1. TitleAcquisition of Additional Shares in MSM India Investment Destination IndiaPresenter (Division) SPE AttendeesAndy Kaplan, Dave Hendler, Drew Shearer, Jim Underwood, Janet Tsai Dargan and Mark Rogers Investment Amount Latest planBudgetMid range plan $311MM for 38%N/A ScheduleInvestment CommitteeGp Exec Committee or Elec Mgt Committee Equipment order placement N/A Date: 6 October 2011 Date: 12 October 2011 Date: / / / Purpose SPE seeks deliberation of the following transaction in relation to Multi Screen Media (“MSM”) in India: -Increase SPE’s MSM shareholding from 62% to 100% by acquiring a 38% minority stake from Grandway/Atlas and Captial Group for $311mm. And Such deal will not be closed until FYE13 with associated payments to be made in FYE13 – FYE16.. -Obtain a Sony Corporation/SGTS credit enhancement (Sony guarantee) for a portion of the total deferred purchase price ($121MM of the total $167MM deferral). Investment Summary [Has legal reviewed this?] Increased ownership of MSM would provide SPE substantially more flexibility in directing MSM’s operations and in growing and expanding the business. SPE would gain control over all decisions that the minorities can currently veto, such as executive appointments, new channel launches and strategic expansion into other fast-growing regions of India. Along with their right to block investments, minorities have an inability to fund their pro rata share of these investments and so have hindered MSM’s growth and strained the partnership. Full ownership by SPE would allow management to pursue strategic growth opportunities, without the burden of a partner who is unable or unwilling to participate. Also, as part of the purchase, SPE will require one of the litigious partners, Grandway/Atlas, to release and settle past and future claims against Sony and its subsidiaries including the current litigation. SPE currently consolidates MSM’s financial results, therefore revenue and EBIT recognition will not change as a result of the proposed acquisition. However, SPE will benefit from increased asset appreciation since the minority stake is expected to grow in value. SPE will also benefit from increased future cash flow since once the current debt is repaid (estimated in to be repaid in FYE16), SPE will retain an additional 38% of cash flow in dividends that would otherwise be payable to the minorities through dividends. Purchase of the minority stake will also improve Net Income Attributable to Shareholders since non-controlling interest expense will be avoided. If SPE were to include other replace the current minority partners, new minority partnersthey will likely require significant influence or approval over hire or fire of the CEO as well as exit rights in the future. These exit rights are expected to will require an IPO of MSM or that Sony purchase the minority stake via a Put and/or Call right and likely at a much higher value estimated to be $450MM – [$650MM] in 3 – 6 years. Financial Summary EBIT/OI: SPE already consolidates MSM India; therefore EBIT recognition will not change. CASH OUTLAY: Total commitment of $311MM payable $144MM FYE13, $59MM FYE14, $58MM FYE15 and $50MM FYE16. The post-tax IRR and payback period are estimated at [27%] and 8 years. Contacts NameDrew ShearerDivisionSPT Tel+1 310 244 8964Fax+1 310 244 1244e-mail Drew_Shearer@spe.sony.com Investment Committee Application Contact: Investment Committee Secretariat Tel. +81-3-6748-2307 (Ext.9-308-2307) e-mail. gh-keiki-toushi@jp.sony.com No.