Following is a brief summary of Sony Music's agreement with Simon Cowell.

BACKGROUND:
Simon Cowell (SC) has a 20 year relationship with BMG and Sony Music. In addition to being a
very successful a&r executive, SC created the hugely successful TV formats for Pop Idol, X
Factor and America/Britain's Got Talent. X Factor has launched in 17 countries, while Got Talent
launched in 27 countries. As a result of the SC relationship, Sony Music obtained the exclusive
recorded music rights from these TV formats. Over his career with BMG and Sony Music, SCrelated music projects have sold over 115m units.
SC is an extremely well-known TV personality in the US and UK. In the US, SC has been a judge
for nine seasons on American Idol, the highest rated TV show in America. In the UK, SC has
been a judge on both Britain's Got Talent and X Factor. Both these shows are top-rated in the UK
and (as described below) are owned by the new SC/Sony Music joint venture.
During his relationship with BMG and Sony Music, there were two prior joint ventures with SC-Ronagold and Syco. We purchased SC's share of Ronagold in 2003, and we purchased
SC's share of Syco in 2005. As a result of these purchases, Sony Music became the full owner of
the Got Talent and X Factor TV formats, as well as the owner of recordings rights to such artists
as Susan Boyle, Il Divo and Leona Lewis. (Although SC was a very famous judge on the
American Idol TV series, neither SC or Sony Music had any ownership interest in the Pop
Idol/American Idol format. However, SC used his position as a judge on American Idol to obtain
the music rights for Sony Music.) Also as part of the 2005 Syco purchase, we obtained SC's
exclusive services through December 2010. But after that date, we had no continuing contractual
relationship with SC--unless we made a new deal.
STRATEGY OF THE NEW DEAL:
The purpose of a new deal with SC was to extend our relationship beyond 2010. But more
importantly, the new deal converted that relationship to a broader "partnership model". Under this
partnership, Sony Music (and the broader Sony companies) would share for the first time in new
aspects of the SC "brand" and business. At the same time, we will continue to use SC to
generate new TV programming to drive our recorded music business. This is an essential tool for
maintaining and maximizing recorded music sales in a challenged business environment, and is a
key part of Sony Music's ongoing transformation into a diversified entertainment company, not
dependent solely on recorded music. The new deal also prevents SC from associating with any
competing record company.
The first key objective of the new SC/Sony Music partnership was to launch X Factor in the US
for the first time. That objective has been met, as we concluded an agreement with the Fox
Network to air X Factor in the Fall of 2011. Fox agreed to very attractive financial terms, and SC
will appear as a judge on US X Factor, having just finished his final season as a judge on
American Idol.
The US launch of X Factor is a critical step in creating new media content that (i) is owned and
controlled by Sony Music and SC, and (ii) provides associated music rights to Sony Music.
Because SC will no longer appear as judge on American Idol, Sony Music will lose the Pop
Idol/American Idol record rights. Therefore, the launch of US X Factor will serve as a
vital replacement vehicle for those lost Idol record sales.

KEY DETAILS OF THE NEW DEAL:

a. General Structure: SC and Sony Music are 50/50 partners in a new joint venture company
(called "Syco Entertainment").
b. Term: January 1, 2010 through December 31, 2015
c. Asset Contributions to Syco Entertainment: Sony Music contributed its Ronagold and Syco
assets, including TV formats and artists. SC contributed his exclusive services in the areas of
music, TV and film production, talent-based content, and all other areas of content creation and
production, as well as exclusive rights to SC's name/likeness, as used in connection with Syco
assets and properties. Under the venture deal, Sony Music shares in all new TV formats
developed by SC during the term.
d. Music Rights: Sony Music has an exclusive, worldwide license for all Syco Entertainment
music rights.
e. Payments: We paid a total of $50m to SC in March 2010.
f. Income Sharing: SC and Sony Music share all income from TV/Film, music rights and other
non-music income, according to agreed splits by category. Sony Music has a preferential income
share, whereby we receive first profits from the new Syco venture.
g. End of Term: At the end of the term, there is a mechanism leading to the sale of Syco
Entertainment, Sony Music always has the first option (but not the obligation) to acquire 100%
of the venture.
h. Other Sony Opportunities: As part of the SC deal, the parties agreed to separately negotiate in
good faith about additional opportunities in the areas of feature filmtheatrical motion picture
development, financing and production; Sony Pictures Television library development;
contribution of a portion of SPTs equity stakes in GSN and MSM; SC and TV branded
hardware/software for SCE; Sony/ATV Music Publishing potential ventures; and game
development with SCE. In this regard, SPE and SC are now close to finalizing a multi-year film
development project/financing/production agreement under which SC will have the right to cause
SPE to produce and finance up to three low-budget theatrical motion pictures.
OTHER RELATED NEGOTIATIONS:
In connection with the new SC deal, there are a few related negotiations now underway:
a. Fremantle Media- Fremantle is the worldwide production and distribution company for both X
Factor and Got Talent. Syco Entertainment is now in negotiations with Fremantle to improve
various terms of this relationship, to better reflect the great value that SC and Sony Music bring to
the relationship.
b. Pop Idol/American Idol Record Rights- As mentioned above, because of SC's departure from
American Idol, Sony Music will lose the worldwide record rights to future seasons of Pop Idol
and American Idol. Various preliminary discussions are taking place among SC, Sony Music,
CKX/19 Entertainment (the owner of the Idol TV format) and Simon Fuller/Robert Sillerman (the
principals of CKX/19 Productions), regarding an extension of Sony Music's record rights for
additional seasons of Idol