EQUITY RESEARCH

27 January 2012

U.S. MEDIA Who Bears the Burden of Higher Sports Rights Costs?
Recent headlines about increasing NFL rights fees have raised questions about which parties in the cable ecosystemprogrammers, distributors, or consumerswill bear the costs. With unparalleled ratings, we believe NFL programming is by far the most valuable on air, maintaining essential status for many cable subscribers. As a result, we believe sports programmers have the most leverage in discussions with the Multiple Systems Operators (MSOs) about securing higher subscription fees to offset their rising content costs, although we expect temporary margin compression at ESPN in FY 2015. If the MSOs agree to higher affiliate fees for the sports programmers, we believe the non-sports programmers could be at a disadvantage in competing for affiliate fee increases in what is increasingly a zero-sum game. Three key points: NFL rights fees reach new highs In the last several months, ESPN and broadcast networks CBS, Fox, and NBC all re-signed their respective rights deals with the NFL, locking in significant, total price hikes of ~50-70% through 2022 (and 2021 for ESPN). We believe the value of NFL content has increased substantially in recent years, as a more engaged fan base, captivated by fantasy football interests, has helped NFL programming consistently achieve the highest ratings on television. Given the unmatched value of the NFL, we believe the networks had little choice but to renew their deals, since outsized NFL ratings are crucial for promoting other network programming and justifying higher retrans/affiliate fees from the MSOs. MSOs and consumers will likely shoulder higher sports rights costs To offset the rights cost increases, we believe the sports programmers will actively seek subscription and retransmission consent fee price hikes at least commensurate with their added cost burden. Since NFL content is considered essential viewing for many subscribers, we believe the MSOs will ultimately acquiesce to the demands of the programmers and will attempt to pass on the costs to the consumer. But if a subsequent consumer backlash leads to subscriber declines, we believe the MSOs may end up absorbing some of the programming cost increases themselves. Non-sports programmers may be struggle to secure desired affiliate rates Given the more difficult revenue environment for the MSOsflattish subscriber growth and consumer discontent over rising cable billswe believe non-sports programmers (DISCA, SNI, and VIAB) may have a more difficult time securing affiliate fee increases if sports programmers are already pressuring the MSOs for substantial rate hikes. Should a consumer backlash over video subscription costs gains traction, we believe that nonsports programmers would be the group most adversely affected, a risk we believe is not fully appreciated by the market, and certainly not priced into the stocks.
Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 11.

INDUSTRY UPDATE U.S. Media 2-NEUTRAL Unchanged U.S. Media Anthony J. DiClemente, CFA 1.212.526.1341 anthony.diclemente@barcap.com BCI, New York Chris Merwin 1.212.526.7778 chris.merwin@barcap.com BCI, New York

Barclays Capital | U.S. Media

NFL Rights Fees Skyrocket to New Highs

ESPN pays up for Monday Night Football rights through 2021
In September 2011, ESPN extended its Monday Night Football rights deal with the NFL through 2021 at a total cost of $15.2 billion. Starting in 2014, ESPN will pay the League roughly $1.9 billion per season, an increase of ~70% from the $1.1 billion average annual cost under the previous agreement. Included in the deal, ESPN will have the rights to air 500 new hours of NFL-branded programscontent that could help drive total day ratings beyond the predictable lift from the flagship broadcast on Monday night. Also, ESPN will retain authentication rights on non-linear platforms, allowing ESPN subscribers to view NFLlicensed programming through both linear and over-the-top formatspotentially expanding the networks addressable audience and allowing for incremental ad sales on streaming video platforms. Lastly, ESPN secured an enhanced package for international territories, including rights to air games in 144 counties. 1 Figure 1: Selected NFL Rights Deal Increases
$16 $14 $12 $10 $8 $6 $4 $2 $0 ESPN Fox Old Deal
Source: Sports Business Daily.

