Fred Destin - Tech Tour: Show Me The Money

Slide 1: Social Networking “Show me the money” Fred Destin Montreux, 15 November 2007

Slide 2: Social networks are real – usage isn’t hype Social networking sites have attracted over 300M users world-wide  VERY LARGE Social networks are 1 in 20 UK internet visits  ABSOLUTE SIZE MySpace has over 100M registered users and is 2nd largest web site in  page views 85% of US college students have Facebook profiles  DEEP REACH IN More than 90% of UK teens use social networks  TOTAL POPULATION In US, 80% of young adults, 60% of teens and 30% of adults  The top 20 social networks receive over 15% of all attention spent online  in US MySpace has 329 monthly page views per unique visitor, more than  STICKINESS IS Google (273) and Yahoo! (223) UNPRECEDENTED 60% of Facebook users log in daily and spend an average of 20 minutes  Average UK social network visit duration was 25 minutes, 250% average  StudiVZ had 4.5B page views in September, up from 2.5B in July  S o u rc e : C o m S c o re 2 0 0 7 , F o rre s t e r 2 0 0 7 , H it w is e 2 0 0 7 , M e rrill L y n c h 2 0 0 7 2 1

Slide 3: Huge untapped potential in advertising revenues Education / Awareness Online advertising in general is tiny  I nformation relative to the importance of the medium Radio Social networking sites command much  $33.2 bn more attention (15%) than their current share of online advertising (3%) – and Internet they can target ads well $23.7 bn Print $147.6 bn FACTS: Advertising on social networks in US is  TV $900M in 2007 and growing at 100% to $162.1 bn $1.8bn in 2008 Outdoor US social network advertising revenues  DM $23.0 bn will grow to $3.6bn by 2011 $166.5 bn MySpace advertising revenues were  $500M in 2007 and expected to grow to $930M Facebook will have ad revenues of  $400M in 2008 Direct response Branding (leads, sales, etc.) S o u rc e : e M a rk e t e r 2 0 0 7 , M e rrill L y n c h 2 0 0 7 , I n it ia t iv e S p h e re s 2 0 0 6 1

Slide 4: Social networks change behaviour and influence commerce Traffic to UK online retailers from social networking sites was up 153%  2006-YTD2007 SOCIAL SHOPPING WILL DRIVE ECOMMERCE TopShop.co.uk‘s #2 referring website in April 2007 was MySpace  (+500% YoY) Social shopping communities such as Threadless or LaFraise are  generating significant revenues MOBILE IS A HUGE Mobile social network content delivery will generate revenues of  POTENTIAL REVENUE $500M in 2007, expected to rise to $5.7bn in 2011 GENERATOR Mobile social network content downloads will increase from 200M in  2007 to 9B in 2011 Korean social network Cyworld is the second largest retailer of MP3s  after iTunes, having sold more than 160M songs directly to its MUSIC & VIDEO members CONSUMPTION WILL CHANGE SIGNIFICANTLY Average online video consumer watches 100 minutes a month  DailyMotion has grown from 2 to 40M uniques in a year and attracts c.  55% of French broadband users each month S o u rc e : Ju n ip e r2 0 0 7 , M e rrill L y n c h 2 0 0 7 , p ro p rie t a ry d a t a 1

Slide 5: With no hard financials, how do acquirors value social networks today? Usage statistics have a clear impact on revenues and profitability  Best indicators for advertising revenue are absolute monthly unique  visitors (impressions per person) and monthly page views (sell- through) Good indicator for strategic value is number of registered users  (depending on the service) Value per unique then gets assessed against operational leverage  and likely EBIT potential of business model EXAMPLE: Club Penguin 700K registered users, 10M uniques and 500M page views  $350M TEV implies $0.69 per page view and $35 per unique  Double these figures for $700M TEV with earn-out  However, strategic value is huge given young demographic: $500 per  registered user before earn-out! S o u rc e : Je f f e rie s 2 0 0 7 , M e rrill L y n c h 2 0 0 7 , A t la s 1

