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Studio 4 Networks News Release


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
Friday September 28, 11:44 am ET

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

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

Studio 4 Learning Studio 4 Fitness Studio 4 kids Studio 4 Networks Studio 4 kids