$15.2

$8.8 $5.8

$8.8

$8.0 $5.0 $4.8

$7.6

CBS New Deal

NBC

Broadcasters follow suit, re-up with NFL at increases of ~60%

Not long after the ESPN deal, the broadcasters followed suit, each signing contract extensions through 2022 at average price increases of just below 60%. According to CBS CEO Les Moonves, No other franchise delivers ratings the way an NFL game does, offering some insight into the media companies appetite for what appear to be excessive price increases. 2 To be sure, the NFL provides broadcasters with unparalleled ratings, elevated ad revenues, and the ability to promote other programming in front of the largest possible audience. Also, by maintaining rights to NFL content, the broadcasters have a much stronger case to make with the MSOs about securing higher retransmission content fees, revenue streams that are crucial in moving toward the cable network model of higherquality subscription revenues, augmented by cyclically-driven advertising revenues.

1 2

ESPN, ESPN, NFL agree to eight-year deal, 9/8/11 Los Angeles Times, NFL signs TV rights deals with Fox, NBC, and CBS, 12/15/11

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Figure 2: NFL Rights Deals by Network

Networks ESPN Fox CBS NBC

Contract Years 2014-2021 2014-2022 2014-2022 2014-2022

Term 8 years 9 years 9 years 9 years

Avg. Annual Total Amount Amount per ($B) Year ($B) $15.20 $1.90 $8.80 $0.98 $8.00 $0.89 $7.60 $0.84

% Increase vs. Previous Contract 73% 53% 61% 58%

Source: Sports Business Daily.

While there are certainly many benefits to these deals, enough that the networks agreed to lofty 53-73% increase in rights fees, there are plenty of questions about how good these deals really arein particular, how they will be paid for, given a backdrop of flat-to-down video subscribers.

Video Subscriber Growth Has Fallen in Recent Quarters

According to our industry database, video subscribers posted a net decline of 79k in the 3Q11, the second consecutive quarter of sub losses. We believe recent sub declines are evidence of a mature multichannel market and also easing consumer demand, as rising cable bills and the proliferation of online content aggregators like NFLX and Hulu may have steered some consumers away from Pay TV. While the multichannel industry could eventually benefit from a turnaround in the housing marketwere not holding our breathall signs point to flattish subscriber growth for the foreseeable future. Without more subs to drive top line growth, we believe the MSOs instead will attempt to force price increases on their customers, only adding to a growing sense of discontent. Figure 3: Multichannel Subscribers Net Adds (1Q10A-3Q11A)
400 300 200 100 0 (100) (200) 1Q10A 2Q10A 3Q10A 4Q10A 1Q11A 2Q11A 3Q11A

12 month rolling average for multichannel subscriber net adds (000s)

Source: Company Reports, Barclays Capital estimates.

Facing a potential consumer backlash, we expect the MSOs will be in a difficult revenue environment going forward, and therefore will be looking to save on programming costs, rather than increase themdirectly at odds with what the content owners are trying to accomplish. While some are concerned about the emergence of non-sports tiers, a disaggregation of the bundle that would reduce the earnings power of the sports

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programmers, we believe the networks have enough leverage in their relationship with the MSOs to prevent more limited tiers from being offered to the consumer. Ultimately, someone in the value chain will have to shoulder higher rights coststhe programmers, the distributors, or the consumers. And if the MSOs have to absorb a portion of those costs, as we believe they will, we expect the non-sports programmers will have a more difficult time securing affiliate fee increases.

