[PPT] - HBO Latin America Group 2010 Budget 2010 Budget Coral Gables, PowerPoint Presentation

SLIDE 1

HBO Latin America Group 2010 Budget 2010 Budget

Coral Gables, Florida Coral Gables, Florida Tuesday, November 10 Tuesday, November 10 th

th, 2009

, 2009

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2

HBO LAG Finance Committee Meeting Agenda HBO LAG Finance Committee Meeting Agenda

Economic Outlook

Jose Gonzalez

YTD Financials

Nelson Mendoza

Budget Overview

Nelson Mendoza

Revenues
Affiliate Revenues

Giovanna Fronduto

Other Revenues

Giovanna Fronduto

Service Fees

Nelson Mendoza

Programming
Amortization

Nelson Mendoza

Acquisitions & Original Production

Nelson Mendoza

Sales & Marketing

Nelson Mendoza

Staff

Dennis O’Sullivan

Other Expenses (Net Ops, G&A, Other)

Other Expenses (Net Ops, G&A, Other) Nelson Mendoza

CAPEX

CAPEX Nelson Mendoza

Financing

Jose Gonzalez

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Economic Outlook

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4

Latin America Economic Outlook Latin America Economic Outlook

Overview of Region

Estimated regional GDP 2010: 2.9 to 3.6% growth 2009: contraction of 1.7 to 2.5% Signs of recovery Improving industrial production & domestic demand Rebound of commodity prices Improving capital flows

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Latin America Economic Outlook Latin America Economic Outlook

Political Overview

Upcoming Elections Uruguay – October 25, 2009

Resulted in November 29 run-off election

Honduras – November 29, 2009 Bolivia – December 6, 2009 Chile – December 11, 2009 Colombia – May 2010 Brazil – October 2010 Argentina: change in government majority

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Latin America Economic Outlook Latin America Economic Outlook

GDP % YOY 2007 2008 2009 2010 Actual Actual Forecast Forecast Argentina 8.7% 7.0%

1.3%

1.5% Brazil 5.4% 5.1%

0.5%

4.0% Mexico 3.3% 1.3%

7.1%

3.0% Venezuela 8.4% 4.8%

2.7%
0.8%

Sources: IMF, Latin Trade, Latin American Monitor, Bank of America

Regional growth (3.2%) expected modest compared to 2004 – 2008 (avg.

5.46%)

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Latin America Economic Outlook Latin America Economic Outlook

Argentina figures reflect unofficial non-government estimates

(questions persist regarding legitimacy of government figures)

Likely Venezuela declared hyperinflationary for US GAAP

Inflation % YOY 2007 2008 2009 2010 Actual Actual Forecast Forecast Argentina 10.9% 16.3% 23.0% 21.5% Brazil 3.6% 5.7% 5.3% 4.3% Mexico 4.0% 5.1% 5.6% 3.6% Venezuela 18.7% 30.4% 32.6% 35.0% Sources: IMF, Latin America Monitor and Bank of America

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Latin America Economic Outlook Latin America Economic Outlook

Premium over US Treasury bond yield (%) Oct-08 Jul-09 Oct-09 Argentina 18.78% 9.76% 7.21% Brazil 6.88% 3.50% 2.40% Mexico 6.04% 2.12% 1.93% Venezuela 18.04% 11.83% 8.83% Source: JP Morgan Chase EMBI+ Index

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Latin America Economic Outlook Latin America Economic Outlook

Chile unemployment at five-year high
Colombia unemployment three-year high
Mexico unemployment at record levels

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Latin America Economic Outlook Latin America Economic Outlook

Venezuela

Q2 2009 GDP: 2.4% decrease y-o-y Inflation: 28.9% y-o-y in September 3 year inflation rate of 102.1% (fifth consecutive month > 100%)

Highest expected inflation in the world over next five years (IMF)

IFRS discussion if parallel market rate is a more meaningful FX rate for financial reporting

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Latin America Economic Outlook Latin America Economic Outlook

Venezuela

CADIVI increased allocations of USD for Q3 2009 to $7.7B Still below demand

$10B imports in Q2 2009
14% lower than worst quarter in 2007 or 2008

Lack of USD contributed to 8.5% decline in manufacturing output in Q2 2009

Recent USD bond issues attempt to narrow spread of parallel rate to 3.4 – 3.6 (resulted in rate of approximately 5.25)

$5B sovereign debt $3.26B PdVSA

BsF/US$

1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 Parallel Market Official Rate

Recently approved

legislation will allow central bank to trade PdVSA bonds - another attempt to influence parallel rate

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Latin America Economic Outlook Latin America Economic Outlook

Venezuela

Proposed Audiovisual Law – Definition of “National Producers”

Cable programmers with more than 30% of content produced in Venezuela considered a “national producer” Must carry certain programming, including Presidential addresses (“cadenas”) Proposed Reforms to Labor Law Work Day

6 hours of work (42 hours max per work week)
Overtime hours limited to 2 per day and 80 per year
Management member may not work more than 10 hours per

day

Increase in bonus pay (to 60%) for employees working

Sundays or holidays Prohibition of dismissal without cause Change in calculation of severance benefits

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Latin America Economic Outlook Latin America Economic Outlook

Venezuela

Expropriation of Margarita Island Hilton Hotel Complaint against cable operators Filed with CONATEL in Oct 2009 by a consumer group associated with local channels against Intercable, DirecTV, Supercable, Cable Corp, Net-Uno, Cabletel, Cablevisión and Omnivisión Requests

Price regulation of cable TV service
A la carte packages for basic channels
Only CONATEL approved channels may be distributed
License agreements must be registered with CONATEL and subject

to Venezuelan laws and jurisdiction

At least 50% of programming lineup to include national channels

Ranked 177 of 183 economies in World Bank’s 2010 Doing Business report

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Latin America Economic Outlook Latin America Economic Outlook

Argentina

Recent economic data

Q2 2009 GDP: decrease of 0.8% September 2009 y-o-y Inflation:

INDEC official CPI: 6.2%
Provincial CPI: 9.1 – 13.6%
Analyst estimates: 13.25%

Government recently announced intentions to improve INDEC’s collection and calculation methodology Conciliatory stance with debtors, IMF Stated willingness to reopen debt swap of $20B in defaulted bonds and repay $6.7B owed to Paris Club creditors May allow IMF review of economy and policies

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Latin America Economic Outlook Latin America Economic Outlook

Argentina

New Law on Audiovisual Communication Services Signed into law October 10, 2009 (implementing regulations

pending) Registration requirement

Must register in public registry
Must appoint a local agent and establish legal domicile

Content regulation

Limit of 6 minutes per hour for commercials; no

commercials on premium channels

Infomercials – hours to be established by authority
Programming during 06:00-22:00 must be suitable for all

persons (premium channels excepted)

Programmers airing > 50% fiction programming must use

0.5% of revenue annually to purchase local product

5% tax on Ad Sales

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Latin America Economic Outlook Latin America Economic Outlook

Brazil

Recent economic data Q2 2009 GDP:

Decrease of 1.2% y-o-y
1.9% increase from Q1

September 2009 inflation: 4.3% y-o-y September 2009 unemployment: 7.8%

Lowest level since October 2008
738K net jobs created in Q2 2009

2% financial transaction tax on foreign investments in Brazilian stocks and fixed-income securities Effective October 2009 Attempt to rein in strengthening real

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Latin America Economic Outlook Latin America Economic Outlook

Mexico

Recent economic data GDP

Q3 2009: 2.7% increase from Q2 (6.4% decrease y-o-y)
Q2 2009 GDP contraction of 10.3%

4.89% inflation in September 2009 y-o-y

Slowest increase in 17 months
8th decrease in 9 months this year

735K jobs lost year to date August remittances down 13% y-o-y Auto production down 40% 2010 Budget includes Income tax increase to 30% (from 28%) 3% luxury tax on cable operators 1% VAT increase (to 16%) 1% increase on bank deposit tax (to 3%)

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Latin America Economic Outlook Latin America Economic Outlook

FX Assumptions

2010 2009 2010 Spot Rate Budget Reestimate Forecast* Actual** Argentina 4.50 4.00 4.21 3.82 Brazil 1.90 2.40 1.77 1.77 Mexico 13.92 15.50 12.51 13.22 Venezuela 3.18 2.50 3.21 2.15 * Sources: Bank of America Securities and Latin America Monitor ** Spot rates as of November 2, 2009. Source: Bank of America Securities

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Latin America Economic Outlook Latin America Economic Outlook

FX Volatility

Actual Volatility (%)

20.00%
15.00%
10.00%
5.00%

0.00% 5.00% 10.00% Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 USD/ARS USD/BRL USD/MXN

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Latin America Economic Outlook Latin America Economic Outlook

Key Economic Factors that May Impact HBO LAG Business

Regulatory

Exchange controls in Venezuela Telecommunication laws in Argentina and Venezuela Luxury tax on cable TV in Mexico

Inflation

Impact on costs in Venezuela

Hyperinflation in Venezuela

FX Rates

Rate volatility

Impact on revenues (Argentina, Brazil, Mexico) US GAAP adopting parallel rate for financial reporting

Commodity prices
Mexico drug war

SLIDE 21

September 2009 YTD Results & 2009 Budget Overview

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September 2009 YTD Operational Highlights September 2009 YTD Operational Highlights

Operational Highlights Operational Highlights – Capadocia receives 3 International Emmy nominations for Best Drama Series, Best Leading Actress, Best Leading Actor. – HBO LAG Original Production receive awards:

Alice: Monte Carlo Television Festival
Capadocia: Geneva TV & GLAAD

– Completed exhibition of Epitafios II & Sexo Urbano. – HD launched with Sky Brazil & DTV Panamericano. – Production of Capadocia II begins. – Marketing activities for premiere of FDC II (exhibition Oct 2009). – Warner output deal agreed in principle. – Mulher de Fases approved by Ancine (Q4 highlight) Financial Highlights Financial Highlights – Major currency impacts:

Net currency gains on collection in Brazil & Argentina ($1.2M)
Currency devaluation impact on revenues in Mexico ($2.0M).
Gain on bond transactions ($1.5M).

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2009 September YTD Variance Analysis 2009 September YTD Variance Analysis Revenues higher than Reestimate Revenues higher than Reestimate

Revenues higher than Reestimate due to increased

subscribers and exchange rates.

Ad Sales better than Reestimate due to exchange rates. Ad

sales recorded at minimum guarantee.

Original Production revenues above Reestimate due to timing
f sale Epitafios II ($520K), DVD sales of Capadocia ($10K)

and boxing ($5K).

Service Fee revenues above Reestimate ($861K) due to

higher basic channel distribution fees ($140K) and additional services requested by channels ($640K). Additional services include downlink ($98K), decoders ($78K) and regional office support ($464K).

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2009 September YTD Variance Analysis 2009 September YTD Variance Analysis

Expenses higher than Reestimate Expenses higher than Reestimate

Programming higher than Reestimate due higher EBU’s ($7.7M), offset by timing
f MEGA title ($1.9M) and non movie exhibitions ($175K). Savings on second

season of La Liga en Accion ($114K).

Cost of Licensing is higher due to timing of sales of Epitafios II and Capadocia

DVD’s.

Marketing lower due to timing delays with Research ($344K), Media ($261K),

Affiliate Marketing ($259K), Consumer Marketing ($230K), website development ($114K) and public relations ($62K). Delays associated with the timing of exhibition of LAG Original Productions.

