The Orchard and Digital Music Group (Nasdaq: DMGI) Agree to Merger

The Orchard and Digital Music Group (Nasdaq: DMGI) Agree to Merger

Combination Forms Powerful Global Digital Music and Video Marketing and Distribution Services Company

The Orchard Enterprises, Inc., a leading global digital distributor and marketer of music, and Digital Music Group, Inc. (Nasdaq: DMGI), a content owner and leader in the digital distribution of music and video catalogues, today announced that the two companies have entered into a merger agreement. The combined business will retain DMGI’s NASDAQ listing and change its name to The Orchard. Current Orchard president and chief executive Greg Scholl will lead the combined company.

The combined company will control a substantial catalogue of entertainment assets, with over one million music recordings available for sale and thousands of hours of television, film and video programming, and will be a market leader for independent distribution of digital music and video, with powerful marketing, promotion, distribution and operations capabilities throughout the world. The company will continue to serve artists, labels, music publishers, television, film and video library owners and other rights holders by developing new and inventive ways to market and sell digital content. In addition, for digital and mobile retailers, advertisers, consumer brands and technology companies, the company will continue to provide a single point of access to one of the world’s largest and highest quality digital content catalogues that spans global superstars and niche and specialty artists, together with state-of-the-art marketing, promotion and programming capabilities.

The Orchard has changed traditional notions of “distribution” by pioneering a broad suite of client services, ranging from worldwide synchronization placement, to co-marketing initiatives with leading consumer brands, to global publishing administration. With operations in 25 countries and an ability to coordinate global programs within local markets, The Orchard has pioneered new forms of entertainment marketing for the digital media era. An impressive array of label clients take advantage of The Orchard’s offering, ranging from leading North American independents like Discos Musart, Definitive Jux, Delicious Vinyl, Shanachie, Surfdog, SST, Smithsonian Folkways, Cleopatra Records, Norton Records, Park The Van/Cornerstone RAS and Dim Mak; leading European independents like Greensleeves, Fierce Panda, Sanctuary, Snapper, Proper Records and Nuclear Blast; and global non-Western powerhouses like Rotana, Saregama and Mu-Yap.

In addition to its own impressive catalogue of digital rights and master recordings, DMGI’s music distribution and exclusive licensing partnerships span landmark independent labels including Kill Rock Stars, Ipecac and Barsuk Records, and leading artists ranging from hip-hop stars Daddy Yankee, Chamillionaire and Lil’ Flip to classic rock and r&b including Johnny Cash, Ike and Tina Turner and The Commodores. The DMGI catalogue was significantly expanded by the acquisition of marquee digital music pioneer Digital Rights Agency (DRA) in September of 2006.

DMGI has been an early-mover and market leader in licensing video under long-term contracts for digital exploitation, ranging from classic television favorites such as I Spy, The Bill Cosby Show, My Favorite Martian, Daniel Boone, The Super Dave Show, and The Mr. Bill Show; animated children’s classics such as Gumby, Legend of the Dragon, Sonic The Hedgehog, Gigantor, and Batfink; comedy from Sam Kinison, Andrew Dice Clay, Pauly Shore, and Jamie Foxx; to contemporary content from superstar illusionist Criss Angel and wrestling icon Hulk Hogan. Mitchell Koulouris, who currently serves as chief executive of DMGI, will leave DMGI to pursue other interests, and Karen Davis, DMGI’s chief financial officer, will serve as DMGI’s interim chief executive officer until the closing of the merger.