Download STANDALONE FUN VALUATION

REQUEST FOR DILIGENCE MATERIALS
REGARDING GSN & FUN TECHNOLOGIES
BACKGROUND
The materials requested in this diligence list are intended to provide Sony Pictures a
detailed understanding of three potential scenarios for GSN and FUN, including:
 An updated view of GSN’s financial forecast in a “Base Case”, assuming no formal
partnership or merger with FUN Technologies

The general nature of a potential “Partnership” between GSN and FUN (assuming
no merger), including the associated financial forecast for both businesses

The financial forecast for a “Merger” between GSN and FUN
OVERVIEW OF ASSUMPTIONS
 For the Base Case, describe any key assumptions, including recently identified
improvements to the business

In a Partnership scenario, address the overall relationship and anticipated flow of
funds between the two companies. For example:
o Would FUN license game shows from GSN to be developed into casual
games? If so, which properties? What are the anticipated license terms /
economics
o Would GSN license a white-label platform from FUN (e.g., to power
GSN.com/games)? If so, what are the anticipated license terms

In a Merger, confirm which assets would be included (e.g., FUN Games) and
excluded (e.g., FUN Sports)

Describe how the below items would be managed in a Partnership and in a Merger
(clarify if the approach would differ between the two scenarios).
o Promotion
 How would GSN use its advertising inventory to promote FUN and
vice versa
o Cross platform
 How would GSN and FUN collaborate to bring interactivity to GSN
shows? What investment would be required? How would they be
funded
 What would be the impact on revenues of leveraging TV ad sales
packaging and content across all platforms
o Customers (Acquisition/Retention)
 What would be the overall strategy for FUN to access GSN’s user base
and vice versa
 How would the partnership / merger expand the overall audience base
 How would both companies drive reductions in customer acquisition
and retention cost
FINANCIALS
For GSN (in all cases) and FUN (in the Partnership and Merger cases) please provide a
5-year forecast addressing:

Base revenues by type and division:
o For FUN address:
 Revenue by type (hosting fee retained on cash competitions,
advertising, transactional)
 Revenue by division (FUN Games, FUN Sports, Teagames,
SkillJam, Worldwinner, Octopi, CDM)
 Key growth drivers (growth in number of users per division,
growth in partners and hosting fees by partner, changes in pricing,
industry growth rates, changes in market share)
o For GSN address:
 Revenues by type (license fees, advertising revenues, interactive
and other revenues)
 Revenue drivers (ratings assumptions, growth / changes in
advertising CPMs and sell-out rates)

Incremental revenues derived in a Partnership
o By FUN from GSN (e.g., fees paid by GSN to FUN to license technology)
o By GSN from FUN (e.g., to license shows to become casual games)

Incremental revenues in a Merger
o Customer growth from cross-promotion
o Revenue growth from premium CPMs or improved account penetration

Base Expenses
o Expenses by type
o Headcount assumptions
o Key areas of investment

Incremental expenses and/or cost savings (clarify if these differ in a Partnership
vs. in a Merger)

Adjustments required to calculate cash flow in each case (amortization, CAPEX)