G&A higher due to rent increases, higher utilities and office supplies.
Bad debt release associated with collection of past due balances.
Staff expenses higher due to foreign exchange ($1.3M), basic channel staff

($165K), timing of social security taxes ($161K) and freelancers ($123K).

Other income higher due to gain on bond transactions ($1.5M), gain on Brazil

collections ($1.3M). These are offset by loss on Argentina collections ($100K) and revaluation of tax assessments in Brazil ($220K).

Taxes are above due to higher affiliate revenue, timing of Ancine credits ($2.2M),

VAT accruals in Venezuela ($391K), higher VAT in Brazil due to higher service fees ($190K).

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YTD 2009 September Actual vs. Reestimate YTD 2009 September Actual vs. Reestimate

Variance Gross Revenue Affiliate Cable $ 140,879 $ 137,298 $ 3,581

3%

DTH 91,894 87,755 4,139

5%

Total Affiliate Gross Revenue 232,773 225,053 7,720

3%

Original Production/TV Rights 798 263 535

203%

Ad Sales 6,175 5,636 538

10%

Service Fees 23,136 22,275 861

4%

Total Gross Revenue 262,881 253,227 9,655

4%

Operating Expenses Programming 125,753

48%

121,092

48%

4,661

4%

Cost of Licensing 597

0%

154 443

288%

Sales 3,220

1%

3,447

1%

(228)

7%

Marketing 12,850

5%

14,050

6%

(1,199)

9%

Network Operation 8,616

3%

8,617

3%

(1)

0%

General & Administrative 8,099

3%

7,793

3%

307

4%

Bad Debt (398)

0%

(183)

0%

(215) Staff Expenses 38,175

15%

36,432

14%

1,743

5%

Leasing Expenses 263

0%

251

0%

12

5%

Depreciation 4,919

2%

5,003

2%

(83)

2%

VAT, Property, and other Taxes 2,439

1%

1,720

1%

719

42%

Total Operating Expenses 204,534

78%

198,375

78%

6,159

3%

Other (Income)/Expense (3,828)

1%

(1,237)

0%

(2,591)

209%

Operating Profit (Loss) 62,176

24%

56,089

22%

6,087

11%

Taxes Condecine 2,022

1%

1,025

0%

997 Withholding & Income Taxes 29,447

11%

27,670

11%

1,777

6%

Net Profit (Loss) $ 30,707

12%

$ 27,394

11%

$ 3,313

12%

Actual Reestimate 2009 2009

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YTD 2009 September Actual vs. Budget YTD 2009 September Actual vs. Budget

Variance Gross Revenue Affiliate Cable $ 140,879 $ 131,314 $ 9,565

7%

DTH 91,894 81,833 10,061

12%

Total Affiliate Gross Revenue 232,773 213,147 19,626

9%

Original Production/TV Rights 798 1,840 (1,042)

57%

Ad Sales 6,175 5,567 608

11%

Service Fees 23,136 20,720 2,416

12%

Total Gross Revenue 262,881 241,273 21,608

9%

Operating Expenses Programming 125,753

48%

109,526

43%

16,227

15%

597

0%

1,527

1%

(930)

61%

Sales 3,220

1%

3,710

1%

(490)

13%

Marketing 12,850

5%

15,261

6%

(2,411)

16%

Network Operation 8,616

3%

8,680

3%

(64)

1%

General & Administrative 8,099

3%

7,914

3%

186

2%

Bad Debt (398)

0%

(398) Staff Expenses 38,175

15%

34,685

14%

3,490

10%

Leasing Expenses 263

0%

241

0%

22

9%

Depreciation 4,919

2%

4,994

2%

(74)

1%

VAT, Property, and other Taxes 2,439

1%

1,608

1%

831

52%

Total Operating Expenses 204,534

78%

188,146

74%

16,388

9%

Other (Income)/Expense (3,828)

1%

(573)

0%

(3,255)

568%

Operating Profit (Loss) 62,176

24%

53,701

21%

8,475

16%

Taxes Condecine 2,022

1%

1,867

1%

155 Withholding & Income Taxes 29,447

11%

25,223

10%

4,223

17%

Net Profit (Loss) $ 30,707

12%

$ 26,610

11%

$ 4,097

15%

Actual Budget 2009 2009

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YTD September 2009 vs. YTD September 2008 YTD September 2009 vs. YTD September 2008

Variance Gross Revenue Affiliate Cable $ 140,879 $ 136,138 $ 4,741

3%

DTH 91,894 79,909 11,985

15%

Total Affiliate Gross Revenue 232,773 216,047 16,726

8%

Original Production/TV Rights 798 963 (164) Ad Sales 6,175 5,286 889

17%

Service Fees 23,136 21,448 1,688

8%

Total Gross Revenue 262,881 243,743 19,138

8%

Operating Expenses Programming 125,753

48%

99,857

41%

25,895

26%

Cost of Licensing 597

0%

890

0%

(293)

33%

Sales 3,220

1%

3,162

1%

57

2%

Marketing 12,850

5%

11,427

5%

1,424

12%

Network Operation 8,616

3%

8,794

4%

(178)

2%

General & Administrative 8,099

3%

7,628

3%

471

6%

Bad Debt (398)

0%

327

0%

(725)

222%

Staff Expenses 38,175

15%

36,336

15%

1,839

5%

Leasing Expenses 263

0%

337

0%

(74)

22%

Depreciation 4,919

2%

4,536

2%

383

8%

VAT, Property, and other Taxes 2,439

1%

2,033

1%

405

20%

Total Operating Expenses 204,534

78%

175,329

72%

29,205

17%

Other (Income)/Expense (3,828)

1%

(1,684)

1%

(2,144)

127%

Operating Profit (Loss) 62,176

24%

70,099

29%

(7,923)

11%

Taxes Condecine 2,022

1%

2,022

1%

Withholding & Income Taxes 29,447

11%

26,165

11%

3,281

13%

Net Profit (Loss) $ 30,707

12%

$ 43,934

18%

(13,227)

30%

Actual Actual 2009 2008

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2010 Budget Overview

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29

2010 Budget Overview 2010 Budget Overview Revenues: Revenues: Continue growth in Affiliate (subscribers and exchange rates), Original Production & Ad Sales revenue. Offset by lower service fees. Expenses: Expenses: Higher due to increased Programming, Marketing & Staff

expenses. High profile HBO original productions.

Cash Distribution: Cash Distribution: Estimated $30.9. Increased CAPEX and Original Production

2010 2009 Budget Reestimate Variance Revenues 380.8 $ 340.8 $ 40.0 $ Operating Expenses 296.9 255.3 41.5 Taxes/Other 32.7 35.5 (2.8) Net Income 51.3 50.0 1.3 Cash Distributed from 2008 4.3 12.2 (7.9) Cash Distributed from 2009 30.9 36.4 (5.5) Total Cash Distribution/Declaration 35.2 48.6 (13.4)

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2010 Budget vs. 2009 Reestimate 2010 Budget vs. 2009 Reestimate

(in US$ unless otherwise indicated)

Variance Gross Revenue Affiliate Cable $ 196,444 $ 183,265 $ 13,179

7%

DTH 143,448 118,274 25,173

21%

Total Affiliate Gross Revenue 339,891 301,539 38,352

13%

Original Production/TV Rights 3,037 2,618 419

16%

Ad Sales & Sponsorships 8,075 7,492 583

8%

Service Fees 29,809 29,160 649

2%

Total Gross Revenue 380,813 340,808 40,004

12%

Operating Expenses Programming 177,170

47%

150,702

44%

26,468

18%

Cost of Licensing 1,899

0%

2,474

1%

(575)

23%

Sales 4,727

1%

4,769

1%

(42)

1%

Marketing 23,311

6%

17,994

5%

5,317

30%

Network Operation 13,597

4%

11,517

3%

2,079

18%

General & Administrative 12,146

3%

10,309

3%

1,837

18%

Bad Debt

0%

() Staff Expenses 52,590

14%

48,066

14%

4,524

9%

Leasing Expenses 206

0%

311

0%

(105)

34%

Depreciation 9,080

2%

7,032

2%

2,048

29%

VAT, Property & Sales Tax 2,143

1%

2,151

1%

(8)

0%

Total Operating Expenses 296,869

78%

255,325

75%

41,544

16%

Other (Income)/Expense (44)

0%

(1,250)

0%

1,207

97%

Operating Profit (Loss) 83,988

22%

86,734

25%

(2,747)

3%

Taxes Condecine, W/H and Income Tax 32,707

9%

36,730

11%

(4,023)

11%

Net Profit (Loss) $ 51,280

13%

$ 50,004

15%

$ 1,276

3%

Budget Reestimate 2010 2009

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31

2010 Risks & Opportunities 2010 Risks & Opportunities

Risks: Risks:

Currency Volatility
Customer Impacts
Debt of customers
Poor Treasury habits (foreign exchange losses)
End of buy through in Brazil (short term).

Opportunities: Opportunities:

Recession is short term
End of buy through in Brazil (long term).

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Affiliate Sales

SLIDE 33

33

Agenda Agenda

2009 Highlights Budget 2010 Key Variables Budget Premises Affiliate Revenue Subscribers Basic and Premium Distribution Variance Analysis: Budget vs. Reestimate DTH Affiliate Revenue by Region Southern Cone Mexico Central America Andes Caribbean Brazil

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34

2009 Highlights 2009 Highlights

Pay TV market has been growing at higher rates than last year but in the low entry

level packages. Many operators have created new offers to target customers with a lower socioeconomic status (SES). Satellite platforms facing difficulties competing against bundled offers by cable

perators and telecommunication companies.

Telecommunication Companies’ new operations:

Oi Brazil Telmex/America Movil Peru Dominican Republic Central America Flow – Trinidad and Grenada Wireless Communication– St. Marten

FOX platform considerably stronger competitor as now can offer Premium and basic channels,

with distribution of CineCanal (premium and basic), MovieCity, City buy, City star, City max and City family.

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35

Brazil:
Lower subscribers than expected in Brazil mainly due to:

Net Servicios finalizing the digitalization process. No effort oriented to HBO growth due to the proximity of the end of buy through (EOB). Telefonica CAPEX constraint and lack of focus in TV due to the low margin in this segment. Several migration processes to a buy through offer: TV Filme acquired by SKY; Vivax and Big TV acquired by Net. More competition due to Telecine increasing an already aggressive marketing investment due to the end of the buy through. Several

affiliates may choose to launch Telecine affecting our penetration and growth.

Mexico:
Successful launch of Dish Networks
Megacable digitalization process resulted in an increase in premium subscribers.
Greater increase in revenues than in subscribers mainly due to:
Brazil and Venezuela F/X:
One time events:

DirecTV Settlement results: $728K NEO Settlement results: $480K Millicom minimum guarantee: $480K TV Cable Ecuador audit results: $395K Sky Brazil HD launching exclusivity period fee: $500K TDS Curacao: $313K

Jan. - Sept.

2009 Avg. Reestimate 2009 Brazil 2.08 2.40 Venezuela 2.15 2.50

Sept. 2009
Dec. 2008
Dec. 2007

60,333 37,709 39,412

2009 Highlights 2009 Highlights

SLIDE 36

Budget 2010

SLIDE 37

37

Budget 2010 Budget 2010

Financial impact of global crisis has not affected Latin American region as hard as

expected. There has been general economic growth.

