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

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

BARCELONA, Aug. 17 /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 June 30, 2009.

Net sales. For the three months ended June 30, 2009, we had net sales of EUR
6.2 million compared to net sales of EUR 5.2 million for the three months
ended June 30, 2008, an increase of EUR 1.0 million, or 19%. The increase was
the result of increased Internet sales offset by decreases in sales of DVD &
Magazines and broadcasting. Internet sales increased EUR 2.4 million to EUR
3.4 million, which represents an increase of 232% 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 0.7 million, or 37%, to EUR 1.2
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 0.7 million, or 39%, to EUR 1.1 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 remained
at EUR 0.4 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 4.0 million for the three months ended June 30, 2009
compared to EUR 3.6 million for the three months ended June 30, 2008, an
increase of EUR 0.5 million, or 13%. Included in cost of sales is Internet,
broadcasting and wireless cost. printing, processing and duplication and
amortization of library. Internet cost was EUR 1.8 million for the three
months ended June 30, 2009 compared to EUR 0.3 million for the three months
ended June 30, 2008. Internet cost as a percentage of related sales in the
period was 54% compared to 28% in the same period last year. The increase of
EUR 1.6 million was primarily the result of the acquisition of GameLink.
Broadcasting and wireless cost was EUR 0.1 million for the three months ended
June 30, 2009 compared to EUR 0.4 million for the three months ended June 30,
2008. Broadcasting and wireless cost as a percentage of related sales in the
period was 5% compared to 19% in the same period last year. The decrease of
EUR 0.3 million was primarily the result of lower wireless and broadcasting
cost as result of more cost efficient content delivery. Printing, processing
and duplication cost was EUR 0.5 million for the three months ended June 30,
2009 compared to EUR 1.3 million for the three months ended June 30, 2008, a
decrease of EUR 0.7 million, or 58%. Printing, processing and duplication cost
as a percentage of DVD & Magazine sales was 45% for the three months ended
June 30, 2009 compared to 66% in the same period last year. Amortization of
library was EUR 1.6 million for the three months ended June 30, 2009 compared
to EUR 1.5 million for the three months ended June 30, 2008, which represents
an increase of EUR 0.1 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 June 30, 2009, we realized a gross profit of EUR 2.1
million, or 35% of net sales compared to EUR 1.6 million, or 31% of net sales
for the three months ended June 30, 2008. The increase in gross profit was the
result of the acquisition of GameLink.

Our selling, general and administrative expenses were EUR 4.4 million for the
three months ended June 30, 2009 compared to EUR 2.9 million for the three
months ended June 30, 2008, an increase of EUR 1.5 million, or 53%. The
increase was the result of the acquisition of GameLink which added EUR 1.4
million and bad debt provision, which increased by EUR 0.1 million.

We reported a loss of EUR 1.6 million for the three months ended June 30,
2009, compared to EUR 0.8 million for the three months ended June 30, 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 in Europe, and as they
continue to build out and get larger, we project significant 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 80% percent
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 Game Link 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 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 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 is highly flexible, customizable and scalable
designed to support multiple retail strategies and products simultaneously.
Additionally, through its related companies, GameLink offers third-party and
white-label ecommerce solutions and development. For the year ended 2008
GameLink and its affiliates reported net sales of USD 16.4 million.

The acquisition of GameLink is a significant development that will
substantially contribute to our growth, while creating economies of scale. We
have been establishing our digital strategy for the last year, and concluded
that the combination of Private with a major online retailer and accomplished
platform developer is the approach to achieving our goals in the rapidly
changing business landscape. 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 expect to announce a variety of compelling new initiatives
during 2009, including additional strategic acquisitions of Internet
businesses.

We are successfully implementing our new media strategy for growth of VOD
(Video-on-Demand) via IPTV and to date we have contracted with 38 major
platform operators in 24 countries in Europe, as the leading supplier of adult
content. Currently we have gained more than 75% coverage of the European IPTV
market(1) and across all platforms, quarter by quarter, sales are growing
continuously in line with the general growth of the market, or faster. 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.

Furthermore, the introduction of IPTV in Europe has challenged the Cable-TV
industry and subsequently cable operators are rapidly upgrading their systems
to provide the same functionality as IPTV. Recently we have contracted with
two leading cable operators in Western Europe and going forward we expect to
add further Cable/VOD platforms to our portfolio.

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. During the past twelve months,
Playboy TV Latin America increased the distribution significantly in Brazil,
Argentina and Central America and we expect to see 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 the end of 2008,
we started optimizing our content delivery network of aggregators in order to
secure a more aggressive long-term growth. Now this process is completed and
consequently we expect sales to increase significantly going forward.
Additionally, we are implementing a new off-portal strategy in 2009 to
capitalize on the expected transition and growth with this new consumer access
to mobile content.

The markets of Asia and the North America are still underexploited by us and
therefore represent a significant growth potential. In addition, Mobile TV,
increased penetration of smart-phones and the implementation of age
verification systems offer additional significant growth potential with both
current and future operators in 2009 and beyond(2).

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
June 30,
--------
2008 2009
---- ----

Net Sales 5,200 6,175
Net loss 826 1,553

Weighted average common and common
equivalent shares outstanding:
Basic 53,587,408 62,114,803
Diluted n/a -

Loss per share:
Basic 0.02 0.03
Diluted 0.02 0.03

NOTES TO THE EDITOR:

Footnotes
1. 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.

2. 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, Private Media Group, +34 93 620 80
90, johan.gillborg@private.com