HBO Divestiture Opportunity (DRAFT)

September [8], 2009

-- Confidential -- p. 2

Executive Summary

• SPE is recommending the sale of our 33.3% stake in HBO Central Europe (CE)

• Sale of a minority stake aligns with SPE’s increased focus on controlling stakes in our network investments

• We believe Time Warner’s desire to consolidate HBO CE makes this the right time to monetize our investment, receive cash of $78MM, and recognize a gain of approximately $39MM

– Presents an opportunity to exit a minority position at a full valuation– Time Warner is believed to have a “hand shake” deal to buy Disney’s stake in HBO CE; SPE’s options are to exit,

maintain position with little board leverage, or exercise our preemptive right to buy-up and maintain equal board representation with Time Warner

• Transaction would be structured to protect SPE’s ongoing operating relationship with HBO in Central Europe

• Sale of our HBO CE stake requires near-term approval and execution to close within FY10 assuming a 4-6 month regulatory review

• We are also in negotiations for a sale of all or a portion of our 29.4% stake in HBO Latin America; assuming agreement on key terms, we will separately review this transaction with the GEC

-- Confidential -- p. 3

HBO CE Background

[Need background on ownership, our original investment, distribution of our channels, licensing deals, etc.]

[Requested from Ross Hair]

-- Confidential -- p. 4

HBO CE: Gain, Cash, and Ongoing EBIT Impact

• Time Warner is believed to have a hand-shake deal to acquire Disney’s 33.3% stake in HBO CE on a $235MM valuation

• Sale of our HBO CE stake at this valuation would generate a gain of $39MM and cash of $78MM in FY10

Valuation Consideration Gain & Cash Consideration

($MM)

Valuation $235

SPE Interest Sold 33.3%

Proceeds from Sale $78

Book Value of Amount Sold $39

Gain $39

EBIT Impact ($MM) FY09 FY10 FY11 FY12

Current MRP $37.9 $3.1 $3.8 $4.5

If SoldOperations $37.9 $0.8 $0.0 $0.0Sale Proceeds $0.0 $39.0 $0.0 $0.0

Total $37.9 $39.8 $0.0 $0.0

Variance $0.0 $36.7 ($3.8) ($4.5)

FY10 MRP

FY10 impact assumes a December 31, 2009 close

-- Confidential -- p. 5

HBO CE Historical Returns

($MM)

Acquisition of Equity by SPE ($21.7)(FY99 - FY10)

SPE Share of Operational Funding ($4.1)(FY99)

Total Dividends Received by SPE $41.4(FY00 - FY10)

Sale to Time Warner $78.0(FY10)

Net Cash to Date $93.6

IRR TBD

[Requested timing of flows from Sukhi Arora to calculate IRR]

A sale of our HBO CE stake at the proposed valuation will provide an attractive return

-- Confidential -- p. 6

Protection of Ongoing HBO CE Relationships

Relationship• HBO distributes SPE channels in region

• HBO licenses [$XMM] of content from SPE annually

Key protections include:

• Extend our affiliate representation (currently through 4/1/10) by up to 8 years at our option

• Extend existing license agreements by up to 6 years at our option

Protections

-- Confidential -- p. 7

Preview of HBO Latin America Sale Opportunity

• HBO Latin America negotiations are in earlier stages; agreement on terms is expected to require 60-90 days

• We are weighing selling our entire 29.4% stake or selling down to a 10% stake• Sale could generate $130-$200MM in proceeds and $108-163MM of gain

Relationship• HBO distributes SPE channels in region

• HBO licenses ~$50MM of content from SPE annually

• SPE provides ad sales for HBO channels in Brazil

Potential Protections• If SPE retains an ownership interest

– Retain board seat with decreased governance

– Receive a put on remaining stake

• If SPE sells entire stake

– SPE will have a long-term contractual relationship for HBO to distribute our channels

Cash and Gain Structural Considerations

($MM) Retain 10% Full Sale

Valuation $680 $680

SPE Interest Sold 19.4% 29.4%

Proceeds from Sale $132 $200

Book Value of Amount Sold $24 $37

Gain $108 $163

-- Confidential -- p. 8

Next Steps

-- Confidential -- p. 9

Appendix

-- Confidential -- p. 10

HBO CE P&L

[Sukhi to Provide]

-- Confidential -- p. 11

HBO CE Valuation

[Need DCF and Comps to Validate Price]