Virtue Broadcasting PLC ACQUIRES STAKE IN VIDZONE

Virtue Broadcasting PLC acquires a 25% shareholding in VidZone for the provision of technical and business services

26 June 2002

Virtue Broadcasting PLC (LSE:TDO), Europe's leading digital service provider, announce today that it has acquired a 25% shareholding in VidZone, the European subscription provider of music videos on demand, in return for the provision of technical and business infrastructure services.

VidZone aims to become the leading European subscription provider of music videos on-demand, aggregating the entire record industry's video output under an independent umbrella brand. VidZone has already secured revenues through its content distribution deal with RealNetworks and has concluded licensing agreements with four of the five major UK record labels. These agreements currently give VidZone and its distribution partners' subscribers access to approximately 2,000 music videos online. Subscribers will be able to enjoy the latest music videos from Madonna, Kylie, Will Young, Holly Valance, Ronan Keating, Westlife, Blue, Gareth Gates, Pink and 100's more including a broad catalogue of past releases.

VidZone is currently available in Europe as part of RealNetworks' European RealOne SuperPass subscription service that launched on 19th June 2002. RealOne SuperPass delivers premium subscription programming with news, sports, music and entertainment content from media and sports leaders across Europe. With first mover advantage via RealOne's launch, the company plans to firmly establish VidZone as the leading and most comprehensive pan-European on-demand music video subscription service. Indeed, VidZone is currently in discussions with other leading ISPs and portals in Europe to increase the service's content distribution network and revenue streams. In addition to being available on ISPs and portals, VidZone will be available as a stand-alone service at www.vidzone.tv later this year.

As consideration for the arrangement, Virtue Broadcasting will provide the technical infrastructure on which the standalone video subscription service will run. Tornado Virtue has already built a robust, scalable technical platform, which currently delivers media (text, images, video and audio) digitally on a global scale in a number of ways including the provision of artist subscription services. This infrastructure lends itself perfectly to the distribution of music videos. In addition to Virtue Broadcasting providing the technical/ subscription requirements for VidZone, they will be providing office accommodation at their Marlow headquarters, as well as administrative services.

"With the European penetration of broadband users increasing exponentially and premium subscription services gaining popularity, there is a significant opportunity for Virtue Broadcasting and VidZone to become a dominant force in the delivery of rich broadband content", says Neil Ferris, Chief Executive Officer of Virtue Broadcasting PLC. "This venture is a natural fit and progression for the existing Virtue Broadcasting business as a leading provider of digital services for the distribution of media content and further proves the flexibility of our systems to deal with a variety of different formats and content."

"This strategic partnership creates a digital delivery and content powerhouse by coupling the technical strength of Virtue Broadcasting with the music video consumer facing brand of VidZone", says Adrian Workman, Founding Partner and CEO of VidZone. "Music video channels were an important offering in the uptake of subscription television, and on-demand music video subscription channels via the Internet will prove to have the same high value."