For budget purposes, some fluctuations are being considered. Brazil, Chile and Colombia are being profiled as the most robust economies. Mexico and Argentina continue to be very volatile. Venezuela – Economic instability due to uncertainty in governmental decisions.

Key Variables

Budget 2010 Actuals

Jan. - Sept.

2009 Avg. Budget/ Reestimate 2009 Brazil 1.90 2.08 2.40 Colombia 2,099.00 2,278.02 2,500.00 Argentina 4.50 3.70 4.00 Venezuela 3.18 2.15 2.50

SLIDE 38

38

Budget incorporates Cinemax in basic
Channel has three different types of distribution considered in budget.

Cinemax Basic already distributed in Colombia, Venezuela and Argentina with no impact on

revenues.

MAX transitions to premium distribution and the Cinemax in basic enters the market with a new rate

in regions such as Chile and Peru.

New distribution for Cinemax in basic in affiliates such as Oi Brazil, Embratel (Telmex Brazil) and

DTV Pan American and DISH.

Brazil:
End of buy through in November of 2009 opens a significant opportunity in the mid and long term, although

there are some current issues that are being considered:

Rate erosion for SKY and NET although budget includes a significant amount of new subscribers. Penetration can be affected by the distribution of Telecine in platforms where HBO is already

distributed (such as TVA).

TVA/Telefonica is considered as one platform.
Launch with Embratel (Telmex DTH platform).
Full year impact of launching Oi Brazil: $2.2M and 42K HBO YE subscribers.

Budget Premises

SKY: NET: 2010 Projected YE subscribers Latest subscriber report Variance 2010 Projected YE subscribers Latest subscriber report Variance 515 444 71 510 434 76

Budget 2010 Budget 2010

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39

Mexico:
Televisa continues to consolidate the market by acquiring more operations and increasing its control of the market. May acquire

Megacable in 2010 giving them control of about 60% of the revenues in the market.

Aggressive growth from Cablevision and Megacable: Full Year impact of DISH: $4.3M

Pan American:
Argentina:

Launched Red Intercable New telecommunications law has been approved. Argentine government is in the process of drafting the final regulation.

Revenue impact remains unclear until said regulation is completed.

Futbol and Cinecanal have moved to basic distribution jeopardizing the growth of premium business.

Venezuela:

Political environment affecting cable operators. Cable operators are unable to get households (set top boxes) due to the restrictions on U.S. Dollars. Government has imposed limitations on promotions offered by cable operators.

Central America:

Strategic alliance with Claro TV with the objective of combating the under reporting of subscribers and pirating and move

toward total digital distribution and a cleaner subscriber base.

Due to said alliance, some affiliates are not considered in budget since no agreement has been reached (have not

wanted to accept the subscriber increase).

Chile/Peru:

Key affiliates have advanced digitalization network creating the base to initiate the transition of HBO/MAX from basic to

premium.

Pan Regional:
HD and SVOD business materialized in 2009 and is projected to continue growing throughout 2010 by using it as a tool to adjust

rates and/or enhance package offerings.

Budget Premises

Cablevision: Megacable: 2010 Projected YE subscribers 2009 Reestimate YE subscribers Variance 2010 Projected YE subscribers 2009 Reestimate YE subscribers Variance 120 100 20 110 58 52

Budget 2010 Budget 2010

SLIDE 40

40 Affiliate Revenue

Budget revenue has an increase of 12.7% and 19.2% when compared to 2009 Reestimate and 2008 Actuals respectively. Budget Includes $9.8M in revenue from Cinemax in basic. New channel projected to being invoicing in 2010. DTH platform represents 65.6% and 67.6% of the growth vs. 2009 reestimate and 2008 actuals respectively.

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. % (000's) DTV Panamericana 42,272 38,813 3,460 8.9% 31,574 10,699 33.9% Sky Brazil 48,010 37,157 10,854 29.2% 37,970 10,040 26.4% Sky Latin America 19,358 19,478 (119)

0.6%

20,814 (1,455)

7.0%

DISH/MVS 4,260 1,336 2,924 218.9% 1,041 3,219 309.0% Oi 2,226

2,226
2,226

Telmex/America Movil 9,683 6,602 3,080 46.7% 3,683 6,000 162.9% Telefonica 17,638 14,889 2,749 18.5% 11,268 6,370 56.5% DTH Revenue 143,448 118,274 25,173 21.3% 106,350 37,098 34.9% Southern Region 35,491 34,988 503 1.4% 35,974 (483)

1.3%

Mexico Region 24,536 19,724 4,812 24.4% 19,931 4,605 23.1% Central America Region 15,658 16,175 (517)

3.2%

13,846 1,811 13.1% Andes Region 36,108 33,246 2,862 8.6% 28,584 7,525 26.3% Caribbean Region 5,183 4,927 256 5.2% 3,548 1,635 46.1% Brazil Region 79,467 74,205 5,262 7.1% 76,803 2,665 3.5% CATV Revenue 196,444 183,265 13,179 7.2% 178,686 17,758 9.9% TOTAL REVENUE 339,891 301,539 38,352 12.7% 285,036 54,856 19.2% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Budget 2010 Budget 2010

SLIDE 41

41 HBO YE Subscribers

BUDGET ACTUAL SEPT REESTIMATE ACTUAL 2010 2009 Diff. % 2009 Diff. % 2008 Diff. %

(000's)

DTV Pan-American 975 805 170 17.4% 824 151 18.3% 693 282 40.6% Sky Brazil 515 443 72 13.9% 449 66 14.7% 410 105 25.7% Sky Latin America 341 317 24 6.9% 355 (14)

3.9%

321 20 6.3% DISH/MVS 100 50 50 49.6% 55 45 81.8% 15 85 546.0% Oi 42 3 39 93.0%

42
42

Telmex/America Movil 403 293 110 27.4% 285 118 41.5% 209 194 93.2% Telefonica 343 257 86 25.1% 294 49 16.6% 226 117 52.1% DTH Subs 2,719 2,169 550 20.2% 2,262 457 20.2% 1,873 845 45.1% Southern Region 1,109 1,109 0.0% 1,141 (32)

2.8%

1,164 (54)

4.7%

Mexico Region 369 252 118 31.9% 268 102 38.0% 233 137 58.8% Central America Region 559 552 7 1.3% 580 (21)

3.6%

489 70 14.3% Andes Region 615 775 (161)

26.1%

782 (168)

21.4%

698 (84)

12.0%

Caribbean Region 81 69 12 15.0% 68 13 19.1% 58 23 40.2% Brazil Region 790 757 33 4.2% 783 7 1.0% 771 19 2.5% CATV Subs 3,524 3,514 9 0.3% 3,622 (99)

2.7%

3,413 111 3.3% TOTAL SUBS 6,242 5,683 559 9.0% 5,884 358 6.1% 5,286 957 18.1% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08 BUDGET 10 VS SEPT 09

Budget subscribers show an expected increase of 6.1% and 18.1% when compared to 2009 Reestimate and 2008 Actuals respectively. Expected decrease in Andean Region is a result of the first stage of Cablemagico Peru’s transition from basic to premium distribution.

Budget 2010 Budget 2010

SLIDE 42

42 MAX YE Subscribers

BUDGET ACTUAL SEPT REESTIMATE ACTUAL 2010 2009 Diff. % 2009 Diff. % 2008 Diff. %

(000's)

DTV Pan-American 768 978 (209)

21.4%

973 (204)

21.0%

791 (22)

2.8%

Sky Brazil 509 436 72 16.5% 444 65 14.6% 399 109 27.3% Sky Latin America 351 322 29 9.1% 343 8 2.4% 321 30 9.4% DISH/MVS 88 35 53 150.4% 51 37 71.7%

88

Oi 42 2 40 1949.8%

42
42

Telmex/America Movil 480 347 133 38.2% 324 156 48.3% 209 271 130.0% Telefonica 478 368 110 29.8% 415 63 15.2% 377 102 27.0% DTH Subs 2,716 2,489 227 9.1% 2,550 166 6.5% 2,096 620 29.6% Southern Region 2,679 2,417 262 10.9% 2,418 261 10.8% 2,509 170 6.8% Mexico Region 539 992 (453)

45.7%

986 (447)

45.3%

986 (447)

45.4%

Central America Region 583 588 (4)

0.7%

630 (46)

7.4%

538 46 8.5% Andes Region 686 3,146 (2,461)

78.2%

3,407 (2,721)

79.9%

2,738 (2,052)

75.0%

Caribbean Region 76 69 7 10.1% 68 7 10.8% 58 18 30.4% Brazil Region 561 555 6 1.0% 555 6 1.1% 553 8 1.4% CATV Subs 5,124 7,767 (2,643)

34.0%

8,063 (2,940)

36.5%

7,382 (2,258)

30.6%

TOTAL SUBS 7,840 10,255 (2,416)

23.6%

10,613 (2,773)

26.1%

9,478 (1,639)

17.3%

BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08 BUDGET 10 VS SEPT. 09

Budget subscribers have an expected decrease of 26.1% and 17.3% when compared to 2009 reestimate and 2008 actuals respectively. Expected transition to Cinemax in basic: Gremio, DTV Colombia and Mexico.

Budget 2010 Budget 2010

SLIDE 43

43 CINEMAX IN BASIC YE Subscribers

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

DTV Pan-American 1,998

1,998

1,998 Sky Brazil

Sky Latin America
DISH/MVS

143

143

143 Oi 350

350

350 Telmex/America Movil 102

102

102 Telefonica 324

324

324 DTH Subs 2,917

2,917
2,917

Southern Region 1,839

1,839

1,839 Mexico Region 1,092

1,092

1,092 Central America Region 110

110

110 Andes Region 3,076

3,076

3,076 Caribbean Region

Brazil Region

1,142

1,142

1,142 CATV Subs 7,259

7,259
7,259

TOTAL SUBS 10,176

10,176
10,176

BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Cinemax in basic essentially within three groups Already in region with no impact on revenue – Argentina, Mexico, Venezuela, Colombia MAX transitions to premium and Cinemax in basic enters with a new rate – Chile, Peru New distribution – Brazil, DTV Pan-American, DISH

Budget 2010 Budget 2010

SLIDE 44

44 Basic and Premium Distribution: Revenue

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. % (000's) HBO Premium Distribution Rev 212,505 187,551 24,953 13.3% 179,714 32,791 18.2% HBO Basic Distribution Rev 41,921 39,826 2,095 5.3% 36,996 4,925 13.3% Total Revenue- HBO 254,425 227,377 27,048 11.9% 216,709 37,716 17.4% MAX Premium Distribution Rev 51,796 45,003 6,793 15.1% 41,650 10,146 24.4% MAX Basic Distribution Rev 23,847 29,158 (5,311)

18.2%

26,677 (2,829)

10.6%

Total Revenue- MAX 75,644 74,162 1,482 2.0% 68,326 7,317 10.7% Cinemax in Basic Distribution Rev 9,822

9,822
9,822

Total Revenue- Cinemax Basic 9,822

9,822
9,822

Total Premium Distribution Rev 264,301 232,555 31,746 13.7% 221,364 42,937 19.4% Total Basic Distribution Rev 65,768 68,984 (3,216)

4.7%

63,672 2,096 3.3% Total Revenue- HBO/MAX 330,069 301,539 28,530 9.5% 285,036 45,033 15.8%