Slide 6: Valuations are starting to normalise (thank you Longacre/Jefferies) Statistics US$ per Unique Unique Enterprise Monthly page monthly Registered Monthly page monthly Registered Company Valuation date value ($m) views (bn) visitors (m) users (m) view visitor user Jul-05 580.0 7.8 17.7 22.0 $26.36 $0.07 $32.77 MySpace Current 3,750.0 50.6 105.7 75.0 $50.00 $0.07 $35.48 Apr-06 525.0 7.6 12.9 7.0 $75.00 $0.07 $40.70 Facebook Current 15,000.0 33.0 69.3 24.0 $625.00 $0.45 $216.45 Dec 05 (w/o earnout) 208.0 0.2 5.1 16.4 $12.68 $0.93 $40.78 Friends Reunited Dec 05 (w/ earnout) 303.4 0.2 5.1 16.4 $18.50 $1.35 $59.49 Aug 07 (w/o earnout) 350.0 0.5 10.0 0.7 $500.00 $0.69 $35.06 Club Penguin Aug 07 (w/ earnout) 700.0 0.5 10.0 0.7 $1,000.00 $1.39 $70.13 May-07 280.0 0.1 11.5 15.0 $18.67 $2.37 $24.35 Last.fm Mar-06 616.0 0.3 18.2 NA NA $2.46 $33.85 iVillage Jun-07 382.3 1.9 20.0 NA NA $0.20 $19.14 AuFeminin Jan-2007 (w/o earnout) 44.7 1.3 2.2 NA NA $0.03 $20.52 StudiVZ Jan-2007 (w/ earnout) 75.9 1.3 2.2 NA NA $0.06 $34.88 Aug-07 90.0 5.3 15.5 10.0 $9.00 $0.02 $5.81 Fotolog $0.69 $34.88 Median $26.36 $0.79 $34.49 Mean $238.74 High $2.46 $216.45 $1,000.00 Low $0.02 $5.81 $9.00 1

Slide 7: Hold on to your Social Network: the bigger exits are yet to come EV / 1-Year Bid Ent EV / LTM Forward Annc Value Stake Value LTM Forward Target Acquirer Target Description/Comments Curr (m) (m) Sales EBITDA Margin Sales EBITDA Date (%) Margin Social networking 27/08/2007 Fotolog HiMedia Photo sharing community website USD 90.0 100% 90.0 NA NA NA 19.4x NA NA 01/08/2007 Club Penguin Disney Online community for children USD 350.0 100% 350.0 7.0x NA NA 5.8x 11.7x 50.0% (1) 01/06/2007 AuFeminin Axel Springer Online women’s community EUR 280.0 100% 280.0 20.5x 36.1x 57.0% 12.3x 20.4x 60.0% 30/05/2007 Last.fm CBS Corp Online music community site USD 280.0 100% 280.0 NA NA NA NA NA NA 09/01/2007 Playahead Modern Times Group Swedish online social networking community SEK 102.0 90% 113.3 4.2x NA NA NA NA NA 08/01/2007 MyBlogLog Yahoo! Blog-based online community USD 10.0 100% 10.0 NA NA NA NA NA NA 03/01/2007 StudiVZ Holtzbrinck German-based online community for students EUR 50.0 100% 50.0 NA NA NA NA NA NA (2) 06/03/2006 iVillage NBC Universal Women's community site USD 600.0 100% 600.0 6.1x 32.5x 18.6% 5.3x 23.9x 22.2% 06/12/2005 Friends Reunited (3) ITV Online community site GBP 120.0 100% 175.0 10.2x 18.8x 54.2% 7.0x 13.5x 51.7% 18/07/2005 Intermix Media News Corp MySpace USD 580.0 100% 580.0 7.3x 53.2x 13.8% 4.9x 37.9x 13.0% 20/06/2005 Neopets Viacom Virtual pet community USD 160.0 100% 100% NA NA NA NA NA NA 25/10/2004 Classmates Online United Online Online community-based networking USD 100.0 100% 100.0 1.4x 8.7x 15.9% NA NA NM 24/05/2004 Tickle Monster Worldwide Matchmaking and social networking services USD 93.9 100% 93.9 3.8x NA NM NA NA NM Median 6.8x 35.4x 18.6% 6.4x 20.4x 50.0% 1