A nnual Business Review Meeting October 2004 BRAZIL

2 Economic outlook f GDP (real growth rate, %) GDP per capita (US$)2,1833,0293,191 3,128 Exchange rate (Reais/US$) Inflation (y-o-y, %) Unemployment (%) Fiscal Balance (% GDP) Total External Debt (US$bn) Trade Balance (US$bn) Exports (fob, US$bn) Imports (cif, US$bn) Reserves (US$bn)

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5 SCREENS PER INHABITANT: exemples in the world

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8 ATP x Print Cost % Accum to 2004 (est)

9 ATP x Midia Costs % Accum. – 2000 to 2004 (est)

10 NEW LAW: A THREAT A law project is being prepared by the Ministry of Culture (MINC) creating the Audiovisual National Agency (ANCINAV) and it brings taxes increases in general. ANCINAV would be an organ to rule and fiscalize all the activity, including:

11 NEW LAW: A THREAT Theatrical, Home Entert., Pay and Free TV, internet and cel. Companies, regarding the transmission of the audiovisual content.

12 NEW LAW: A THREAT The project has the opposition of all important companies of Brazilian audiovisual, including producers, distribuitors, exhibitors, TV and Pay TV broadcasts and telecommunication companies. There is news that some Ministries are against the project.

13 NEW LAW: A THREAT In the Congress,several senators have already expressed their opposition. However, MINC has the support of the small producers and filmakers, which are many and articulated.

14 NEW LAW: A THREAT MINC has retreated several original proposals, but even though, the taxes remain high. The main taxes are: 1.3% over all the advertising campaigns in Free and Pay TV made in Brazil; 2.5% over the sales price of VHS and DVD;

15 NEW LAW: A THREAT 3.Percentage not defined yet over the TVs, videos and DVD players 4.3% over the remittance made by the Pay TV programmer(HBO, TNT, Disney, Warner, Sony, Fox, Cartoon, etc.) 5.Permanent amount before the importation of the master for the HE, Pay and Free TV markets.

16 NEW LAW: A THREAT 6. Permanent amount paid for the importation of internegative for theatrical market, according to the following table: Up to 10 prints: R$ 3,000 From 11 to 30 prints: R$ 6,000 From 31 to 80 prints: R$ 15,000 From 81 to 150 prints:R$ 30,000

17 NEW LAW: A THREAT From 151 to 300 prints: R$ 40,000 From 301 to 450 prints: R$ 60,000 More than 450 prints: R$ 80,000 7.Presently, the title pays, per media: R$ 3,000

18 NEW LAW: A THREAT It will cause a decrease on the number of prints with consequences for the theatres of the small towns and from the popular areas of the big cities. It will affect the growth of the number of screens in these areas and it will favour the concentration of the market in the big exhibitors.

19 NEW LAW: A THREAT The new taxes may cause an increase of de 6% in the total of the Release costs. Based on the BVI and Sony releases in 2003 and 2004, I estimate a general reduction of printing between 10 and 15%.

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23 Key Titles Released

24 Home on the range

25 King Arthur

26 The Village

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38 LOCAL PRODUCTION More and more the Brazilian films co-produced through the fiscal benefits, assume great importance for the Distributors; For Sony, in 2003, the Brazilian films represented 48% of the Gross Revenue and 84% of the Net Contribution, before overhead and royalties.

39 LOCAL PRODUCTION In 2004, despite of and due to the Spider-Man 2, the Brazilian films should represent 25% of the Gross Revenue and 35% of the Net Contribution before overhead and royalties. For BVI the estimate is that the Brazilian films released in FY 05 represent 25% of the Gross Revenue and 27% of the Net Brazil (before overhead and basics).

40 LOCAL PRODUCTION The local product benefits all the Line of Business and the company as a whole. For instance, although the release of Caminho das Nuvens in Brazil was not so well, it presents a positive forecast:

41 LOCAL PRODUCTION

42 LOCAL PRODUCTION Films and projects for the next years, including contracts executed, in process of being executed and operations not forward to Burbank yet: : in post-production; release in May 2005; 2.CASAMENTO DE ROMEU E JULIETA; in post-production; release in March 2005.

43 3. JOGO SUBTERRÂNEO (UNDERGROUND GAME):in post-production; release in March PERIGOSA OBSESSÃO (DANGEROUS OBSESSION): co-production with Patagonik; already released in Argentina; Release in Brazil in April A MÁQUINA (THE MACHINE): in post-production; release in October SÓ DEUS SABE (ONLY GOD KNOWS): co-production with Mexico. Shotting. 7. GOLEIRO (GOOL KEEPER): in pre-production, shooting in May/June. 8.MUITO GELO E DOIS DEDOS DE ÁGUA (A LOT OF ICE AND 2 FINGERS OF WATER): in development. Shooting Scheduled for September / October.

44 9. O ESPECTRO (THE GHOST): in development; shooting scheduled for the end of O MAGNATA (THE TYCOON): in development; shooting scheduled for QUALQUER GATO... (ANY CAT HAS A SENTIMENTAL LIFE HEALTHIER THAN OURS): In development; shooting scheduled for COLEÇÃO CAMISA 13 (COLLECTION SHIRT 13): Series of documentaries for video/DVD and TV about the 13 main soccer clubs in Brazil, each one directed by na important filmaker. Possible joint with ESPN and/or ESPN BRASIL. Objective: period pre World Cup 2006.