China Digital Media's Major Shareholder Reduces Conversion Ratio of Preferred Shares

China Digital Media's Major Shareholder Reduces Conversion Ratio of Preferred Shares

Move Designed to Make Company More Attractive to Investors

HONG KONG, Oct. 28 /Xinhua-PRNewswire-FirstCall/ -- China Digital Media Corporation (BULLETIN BOARD: CDGT) , a leading provider of cable and digital television services and content in China, announced today that Daniel Ng, Chairman and CEO, has reduced the conversion ratio under his Series A Preferred Stock from two hundred shares of common stock for each share of Preferred Stock to five shares of common stock for each share of Preferred Stock. The action reduces the as-converted outstanding shares of the Company to 39,462,468, of which Mr. Ng owns 82.6%. Previously, Mr. Ng's Preferred Stock, if converted into common stock, would have given him ownership of approximately 98% of the Company.

''I believe this decision will enable us to attract greater interest from the investment community,'' said Mr. Ng. ''The reduction should make the Company's capital structure more attractive for new investors to build positions. While I will still be the Company's largest shareholder, this move on my part will allow third parties to own more of the Company, while reducing dilution to existing shareholders.''

Mr. Ng also noted that ''The high conversion ratio of 200 shares of common stock for each share of Series A Preferred Stock was put in place by CDGT's predecessor corporation, which was a ''business development company'' as defined in the Investment Company Act of 1940, as amended. Prior management planned to issue a large number of shares to acquire portfolio companies, and, at the same time, wanted a high conversion ratio to protect their ownership position. When those plans failed, we decided to acquire control of that public company, terminate their investment company status, and eliminate the high conversion ratio. We believe our new capitalization gives shareholders a more meaningful position and voice in CDGT.''

Recently, the Company announced that more than 120,000 households have installed its digital television equipment, with over 20% subscribing to receive premium packages of television broadcasting and additional digital set-top-boxes ("STB"). The Company receives a portion of the subscription fees and various services fees from its 400,000 customers in Nanhai, a city near to Guangzhou City.

For more information on the Company, please visit the Company's website at http://www.chinadigimedia.com/ .

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) focuses its business in three main areas: Cable Television Operations, Advertising Sales and Programs Production. Arcotect (Guangzhou) Technology Limited, a wholly owned subsidiary of CDGT in China, is the sole contractor and operator of digital television services in Nanhai, a city with 400,000 cable television subscribers. As of today, Nanhai's cable television operation provides 130 television channels which comprises of 38 basic channels and 92 pay channels. The pay channels are categorized into various value added packages. The digital broadcasting system could offer more than 800 digital channels of pay television programs and value added multimedia services. The Group is seeking to establish similar models elsewhere in China.

Certain information contained in these materials is "forward-looking" information, such as projections, estimates, pro formas, or statements of intentions, expectations or plans. All forward-looking information is subject to known and unknown risks and uncertainties, many of which are outside of the control of the company. Consequently, actual results may, and probably will, differ materially from the results contemplated in such forward-looking information.

Source: China Digital Media Corporation

CONTACT: Y. K. Ma of China Digital Media Corporation, +852-2390-8686,
ir@chinadigimedia.com; or Ed Lewis of CEOcast, Inc., +1-212-732-4300, for
China Digital Media Corporation

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

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