China Digital Media Corporation Reports Second Quarter 2006 Results

China Digital Media Corporation Reports Second Quarter 2006 Results

Revenue Increases 241% Leading to 60% Increase in Pre-Tax Earnings

HONG KONG, Aug. 16 /Xinhua-PRNewswire-FirstCall/ -- China Digital Media Corporation (BULLETIN BOARD: CDGT) , a leading provider of cable and digital television services, advertising services and content in China, announced today record quarterly revenue for its second quarter ended June 30, 2006.

Financial Highlights for the Three Months Ended June 30, 2006 Compared to the Three Months Ended June 30, 2005:

-- Revenues increased 241% to $4,470,600 from $1,310,800
-- Earnings before depreciation and taxes increased 81% to $1,808,400 from
$997,000
-- Net income increased 11% to $786,000 from $$705,700

Financial Highlights for the Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005:

-- Revenues increased 254% to $8,167,300 from $2,304,300
-- Earnings before depreciation and taxes increased 78% to $3,017,400 from
$1,697,800
-- Net income increased 8% to $1,230,600 from $1,143,500

The strong revenue growth in the 2006 second quarter compared to the same period in 2005 was primarily due to the increase in number of digital TV subscribers in the DTV operations in Nanhai, and additional contributions from advertising agency business and channel management of joint ventures operations in Guizhou. The Company also experienced an improvement in gross profit margin to 55% from 48% as compared to the first quarter of 2006.

Of the revenue increase, $3.7 million was earned from the television advertising business which was not present during the comparable first half year in 2005, helping growth in the DTV operations in Nanhai increase about 84% compared to the same period of 2005.

"We are delighted with our strong results in the second quarter. Our DTV operations in Nanhai and our advertising agency business has generated substantial growth for the Company," said Daniel Ng, Chairman and CEO of China Digital Media Corporation. "Despite having a substantially higher corporate tax rate, due to the strength in our operations, we were still able to increase net income by 11%. We anticipate that synergies from the combination of channel management and advertising agency business will drive our growth for many years to come."

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 focuses its business in three main areas: Cable TV Operations, Programs Production and Advertising Sales. Arcotect Technology (GZ) Limited, a wholly owned subsidiary of CDGT in China, is the sole contractor and operator of digital television services in Nanhai, a city with 410,000 cable TV subscribers. As of today, Nanhai's cable television operation provides 148 television channels which comprises of 48 basic channels and 100 pay channels. The pay channels are categorized into various value added packages.

Certain information contained in these materials is "forward-looking" information, such as projections, estimates, pro formas, or statements of intentions, expectations or plans. Forward-looking information in this release includes, without limitation, the future success of the Company's advertising business and of the Company's joint ventures, the Company's ability to grow and generate new sources of revenues from its IP STB in the future and its ability to keep its IP STB technologically current. 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.

For more information, please contact:

China Digital Media Corporation
Investor Relations
Tel: +852-2390-8600

or

Daniel Schustack of CEOcast, Inc.
Tel: +1-212-732-4300

Source: China Digital Media Corporation

CONTACT: China Digital Media Corporation Investor Relations,
+852-2390-8600; or Daniel Schustack of CEOcast, Inc., +1-212-732-4300

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

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