Cinemax in Basic Distribution Rev

9,822

9,822
9,822

Total Revenue- Cinemax Basic 9,822

9,822
9,822

Total Revenue 339,891 301,539 38,352 12.7% 285,036 54,856 19.2% BUDGET 10 VS REEST 09 BUDGET 09 VS ACTUAL 08

Budget 2010 Budget 2010

SLIDE 45

45 Basic and Premium Distribution: Subscribers

BUDGET ACTUAL SEPT. REESTIMATE ACTUAL 2010 2009 Diff. % 2009 Diff. % 2008 Diff. % (000's) HBO Premium EOY Subs 3,938 3,201 737 23.0% 3,435 503 14.6% 2,961 977 33.0% HBO Basic EOY Subs 2,304 2,482 (178)

7.2%

2,449 (145)

5.9%

2,324 (20)

0.9%

Total Subscribers- HBO 6,242 5,683 559 9.8% 5,884 358 6.1% 5,286 957 18.1% MAX Premium EOY Subs 3,607 3,001 606 20.2% 3,119 487 15.6% 2,684 923 34.4% MAX Basic EOY Subs 4,233 7,255 (3,021)

41.6%

7,494 (3,260)

43.5%

6,794 (2,561)

37.7%

Total Subscribers- MAX 7,840 10,255 (2,416)

23.6%

10,613 (2,773)

26.1%

9,478 (1,639)

17.3%

Cinemax Basic EOY Subs 10,176

10,176

10,176

10,176

Cinemax Basic EOY Subs 10,176

10,176
10,176
10,176

BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08 BUDGET 10 VS SEPT. 09

Budget 2010 Budget 2010

SLIDE 46

Variance Analysis

SLIDE 47

47

Variance Analysis Variance Analysis

Out of the $38M projected total growth for 2010: 28% (~$10.9M) is attributable to Sky Brazil 17% (~$6.4M) is due to Net/Vivax 13% (~4.8M) is a result of Mexico CATV 9% (~3.5M) is because of DTV Pan American.

Affiliates Revenue Reestimate 2009 301,539 DTH: Sky Brazil 10,854 DISH 2,924 DirecTV Colombia 2,560 Telmex Chile 2,246 Oi Brazil 2,226 Telefonica Brazil 1,207 Telefonica Venezuela 995 Embratel (Telmex) 515 DirecTV Chile 514 Others 1,133 Total DTH 25,173 CATV: Brazil - Net/Vivax 6,407 Mexico - Megacable 2,800 Mexico - Cablevision Mexico 712 Mexico - Cablemas 504 Colombia - EPM 959 Colombia - Telmex 435 Peru - Cablemagico 573 Peru - Telmex 239 Others 550 Total CATV 13,179 Affiliates Revenue Budget 2010 339,891 BUDGET 2010 vs REESTIMATE 2009

SLIDE 48

48 TOTAL BUDGET 10 REESTIMATE 09 F/X SUBS PRICE MIX VARIANCE Sky Brazil

48,010 37,157 7,969 5,142 (2,257)

10,854 $ Telefonica Brazil

8,419 7,213 1,465 287 (546)

1,207 $ NET/VIVAX

54,925 48,517 9,706 3,131 (6,430)

6,407 $ DirecTV Argentina

11,921 12,126 (2,017) 1,308 504

(205) $ Argentina MSOs

7,667 8,135 (1,321) 520 333

(468) $ DirecTV Colombia

5,601 3,041 683 1,438 439

2,560 $ Telefonica Colombia

1,855 1,733 258 (95) (42)

122 $ DirecTV Chile

3,193 2,679 413 336 (235)

514 $ Telefonica Chile

4,473 4,282 593 31 (432)

191 $ Telmex Chile

8,495 6,249 1,162 2,179 (1,095)

2,246 $ DirecTV Venezuela

16,599 17,175 (4,975) 1,316 3,083

(576) $ Telefonica Venezuela

1,770 775 (576) 1,426 145

995 $ Others

166,963 152,457

2,063

12,442

14,505 $

TOTAL

339,891 $ 301,539 $ 13,361 $ 19,082 $ 5,909 $ 38,352 $ DUE TO:

Variance Analysis Variance Analysis

SLIDE 49

49

DTH BRAZIL

Sky:

Revenue show a 29.2% ($10.9M) expected increase over reestimate because of the favorable exchange rate and a 14.7% projected increase in YE subscribers 515K v. 449K (budget v reestimate). Subscriber growth can be partially attributable to acquisition of TV Filme.

Telefonica: Increase in revenue compared to reestimate is primarily a result of the favorable exchange rate. New Players:

Embratel (Telmex Brazil) projected to contribute $515K in revenues by YE. Oi Brazil has $2.2M foreseen revenues by YE.

LATIN AMERICA

DTV Panamericana projects 8.9% ($3.5M) increment in revenue compared to reestimate:

Chile has a projected increase revenue of 19.2% ($514K) mainly due to a favorable exchange rate. Colombia has an anticipated increase of 84.2% ($2.6M) primarily as a result a 37% (19K) projected increase in HBO YE subscribers.

Variance Analysis Variance Analysis

SLIDE 50

50

DTH (CONTD.) LATIN AMERICA (CONTD.)

Telmex/America Movil Latin America foresees a 38.9% ($2.6M) increase in revenue:

Chile anticipates a 35.9% ($2.2M) increase mainly because of an expected increase of 35% (97k) in YE HBO subscribers and also due to a favorable exchange rate when compared to the 2009 reestimate. Dominican Republic and Peru have a combined projected revenue of $311K by YE (neither was considered in the 2009 Reestimate.

DISH has an anticipated revenue increase of $2.9M compared to reestimate as a result of 81.8% (45K) higher number of projected YE subscribers. Multivision migration has been completed. Telefonica has an expected increase of 20.1% ($1.5M) in revenue: Venezuela has an anticipated increase of $995K versus reestimate due to an increase of 25K in subscribers.

Variance Analysis Variance Analysis

SLIDE 51

51

CATV BRAZIL

Net/Vivax 13.2% ($6.4M) projected increase in revenue is due primarily to a favorable exchange rate compared to

2009 reestimate and a 12% anticipated increase in subscribers by YE.

LATIN AMERICA

Argentina:

6.4% decrease in revenue is largely attributable to an unfavorable exchange rate as compared to the 2009 reestimate (4.50 budget rate vs. an average rate of 3.82 for the reestimate).

Mexico:

Cinemax in Basic has $2M in revenues projected by YE from various affiliates. Megacable: Projected increase of 89.3% ($2.8M) is mainly due to the Hbo/Max bundled package ($2.1M in revenue and 35K subs by YE).

Colombia:

Cinemax in Basic has $3.5M in revenues projected by YE:

EPM: $1.3M
Telmex: $1.9M

.

Variance Analysis Variance Analysis

SLIDE 52

DTH

SLIDE 53

53

DTH DTH

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. % (000's) Argentina 11,921 12,126 (205)

1.7%

10,908 1,012 9.3% Chile 3,193 2,679 514 19.2% 2,713 481 17.7% Venezuela 16,599 17,175 (576)

3.4%

11,094 5,505 49.6% Colombia 5,601 3,041 2,560 84.2% 3,603 1,998 55.5% Others 4,959 3,792 1,167 30.8% 3,256 1,702 52.3% DTV Pan-American Revenue 42,272 38,813 3,460 8.9% 31,574 10,699 33.9% Mexico 17,196 17,246 (50)

0.3%

18,817 (1,621)

8.6%

Brazil 48,010 37,157 10,854 29.2% 37,970 10,040 26.4% Others 2,163 2,232 (70)

3.1%

1,996 166 8.3% SKY Revenue 67,369 56,634 10,734 19.0% 58,784 8,585 14.6% Chile 4,473 4,282 191 4.5% 3,758 715 19.0% Venezuela 1,770 775 995 128.3%

1,770

Colombia 1,855 1,733 122 7.0% 1,261 594 47.1% Peru 1,120 886 234 26.4% 785 335 42.7% Brazil 8,419 7,213 1,207 16.7% 5,464 2,956 54.1% Telefonica Revenue 17,638 14,889 2,749 18.5% 11,268 6,370 56.5% Chile 8,495 6,249 2,246 35.9% 3,683 4,813 130.7% Central America 362 353 9 2.7%

362

Peru 140

140
140

Dominican Republic 171

171
171

Brazil 515

515
515

Telmex/ America Movil Revenue 9,683 6,602 3,080 46.7% 3,683 6,000 162.9% Oi 2,226

2,226
2,226

DISH 4,260 1,336 2,924 218.9% 1,041 3,219 309.0% DTH Others Revenue 6,486 1,336 5,150 385.5% 1,041 5,445 522.8% TOTAL DTH REVENUE 143,448 118,274 25,173 21.3% 106,350 37,098 34.9% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

SLIDE 54

Affiliate Revenue by Region

SLIDE 55

55

Affiliate Revenue by Region Affiliate Revenue by Region

Southern Cone

Region represents 18.9% of overall budget revenue

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

Argentina 11,921 12,126 (205)

1.7%

10,908 1,012 9.3% Chile 3,193 2,679 514 19.2% 2,713 481 17.7% Uruguay 482 441 41 9.3% 381 101 26.4% Telefonica Chile 4,473 4,282 191 4.5% 3,758 715 19.0% Telmex Chile (Zap TV) 8,495 6,249 2,246 35.9% 3,683 4,813 130.7% Total DTH 28,565 25,778 2,787 10.8% 21,443 7,121 33.2% Argentina 10,965 11,716 (751)

6.4%

12,575 (1,609)

12.8%

Chile 14,588 14,446 141 1.0% 14,845 (257)

1.7%

Uruguay 5,244 4,396 847 19.3% 4,183 1,060 25.3% Bolivia 3,808 3,576 232 6.5% 3,426 381 11.1% Paraguay 887 853 34 4.0% 945 (58)

6.1%

Total CATV 35,491 34,988 503 1.4% 35,974 (483)

1.3%

Total Southern Region 64,056 60,766 3,290 5.4% 57,417 6,639 11.6% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

SLIDE 56

56

Mexico

Region represents 13.5% of overall budget revenue.

