Knightscove Media Corp executes a letter of intent to acquire VOD provider Studio 4 Networks for $7 million in cash and stock; Studio 4'S family programming reaches approximately 7 million households throughout USA and Canada



    TORONTO, Sept. 28 /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 (the "Agreement") to acquire
Studio 4 Networks ("Studio 4"), a Los-Angeles-based broadband and
video-on-demand (VOD) broadcaster.
    Studio 4 operates three cable VOD channels (Studio4 Learning, Fitness and
Kids) and two internet video sites, (www.studio4kids.tv and
www.studio4fitness.tv) which provide family friendly programming complementary
to Knightscove's core product. Knightscove will employ Studio 4's existing
three VOD channels with carriage on Cox, Shaw, AT&T and Akimbo networks, which
are forecasted to reach over 15 million households by 2009 to distribute its
family library content.
    "This is an exceptional synergy in light of our recent acquisition of
Morningstar Entertainment, with its library of 1,400 DVD titles", says Leif
Bristow, Knightscove's Pres. and CEO, "and it is the next step in realizing
our business objectives of becoming one of the largest independent providers
of family friendly programming in North America and internationally. Carriage
of Studio 4's VOD channels covered 7-8 million households in the US and Canada
in the fourth quarter. Knightscove intends to distribute our products in the
family, children, fitness and education genre to those households. Studio 4
will have access to Knightscove's proprietary feature and television
productions for the network's flagship programming and will have access to
sufficient product through Knightscove's acquisitions and licensing
initiatives to program internally from the DVD and television divisions. We
will now be able to launch a web based store to cross promote our existing and
future film, television, DVD titles and ancillary merchandise and we will be
able to support our retail product placement with our many national retail
partners by providing on - air advertising support and vice-versa."
    Studio 4 offers its programming services across multiple platforms
including cable, satellite and broadband. VOD is one of the fastest growing
services among cable MSO's and has reached over 25 MM homes and is forecast to
reach over 63 MM households by 2010. Broadband penetration among US households
with internet access has surpassed 60% and is forecast to reach 70% next year
with Plug and play technology and streaming video online.
    Additionally, Studio 4 has entered into strategic partnerships with
leading print publishers such as Parenting, Babytalk & Self magazines to
create multiplatform ad packages in the magazine print pages and on their
respective web properties. Its revenues are derived from advertising,
subscription, sponsorship, PPV and other fees. Studio 4's content library of
over 400 hours of licensed and original productions is focused on the kids'
edutainment, adult education and fitness categories which comprise over $2
billion of the $20 billion home entertainment market.
    "We're excited to be a part of the Knightscove family. The Knightscove
film and TV productions plus Morningstar's extensive DVD library of lifestyle
programming provide Studio 4 with a great source of exclusive, high quality,
family friendly programming " says Ed Stansfield, Studio 4's founder and CEO.
"We believe featuring Knightscove programming will help us to continue to
build the family audiences that top-tier sponsors want to reach."
    Under the Agreement, Knightscove will acquire all of the issued and
outstanding shares of Studio 4, for a purchase price of $3.5 million in the
form of cash payable on a pro-rata basis to the shareholders of Studio 4, less
debt payments, as well as the issuance of 5,500,000 common shares of
Knightscove (at a deemed value $0.64 per share). 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. The principal shareholders of Studio 4,
Ed Stansfield formerly an executive with Disney and a Principal of the McKenna
Group will become EVP in Charge of Broadcasting for Knightscove and remain
President of Studio 4; Colin Phillips the former Publisher of Editor &
Publisher Magazine will remain as COO of Studio 4. Both will receive stock as
part of their consideration to reflect their continued commitment to the
future growth of the overall business, aligning their interests with those of
all shareholders. No finder's fee was paid in connection with this
transaction.

    About Knightscove and Morningstar:
    Knightscove Media Corp. along with its wholly owned subsidiaries,
Morningstar Entertainment Inc. ("Morningstar") and Knightscove Family Films
Inc., is an integrated Canadian entertainment company specializing in the
distribution, acquisition and creation of high quality live-action feature
films and television productions for the whole family. With the acquisition of
Morningstar , one of Canada's leading independent home entertainment
distribution companies in the home video and DVD markets, Knightscove has
executed the first step in its strategy to distribute family film product to
the theatrical, home video/DVD, pay, specialty and free television markets in
North America and internationally. Established 15 years ago, Morningstar has
over 1,400 titles in its DVD library.

    About Studio 4 Networks:
    Based in Los Angeles, Studio 4 Networks was launched at the end of 2003
and is the leading provider of family friendly programming for kids, education
and fitness on demand services. Currently available in more than four million
VOD homes, Studio 4 Networks offers three on-demand channels: Studio 4
Fitness, Studio 4 Learning and Studio 4 Kids. The networks are available under
a variety of models including free on-demand, PPV and subscription VOD. Studio
4 also operates www.studio4kids.tv and www.studio4fitness.tv, both of which
offer video programming complementary to the VOD channels.
    Knightscove currently has 19,495,808 common shares outstanding.
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) 691-6655 ext 267; Porter, Levay & Rose, Michael
Porter, President or Linda Decker, (212) 564-4700; Studio 4 Networks, Inc, Ed
Stansfield, President and CEO, (323) 965-8200 ext. 703

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KNIGHTSCOVE MEDIA CORP.

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