Private Media Group Reports on First Quarter Results and Comments on the Business...

Private Media Group Reports on First Quarter Results and Comments on the
Business Going Forward

BARCELONA, Spain, May 18 /PRNewswire-FirstCall/ -- Private Media Group, Inc.
(Nasdaq: PRVT), a worldwide leader in premium-quality adult entertainment
products, today announced its results for the three months ended March 31,
2009.

Net sales. For the three months ended March 31, 2009, we had net sales of EUR
5.8 million compared to net sales of EUR 5.3 million for the three months
ended March 31, 2008, an increase of EUR 0.6 million. The increase was the
result of increased Internet sales offset by decreases in sales of DVD &
Magazines, broadcasting and wireless. Internet sales increased EUR 1.9 million
to EUR 3.0 million, which represents an increase of 162% compared to the same
period last year. The increase in Internet sales was the result of the
acquisition of GameLink. DVD & Magazine sales decreased EUR 0.8 million, or
38%, to EUR 1.4 million. The reduction in DVD & Magazine sales was primarily
attributable to an industry wide decrease in DVD sales (see discussion under
Outlook below). Broadcasting sales decreased EUR 0.4 million, or 28%, to EUR
0.9 million, primarily as a result of a decrease in title sales, offset by
increases in TV-channel sales and video on demand sales via IPTV. Wireless
sales decreased by EUR 0.1 million to EUR 0.5 million in the period.

Going forward, we expect Internet, wireless and Broadcasting sales to increase
(see discussion under Outlook below).

Our cost of sales was EUR 3.6 million for the three months ended March 31,
2009 compared to EUR 3.4 million for the three months ended March 31, 2008, an
increase of EUR 0.2 million, or 5%. Included in cost of sales is Internet,
broadcasting and wireless cost. printing, processing and duplication and
amortization of library. Internet, broadcasting and wireless cost was EUR 1.5
million for the three months ended March 31, 2009 compared to EUR 0.5 million
for the three months ended March 31, 2008. Internet, broadcasting and wireless
cost as a percentage of related sales in the period was 34% compared to 17% in
the same period last year. The increase was primarily the result of an
increase in Internet cost of EUR 1.3 million as a result of the acquisition of
GameLink, offset by lower wireless and broadcasting cost as result of more
cost efficient content delivery. Printing, processing and duplication cost was
EUR 0.6 million for the three months ended March 31, 2009 compared to EUR 1.3
million for the three months ended March 31, 2008, a decrease of EUR 0.7
million, or 50%. Printing, processing and duplication cost as a percentage of
DVD & Magazine sales was 45% for the three months ended March 31, 2009
compared to 56% in the same period last year. Amortization of library was EUR
1.4 million for the three months ended March 31, 2009 compared to EUR 1.6
million for the three months ended March 31, 2008, which represents a decrease
of EUR 0.2 million. Amortization of library does not vary with sales since it
reflects the amortization of our investments in content which has been
available for sale for a period of three to five years.

In the three months ended March 31, 2009, we realized a gross profit of EUR
2.2 million, or 39% of net sales compared to EUR 1.9 million, or 35% of net
sales for the three months ended March 31, 2008. The increase in gross profit
as a percentage of sales was primarily the result of reduced margins on DVD &
Magazine sales.

Our selling, general and administrative expenses were EUR 3.6 million for the
three months ended March 31, 2009 compared to EUR 3.3 million for the three
months ended March 31, 2008, an increase of EUR 0.3 million, or 11%. The
acquisition of GameLink added EUR 1.0 million, which was offset by EUR 0.8
million in reduced selling, general and administrative expenses in all other
areas except bad debt provision, which increased by EUR 0.1 million.

We reported a loss of EUR 0.8 million for the three months ended March 31,
2009, compared to EUR 0.8 million for the three months ended March 31, 2008.

Commenting on some important factors relating to the business going forward,
Private Media Group, Inc., CFO Johan Gillborg stated: "We have been
transitioning our business model from linear to digital content production and
distribution over the last 18 months and this has affected our margins. As DVD
and magazines sales have rapidly declined, we have made great progress moving
to digital business with significant new media distribution deals and the
monetization of our expansive library of content. We are now a leading adult
content provider on all major digital platforms, and as they continue to build
out and get larger, we project aggressive growth in both sales and net income.
Specifically, we project the biggest gains to be achieved through: Internet,
broadcasting and wireless. During the three-month period ending March 31,
2009, these platforms were responsible for 76% of our sales. Following is a
discussion highlighting some of the important factors of our business going
forward.

"On January 20, 2009 we expanded our Internet operations through the
acquisition of GameLink LLC and its affiliates, companies engaged in digital
distribution of adult content over the Internet and eCommerce development.
GameLink is a leading US adult entertainment VOD and eCommerce platform
through its www.gamelink.com website. The site's installed user base
represents over one million domestic and international customers and it serves
over 100,000 users daily. Including more than 70,000 video titles, GameLink
has the largest library of digital and physical adult media and novelties in
the United States. The Company offers VOD in multiple media formats including
streaming and downloads to computers and iPhones. GameLink's infrastructure is
the most robust in the industry and it is highly flexible, customizable and
scalable, designed to support multiple retail strategies simultaneously.
Additionally, through its related companies, GameLink offers third-party and
white-label ecommerce solutions and development.

