Knightscove Media Corp executes a letter of intent to acquire Specialty Markets DVD distributor



    TORONTO, Dec. 7 /CNW/ - KNIGHTSCOVE MEDIA CORP (TSXV: KC/OTCQX: KCMDF)
("Company", "Knightscove" www.knightscove.com) is pleased to announce that it
has entered into a letter of intent to acquire the common shares of a
Specialty Markets DVD ("SMD") supplier of film product to a major Canadian
retailer.
    The acquisition complements the distribution network and relationships of
Knightscove's existing DVD distribution division, Morningstar Entertainment
Inc. Morningstar is one of Canada's leading independent home entertainment
distribution companies in the home video and DVD markets with over 1,400
titles in its DVD library. SMD operates and manages large seasonal DVD orders
together with year round unique promotional and marketing campaigns at retail.
A significant portion of current and future revenue in the DVD sector is and
will be derived from the exploitation of titles in the under $10.00 price
category which is quite often an impulse purchase, SMD has a proven track
record in this area. The opportunity to expand significantly throughout Canada
is an additional motivating factor for the purchase together with the
synergies that will be created though managing the full business from the same
location
    Currently the distributor generates revenue of approximately $5.2 million
in sales in Canada. With new product from Morningstar's back catalogue, a
significant increase in the volume of sales is expected to be realized and
management believes the Company could have access to 45% of the discount DVD
market in Canada. About half of the DVDs sold by the distributor are a
selection of top selling movies, compilations and classics and the rest are
sourced from a sister distributor in the US. The Company intends to distribute
Morningstar's DVD product through that US based distributor, enhancing its own
sales and geographic reach.
    "This would allow Knightscove to enhance its distribution network in
light of the completion of our acquisition of Morningstar Entertainment and
its library of 1,400 DVD titles", says Leif Bristow, Knightscove's Pres. and
CEO, "along with the recently executed letter of intent with Studio 4, and its
three VOD channels covering 7-8 million households in the US and Canada.
Knightscove intends to distribute our products in the family, children,
fitness and education genre to those VOD households and as well as the big box
stores. Other divisions of the Company will have access to Knightscove's
proprietary feature and television productions for their flagship
programming."
    The specific terms of the Letter of Intent remain confidential, but in
general Knightscove intends to acquire the shares of SMD for $1.0 million. The
purchase is subject to the approval and acceptance of the TSX Venture Exchange
and compliance with all applicable securities laws, all required governmental,
judicial, regulatory and third-party approvals. No finder's fee was paid in
connection with this transaction.

    Additional information regarding the business of Knightscove may be found
on www.knightscove.com on SEDAR at www.sedar.com and on www.OTCQX.com. The TSX
Venture Exchange does not accept responsibility for the adequacy or accuracy
of this release.





For further information:

For further information: Knightscove Media Corp., Leif Bristow,
President and CEO, (416) 444-7900 x222; Porter, Levay & Rose, Michael Porter,
President or Linda Decker, (212) 564-4700

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KNIGHTSCOVE MEDIA CORP.

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