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

DISH 4,260 1,336 2,924 218.9% 1,041 3,219 309.0% Sky Mexico 17,196 17,246 (50)

0.3%

18,817 (1,621)

8.6%

Total DTH 21,456 18,582 2,874 15.5% 19,859 1,597 8.0% Mexico 24,536 19,724 4,812 24.4% 19,931 4,605 23.1% Total CATV 24,536 19,724 4,812 24.4% 19,931 4,605 23.1% Total Mexico Region 45,992 38,305 7,687 20.1% 39,790 6,203 15.6% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Affiliate Revenue by Region Affiliate Revenue by Region

SLIDE 57

57

Central America

Region represents 5.0% of overall budget revenue

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

Sky Costa Rica 692 795 (103)

13.0%

821 (130)

15.8%

Sky Guatemala 237 229 8 3.7% 331 (94)

28.3%

Sky Nicaragua 98 169 (71)

41.8%

70 28 40.4% Sky El Salvador 38

38
38

Sky Honduras 35

35
35

America Movil 362 353 9 2.7%

362

Total DTH 1,462 1,546 (83)

5.4%

1,222 240 19.6% Costa Rica 7,303 7,013 290 4.1% 5,198 2,105 40.5% Guatemala 2,590 3,778 (1,187)

31.4%

4,140 (1,550)

37.4%

El Salvador 2,936 2,583 353 13.6% 2,122 814 38.3% Honduras 2,423 2,505 (82)

3.3%

1,778 645 36.3% Nicaragua 405 301 104 34.6% 607 (202)

33.3%

Total CATV 15,658 16,181 (523)

3.2%

13,846 1,811 13.1% Total Central America Region 17,120 17,726 (606)

3.4%

15,069 2,052 13.6% *Sky includes DTV for actuals BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Affiliate Revenue by Region Affiliate Revenue by Region

SLIDE 58

58

Andes

Region represents 19.7% of overall budget revenue

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

Venezuela 16,599 17,175 (576)

3.4%

11,094 5,505 49.6% Colombia 5,601 3,041 2,560 84.2% 3,603 1,998 55.5% Ecuador 1,104 758 346 45.6% 720 384 53.3% Sky Panama 475 467 8 1.8% 454 21 4.6% Peru 1,501 1,060 441 41.6% 856 645 75.3% Sky Dominican Republic 587 567 21 3.7% 320 267 83.6% Telefonica Peru 1,120 886 234 26.4% 785 335 42.7% Telefonica Venezuela 1,770 775 995 128.3%

1,770

Telefonica Colombia 1,855 1,733 122 7.0% 1,261 1,261 100.0% Telmex Peru 140

140
140

America Movil Dominican Republic 171

171
171

Total DTH 30,923 26,462 4,461 16.9% 19,093 11,830 62.0% Peru 11,078 9,997 1,081 10.8% 8,876 2,202 24.8% Colombia 7,663 6,376 1,288 20.2% 5,571 2,092 37.5% Ecuador 4,839 5,503 (664)

12.1%

3,677 1,162 31.6% Venezuela 6,737 6,539 198 3.0% 5,849 888 15.2% Dominican Republic 3,246 2,795 451 16.1% 2,743 503 18.3% Panama 2,544 2,035 509 25.0% 1,866 678 36.3% Total CATV 36,108 33,246 2,862 8.6% 28,584 7,525 26.3% Total Andes Region 67,031 59,708 7,323 12.3% 47,677 19,354 40.6% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Affiliate Revenue by Region Affiliate Revenue by Region

SLIDE 59

59

Caribbean

Region represents 2.1% of overall budget revenue.

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

Curacao 355 302 53 17.5% 230 126 54.7% Aruba 10 14 (4)

28.9%

19 (9)

45.8%

Trinidad 1,506 1,216 291 23.9% 1,050 456 43.5% Total DTH 1,872 1,532 339 22.1% 1,298 574 44.2% Curacao 653 859 (206)

24.0%

541 111 20.5% Aruba 481 429 53 12.3% 372 109 29.4%

St. Lucia

732 686 46 6.7% 663 69 10.4% Trinidad/Bonaire/Grenada 2,298 2,004 294 14.7% 991 1,307 132.0% Barbados 940 950 (10)

1.0%

981 (41)

4.2%
N. Antilles

26

26
26

Jamaica 52

52
52

Total CATV 5,183 4,927 256 5.2% 3,548 1,635 46.1% Total Caribbean Region 7,055 6,460 595 9.2% 4,847 2,208 45.6% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Affiliate Revenue by Region Affiliate Revenue by Region

SLIDE 60

60

Brazil

Region represents 40.8% of overall budget revenue.

BUDGET REESTIMATE ACTUAL 2010 2009 Diff. % 2008 Diff. %

(000's)

SKY Brazil 48,010 37,157 10,854 29.2% 37,970 10,040 26.4% Telefonica Brazil 8,419 7,213 1,207 16.7% 5,464 2,956 54.1% Embratel (Telmex) 515

515
515

Oi 2,226

2,226
2,226

Total DTH 59,170 44,369 14,801 33.4% 43,434 15,736 36.2% TVA 18,920 18,271 649 3.6% 15,418 3,501 22.7% TV Filme

1,190

(1,190)

100.0%

1,927 (1,927)

100.0%

NEO 4,290 5,092 (802)

15.7%

7,128 (2,838)

39.8%

NET/Vivax 54,925 48,517 6,407 13.2% 51,354 3,570 7.0% Independents 1,333 1,135 198 17.4% 975 358 36.7% Brazil Region 79,467 74,205 5,262 7.1% 76,803 2,665 3.5% Total Brazil Region 138,637 118,574 20,063 16.9% 120,237 18,400 15.3% BUDGET 10 VS REEST 09 BUDGET 10 VS ACTUAL 08

Affiliate Revenue by Region Affiliate Revenue by Region

SLIDE 61

Ad Sales HBO Original Production Revenue (Home Video & Licensing)

SLIDE 62

62

Budget 2010 Budget 2010 Ad Sales Ad Sales

In line with 2009 ad sales.
Increases associated with foreign exchange.

HBO LAG Original Production Licensing HBO LAG Original Production Licensing

2010 Budget 2009 Reestimate Variance Epitafios (S2) 858 501 357 Capadocia (S2) 667 667 Mandrake 387 660

274

Filhos do Carnaval (S1 & S2) 298 278 19 Capadocia 234 333

100

Golden Boy 198 75 123 Epitafios (S1) 142 49 93 Alice 123 504

381

Sexo Urbano (S2) 67 70

3

Sexo Urbano (S1) 20 21

1

Boxing 44 90

46

Los Simuladores 35

35

3,037 2,618 419

SLIDE 63

Service Fees Service Fees

SLIDE 64

64

Service Fees Service Fees Overview: Overview:

Fee basis same as 2009 Reestimate
Fees based on established rate card for basic channels
Average increase:
USA fees: 3%
Venezuela fees: 25%

Services to Basic Channels 2010 Budget 2009 Reestimate Variance Distribution Fees 11,803 8,957 2,846 Marketing Support 2,000 2,000 Technology Fees 12,235 13,435 (1,200) Administration & Facilities 1,703 1,846 (142) Globecast and SARs 2,067 2,922 (855) Total 29,809 29,160 649

SLIDE 65

65

Distribution Fees Distribution Fees

Incremental Fee: Incremental Fee:

Increase due to higher expected Affiliate Revenues compared to 2009
Basic Channels: 17% growth in Affiliate Revenues

Growth Incentive Fee: Growth Incentive Fee:

Increase due to higher Affiliate Revenue growth rate

Distribution Services to Basic Channels 2010 Budget 2009 Reestimate Variance Affiliate Revenues 194,000 165,961 28,039 Number of Networks 8 8 Distribution fees Flat Fee 2,800 2,800 Incremental Fee 6,199 5,562 637 Incentive Fee 2,804 595 2,209 Total Distribution Fees 11,803 8,957 2,846 Affiliate Marketing Support Group Affiliate Development 2,000 2,000 Channel Specific Marketing Total Affiliate Marketing Support 2,000 2,000 Miscellaneous Total Distribution Division Fees 13,803 10,957 2,846

SLIDE 66

66

Technology Fees Technology Fees

Technology Services to Basic Channels 2010 Budget 2009 Reestimate Variance Number of Networks EOP 7 8 (1) Number of Feeds EOP Sunrise 23 28 (5) Caracas 7 7

Total

30 35 (5) Transponder Fees 4,752 4,752 Sunrise Service Fees 4,113 4,388 (275) Post-Production Subtitling Total Sunrise Service Fees 4,113 4,388 (275) Caracas Service Fees Uplink 547 531 16 Origination Post-Production 106 268 (162) TQC 1,328 1,185 144 Traffic 81 246 (166) Library 358 743 (385) Subtitling 570 940 (370) Affiliate Authorization 320 240 80 Production External 60 142 (83) Production Studio Total Caracas Service Fees 3,370 4,295 (925) Total Technology Division Fees 12,235 13,435 (1,200) Uplink /Origination /MC /Ingest / ...Dekocast ,Signal Monitoring

SLIDE 67

67

Technology Fees Technology Fees

Overall decrease of $1.2M Overall decrease of $1.2M

WBTV leaving 2Q 2010
E! Entertainment transfer of 2 feeds to VC Studios, library services, TQC

Services Transponder: Transponder:

Same as 2009 Reestimate

Sunrise: Sunrise:

Lower Basic Channel revenues due to transfer of some services to VC

Studios for E!, A&E, THC and Biography Caracas: Caracas:

Decrease in Post-Production hours
E! TQC service transferred to VC Studios, offset by prices increase and

higher number of hours for SET and Animax

Traffic service decreased
Decrease in number of tapes. No library services for E!
Decrease in subtitling service/volumes

SLIDE 68

68

Administrative Fees Administrative Fees Overall decrease of $142K: Overall decrease of $142K:

Less volume of Condecine projects.
Less IT infrastructure (IT remote and onsite support services

(WBTV).

Administrative Services to Basic Channels 2010 Budget 2009 Reestimate Variance Research

Condecine Support

35 84 (49) IT Support, Infrastructure & Systems 468 683 (215) Fiber Connections 80 76 4 Human Resources 116 93 23 Controller 274 221 53 Services & Logistics 121 97 24 Taxation 243 236 7 Legal 221 214 6 Internal Audit 146 142 4 Basic Channels F&A

Total

1,703 1,846 (142)

SLIDE 69

69

Other Service Fees Other Service Fees Overall decrease of $855K: Overall decrease of $855K:

Globecast minimum guarantee after third year lease
Other Services to basic channels included in budget (ie: downlink).

2010 Budget 2009 Reestimate Variance Fixed Asset Leasing (Globecast) 1,322 1,103 219 Other Service Fees 746 1,820 (1,074) Total 2,068 2,923 (855)

SLIDE 70

70

Rate Cards Rate Cards Increases due to CPI increase: Increases due to CPI increase:

US: 3%
Venezuela: 25%

Cost Driver 2010 Budget 2009 Reestimate % Change Technology Rate Cards Sunrise Uplink Per feed (monthly price) 6,514 6,324 3% Origination Per feed (monthly price) 4,098 3,978 3% Master Control (performed in Caracas) Per feed (monthly price) 5,589 4,471 25% Ingest Per feed (monthly price) 533 518 3% Dekocast Per feed (monthly price) 229 223 3% Signal Monitoring Per feed (monthly price) 369 358 3% TQC HD Enhancement Per suite (monthly price) 2,827 0% Digital Cue Tones Per feed (monthly price) 85 0% DVB Subtitle System Per feed (monthly price) 100 0% Caracas (includes VAT) Post Production Price per labor hour 58.75 47 25% TQC Price per labor hour 60.56 48.45 25% Traffic Price per labor hour 44.06 35.25 25% Library Price per tape 0.75 0.75 0% Subtitling Spanish Only Price per minute Affiliate Authorization Price per decoder per month 2.55 2.04 25% Production External Price per day 422 338 25% Production Studio Price per day 995 865 15% (in US$ except for %)

SLIDE 71

71

Rate Cards Rate Cards Increases due to CPI increase: Increases due to CPI increase:

US: 3%
Venezuela: 25%

Cost Driver 2010 Budget 2009 Reestimate % Change Administrative Services Price List Condecine Support Per project (minimum rate) 5,570 5,408 3% IT Support - Remote Per employee (per year) 2,339 2,271 3% IT Support - On Site US Per day 2,060 2,000 3% IT Infrastructure Per employee (per year) 1,170 1,136 3% IT General Financial Systems Per authorized user 3,509 3,407 3% IT Traffic Systems Per authorized user 1,170 1,136 3% Human Resources Caracas Per network 57,833 46,266 25% Controller US Per network 11,696 11,356 3% Controller Caracas Per network 131,270 105,016 25% Services & Logistics Per network 60,586 48,469 25% Taxation Per network 40,436 39,258 3% Legal Per network 73,520 71,379 3% Internal Audit Per network 29,242 28,390 3% (in US$ except for %)

SLIDE 72

Sales & Marketing Sales & Marketing

SLIDE 73

73

Sales & Marketing Sales & Marketing

2010 2009 Budget Reestimate Variance Sales 4,727 $ 4,769 $ (42) $ Affiliate Marketing 1,331 1,252 79 Affiliate Promotional Support 6,905 5,220 1,686 Consumer Marketing 904 598 306 Media 8,950 7,000 1,950 Website / Internet 570 475 95 Agency Fees 115 120 (5) Research 1,677 1,172 505 Public Relations 2,438 1,736 702 Ad Sales Marketing 421 422 (1) Total Sales & Marketing 28,038 $ 22,763 $ 5,275 $

SLIDE 74

74

Sales Expenses Sales Expenses

Sales Expenses ($4.7M) Sales Expenses ($4.7M)

Trade Shows increase due to increases for ABTA in Brazil ($96K).
Decoder incentive decrease associated with capitalization of new

decoders.