"The acquisition of GameLink is a significant development that will
substantially contribute to our growth, while creating economies of scale. As
part of our digital strategy we have concluded that the combination of Private
with a major online retailer and accomplished platform developer is the best
approach to achieving our goals. The combined content assets of Private and
core competencies of GameLink offer a compelling new business model. We will
be expanding our joint Internet strategies globally with new formats and
applications to be launched in 2009. 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
during 2009. As from the first quarter of 2009, we will be consolidating 100%
of GameLink's financials with Private's. For the year ended 2008, GameLink and
its affiliates reported net sales of USD 16.4 million.

"Furthermore, we are successfully implementing our new media strategy for IPTV
growth and to date we have contracted with 36 major platform operators in 18
countries in Europe, as the leading supplier of adult content. Currently we
have gained more than 75% coverage of the European IPTV market(i) and across
all platforms, quarter by quarter, sales are growing continuously in line with
the general growth of the market. Going forward, we expect to increase our
market coverage in this rapidly expanding market, which compared to
traditional pay-TV generates substantially higher sales per subscriber at a
considerably better margin and subsequently this will contribute significantly
to operating profit going forward.

"In relation to Private branded TV channels carrying our content in Europe and
Latin America our partners Playboy TV Latin America and Playboy TV
International continue to improve distribution. In 2008, Playboy TV Latin
America increased the distribution significantly in Brazil, Argentina and
Central America and we expect to see the positive impact from this going
forward.

"With respect to mobile content, Private content is available to 1.2 billion
handsets via 104 mobile network operators in 45 countries. In 2008, we have
been optimizing our content delivery network of aggregators in order to secure
a more aggressive long-term growth. In the fall of 2008 this process was
completed and consequently we expect sales to increase significantly going
forward. Additionally, we are implementing a new off-portal strategy in Q2
2009 to capitalize on the expected transition and growth with this new
consumer access to mobile content.

"The markets of Asia and the Americas are still underexploited by us and
therefore represent a significant growth potential as they are projected to be
more accessible for adult content in the next 12 months. In addition, Mobile
TV, increased penetration of 3G handsets and the implementation of age
verification systems offer additional significant growth potential with both
current and future operators in 2009 and beyond(iii).

"As we further transition into global digital content delivery, DVD pricing
and volume is being affected considerably and as a result the industry in
general is experiencing a severe downturn in DVD sales. In view of the
aforementioned, we continue to re-strategize our distribution of DVDs and
Magazines to reduce any further negative impact of this downward DVD trend,"
Mr. Gillborg concluded.

Financial Highlights
(In thousands of euro, except per share
amounts) three months ended
March 31,
2008 2009

Net Sales 5,251 5,804
Net loss 840 835

Weighted average common and common
equivalent shares outstanding:
Basic 53,590,147 60,127,361
Diluted n/a -

Loss per share:
Basic 0.02 0.01
Diluted 0.02 0.01

NOTES TO THE EDITOR:

Footnotes
i According to Global IPTV Forecasts made by MRG (Multimedia Research
Group, Inc.) in 2008, the number of global IPTV subscribers is
estimated to grow from 20.4 million in 2008 to 89.1 million in 2012, a
compound annual growth rate of 45 percent. Europe continues to be the
biggest market for IPTV, with France significantly leading the growth
projections through its principal telcos. The number of IPTV
subscribers in Europe is forecasted to grow from approximately 10.5
million in 2008 to 36.4 million in 2012.
ii According to the new research brief, "European DTT Services Snapshot",
published by ABI Research, June 2008.
iii Juniper Research estimates in its white paper Monetising Adult Content
on the Mobile (December 2008) that the global mobile adult content
market will increase from US$2.2 billion in 2008 to US$4.9 billion by
2013.

About Private Media Group
With its 44-year track record, NASDAQ listed Private Media Group is a
brand-driven world leader in adult entertainment, distributing premium quality
adult content globally via multiple platforms, including broadcasting (cable,
satellite, IPTV and DTT), mobile, Internet, as well as DVDs and print
publications. Private Media Group owns the worldwide rights to its extensive
archive of high-quality content, and also licenses its Private and "Silver
Girls" trademarks internationally. Private's acquisition of San
Francisco-based GameLink LLC and its related companies in January 2009 further
increased the Group's digital technology development capabilities and online
retail reach. Established in 1993, GameLink is a leading adult Internet retail
site, focusing on the digital distribution of adult media and merchandise
delivered through its retail website. It is the third largest VOD platform in
the US, and currently offers over 70,000 movies in all major formats. The
company has established an industry-leading reputation for innovative online
retail and eCommerce solutions. Visit prvt.com (http://www.prvt.com/) and
gamelink.com (http://www.gamelink.com/) for more information.

Disclaimer This release contains, in addition to historical information,
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, which reflect the Company's current judgments of those
issues. However, because those statements are forward-looking and apply to
future events, they are subject to such risks and uncertainties, which could
lead to results materially different than anticipated by the Company.

For further information please contact:
Johan Gillborg
Chief Financial Officer
Private Media Group
Tel +34 93 620 80 90
johan.gillborg@private.com

SOURCE Private Media Group

Johan Gillborg, Chief Financial Officer of Private Media Group, +34 93 620 80
90, johan.gillborg@private.com