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Private Media Group to Acquire GameLink

Transaction to be completed by the end of 2008

Private Media Group to Acquire GameLink

BARCELONA - In one of the year's largest adult entertainment deals, Private Media Group has announced plans to acquire leading internet VOD and eCommerce developer GameLink.

On Monday, Private executed a binding letter of intent to buy San Francisco-based GameLink and its related companies in exchange for Private stock worth a reported $20 million. The estimated combined revenue of both companies for 2007 was $53.8 million, with GameLink representing 36 percent of that figure.

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Private officials said in a press statement that the acquisition will create a "uniquely positioned, multi-faceted, global content, distribution and development company in the adult entertainment sector."

The agreement calls for Gamelink to receive approximately 8.5 million shares of Private common stock at closing, with the majority of the shares subject to a lockup agreement for one year. Gamelink will be entitled to receive up to an additional 4.6 million shares if the combined EBITDA of the digital media operations of Private and GameLink meet specified targets in 2009, 2010 and 2011.

Private provides adult content to a wide range of platforms including mobile telephone handsets via 85 network operators in 36 countries, IPTV via 35 platforms in 18 countries, broadband Internet, television broadcasting, DVDs and magazines.

Gamelink is one of the "big three" adult VOD sites, along with competitors HotMovies and AEBN. Gamelink.com offers a library of more than 60,000 titles on demand. The site boasts over one million domestic and international customers and serves over 10,000 users daily.

Gamelink offers VOD in multiple media formats including streaming and downloads to computers and iPhones. The company is also a vendor of adult novelties. Additionally, through its related companies, GameLink offers third-party and white-label ecommerce solutions and development.

"We really look forward to combining GameLink and their unsurpassed digital distribution and development skills with Private," said Private CEO Berth Milton. "GameLink is a highly complementary addition to our existing brand and operations and will allow a substantial acceleration of our ability to become the world leader in the digital adult media sector. The unique synergies of this transaction will create a major company with an unrivaled combination of content, brand and global reach, with both traditional and digital distribution channels and the best technical expertise.

"The acquisition of GameLink is a major step in an acquisition strategy to target leading companies and consolidate the fragmented adult entertainment sector. This undoubtedly will create an even more dominant global brand and substantially enhance shareholder value."

Private COO Peter Cohen said the combination of Private's massive content library with Gamelink's technological expertise will create "a compelling new business model."

"We will be expanding our joint internet strategies globally with new formats and applications to be launched in 2009," Cohen said. "Additionally, we will be developing improved interactive functionality for new media platforms such as IPTV and mobile, and maximizing our content monetization with the existing vast Private library as well as aggregation of select international studios offering a wide range of content and genres for all platform needs. With this expanded digital strategic focus we will be announcing a variety of compelling new initiatives in the next few months."

Gamelink founder and CEO Ilan Bunimovitz said the deal will position the two companies as a dominant force in the adult market.

"The GameLink team is excited to join with Private and their unsurpassed brand in the adult market," Bunimovitz said. "GameLink has always focused on being the leader in VOD and eCommerce in the adult entertainment space. The combination of GameLink’s digital focus and Private’s brand, global reach and market leading content will allow us to create the dominant company in adult entertainment going forward."

The deal calls for the transaction to be completed by the end of 2008, pending execution of a definitive agreement and further due diligence by Private.

GameLink was advised in the transaction by P. Holt Gardiner.






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