HBO LAG Affiliate Sales expenses increase due to increased

support for Central America.

Advertising Commission increase associated with foreign

exchange.

2010 2009 Budget Reestimate Variance Trade Shows & Conventions 663 $ 567 $ 96 $ Decoder Incentives

500

(500) Affiliate Support Expenses 663 702 (39) HBO LAG Affiliate Sales Expens 1,383 1,136 247 Advertising Commissions 2,019 1,865 154

Total Sales Expenses

4,727 $ 4,769 $ (42) $

SLIDE 75

75

Marketing Expenses Marketing Expenses

Overview Overview

Overall increase to support key initiatives:
Increased high profile original productions (The Pacific, Capadocia II,

True Blood, Big Love, Hung, Mad Men)

HBO channels (HD, HBO Plus, HBO Family)
Max channels (HD, other Max channel rebranding)

Affiliate Marketing & Promotional Support ($8.2M) Affiliate Marketing & Promotional Support ($8.2M)

Overall increase of $1.8M attributed to:
Support launch of new platforms in Brazil (Oi TV, Embratel) and Mexico

(Dish).

Support necessary for end of buy through in Brazil.
Support operator efforts (primarily DirecTV & Sky) to acquire new HD

subscribers and increase HD penetration throughout the region.

Respond to increased competition of LAPTV distribution by Fox.

SLIDE 76

76

Marketing Expenses Marketing Expenses

Consumer Marketing ($904K)

Overall increase of $306K primarily due to Cinemax ($350K).
Consumer marketing initiatives focused on Cinemax ($350), HD ($160K),

and original productions ($350K). Media ($9.0M) Media ($9.0M)

Overall increase of $1.95M.
Media expense support 11 primary campaigns
HBO Original Productions ($5.6M)
Includes 6 high profile productions exhibited in 2010 (The Pacific,

Capadocia, True Blood, Big Love, Hung, Mad Men).

Movie campaigns ($2.5M)
Includes quarterly movie campaign which improves mix of

movie/series media promotion.

Max Channels ($900K)

SLIDE 77

77

Marketing Expenses Marketing Expenses Website/Internet/Agency ($685K) Website/Internet/Agency ($685K)

Website/Internet increase of $95K due to enhancements to new

website and additional focus on HBO original productions.

Agency fees in line with 2009. Overall decrease ($5K).

Research ($1.2M) Research ($1.2M)

Overall increase of $505K due to Cinemax ($200K) and

research of HBO channels ($235K) (HBO Plus, HBO Family) and new HBO concepts.

Research expenses include ongoing audience measurement

($395K) (IBOPE, DTV), general marketing research for brand tracking and TV usage applied to programming strategies ($220K), and individual channel audience studies ($170K).

SLIDE 78

78

Marketing Expenses Marketing Expenses Public Relations ($2.4M) Public Relations ($2.4M)

Overall increase of $702K
Maintain leadership position in the region by maximizing

exposure and support of existing and future HBO LAG Original Productions.

Support milestone HBO series (The Pacific) as well as other

key HBO series (True Blood, Big Love, Hung, Bored to Death).

Expand communications to obtain more nominations and

awards in 2010.

Enforce antipiracy efforts in the Central America &

Caribbean and throughout the region.

SLIDE 79

Cost of Licensing Cost of Licensing

SLIDE 80

80

Cost of Licensing Cost of Licensing

Cost of Licensing includes the amortization ($1.9M) of long

term rights for sale of HBO LAG original production rights for DVD and international distribution.

Decrease due to timing of sales.

2010 Budget 2009 Reestimate Variance Capadocia (S2) 515 515 Filhos do Carnaval (S1 & S2) 446 468

22

Epitafios (S2) 320 417

97

Mandrake 240 539

299

Capadocia (S1) 213 337

124

Alice 118 628

510

Sexo Urbano (S2) 28 70

42

Epitafios (S1) 20 15 5 1,899 2,474

575

SLIDE 81

Proposal to Amortize Programming Costs

SLIDE 82

82

Amortization Amortization

Proposal to Amortize Programming Costs

Cost of top rated titles has varied significantly from

prior output deal

2007: SHR/SFR range from $800K - $1.0M
2010: Megas/SHR range from $1.7M - $2.1M
These titles are not exhibited every month, resulting in

significant variations in monthly/quarterly operating profits.

HBO (US) and other HBO International ventures have

adopted amortization policies.

SLIDE 83

83

Amortization Amortization

Proposal to Amortize Programming Costs

First and second windows are valued in accordance

with contractual terms (currently 80% / 20%)

All products are expensed on first exhibition in its

window, except for product with cost greater than or equal to $1.5M.

Products with cost greater than $1.5M in a window will

be amortized equally over the length of the window.

SLIDE 84

84

Amortization Amortization Proposal to Amortize Programming Costs

Impact on 2010 Budget is approximately $15M

$- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Amortized Non-amortized

SLIDE 85

Programming & Original Production

SLIDE 86

86

Major Studio Output Deal Major Studio Output Deal

Note: 2010 Budget Reinvestment and Flat Fee acquisition amounts for Sony ($15K) are not reflected in the amounts above. They are reflected in the Related Party acquisitions slide. Profit & Loss amounts per studio include output deal and reinvestment amounts. 2010 Budget 2009 Reestimate Variance MOVIE EXPENSE

Warner Bros.

$41,524 $50,957

$9,433
SPTI

$55,478 $30,524 $24,954

SPTI (2nd Window)

$3,612 $1,963 $1,649

BVI

$35,030 $33,502 $1,528

BVI (2nd Window)

$2,559 $2,559 Total $138,203 $116,946 $21,257

$ $

AVG EBU EXPENSE

Warner Bros.

$1,292 $1,603

$311
SPTI

$1,999 $1,688 $311

BVI

$1,347 $1,089 $258 Total $4,638 $4,380 $258 TOTAL EXPENSE

Warner Bros.

$42,817 $52,560

$9,744
SPTI

$57,477 $32,213 $25,265

SPTI (2nd Window)

$3,612 $1,963 $1,649

BVI

$36,377 $34,591 $1,786

BVI (2nd Window)

$2,559 $2,559 Total $142,842 $121,327 $21,515

SLIDE 87

87

Major Studio Output Deal Movie Mix Major Studio Output Deal Movie Mix

WB SPTI SPTI (2nd Window) BVI BVI (2nd Window) TOTAL

1
1
2

SHR 4

1

1 4 SFR

2

5 2 1 6 FR's (FR - FR 4)

6

10 8

2

13 23 MFTV/DTV

1
1
3
5

LOCAL

1
1

1 9 8 LIB/Me 2 5 6 13 LIB/ER

1

15 8 22 LIB

8

45 9 46 LIB FF

2
1

7 4

19

80 10 25 23 119 Variation 2010 Budget vs. 2009 Reestimate MEGA Category

SLIDE 88

88

Major Studio Output Deal Movie Mix Major Studio Output Deal Movie Mix

WB SPTI SPTI (2nd Window) BVI BVI (2nd Window) TOTAL 2 1 1 4 SHR 4 5 1 3 13 SFR 5 7 3 4 1 20 FR's (FR - FR 4) 11 25 15 9 13 73 MFTV/DTV 11 21 13 45 LOCAL 1 1 2 8 9 21 LIB/Me 8 7 11 26 LIB/ER 18 24 18 60 LIB 57 80 47 184 LIB FF 40 46 38 124 157 216 22 152 23 570 2010 Budget Category MEGA Total 2010 Budget

SLIDE 89

89

Major Studio Output Deal Movie Mix Major Studio Output Deal Movie Mix

WB SPTI SPTI (2nd Window) BVI BVI (2nd Window) TOTAL 2 1 1 2 6 SHR 4 1 2 2 9 SFR 7 2 1 4 14 FR's (FR - FR 4) 17 15 7 11 50 MFTV/DTV 12 22 16 50 LOCAL 2 2 1 8 13 LIB/Me 6 2 5 13 LIB/ER 19 9 10 38 LIB 65 35 38 138 LIB FF 42 47 31 120 176 136 12 127 451 2009 Reestimate Category MEGA Total 2009 Reestimate

SLIDE 90

90

Major Studio Movie Quantity Analysis Major Studio Movie Quantity Analysis

Titles Per Month 2010 Budget 41 40 27 32 29 30 36 40 30 27 22 40 8 7 9 7 2 4 7 8 3 2 3 6 5 5 4 8 10 13 10 15 10 8 7 15

10 20 30 40 50 60

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Month Number of titles

Library MFTV/DTV & Local First Run Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total First Run 8 10 5 4 13 10 15 10 8 7 5 15 110 MFTV/DTV & Local 8 7 9 7 2 4 7 8 3 2 3 6 66 Library 41 40 27 32 29 30 36 40 30 27 22 40 394 Total 2010 Budget 57 57 41 62 44 44 58 4 41 36 30 61 570

SLIDE 91

91

Average Cost of Films Average Cost of Films

2010 Average EBU $3,510 2009 Average EBU $3,106 OUTPUT DEAL FILMS 1st Window 2nd Window Total 1st Window 2nd Window Total MEGA $2,106 $421 $2,527 $1,864 $373 $2,236 SHR $1,755 $351 $2,106 $1,553 $311 $1,864 SFR $1,404 $281 $1,685 $1,242 $248 $1,491 FRA $1,053 $211 $1,263 $932 $186 $1,118 FRA-2 $702 $140 $842 $621 $124 $745 FRA-3 $351 $70 $421 $311 $62 $373 FRA-4 $263 $53 $316 $233 $47 $280 LOCAL $211 $42 $253 $186 $37 $224 LOCAL - BVI $291 $60 $351 $258 $53 $311 MFTV/DTV $263 $263 $233 $233 LIB/Me $263 $263 $233 $233 LIB/ER $263 $263 $233 $233 LIB $140 $140 $124 $124 LIB FF $43 $43 $41 $41 2009 REESTIMATE 2010 BUDGET

SLIDE 92

92

Independent & Related Party (non Independent & Related Party (non-

output deal)
utput deal)

Independent & Related Party Independent & Related Party

Related Party includes:
16 HBOe branded product ($1.3M). Includes 7 titles with second window

transmission ($300K).

