China Digital Media Corporation Enters into a Memorandum of Understanding to Implement Digital TV Project with the City Network Company

HONG KONG — China Digital Media Corporation (the “Company”) (OTC Bulletin Board: CDGT) announced today the Company has entered into a Memorandum of Understanding (the “MOU”) with a city owned cable network company in the western part of Guangdong province to implement a digital TV digitalization project, where both parties intend to finalize an agreement in the next 3 months.

Pursuant to the MOU, the Company will invest in digital TV set top boxes to convert all subscribers in the city from analog into digital TV broadcasting whereas the cable network company will upgrade its cable network into 2-way capable. Both parties agree to develop business plans on the digital TV platform, broadband Internet and other value added services to be deployed into the market.

Currently, China has over 130 million cable TV subscribers, of which there are about 15 million digital TV subscribers, and the government has a mission to migrate the whole country to digital TV by 2015.

“We are excited to have a new MOU signed,” said Daniel Ng, Chairman and CEO of China Digital Media Corporation. “With our operational expertise and experience, we target to replicate our Nanhai business model into other cities in Guangdong province.”

Arcotect (GZ) Limited, a wholly owned subsidiary of CDGT in China, is the sole contractor and operator of digital television services in Nanhai, a city with 410,000 cable TV subscribers, where Nanhai, one of the eight cities in China, has granted the status of ”migrated city” from the State Administration for Radio, Film and Television. As of today, Nanhai’s cable television operation provides 128 television channels which comprises of 48 basic channels and 80 pay channels. The pay channels are categorized into various pay TV packages. The Company also engages in offering value added services to its subscribers.