Affiliate Fee Increases Must Be Awarded to Sports Programmers

NFL games made up 9 of the top 10 highest rated programs on TV in 2011
In 2011, 9 of the top 10 highest-rated telecasts were NFL games, the only exception being the Academy Awards, which finished with the 9th highest rating of the year. In primetime, NBCs Sunday Night Football was the perennial #1 rated program in the 18-49 demo, singlehandedly helping to lift the network to a 3rd place position in the season-to-date rating race among the broadcasters. Figure 4: Top 10 TV Programs in 2011 Single Telecast
Rank 1 2 3 4 5 6 7 8 9 10 Program FOX Super Bowl XLV FOX Super Bowl XLV Kickoff FOX Super Bowl Post Game AFC Championship on CBS FOX NFC Championship AFC Divisional Playoff-SU AFC Championship Pre-Kick on CBS FOX NFC Wild Card Game Academy Awards FOX Super Bowl Preview Network FOX FOX FOX CBS FOX CBS CBS FOX ABC FOX Date Aired 2/6/2011 2/6/2011 2/6/2011 1/23/2011 1/23/2011 1/16/2011 1/23/2011 1/9/2011 2/27/2011 2/6/2011 Persons 2+ Total Viewers Rating (000) 37.7 111,041 23.6 69,666 22.4 66,030 18.6 54,850 17.6 51,884 14.8 43,463 13.4 39,473 13.3 39,274 12.9 37,922 11.9 35,136

Source: Nielsen Media Research. Note: Data from 1/1/11 11/27/11. Persons 2+ estimates include Live and Same Day time-shifted viewing.

While Monday Night Football ratings were actually down 10% this past season according to Horizon Media, mainly due to unfavourable match ups which were set before the season began, the program was still consistently one of the top 5 most watched programs on TV. But we dont think advertising revenues will be main offsetting factor for higher rights costs; affiliate fee increases should serve that purpose. A past study done by ESPN and Nielsen revealed that people who were medium to heavy sports viewers (which account for 90% of ESPN viewing) showed zero evidence of cord cutting, giving credence to the theory that sports networks can serve as a primary justification for many consumers choosing to maintain a pay TV subscription. 3 We therefore believe that sports programming, and NFL broadcasts in particular, is clearly the most valuable content on air.

ESPN Media Zone, Latest ESPN Study of Multichannel Households Shows Net Zero Loss to Cord Cutters, 3/14/11

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Figure 5: Top 30 Cable Networks by Affiliate Fees and CPMs

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Network ESPN/ESPN HD ESPN 3D 3net TNT Disney Channel NFL Network FOX News ESPN2 USA TBS MGM HD CNN en Espaol CNN/HLN Nickelodeon/Nick At Nite HDNet FX Network HDNet Movies FOX College Sports MTV BTN Discovery Channel Sony Movie Channel CNBC Antena 3 Lifetime Television Affiliate Fee Per Sub Per Month 5.06 2.71 1.29 1.21 0.97 0.84 0.82 0.67 0.62 0.59 0.58 0.58 0.57 0.52 0.47 0.46 0.38 0.39 0.39 0.37 0.37 0.32 0.32 0.31 0.31 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Network ESPN/ESPN HD Golf Channel MTV Bravo WE tv Discovery Channel ESPN2 MLB Network CNBC FX Network ESPNews TBS SPEED GolTV Comedy Central NBA TV NFL Network BBC America G4 Food Network MTV2 VH1 Lifetime Television NBC Sports Network LOGO CPM 15.63 11.56 11.38 10.82 9.66 9.33 8.86 8.85 8.61 8.53 8.34 8.33 8.32 7.95 7.85 7.77 7.72 7.32 7.25 7.24 7.04 7.03 6.96 6.91 6.87

Source: SNL Kagan and Barclays Capital estimates. Note: Only includes networks with 40M+ subscribers. Sports networks are shaded. Does not include Regional Sports Networks.

Essential sports programming could warrant affiliate fee increases

Since live sports are considered to be essential viewing for many subscribers, we believe the MSOs will have little choice but to acquiesce to the demands of the sports networks and grant affiliate fee increases, though not necessarily to an extent that will fully offset additional rights costs right away. Figure 6: DIS Affiliate Fee Increases (2012E-2021E)
9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Affiliate Fee $ Increases Affiliate Fees per Sub % Growth $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0
15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Rights Costs $ Rights Costs % Growth $500 $0 $1,000

Figure 7: Monday Night Football Rights Costs (2012E-2021E)

35% 30% 25% 20% $1,500 $2,500 $2,000

Source: Barclays Capital estimates.

Source: Barclays Capital estimates.

