Consumption of entertainment content is up, but increasingly volatile Box OfficeTV Viewership Home Entertainment Transactions US Box Office (1) US$ Billions North American box office has grown at a CAGR of 4% over the last 10 years – However, price growth historically outpaced admissions growth and admissions are down year-to-date Usage per US TV household has steadily increased over the last 10 years – Incremental to this is consumption across additional platforms/devices (e.g., smartphones, tablets etc.) Home entertainment continues to fluctuate, influenced by competing forces – Decline in physical sell-through and shift to rental – Within rental, shift to subscription, kiosk and VOD models – Growth of digital (1)MPAA, BMO Capital Markets (2)Nielsen, and BMO Capital Markets (3)Adams Media Research / Screen Digest Includes video rental, video retail, cable/DBS/Telco VOD, online rental and online retail. Usage per US TV HH per Day (2) Hours:Minutes US Home Entertainment Transactions (3) Billions 1

New release sell-through continues to decline Domestic Sell Through Performance Against Box Office Across All Major Studios Quarter-on-Quarter % Change from CY to to to 2009 Q1 Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Q1Q to 2010 Source:Nielsen Home Scan, title-level analysis, major studios include Fox, Lionsgate, Paramount, SPHE, Universal, Warner, and Disney (includes distributed lines); box office adjusted for inflation and 3-D admissions Notes:All Q2 values are comprised of their actual sales volumes (no titles are forecasted.) Domestic new release sell-through box office factor is 35% below 2006 peak 2

Catalog sales are in steady decline U.S. Consumer Revenues for Catalog Films (1) ($B) Source:Nielsen VideoScan. Includes data from all major studios. Nielsen VideoScan revenue includes projections for all non-reporting retailers (e.g., WalMart) to estimate total national sales activity. (1) Catalog includes only those films with a theatrical release. (8%) (1%) (6%) (8%) (14%) Decline vs CAGR: (5%) $10.69$10.07$9.76 Average Price $10.88 Both discounted pricing and year-over-year volume decreases are contributing to the overall decrease in revenues – Through August 2010, catalog revenue is experiencing double-digit declines (16%) vs. the same period in

Brick-and-mortar transactions are expected to continue declining Kiosk and subscription transactions are projected to continue growing, accounting for the majority of total domestic rental transactions in 2014 VOD transactions are growing as well and expected to exceed brick and mortar rental transactions Studios are exploring options for shoring-up lower margin models (e.g., windows on Kiosk and subscription) and driving demand for higher margin VOD models Rental transactions are shifting to more convenient models Industry Average $ Contribution per Transaction (2) (1) Screen Digest VOD includes online, telco, MSO and DBS. (2) Morgan Stanley SPHE margins generally in-line with industry averages with exception of Redbox where SPHE margin is ~$1.10 vs. industry kiosk average of $0.95. (3) Brick and mortar (B&M) margin represents a weighted average of traditional DVD and Blu-ray rental margins. Weighting based on number of total domestic 2009 rental units consumed by format (i.e., 95% traditional DVD, 5% Blu-ray) per Morgan Stanley US Consumer Rental Transactions (B) (1) (3) 4

Impact on home entertainment distribution Brick and Mortar Retail Fastest Growth in Subscription and Kiosks Mass retailers are reducing HE shelf-space, the remaining space is being devoted to new-release at the expense of catalog, and there is downward price pressure on Blu-ray Pure “rentailers” are struggling to remain in business (e.g., Movie Gallery & Hollywood Video have closed and Blockbuster is on the brink of bankruptcy) Physical Media Remains Key; Digital Growing Consumers are turning to subscription (i.e., Netflix, Lovefilm) and kiosk (i.e., Redbox) channels due to a superior combination of convenience and value Lower margin subscription providers and kiosk services are expected to account for 75% of rental spend by 2014 Despite faster growth in digital revenues, traditional/physical revenue streams will remain significant for the next five years Improving home entertainment economics can be achieved by growing digital while seeking to drive adoption of higher margin physical models (e.g., Blu-ray) 5