China Digital Media Corporation Announces Completion of Acquisition on Arcotect Digital Technology Limited and Its Audited Financial Results for Year 2004

China Digital Media Corporation Announces Completion of Acquisition on Arcotect Digital Technology Limited and Its Audited Financial Results for Year 2004

HONG KONG, May 2 /Xinhua-PRNewswire-FirstCall/ -- China Digital Media Corporation (BULLETIN BOARD: CDGT) , one of the fastest growing companies in the China broadcasting media and Cable TV industry, today announced the completion of its acquisition of Arcotect Digital Technology Limited ("Arcotect"), which reported audited financial results of $3.9 million in revenue and $1.9 million in net income for the full year ended December 31, 2004.

Arcotect Digital Technology Limited and its China operating subsidiary Arcotect Technology (Guangzhou) Limited is the sole contractor and operator of digital television services in Nanhai, a city in the Guangdong province. During the first full year of operations in fiscal year 2004, Arcotect recorded revenues of $3.9 million and earned a modest net income of $1.9 million. The city of Nanhai has approximately 400,000 paying Cable TV subscribers which it plans to migrate from analog television to digital television. Thus far, the company had migrated around 100,000 subscribers from analog television to digital television by installing a digital set-top-box into subscriber's premises. The company is offering additional 60 TV channels divided into four product packages, namely "World Movies", "Life & Leisure", "World Sports" and "News". The company is responsible for migrating all 400,000 subscribers from analog to digital television service as well as operating its own pay-TV and interactive services. The company currently employs approximately 200 people to support the existing operations..

The Company plans to allocate more resources in order to develop more high value added services, including but not limited to information services (e- Government), High-Definition Television service, IP Set-top-box and Near- Video-On-Demand service.

"The Company's first full year's operating results are very encouraging," said Daniel Ng, Chairman and CEO of China Digital Media Corporation." Nanhai is the first model city in China to implement city-wide total migration of Digital Television by contracting with professional managers who fund their operations from the capital market. Our success represents a successful model of cooperation and a win-win situation for the state owned Cable Network Company, the TV viewers and investors like us. We intend to duplicate this successful model and seek co-operation with cable companies in other cities of China and continue to grow our business with contributions from existing operations and new businesses."

Mr. Ng also noted that, "The broadcasting media and Cable TV industry is capital intensive and is gradually opening up to foreign investment. The company plans to expand and diversify into 1) TV Channel operations and Advertisement sales and 2) TV program production and related content management services in the near future through selective acquisitions and alliances."

To be added to China Digital Media's investor e-mail list, please send e- mail to our Investors Relations at ir@chinadigimedia.com

About China Digital Media Corporation

China Digital Media Corporation (BULLETIN BOARD: CDGT) is one of the fastest growing companies engaged in the business of broadcasting media and Cable TV in the People's Republic of China. The Company is realigning its business direction to cover more segments of the media industry through investment, mergers, acquisitions and alliance partnership. In view of the rapid growth and potential market of China's media industry, the Company will continue to put its resources into the target media market across the China while looking for potential distribution partners in the United States and other countries.

For more information on us, please go to our website at http://www.chinadigimedia.com/ .

Forward-looking statement: Except for the historical information, the matters discussed in this news release may contain forward-looking statements, including, but not limited to, factors relating to future sales and operation revenues. These forward-looking statements may involve a number of risks and uncertainties. Actual results may differ materially based on a number of factors, including, but not limited to, uncertainties in the demand of China media market, risks related to doing business in China, the impact of competitive products and pricing, changing economic conditions around the world, release and sales of new products.

Source: China Digital Media Corporation

CONTACT: Daniel Ng of China Digital Media Corporation, +852-2390-8686, or ir@chinadigimedia.com

Web site: http://www.chinadigimedia.com/

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