For Disney, we expect the impact of the new rights costs will first hit the P&L in the 4Q of FY 2014, after which point the full impact of higher run rate will be realized in FY 2015. While we expect ESPN will be successful in securing offsetting rate increases from the affiliates, as they have already begun to do, we believe there could be a timing miss-match that will adversely affect margins in 2015. Once all the affiliate fee deals have been repriced and the
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higher run rate for affiliate fee growthwere modelling 7% annually in 2016 and beyond begins to fully offset rights cost escalators of 4%, we believe margin expansion will resume. Figure 8: DIS EBITDA Margin Expansion
1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

DIS EBITDA Margin Expansion

Source: Barclays Capital estimates

More concerning than temporary margin compression, we believe subscription revenues for non-sports programmers may come under pressure. In what is increasingly a zero-sum game for affiliate fees, we believe the ESPNs of the world will cannibalize a large portion of the available pie for incremental fees paid out by the MSOs, potentially leaving the nonsports programmers at a disadvantage. Affiliate fees, unlike advertising revenues, are particularly important to the media companies as a recurring source of revenues, with built in annual escalators that can drive top line growth in any macro environment. And if carriage negotiations with the MSOs result in lower rate cards or moderated annual escalators, we believe the programmers business model could come under some stress.

MSOs maintain healthy, but likely decreasing gross margins for video
As of 3Q11, most of the major MSOs maintained gross video margins between 55-60% fairly robust when compared to other industries. We therefore believe that the MSOs have ample cushion to sustain the higher programming costs necessary to appease the demands by sports programmers for substantial affiliate fee step-ups.

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Figure 9: MSO Gross Margins for the Video Segment at 3Q11

65% 60% 60% 55% 50% 45% 40% Comcast Time Warner Cable Cablevision DIRECTV DISH Network 60% 58% 56% 60%

Video Gross Margins %

Source: Company Documents.

At least initially, we expect the distributors will attempt to pass increasing sports rights costs onto the consumer, a successful strategy in the past but one that may be met with more stringent resistance this time around, to the point where consumers cut their cable entirely or seek cheaper alternatives through tiered video offerings. However, investors and analysts have long predicted that the rising cost of video subscriptions would soon reach the elusive inflection point that ultimately leads to a mass exodus from Pay TVand each time theyve been wrong. Will this forthcoming increase finally be the one to push consumers over the edge? Time will tell, but this much we know for certain: the cable and broadcast networks fully believe they can secure their desired affiliate fees/retrans increases, or it is unlikely they would have agreed to the NFLs price hikes in the first place. We believe the residual impact from these subscription fee increases will include some combination of higher cable bills for the consumer, lower video margins for the MSOs, and lower-than-expected subscription fees for the non-sports programmers. In the best case scenario, consumers shoulder the entire burden, the programmerssports and non-sports alikeget their desired rate increases, and the MSOs maintain their video margins. But the downside case, where scripted programmers are left by the wayside, is an outcome that we believe is not fully understood by the market, and certainly not priced into the stocks. Along those lines, we are taking a closer look at potential implications for stocks in our coverage universe.

Sports Programmers are Relative Winners in the New Ecosystem

Non-sports programmers
Given the risks outlined above, we are incrementally more cautious on DISCA stock nearterm. In addition to our concerns about its premium valuation multiple, relatively high exposure to the Euro, and lowest return of capital yield in the group, we believe its core networks may have difficulty securing its sought after rate hikes, especially if the MSOs end up shouldering a significant portion of incremental sports rights costs. We have similar concerns for SNI, which is set to renew the majority of its carriage agreements for the Travel Channel at the end of 2012 and 2013. While we believe Travel Channel has high-quality programming with a strong appeal to its target demo of affluent
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females, we now believe there is more risk to the significant rate increases that Travel will no doubt seek from the affiliates. Lastly, we believe VIAB may also struggle to secure pricing step-ups, given its lack of any sports programming and lagging ratings at key networks like Nickelodeon. However, with its best-in-class return of capital policy, and a relatively low exposure to advertising cyclical revenues, we find VIAB shares attractive at current levels.