1 Reinvestment Sony title ($15K).
Lower average cost of independent film acquisitions ($25K).

2010 Budget 2009 Reestimate Variance QUANTITY HBOe FILMS 16 10 6 RELATED PARTY FILMS 1 90 (89) INDEPENDENT FILMS 169 168 1 TOTAL MOVIES 186 268

82

EXPENSE HBOe FILMS $1,291 $1,175 $116 RELATED PARTY FILMS $15 $1,947 ($1,932) INDEPENDENT FILMS $5,790 $5,815 ($25) TOTAL COSTS $7,096 $8,937 ($1,841)

SLIDE 93

93

Non Non-

Movie Expenses

Movie Expenses

2010 Budget 2009 Reestimate Variance NUMBER OF EPISODES HBOe non movies 126 158 (32) HBOe Boxing events 11 17 (6) Warner non movies 31 56 (25) Animated & Family Series 433 148 285 Drama & Comedy Series 228 177 51 Specials & Variety 5 10 (5) Sports & Boxing 42 13 29 Documentaries 24 22 2 Music 27 25 2 TOTAL QUANTITY, NON MOVIES 927 626 301 EXPENSE HBOe non movies 2,708 1,886 822 HBOe Boxing events 1,100 1,120 (20) Warner non movies 475 520 (45) Animated & Family Series 1,199 703 496 Drama & Comedy Series 2,170 1,376 794 Specials & Variety 123 111 12 Sports & Boxing 798 646 152 Documentaries 450 335 115 Music 249 187 61 TOTAL EXPENSE, NON MOVIES 9,271 6,884 2,387

SLIDE 94

94

Non Non-

Movie Expenses

Movie Expenses

Non Movie Expenses Non Movie Expenses

Overall increase of $2.4M due to new series and additional seasons of existing

series.

HBOe non movies includes:
New series such as The Pacific ($600K), Boardwalk Empire ($400K), Treme

($400K), and How To Make in America ($80K).

Additional seasons ($838K) of True Blood (S3), Eastbound & Down (S2),

Hung (S2), Life and Times of Tim (S2), Real Time with Bill Maher (S10).

Second windows ($345K) of Five Days, Generation Kill, House of Saddam,

John Adams.

Animation and Family includes new series such Contraptus, Cosmic Cowboys,

Déjà Vu, Halfmoon Investigators, Little Nick and Time Jam and new seasons of Merlin (S2), Carl2 (S4), M.I. High (S3), Zombie Hotel (S2). Product intended for HBO Family.

Drama & Comedy series include Mad Men (S3), Ashes to Ashes (S2), Skins

(S4), Vu du Ciel (S2), Co-Ed Confidential (S3,S4), Satisfaction (S3).

Boxing includes HBOe Boxing and Golden Boy Boxing.

SLIDE 95

95

Original Production Expenses Original Production Expenses

2010 Projects ($8.2M):

Capadocia II – 13 episodes will be aired starting August 2010 Alice - Special – 2 episodes will be aired in June 2010. Mandrake – Special – 2 episodes will be aired in November 2010. Fair Play – 10 episodes will be aired starting March 2010. World Cup Series – 15 episodes will be aired starting April 2010.

2010 Budget 2009 Reestimate Variance HBO ORIGINAL PRODUCTIONS $8,232 $6,183 $2,049 2010 EXPENSED PROJECTS Capadocia II $3,866 $3,866 Alice Special $1,579 $1,579 Mandrake Special $1,579 $1,579 Fair Play $908 $908 World Cup Series $300 $300

Filhos do Carnaval II

$2,679

$2,679

Epitafios II

$1,893

$1,893

La Liga en Acción

$832

$832

Sexo Urbano III

$431

$431

First Look

$349

$349

$8,232 $6,183 $2,049

SLIDE 96

96

Original Production Cash/Ancine Requirements Original Production Cash/Ancine Requirements

2010 Budget 2009 Reestimate Variance Cash Requirements Latin America Projects 13,012 7,501 5,511 Brazil Projects 3,211 673 2,538 16,223 8,174 8,049 Ancine Requirements (Brazil) Article 39 6,605 3,226 3,379 Article 3a 6,316 6,316 12,921 3,226 9,695 Total Production (Cash & Ancine) 29,144 11,400 17,744

SLIDE 97

97

Original Production Cash/Ancine Requirements Original Production Cash/Ancine Requirements

Latin America Projects 2010 Budget Total Production Profugos (Production) 4,321 4,321

Sr. Avila (Production)

4,310 4,310 Capadocia (S2) (Production) 2,694 6,444 Fair Play (Production) 487 908 World Cup (Production) 300 300 Total Production Projects 12,112 16,283 Hernan Cortez (Development) 150 Rey de Espadas (Development) 150 Profugos (S2) (Development) 150 Epitafios (S3) (Development) 150 Capadocia (S3) (Development) 150 Mexican Series (Development) 150 Total Development Projects 900 Total Cash & Ancine Requirements (Brazil) 13,012

*Amounts adjusted for 2010 exchange rates

SLIDE 98

98

Original Production Cash/Ancine Requirements Original Production Cash/Ancine Requirements

Brazil Projects Cash Ancine 2010 Budget Total Production Preamar (Production) 1,947 5,421 7,368 7,368 FDP (Production) 3,684 3,684 3,684 Mandrake Special (Production) 1,579 1,579 1,579 Mulher de Fases (Production) 1,447 1,447 3,684 Alice Special (Production) 789 789 1,579 Total Production Projects 1,947 12,921 14,868 17,894 O Poder (Development) 158

158

Mandrake (S3) (Development) 158

158

Desmandamientos (Development) 158

158

Os Prazeres da Carne (Development) 158

158

Destino Sao Paolo (Development) 158

158

FDP (S2) (Development) 158

158

Mulher de Fases (S2) (Development) 158

158

Filhos do Carnaval Special (Development) 158

158

Total Development Projects 1,264

1,264

Total Cash & Ancine Requirements (Brazil) 3,211 12,921 16,132

*Amounts adjusted for 2010 exchange rates

SLIDE 99

99

Production & Film Facility Expenses Production & Film Facility Expenses

Production & Film Facility Production & Film Facility

Increased Production Outside Services includes general On Air projects ($1.5M) (LAG
riginal production elements, Max channels, Max HD), NBG boxing ($1.1M), Cinemax

($500K), HBO rebranding & new concepts ($300K) (HBO Plus, HBO Family), and series campaign (268K).

Duplication increase due to increased HD requirements.
Increased dubbing related to dubbing for more localization and distribution to low

income subscribers.

2010 2009 Budget Reestimate Variance Equipment & Studio Rental 55 $ 66 $ (11) $ Talent & Wardrobe 519 666 (147) Music Rights, Scenography 208 177 30 Voice Over 1,212 1,221 Post-Production 60 91 (31) Prodution Outside Services 3,832 3,010 822 Permisologies & SP Fees 26 25 1 Miscellaneous Production Expenses 55 77 (22) Total Production 5,967 $ 5,334 $ 633 $ Duplications 1,425 $ 800 $ 625 $ Subtitling 1,157 1,155 2 $ Dubbing 1,212 82 1,130 Total Film Facilities 3,794 $ 2,037 $ 1,757 $

SLIDE 100

Headcount & Staff Headcount & Staff

SLIDE 101

101

Headcount Staff Expenses (Market by Market) Non-Salary Expenses Staff Cost Roll-Up

Topics Topics

SLIDE 102

102

2010 Headcount 2010 Headcount

2010 headcount will be up 13 heads from 2009 Reestimate

2010 Budget

HBO LA Networks 168 50 89 16 13 14 HBO LA Distribution 88 44 1 14 12 17 8 HBO LAG Technology 173 87 84 1 1

11

HBO LAG Administration 127 73 41 4 4 5 2 Audit 2 1 1 CEO 5 5 Facilities US 8 8 Finance & Admin 58 35 10 4 4 5 2 IT 19 9 10 Human Resources 10 6 4 Legal & Bus Affairs 9 9 General Services 16 16 GRAND TOTAL 556 254 215 35 16 36 13 2010 Budget from Current (9/30) 38 60

49

7 5 15

Area

TOTAL USA VEN 2010 vs 2009 Budget BRA ARG MEX

SLIDE 103

103

Staff Expenses Market By Market Analysis

SLIDE 104

104

USA Staff Expenses USA Staff Expenses

Assumptions

Realignment of staff among U.S., Caracas and Regional offices as discussed with board in the 5 year strategic plan
4.0% merit Jan 1st

Salaries Increase in base salaries, conversion of on-going temp/freelancers to regular staff, new positions Full year of impact of filling of positions filled in 2009 Incentive Same as above Benefits Medical and social security costs increase consistent with increased headcount Non-Salary Up primarily due to increase in travel cost

USA

2010 Budget 2009 Reest

USD USD Salaries 21,192 17,489 3,703 21% Incentive 4,006 3,765 241 6% Benefits 3,611 3,261 350 11% Total Salary 28,809 24,515 4,294 18% Total Non Salary 3,831 3,496 335 10% Total Staff Expenses 32,640 28,011 4,629 17%

Variance

USD

SLIDE 105

105

Venezuela Staff Expenses Venezuela Staff Expenses

Assumptions

FX of 3.18 or 27% devaluation / Favorable FX impact ($3.1M)
Salary increases of 10% in May and November, continued high inflation with salary increases lagging inflation

Salary Reductions offset by salary increases (base, utilidades and vacation bonus) Incentives/Benefits Savings in dollars due to favorable FX impact Non Salary Cost reduction due primarily due to travel & FX

Venezuela

USD Bs USD Bs Salaries 8,200 26,075 9,873 23,260 (1,674)

17%

2,815 12% Incentive 727 2,311 998 2,345 (271)

27%

(35)

1%

Benefits 1,830 5,818 2,546 5,988 (717)

28%

(170)

3%

Total Salary 10,756 34,204 13,418 31,594 (2,662)

20%

2,610 8% Total Non Salary 538 1,711 712 1,776 (173)

24%

(65)

4%

Total Staff Expenses 11,294 35,915 14,129 33,369 (2,835)

20%

2,546 8%

FX 3.18 2.50

Bs

Variance

USD

2010 Budget 2009 Reest

SLIDE 106

106

Argentina Staff Expenses Argentina Staff Expenses

Assumptions

FX of 4.50 or 13% devaluation / Favorable FX impact ($33k)
15% salary increase Jan 1st

Salaries Additional impact of filling 2009 vacant positions Incentives Consistent with filling vacant positions Benefits Consistent with salary increases and filling vacancies Non Salary Non salary expenses up primarily due to travel

Argentina

USD ARP USD ARP Salaries 621 2,796 547 2,126 74 14% 670 32% Incentive 185 834 148 575 37 25% 259 45% Benefits 224 1,009 194 757 30 15% 253 33% Total Salary 1,031 4,640 889 3,458 142 16% 1,182 34% Total Non Salary 148 664 105 422 42 40% 242 57% Total Staff Expenses 1,179 5,303 995 3,879 184 18% 1,424 37%

FX Assumption 4.50 4.00

ARP

Variance

USD

2010 Budget 2009 Reest

SLIDE 107

107

Brasil Brasil Staff Expenses Staff Expenses

Assumptions

FX at 1.9 or 21% appreciation of BRL / Negative FX impact of $945k

Salaries Salaries up primarily due to new positions and FX impact Incentive/Benefits Same as above Non-Salary Non salary expenses expected to increasing due to travel

