720MM– DCF before minority/illiquidity discount implies a 100% value of $1.1BN (12x EBITDA in-line with recent

100% sale comps(2)); with a minority/illiquidity discount, value ranges from $680MM to $795MM

100% Value SPE's 29.4%

Total Company Valuation on Sale of Disney's 29.4% HBO LA Stake in 2008 $680 $200

PRECEDENT DEALS(Multiples based on 2008 Sale of Disney's HBO LAM Stake; 2008 Sale of SPE's HBO Asia Stake)

Multiple HBO LAM MetricAverage Trailing Revenue Multiple 1.9x $341 CY09 Revenue $630Average Forward Revenue Multiple 1.8x $366 CY10 Revenue $658Average Trailing EBITDA Multiple 8.3x $94.6 CY09 EBITDA $780Average Forward EBITDA Multiple 8.8x $93.3 CY10 EBITDA $821

Average Implied Value Based on Precedent Transactions $723 $212

DCFDCF of Management Forecast (1) $1,260DCF of Adjusted Management Forecast (1) $1,013

Average before Discount $1,137

Minority / Illiquidity Discount 30%-40%

DCF Value Including Illiquidity Discount $682-$796 $200-$234

-- Confidential -- p. 9

HBO Latin America: Gain, Cash, and Ongoing EBIT Impact

EBITImpact

Summary Impact Gain & Cash Consideration

• Assuming a 100% valuation of $680MM and a sale of our 29.4% stake (as illustrated on this page), transaction would:– Generate proceeds of $200MM– Create a gain of $162MM– Require SPE to forgo $15-$16MM EBIT annually as we

would no longer recognize 29.4% of HBO Latin America net income as EBIT

• If SPE were to retain a 10% stake, proceeds would be $132MM, gain would be $107MM, and we would forgo roughly $10MM of EBIT annually

(1) Includes $45MM in one time proceeds for SPE not to exercise its right to buy-up as part of the Disney/TW transaction

Actuals FYE10 Budget FYE09 MRP

($MM) FYE09 Assuming Full Sale FYE11 FYE12

Current MRPSPE Share of HBO Net Income $62.7 $15.0 $15.4 $16.4

If SoldSPE Share of HBO Net Income $62.7 $9.8 $0.0 $0.0Sale Proceeds $0.0 $161.8Total $62.7 $171.6 $0.0 $0.0

Variance $0.0 $156.6 ($15.4) ($16.4)

($MM) Assuming Full Sale

Minimum Valuation $680.0

SPE Interest Sold 29.4%

Proceeds from Sale $199.9

Book Value of Amount Sold $38.1

Gain $161.8

Note: Book value as of 12/31/09

-- Confidential -- p. 10

HBO Latin America Sale: Risks and Mitigations

Risks Mitigations

• HBO distributes SPE channels in region

• HBO licenses $40-50MM of content from SPE annually

• SPE provides ad sales for HBO channels in Brazil

Anticipated (subject to further negotiations)• If SPE retains an ownership interest

– Retain board seat with decreased governance– Receive a put on remaining stake– Extending license agreement for 6 years

(through 4/2014) plus 4 years at our option

• If SPE sells entire stake– SPE will have a long-term contractual

relationship for HBO to distribute our channels– Extending license agreement for 6 years

(through 4/2014) plus 4 years at our option

• Deal may be subject to potential regulatory approvals

– SPE legal independently reviewing what filings may be required , timing of filings (pre-close vs. post-close) and timing of approvals

– Timing is not in SPE’s control

• Plan to have deal done as quickly as possible to increase likelihood of closing in FYE10

-- Confidential -- p. 11

Next Steps

• Secure approval to delegate decision to CFO for a transaction based on:– 100% market valuation of not less than $680MM– SPE selling its entire share or, if SPE decides to hold a 10% interest, retaining a

board seat– Under the above conditions, details of the transaction will be approved by the CFO

• SPE legal to review regulatory approval requirements

• Finalize negotiation of key terms in late November and present to Investment Committee

• Seek final approvals in December

• Sign and close by end of December

• Secure approvals

• Sign definitive agreements by mid October

• Regulatory review and approval process of up to 6 months (SPE legal is independently verifying)

• Close in February or March 2010, depending on regulatory approvals

-- Confidential -- p. 12

Appendix

-- Confidential -- p. 13

HBO CE: Summary P&L

HBO CENTRAL EUROPE P&L SUMMARY

Values in USD $MMBudget

Actuals Reforecast (2) Management Forecast

2005 2006 2007 2008 2009 2010 2011 2012 2013

Net Revenue $70.0 $79.0 $96.1 $117.9 $109.1 $120.5 $127.1 $132.5 $138.3

Expenses ($62.7) ($64.8) ($76.7) ($86.8) ($86.6) ($97.8) ($103.2) ($107.5) ($112.1)

EBITDA $7.3 $14.1 $19.5 $31.1 $22.5 $22.7 $23.9 $25.0 $26.2

Depreciation ($1.2) ($0.9) ($1.1) ($1.3) ($1.1) ($1.5) ($1.9) ($1.8) ($1.8)

Tax & Other Items (1) ($0.2) ($1.6) ($1.9) $80.5 ($3.2) ($4.3) ($4.5) ($4.7) ($4.7)

Net Income (Loss) $6.0 $11.6 $16.5 $110.3 $18.1 $16.8 $17.5 $18.5 $19.7

Net Cash Flow Adjustments (3) ($14) ($1) ($2) ($0) ($1)

Operating Cash Flow $4.0 $15.9 $15.3 $18.0 $19.0

(1) 2008 Additional Items includes $80.5MM for the sale of Spektrum(2) Decline in CY09 revenues attributed to loss of operating revenue from Spektrum and weakening of local currencies against the USD(3) Includes adjustments to Net Income (Depreciation, Bad Debt, FX), Capex, and change in working capital

Calendar Years

-- Confidential -- p. 14

HBO Latin America: Summary P&L

HBO LATIN AMERICA P&L SUMMARY

Values in USD $MMBudget

Actuals Reforecast Management Forecast

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Net Revenue $187.2 $222.9 $271.5 $323.9 $340.8 $365.6 $399.6 $434.2 $464.4 $496.1

Expenses ($143.2) ($165.6) ($191.4) ($237.3) ($246.2) ($272.3) ($285.6) ($290.0) ($303.4) ($313.6)

EBITDA $44.0 $57.3 $80.1 $86.6 $94.6 $93.3 $114.0 $144.2 $161.0 $182.5

Depreciation ($7.4) ($6.4) ($5.8) ($6.2) ($7.0) ($9.3) ($9.0) ($9.1) ($8.6) ($7.1)

Tax & Other Items ($18.6) ($23.7) ($23.2) ($36.2) ($37.6) ($33.6) ($38.8) ($42.8) ($46.3) ($49.9)

Net Income (Loss) $18.0 $27.2 $51.1 $44.2 $50.0 $50.4 $66.2 $92.3 $106.1 $125.5

Net Cash Flow Adjustments (1) $7 $9 $9 $9 $9 $7

Operating Cash Flow $57.0 $59.7 $75.2 $101.4 $114.7 $132.6

(1) Add back depreciation; diligence currently ongoing to determine more exact free cash flow forecast

Calendar Years