Sports programmers
As previously discussed, we believe ESPN may sustain temporary margin compression in FY 2015; however, we believe the network will be largely successful in negotiating affiliate fee increases from the distributors, given sports programmings status of essential viewing for many cable subscribers, particularly males in the 18-49 demographic. For more detail, please see our DIS note Downgrading to 2-Equal Weight, published on January 10th. For the broadcast networks, we are less concerned about the impact of higher rights fees, given the offsetting impact of retransmission consent fees. For example, we believe CBS could earn in excess of $1B annually from retrans by the time its new rights deal with the NFL expires in 2022more than the estimated annual cost of ~$890M. Combine retrans with the influx of high-margin digital distribution revenues and we think CBS is well positioned to mitigate the impact of rising sports rights fees. While the other broadcasters, ABC (owned by DIS) and Fox (owned by NWSA) are a little behind CBS in securing retransmission consent fees, we believe they too will be able to largely offset higher rights feesmaking the impact of these costs a neutral event for the broadcasters, in our view.

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Figure 10: Media Valuation Comps

($ in millions, except per share metrics)

Company Ticker Price Diluted Shares (CY'12E) Market Capitalization (CY'12E) Net Debt (CY'12E) Total Other Firm Value (CY'12E) EBITDA 2012E 2013E 2012E Growth 2013E Growth 3-year CAGR ('11A - '14E) EV / EBITDA 2012E 2013E Adjusted Fully-Taxed FCF 2012E 2013E 2012E Growth 2013E Growth 3-year CAGR ('11A - '14E) Fully-Taxed P/FCF 2012E 2013E Adj. Fully-Taxed FCF Yield 2012E 2013E Earnings Per Share 2012E 2013E 2012E Growth 2013E Growth 3-year CAGR ('11A - '14E) P/E 2012E 2013E PEG Ratio 2012E 2013E DIVIDEND YIELD Dividends per share Dividend Yield LEVERAGE Net Debt/ EBITDA 2012E 2013E

CBS Corp. CBS $28.72 657.7 $18,921 $5,875 (8) $24,788 3,463 3,737 10.5% 7.9% 8.6% 7.2x 5.9x 2,075 1,744 30.4% (15.9%) 4.7% 9.1x 10.2x 11.0% 9.8% $2.26 $2.63 18.0% 16.3% 15.0% 12.7x 10.9x 0.85x 0.73x $0.40 1.4%

Walt Disney Co. DIS $39.35 1,797.2 $70,722 $10,957 4,287 $85,965 11,188 12,364 11.4% 10.5% 10.7% 7.7x 6.7x 4,088 4,871 12.4% 19.1% 11.7% 17.3x 14.0x 5.8% 7.1% $3.02 $3.53 15.6% 16.7% 16.3% 13.0x 11.2x 0.80x 0.68x $0.60 1.5%

Discovery Communications News Corp. DISCA NWSA $44.34 382.2 $16,242 $2,822 (716) $18,349 1,989 2,152 7.1% 8.2% 7.4% 9.2x 8.0x 1,049 1,159 (1.1%) 10.4% 5.9% 15.5x 13.8x 6.4% 7.3% $2.81 $3.29 17.1% 17.3% 16.5% 15.8x 13.5x 0.96x 0.82x NA NA $18.82 2,439.2 $46,448 $5,069 (11,476) $40,042 7,154 7,584 8.8% 6.0% 6.9% 5.6x 5.3x 2,776 2,942 (6.7%) 6.0% 1.6% 16.5x 15.6x 6.0% 6.4% $1.51 $1.69 15.8% 12.0% 12.6% 12.5x 11.1x 0.99x 0.88x $0.19 1.0%

Scripps Networks Interactive SNI $45.27 156.2 $7,070 $520 1,654 $9,243 1,105 1,233 11.6% 11.5% 9.7% 8.4x 7.0x 616 716 (2.3%) 16.3% 4.5% 11.5x 9.9x 8.7% 10.1% $3.25 $3.78 13.9% 16.5% 12.5% 13.9x 12.0x 1.12x 0.96x $0.40 0.9%