Brazil

USD BRL USD BRL Salaries 2,108 4,006 1,305 3,037 804 62% 970 32% Incentive 307 584 198 461 109 55% 123 27% Benefits 1,224 2,325 804 1,878 420 52% 448 24% Total Salary 3,640 6,916 2,306 5,376 1,333 58% 1,540 29% Total Non Salary 896 1,702 649 1,557 247 38% 146 9% Total Staff Expenses 4,536 8,618 2,955 6,932 1,581 53% 1,685 24%

FX Assumption 1.90 2.40

BRL

Variance

USD

2010 Budget 2009 Reest

SLIDE 108

108

Mexico Staff Expenses Mexico Staff Expenses

Assumptions

FX at 13.92 or 11% revaluation / Negative FX impact of $301k
5% salary increase January 1, 2010

Salaries New positions and filling vacant positions Incentive Increase consistent with salary growth Benefits Benefits up due to higher legal caps (housing savings, food coupons, savings fund) & increased staff Non-Salary Non salary expenses increasing primarily due to travel

Mexico

USD MXP USD MXP Salaries 1,741 24,237 1,247 18,665 494 40% 5,572 30% Incentive 351 4,888 315 4,685 36 12% 203 4% Benefits 466 6,481 249 3,741 217 87% 2,741 73% Total Salary 2,558 35,606 1,810 27,091 748 41% 8,515 31% Total Non Salary 389 5,414 166 2,573 223 134% 2,840 110% Total Staff Expenses 2,947 41,020 1,976 29,664 970 49% 11,355 38%

FX Assumption 13.92 15.50

MXP

Variance

USD

2010 Budget 2009 Reest

SLIDE 109

109

Non Non-

Salary Expense Detail

Salary Expense Detail

Non Salary

Travel primary driver of increase

Detail Non-Salary 2010 Budget 2009 Reest

Travel, Hotel & Meals 3,805 3,144 661 21% Meeting 234 193 41 21% Entertainment Expenses 194 146 48 33% Magazines, Subscriptions & Books 114 191 (76)

40%

Memberships 62 44 17 40% Conferences 51 105 (53)

51%

Freelancers 524 461 63 14% Training & Tuition 191 222 (31)

14%

Special Events 234 347 (156)

45%

Recruitment 209 142 67 48% Relocation 100 100 () 0% Others 77 33 44 133% Total Non Salary 5,796 5,127 669 13%

Variance

SLIDE 110

110

Roll Up Roll Up

Realignment of staff among U.S., Caracas, and Regional offices as discussed with board in the 5 year

strategic plan

Increase in base salaries, conversion of on-going temp/freelancers to regular staff, new positions, and full

year impact of positions filled in 2009

Favorable FX impact of $1.8M. Devaluation savings in Venezuela & Argentina partially offset by revaluation

in Brazil and Mexico

Increase in cost of travel
2010 staff expenses up 9% vs. Reest

HBO LAG Roll-up

2010 Budget 2009 Reest

USD USD Salaries 33,863 30,461 3,402 11% Incentive 5,576 5,423 153 3% Benefits 7,354 7,054 300 4% Total Salary 46,793 42,938 3,855 9% Total Non Salary 5,796 5,127 669 13% Total Staff Expenses 52,590 48,066 4,524 9%

Variance

USD

SLIDE 111

Network Operations Network Operations

SLIDE 112

112

Network Operations Network Operations

Overall increase of $2.1M: Overall increase of $2.1M:

Additional satellite transponder.
Fiber optic increases due to increased capacity requirements and

connections to regional offices (primarily Brazil & Mexico).

Parts and supplies increase due to antenna parts and additional wiring for

HD.

Studio operation increase due to UPS and electrical maintenance

contracts in Arbona ($124K) and software license renewals ($10K).

2010 2009 Budget Reestimate Variance Satellite Transponder 10,134 $ 8,449 $ 1,685 $ Fiber Optic 1,020 888 132 Maintenance Contracts 822 765 58 Parts & Supplies 349 235 114 Studio Operations 1,003 858 145 Video Tape Stock 212 242 (30) Other 56 80 (24) Total Network Operations 13,597 $ 11,517 $ 2,079 $

SLIDE 113

General & Administrative General & Administrative & & Other I ncome Other I ncome

SLIDE 114

114

General & Administrative General & Administrative

Overall increase of $1.8M: Overall increase of $1.8M:

Rent increases associated with new lease in Argentina and foreign exchange impact in

Brazil and Mexico.

Maintenance & Security increase due to reclass from Other G&A ($149K). Utilities

increase due to increased FPL rates in US.

Insurance increases due to increase premiums on property and equipment (truck).
MIS increases due to increase network services for post production services in Brazil &

Mexico (OC3) ($340K), expand LAG internet access & capabilities ($350K), increased network capacity for emails and Exchange hosting ($223K), additional 4CTV maintenance/support ($96K), new billing/collections system (Medea) maintenance and hosting ($91K).

2010 2009 Budget Reestimate Variance Rent 2,199 $ 1,908 $ 291 $ Maintenance & Security 1,527 1,369 158 Utilities 1,099 949 149 Telephone 562 576 (15) Insurance 947 843 105 Professional Fees 1,741 1,766 (25) MIS 2,614 1,474 1,141 Office Supplies 597 462 134 Postage & Delivery 638 554 84 Bank Charges 170 179 (8) Other 51 229 (178) Total G&A 12,146 $ 10,309 $ 1,837 $

SLIDE 115

115

Other (Income)/Expense Other (Income)/Expense Other Income decrease $1.2M: Other Income decrease $1.2M:

Interest income decrease due to lower interest rates.
No Treasury bonds due or currency gains on collections

assumed.

2010 2009 Budget Reestimate Variance Bank Interest Income (52) $ (89) $ 37 $ Gain on Sale of Treasury Bonds

Devaluations
(820)

820 Other 8 (341) 349 Total Other Income/Expense (44) $ (1,250) $ 1,207 $

SLIDE 116

Capital Expenditures

SLIDE 117

117

CAPEX CAPEX

2010 Budget CAPEX $22.8M 2010 Budget CAPEX $22.8M

Technology upgrades $20.2M
Transmission equipment $16.8M

Satellite platform update - Decoder and Uplink equipment (P1 & P2)

Studio HBO $3.2M
Studio Platform $250K
IT equipment and system upgrades $1.9M

Affiliate sales distribution system, HBO Networks BMS project

Building improvement and remodeling projects $637K

2010 Budget CAPEX presented to Technical Committee on November 5 2010 Budget CAPEX presented to Technical Committee on November 5, 2009 , 2009

Technology Upgrades 20,227 IT Equipment and System Upgrades 1,918 Building Improvement and Remodeling Projects 637 2010 Budget 22,782

SLIDE 118

118

CAPEX CAPEX

For HBO BRA MEX USA VEN Total Additional HBO Cinemax HD Feeds (3) 1,983 1,983 High Definition TQC Station: 7th Station 273 273 TQC/Content Processing File Base Transcoding Equipment Expansion 260 260 Archieve System Upgrade: Capacity Storage Expansion 145 145 Live Events HD Capacity 141 141 Production Additions 92 39 131 Post Production Upgrades 72 8 80 HBO and Cinemax Networks Computer Graphics Upgrade 58 58 Arbona TQC Modules Upgrade 41 41 Arbona Studio Upgrade 29 29 Additional Non Linear Editing Suite 4th 24 24 Arbona Server Upgrade 24 24 Non Linear Edit Suites Upgrade 22 22 Post Production XSAN Server Upgrade 9 9 Marketing Computer Graphics Upgrade 8 8 92 39 2,898 198 3,227 For Basic Channels Uplink Disaster Recovery System, Basic Channels 250 250

250
250

TOTAL 92 39 3,148 198 3,477

SLIDE 119

119

CAPEX CAPEX

Satellite Platform Update Satellite Platform Update

Decoder equipment (P1 & P2)
Includes equipment ($9.0M) and shipping/import duties ($4.5M).

USA Total Satellite Platform Update Decoders Equipment P1 & P2 13,690 13,690 Satellite Platform Update Uplink Equipment P1 & P2 2,951 2,951 Digital Cue Tones for MPEG Splicing (DVS-253) 110 110 TOTAL 16,751 16,751

SLIDE 120

120

CAPEX CAPEX

ARG BRA MEX USA VEN Total HBO Networks - BMS Project 800 800 Affiliate Sales & Distribution System (Medea) 570 570 4CTV - Contract/Right Management/Scheduling Module 120 120 MS Office Desktop Version 2007 Upgrade 158 158 Personal Computers 9 11 35 26 12 93 Computer Upgrades 75 75 File Server - Backup Unit 10 16 13 38 Network Data Switch 10 9 19 Citrix Licenses Version Upgrade 17 17 Network Security 17 17 Wireless Network Access and Printers 2 2 3 5 12 TOTAL 19 28 60 1,794 17 1,918

SLIDE 121

121

CAPEX CAPEX

ARG BRA MEX USA VEN Total Liebert/UPS Batteries for" B" Electrical Circuit 265 265 New Office Network Infrastructure 115 115 UPS Batteries Replacement 2 banks 59 bat. 115 115 Security System Upgrade 11 14 9 17 50 Chiller Water Valve Actuator Installation & Pulleys Replacement 30 30 Air Conditioning replacement 6 Floor Macaracuay Plaza 27 27 External Buildings Maintenance 15 15 Repair Emergency Exit Stairs West Side-Loading Dock 15 15 Host Liberator Extractor Vac-Floor/Carpet Maintenance 5 5 TOTAL 126 14 9 461 27 637

SLIDE 122

Financing

SLIDE 123

123

Financing Financing

2010 Budget

CAPEX: $22.8M Cash Distribution $31M declared $17M to be paid in 2010 $16.6M in new financing (mainly vendor financing)

May be good opportunity to finance

Low debt to asset ratio (3% as of September 2009) Existing debt reaching maturity SunTrust Mortgage paid off October 2009 Bank of America 2005 lease final payment due June 2010 ($486K) LIBOR rates historically low (3 month October 2009 rate: 0.2831%)

SLIDE 124

124

Financing Financing

Current Repayment Schedule
Early Buy-Out Provisions

Schedule 2

December 2010: $2.52M December 2011: $1.62M Schedule 3 June 2011: $113K June 2012: $73K

in US $'000s Schedule 1 Schedule 2 Schedule 3 2010 809 1,013 45 2011

1,013

45 2012

1,013

45 2013

688

52 2014

Future minimum payments

809 3,727 188 Bank of America Lease

SLIDE 125

125

Financing Financing

Financing Options

Vendor Financing (subject to review of financials) Motorola

Satellite Platform Upgrade project ($27.3M including basic

channels through 2011)

Up to 360 day financing
Requires 100% of equipment to be purchased through

Motorola Cisco Capital

Non binding offer of up to $20M w/minimum draw downs of

$500K

36 months, 10 quarterly payments commencing 180 days

after each draw down date

70% of the equipment must be Cisco equipment or soft

costs (may not purchase any Cisco competitor’s equipment)

SLIDE 126

126

Financing Financing

Financing Options

Lender Financing Bank of America

HBO LAG currently has 3 lease schedules in place under

master lease agreement

Lower interest rate for equipment leased prior to December

31, 2009

US Bancorp

6th largest US bank; 15th largest equipment/leasing company
NDA in place; awaiting proposal

First American Equipment Finance

8th largest independent lessor in US with $278M in
riginations in (2008)
Currently negotiating NDA