1. Investment Managers: Jionghan Dai Tyler Haida Joseph Kim Layla Liang Meiling Liu

2. Agenda Company Introduction Stock Market Prospects Macroeconomics Industry Analysis Competitor Analysis Company Analysis Valuation Recommendation

3. VIACOM

4. National Amusements Inc. (NAI) CBS Corp. VIACOM Ownership of VIACOM Sumner M. Redstone Exec Chairman and founder of Viacom and CBS Chairman of Board of NAI NAI has Voting Rights for both companies Private Investment Arm Sister Companies NAI is 80% owned by Sumner Redstone, and 20% by his daughter. They both have control over CBS and Viacom through voting shares. Data Source: VIACOM 2011 10K, Forbes List of Wealthy People

5. Stock Market Prospect Class A & Class B Data Source: Yahoo Finance

6. Stock Market Prospect Benchmarking against Peers Data Source: Yahoo Finance

7. Macroeconomic Factors Age group (5-24) Consumer Confidence Index Leisure Time Availability Disposable Income Financial Crisis Data Source: IBIS Industry Report

8. Supply Chain in the Entertainment & Media Industry Studios Creation of content GE’s Universal Studios, Disney’s Pixar, Dreamworks Animation Distributors Market and distribute content Time Warner’s Warner Brothers, Lionsgate Entertainment, Viacom Retailers Sell and deliver content directly to consumers Best Buy, Blockbuster Data Source: Investopedia Show Biz Industry Analysis

9. Industry Analysis Growth Forecast Little growth in cinema attendance Mixed growth in Home Media Slow growth in broadcast TV ; Growth in satellite and cable pay or subscription TV bringing in TV license fee At most 2% growth in theater in the next 5 years, 0 growth in TV production and about 1.5% growth in TV subscription Data Source: IBIS World

10. Industry Analysis Market shares Data Source: IBIS World Global Movie Production Viacom (Paramount): 3.5% TV Production Viacom: 23.3% Cable Networks Viacom: 13.4%

11. Rising production cost Tech trend: HD Blu-ray as standard; Smart phones, iPods and iPads; Movie download; Digital broadcasting Medium but growing concentration Vertically integrated industry structure “Low barrier of entry” High risk in ROI (Piracy issues) Potential Cannibalization of cinema by TV& Digital Distribution Industry Analysis Characteristics and trends Data Source: IBIS Movie Production Industry Report

12. Key Competitors CBS Corporation (CBS) Comcast Corporation (CMCS) Walt Disney Co. (DIS) News Corp. (NWSA) Time Warner Cable Inc. (TWC) Time Warner Inc. (TWX)

13. Competitors Key Statistics CompanyMarket Cap. (in millions)Price Per Share VIA-B23,974.837.38 CBS16,128.116.84 CMCS59,147.020.04 DIS61,081.436.51 NWSA41,547.913.64 TWC18,447.861.54 TWX33,409.529.49 Data Source: Yahoo Finance

14. Relative Share Prices Data Source: Capital IQ

15. Key Statistics CompanyDebt/Equi ty P.E.G.Forward P/E BetaP/BVP/Sales VIA-B83%.6312.41.292.91.8 DIS20%.8414.21.41.7 CBS61%.6111.352.561.731.19 CMCS65%1.0612.161.031.321.22 TWC349%.8414.0.532.51.1 TWX60%.8613.21.231.11.3 NWSA55%.8110.34N/A ?1.581.26

16. Company Analysis Product Introduction Product Segments: – Media Networks (to advertisers, content distributors, and retailers) – Film Entertainment (motion pictures and television programs) Platforms: – Television, motion picture, Internet, and mobile Data Source: Viacom 2011 10-K

17. Company Analysis Revenue Breakdown Segments Revenue ($ in Millions) Data Source: VIA Results for the Quarter and Year Ended Sept 30, 2011

18. Breakdown of Topline Revenue Revenue Breakdown within Segments Breakdown of Operating Income Film Entertainment has smaller gross profit margins and are more volatile than those of Media Networks Data Source: VIA Revenue Breakdown from Bloomberg

19. Company Analysis Media Network Revenue Drivers Advertising – Strength of advertising markets and general economic conditions – Success of programming, measured by viewership – Seasonal variations (highest Sept-Dec) Affiliate fees – Stable multi-year agreements with operators with set rate increases – Program availability and variations Ancillary – Consumer spending and acceptance of products – Popularity of programming and volume of content available Data Source: VIA Results for the Quarter and Year Ended Sept 30, 2011