Time Warner Inc. TWX $37.97 1,014.2 $38,507 $18,060 (548) $56,019 7,213 7,524 6.9% 4.3% 5.4% 7.8x 7.3x 3,076 3,386 27.9% 10.1% 13.9% 12.5x 11.1x 8.0% 9.0% $3.16 $3.39 11.5% 7.4% 8.6% 12.0x 11.2x 1.39x 1.30x $0.94 2.5%

Viacom Inc. VIA.B $48.01 528.3 $25,718 $7,411 (146) $32,983 4,456 4,747 6.4% 6.5% 6.3% 7.4x 6.5x 2,606 2,805 10.3% 7.6% 8.0% 9.7x 8.2x 10.3% 12.1% $4.48 $5.29 14.5% 18.2% 14.5% 10.7x 9.1x 0.74x 0.62x $1.00 2.1%

Regal Entertainment Cinemark Group Holdings, Inc. RGC CNK $12.78 154.5 $1,975 $1,823 (283) $3,514 444 461 1.0% 3.9% 2.9% 7.9x 7.5x 179 199 10.3% 11.2% 9.3% 11.0x 9.9x 9.1% 10.1% $0.46 $0.57 15.5% 23.5% 16.5% 27.7x 22.4x 1.68x 1.36x $0.84 6.6% $20.06 112.9 $2,265 $1,304 (226) $3,343 550 585 12.7% 6.5% 8.5% 6.1x 5.6x 165 179 2.6% 8.9% 8.0% 13.7x 12.6x 7.3% 7.9% $1.45 $1.78 32.8% 22.9% 23.1% 13.8x 11.2x 0.60x 0.49x $0.84 4.2%

National Cinemedia Inc. NCMI $13.60 110.8 $1,507 $762 81 $2,351 233 252 10.3% 7.9% 9.0% 10.1x 9.3x 131 141 2.5% 7.6% 6.7% 11.5x 10.7x 8.7% 9.4% $0.55 $0.69 (4.5%) 26.0% 16.4% 24.7x 19.6x 1.51x 1.19x $0.88 6.5%

Clear Channel Outdoor CCO $12.81 356.4 $4,566 $1,427 --$5,992 767 809 5.3% 5.5% 5.4% 7.8x 7.1x 340 332 (9.1%) (2.2%) (2.4%) 13.4x 13.7x 7.4% 7.3% $0.18 $0.19 29.4% 5.4% 24.7% NM NM NM NM NA NA

Lamar Advertising LAMR $30.43 93.1 $2,832 $1,856 --$4,688 494 513 5.7% 3.8% 4.6% 9.5x 8.8x 242 233 24.2% (3.9%) 8.3% 11.7x 12.2x 8.5% 8.2% $0.25 $0.44 NM NM NM NM NM NM NM NA NA

Interpublic Group IPG $10.25 506.8 $5,195 ($368) 514 $5,341 956 1,123 7.9% 17.4% 12.6% 5.6x 4.5x 518 623 3.6% 20.2% 12.8% 10.0x 7.9x 10.0% 12.7% $0.75 $0.95 19.7% 27.3% 23.0% 13.8x 10.8x 0.60x 0.47x $0.24 2.3%

Omnicom OMC $46.74 270.9 $12,664 $1,055 660 $14,379 2,039 2,154 5.1% 5.7% 5.4% 7.1x 6.1x 1,274 1,347 13.5% 5.8% 8.4% 9.9x 8.9x 10.1% 11.2% $3.63 $4.13 9.2% 13.9% 12.3% 12.9x 11.3x 1.05x 0.92x $1.00 2.1%

DreamWorks Animation SKG Inc. DWA $18.62 81.2 $1,511 ($188) --$1,323 111 128 (7.3%) 14.6% 10.4% 11.9x 9.6x 71 99 2.8% 38.9% 25.0% 21.2x 15.1x 4.7% 6.6% $1.03 $1.15 (4.2%) 10.9% 10.8% 18.0x 16.2x 1.66x 1.50x NA NA

