PRESS RELEASE

Intertainment AG makes substantial adjustments and write-offs
Positive outlook is based on three business fields

Ismaning (near Munich), May 6, 2002 - Intertainment AG's financial year ended Dec 31, 2001 has been characterized by the law-suit against Franchise Pictures, a U.S. film producing company. Until today, no out of court settlement between the media company located in Ismaning near Munich, Germany, and Franchise Pictures could be reached. 

According to recent press reports, Intertainment AG assumes that parts of the film rights involved in this litigation have been sold to third parties, including Kirch Media. The plaintiff, Intertainment Licensing GmbH, therefore has promptly filed an application for a writ of attachment on Franchise's assets, which has been heard before the U.S. Federal Court in Los Angeles on April 29, 2002. The court's decision on this application is expected to be issued during the next few weeks, while the fraud trial against Franchise is scheduled to be held on November 19, 2002. 

As a result of such third party licensing, and considering Franchise's creditworthiness and the insolvency of Kirch Media, Intertainment has largely written off the advance payments made on account of the litigious film rights as a precaution. However, those parts of the film rights which are exploited by Warner Brothers, together with the revenues resulting therefrom, are still constituting a valuable claim for damages. 
This development is also clearly reflected in the annual accounts for the financial year ended Dec 31, 2001: Intertainment AG realized a loss from ordinary business activities in the amount of 6m Euro after a previous year's profit of 10.7m Euro. Included in these results is a 25% depreciation charge on SightSound in the amount of 5m Euro. Due to the extraordinary results, the EBIT went down to - 100.2m Euro (previous year: + 16.2m Euro). The year's net loss amounted to 86.8m Euro, while Intertainment AG still had been able to show a net profit of 5.6m Euro for the year ended Dec 31, 2000. 

All in all, Intertainment AG shows extraordinary expenses of 142.4m Euro for the year ended Dec 31, 2001, including depreciation on film assets in the amount of 59.6m Euro as a result of the necessary revaluation of film rights due to market factors. An amount of 82.8m Euro is directly connected with the Franchise litigation, consisting of write-offs on advance payments made, provisions for sales of licenses, the setting aside of reserves, and the reversal of license sales. 

"By making such adjustments and write-offs and taking such precautionary measures, we have made a clean sweep," said the company's CEO, Ruediger Baeres, during the annual accounts press conference, to explain the measures taken. "Now we can face the future with a clean record." 

For Intertainment, such future is based on three pillars: the film produc-tion, SightSound Technologies, and merchandising. Currently, film production is the most important sector. "Changing business from merely trading rights to producing films, has been a critical step which provides us with new prospects," Ruediger Baeres emphasizes. The agreements concluded with the producer Arnold Kopelson and Para-mount Pictures, one of the leading studios of the U.S. film industry, constitute significant milestones in this process. The initial projects, in which Kopelson is involved, have currently reached various stages of development. The work on "Blackout" has made the most progress - the shooting for this thriller is scheduled to start in July. Having a budget between U.S.$50m and U.S.$70m, this movie is scheduled to be shown in U.S. cinemas in the spring of 2003 and, with little delay, also in German cinemas. 

SightSound Technologies is regarded by the company to be an in-vestment in the future. With a share of 24.4% in SightSound's capital, Intertainment is the largest individual shareholder of this company which owns the patent for digital audio & video downloads using telecommunication lines of any kind in the United States. That technology developed by SightSound enables to offer hundreds of thousands of movies or music tracks for download in an encrypted and controlled manner. The digital on demand market has a substantial potential for growth. "There are estimates expecting a rise in the video on demand volume to U.S.$4bn by 2005, and another doubling of sales to U.S.$8.2bn by the year 2008 for the United States alone," says Ruedi-ger Baeres. 

The merchandising sector featuring the "Rudolph" brand continues to show a favorable development for Intertainment. With more than 150 licensed products, the red-nosed reindeer has again been a star in the 2001 Christmas business. In this year's autumn, a new "Rudolph II" movie will be brought to the market. 


Contact:
Intertainment AG
Osterfeldstraße 84
85737 Ismaning
Phone: 0 89 / 216 99 - 0
fax: 0 89 / 216 99 - 11
Internet: www.intertainment.de 
E-mail: investor@intertainment.de

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