20. Company Analysis Film Entertainment Revenue Drivers Theatrical – Audience response (determinant) – Seasonal variations (highest Sept-Dec around holidays and summer) Home Entertainment – Number, timing and mix of home entertainment releases – Consumer tastes and consumption habits – Prominence given by distributors and retailers – Overall economic conditions and trends in discretionary spending TV and Digital License Fees – Consumer spending and acceptance of products – Popularity of programming and volume of content available Ancillary – Acceptance of theatrical content Data Source: VIA Results for the Quarter and Year Ended Sept 30, 2011

21. Business Strategy Investment in programming – “Content is King!” Sumner M. Redstone, Chairman/Founder of Viacom Grow film entertainment business – Strategically produce smaller slate of movies/year (~20), allocating 3-4 titles to franchise/brand movies Higher Margin Digital Distributors – Amazon, Hulu, Netflix Growing internationally Expanding into newer platforms

22. Company Analysis 2011 Highlights Media Networks Viewership ratings: How many “eyeballs” network captured —The 2011 Video Music Awards (VMAs) attracted the VMAs’ largest audience in MTV history —MTV Network (Jersey Shore) —Comedy Central earned double- digit ratings growth in September (The Roast of Charlie Sheen) —BET Networks achieved another record-breaking year of ratings —Centric (Second Year) double-digit viewer gains in the fourth quarter Film Entertainment Box office sales – Paramount is 2 nd to Disney’s Buena Vista with 18 films in the top 100 grossing films (from 1973-2011) – Top 5 studio makers (from 2006- 2011) Key Metrics for this content-driven industry:

23. Company Analysis Cable Subscription 2011 Data Source: VIA Results for the Quarter and Year Ended Sept 30, 2011

24. Company Analysis – Box Office 2011 Data Source: VIA Results for the Quarter and Year Ended Sept 30, 2011

25. Company Analysis Current News Listing on Nasdaq from NYSE due to cost efficiencies Change of fiscal year end to September 2011 Paramount Picture is set to integrate its DVD and Blu-ray disc sales unit along with its digital video licensing division to create a brand new division called the Home Media Distribution (As of Sept, 2011) Shift its staff from London to the Los Angeles unit Development of its own animation unit

26. Total Asset of Viacom(2011)

27. Financial Risk Interest Payable Debt Ratio is 32% (2012) Adjusted Debt Ratio(by Taking Out Goodwill and Intangible) is 65% Seems Safe from Financial Risk Unit: Mil. ($) Source: 10-K 2011

28. Capital Returns to Shareholders Stock Repurchase Program 7.2 Billion Dollars more will be used to repurchase Current Mar. Cap. for Class B Stock is 24.72 Bil. Current Shareholders will benefit from it, but it also shows that Viacom can’t find growth in its business

29. Capital Returns to Shareholders Dividend - Viacom started paying dividend from 2010. (Payout Ratio is 21% for 2011) - Along with Repurchase Plan, Current Shareholders will benefit from growth in Dividend Per Share - But we think dividend policy is another evidence that shows VIACOM can’t find growth in business

30. What about the business? Good cash-cow, but suspicious about its future growth The recently started dividend policy and repurchase agreement is an evidence that VIACOM can’t find growth in its business Also, absence of voting right will make the stock treated as preferred-stock or bond asset

31. Valuation

32. DCF/Multiple Valuation? VIA Full Voting Rights One Portion of Dividends Full Voting Rights Total Dividends Common Stocks VIA-B No Voting Rights The other Portion of Dividends

33. Synthesized Common Stock? VIA Full Voting Rights 1/11 of Total Dividends VIA-B No Voting Rights 1/11 of Total Dividends

34. Synthesized Common Stock? If we can … – DCF – P/E = (PA + 10 PB)/(11 EPS), multiple valuation But … – The company is repurchasing Class B stock – Very low trading volume of Class A stock

35. What we do For class A, difficult to evaluate voting rights premium For class B, treat it as preferred stock or annuity – Use dividend discount method – See excel file

36. Recommendation Stock value: $38.33 Stock Price: $44.76 Put it on watch list