AMC Networks AMCX $41.82 72.3 $3,022 $1,829 --$4,851 490 529 9.7% 8.1% 5.9% 9.9x 8.8x 230 196 (14.8%) (14.7%) (4.7%) 13.1x 15.5x 7.6% 6.4% $2.35 $3.00 20.9% 27.6% 22.9% 17.8x 13.9x 0.78x 0.61x NA NA

Media Weighted Average

S&P 500 Average $1,318.43

9.1% 7.7% 8.0% 7.3x 6.5x

10.9% 9.9% 8.3% 14.4x 12.8x 7.3% 8.2% $102.55 $107.00 15.1% 14.2% 13.8% 12.7x 11.1x 0.92x 0.80x $0.54 1.6% 6.5% 4.3% 8.1% 12.9x 12.3x 1.59x 1.52x $28.01 2.1%

1.7x 1.2x

1.0x 0.8x

1.4x 1.2x

0.7x 0.7x

0.5x (0.1x)

2.5x 2.3x

1.7x 1.6x

4.1x 3.8x

2.4x 2.1x

3.3x 2.9x

1.9x 1.5x

3.8x 3.2x

(0.4x) (0.4x)

0.5x 0.3x

(1.7x) (2.1x)

3.7x 3.1x

1.3x 1.2x

Source: Source: FactSet, Company documents, Barclays Capital estimates. Note: All years are calendarized for the purposes of comparable valuation. Figures are in millions except for share values. Prices as of 1/26/12.

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ANALYST(S) CERTIFICATION(S)
I, Anthony J. DiClemente, CFA, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

For current important disclosures, including, where relevant, price target charts, regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 1-212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays Capital policy prohibits them from accepting payment or reimbursement by any covered company of the their travel expenses for such visits. In order to access Barclays Capital's Statement regarding Research Dissemination Policies and Procedures, please refer to https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Guide to the Barclays Capital Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal Weight or 3-Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (the "sector coverage universe"). In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating 1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. 2-Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12month investment horizon. 3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. RS-Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including when Barclays Capital is acting in an advisory capacity in a merger or strategic transaction involving the company. Sector View 1-Positive - sector coverage universe fundamentals/valuations are improving. 2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. 3-Negative - sector coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "sector coverage universe": U.S. Media AMC Networks (AMCX) Cinemark Holdings Inc. (CNK) DreamWorks Animation SKG Inc. (DWA) National Cinemedia Inc. (NCMI) Omnicom Group Inc. (OMC) Time Warner Inc. (TWX) Walt Disney Co. (DIS) Distribution of Ratings: Barclays Capital Inc. Equity Research has 2195 companies under coverage. CBS Corp. (CBS) Clear Channel Outdoor Holdings (CCO) Interpublic Group of Companies Inc. (IPG) News Corporation (NWSA) Regal Entertainment Group (RGC) Viacom Inc. (VIAB) CBS Corp. (CBSA) Discovery Communications Inc. (DISCA) Lamar Advertising Co. (LAMR) News Corporation (NWS) Scripps Networks Interactive, Inc. (SNI) Viacom Inc. (VIA)

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Barclays Capital | U.S. Media

IMPORTANT DISCLOSURES CONTINUED

43% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 53% of companies with this rating are investment banking clients of the Firm. 42% have been assigned a 2-Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 48% of companies with this rating are investment banking clients of the Firm. 13% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 39% of companies with this rating are investment banking clients of the Firm. Guide to the Barclays Capital Price Target: Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period. Barclays Capital offices involved in the production of equity research: London Barclays Capital, the investment banking division of Barclays Bank PLC (Barclays Capital, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Limited (BCJL, Tokyo) So Paulo Banco Barclays S.A. (BBSA, So Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCC, Toronto) Johannesburg Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg) Mexico City Barclays Bank Mexico, S.A. (BBMX, Mexico City) Taiwan Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan) Seoul Barclays Capital Securities Limited (BCSL, Seoul) Mumbai Barclays Securities (India) Private Limited (BSIPL, Mumbai) Singapore Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

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