Spain DTT Initiative Update March 2, 2006 Spain

2 Executive Summary SPTI has the opportunity to become a significant player in terrestrial television in a major European market Opportunity to expand SET's footprint to Europe and operate a digital terrestrial television channel (DTT) in Spain through a partnership with VEO TV, a TV broadcaster owned by media group Recoletas (25%), Unedisa - owners of El Mundo newspaper (21%), electricity giant Ivervola (20%) and 4 other smaller investors SET would be predominantly a digital free-to-air channel with revenue driven primarily by advertising –Spain is experiencing strong growth in TV ad sales (15%), the highest of all western European markets in 2005 –DTT market poised for rapid expansion fueled by government incentives and mass-market level hardware pricing –Opportunity to build a $100MM revenue business in 6 years Strong strategic value to the Sony family – SPTI/MGM licensing, flat screen TV sales, interactive and mobile opportunities, and showcase for other Sony entertainment Projected deep watermark of $33.7MM, NPV of $23.4MM and IRR of 29%; Including estimated license fees for SPTI/MGM programming: deep watermark of $26.3MM, NPV of $48.3MM and IRR of 42% Request approval to close deal with VEO TV and prepare for launch

3 Spanish TV Market Overview Due to low Pay TV penetration, terrestrial broadcasters still capture 98% of TV advertising expenditures La SextaCuatroTele 5Antena 3 Analogue groups La Primera New Televisa Group La 2 5 major stations and additional public regional channels dominate current free-to-air TV market landscape; a new Televisa-led consortium was recently granted new terrestrial broadcasting license to launch La Sexta and vie for market share All broadcasters to convert from analog to digital (DTT) distribution by 2010, when analog will be shut down –21 DTT licenses have been granted, with 12 additional to be distributed post analog shutdown for a total of 33 channels –DTT access will be available through DTT and pay TV set-top boxes as well as flat screen TVs with integrated DTT decoders Spain 2005 Population: 43 MM TV HH’s: 13 MM Pay TV HH’s: 2.5 MM DTT HH’s: 0.5 MM

4 DTT Market Development Spanish DTT market is expected to grow rapidly through numerous impetus Spanish government actively driving DTT roll-out through various promotional vehicles and also moved up analog shutdown by 2 years to 2010 Low price of digital set top boxes (retail price below €50) coupled with robust sales of DTT-enabled flat screen TVs set top box sales already doubled initial projections Pay TV platforms' set top boxes will also be DTT ready

5 Strategic Partner VEO TV is offering SPTI a carriage opportunity to operate one of its DTT channels VEO TV is owned by media group Recoletas (25%), Unedisa - owners of El Mundo newspaper (21%), electricity giant Ivervola (20%) and 4 other smaller investors VEO is 1 of only 3 new players granted DTT licenses while all other licenses have been distributed to the 4 major existing free TV broadcasters; future opportunities to launch a national terrestrial TV channel in Spain, if any, would be very limited Key proposed partnership terms include: –A firm 10-year commitment to operate the channel –Annual operating costs to VEO of appr. $5MM per year plus inflation to cover transmission costs, playout and marketing contribution –VEO participation fee of $2.4MM per year plus inflation, but payments will be deferred until DTT reaches 60% penetration of TV households –Fees related to future government mandated DTT upgrade costs, which may be appr. $1-$2.5MM per year, but won't start till 2008/2009

6 Programming Strategy SET Spain's programming to focus on feature and TV series Opportunity to exploit SPTI/MGM library and generate additional licensing revenue for SPE SET Spain can also be leveraged to improve buying power for AXN and diginets programming acquisitions

7 Summary Update Significant developments since November: Regulatory risks clarified and should be manageable DTT penetration progressing more quickly than anticipated; however intensifying competition driving up product license fees Agreement almost fully negotiated – launch scheduled for May 2006 Opportunity presents attractive returns; Recommend proceeding to finalize transaction

8 Legal Structure Update Regulatory risks exist but should be manageable DTT license issued to VEO requires that the license holder "directly operates" the channel which essentially restricts material outsourcing (including the activities contemplated to be performed by SPTI) The proposed carriage agreement with VEO may therefore be challenged by the local licensing authorities. If challenged, our position is not strong and we could be compelled to stop distributing the channel In recent months, other forms of outsourcing arrangements have been launched on DTT without being challenged Also, the current Spanish administration is very actively promoting DTT expansion, and therefore challenging quality, well-funded operators such as SPTI would be contrary to their liberal agenda A Draft Audio Visual Act now in circulation aims to permit outsourcing of editorial control, but if approved may still take months to enact Regulatory risks therefore exist; we have negotiated methods to mitigate potential issues

9 Deal Economics Update DTT penetration progressing more quickly than anticipated; however intensifying competition driving up product license fees (US$000s) November ReviewLatest Update Excluding SPTI / MGM License Fees: Including SPTI / MGM License Fees:

10 Next Steps Sony Corp. senior management approval Final documentation Prepare for launch