1. ATTORNEY / CLIENT PRIVILEGED Confidential Draft Starz / Netflix Considerations FOR SONY INTERNAL USE ONLY November 2008

2. 1 Access Rules 1a. Separate User Payment to Opt-in for all Services besides Netflix Starz Play would require a separate brand, payment, and user action to add on. Advantages –In conjunction with deemed prices (on next page), increases likelihood of an end-user charge and downstream perception of “premium” service Disadvantages –Separate payment can be “gamed” with $0.01 add-on charges 1b. Separate User Action to Opt-in for Netflix Starz Play on Netflix will not require a separate charge. But access to Starz Play will require separate branding and affirmative user action to add-on. In other words, Netflix users do not automatically receive Starz Play unless they proactively opt-in Advantages –In conjunction with requiring Netflix to bundle on a higher tier, further narrows the universe of Netflix users with access to the Starz Play service Disadvantages –May not be necessary to ask for at highest tiers.

3. 2 Access Rules 2a. Premium Pricing Protection for Services other than Netflix Deemed Price - For a Service Including Pay 1, Pay 2 and Library A la carte or $4.99 tier$ 9.99 $8.99 tier$ 8.99 $13.99 tier $ 7.99 $16.99 tier $ 6.99 >$16.99 tier $ 5.99 Deemed Price - For a Pay 2/Library Only A la carte or $4.99 tier$ 5.99 $8.99 tier $ 4.99 $13.99 tier $ 3.99 $16.99 tier $ 2.99 >$16.99 tier $ 1.99 Advantages: –Starz Play may be bundled, but the pricing floor increases as the base tier gets cheaper Disadvantages: –Deal Risk for Starz: Starz may have trouble controlling price to consumer, which is set by Starz partners. Starz would have to pass through its obligations to Sony set out above

4. 3 Access Rules 2b. Premium Pricing Protection for Netflix Starz Play may only be bundled with the $16.99 or higher tier Advantages –Simple solution for ensuring offering is viewed as premium without requiring Netflix to “retrofit” an add-on charge into their model Disadvantages –Limits Netflix ability to offer more broadly on an a la carte basis or as an add-on to lower tiers –Need to discuss mechanism for enforcing this

5. 4 Deemed Price / Revenue Share Model Sony receives the greater of a Deemed Price Calculation and Sony’s Share of 60% of any Flat Fee Starz receives Subscriber Definition For Netflix – Anyone that has gained access to Starz Play by: 1.Subscribing to the Netflix $16.99 tier or higher 2.AND, Proactively opting-in to gain access For those other than Netflix – Anyone that has gained access to Starz Play by: 1.Paying for access to the service Deemed Price Calculation For Netflix: –Sony Share X 60% X $4.99 X Subscribers X Starz Share –Starz Share is assumed to be 60% X $4.99 For those other than Netflix –Sony Share X 60% X Deemed Price (See 2a.) X Subscribers X Starz Share –Starz Share is assumed to be 60% X (the greater of deemed price or actual price) * The 60% share could be reduced, eg, to 50% for a full service and 40% for a Pay 2/Library only service Sony’s Share Definition 1.Sony Title Share -- Number of Sony Titles in the Offering / Total Titles in the Offering, OR 2.Sony Usage Share -- Number of Sony Movies Viewed on Starz Play / Total Movies Viewed (may be more volatile on upside and downside)

6. 5 Other Considerations As a working team, we should discuss the potential need to forgo the Deemed Price Calculation and work with a straight revenue share Advantages Reduced deal risk for Starz because (a) Sony isn't paid based on actions such as usage and opt-ins beyond Starz' control and (b) Starz has flexibility to price based on where market is in a given year (i.e., lower in early years, higher in out years) Sony Upside: Sony would rely on Starz' self interest to cut the best deals possible. Disadvantages Starz may cut a bad deal Deal risk for Starz: if Disney/others insist on a different apportionment mechanism, then Starz could come out underwater

7. 6 FINANCIAL EXAMPLES

8. 7 Netflix Example

9. 8 Theoretical Service