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May 11, 2006 12:58am
Private & Erotic Sign VOD/Pay-TV Deal
Source: Private Media Group, Inc.
by: Company Press Release

(BARCELONA, SPAIN) -- Private Media Group Inc. (NASDAQ NM: PRVT - News), a worldwide leader in premium-quality adult entertainment products, services and mobile and Internet content, and Erotic Media AG today announced the signing of a Pay-TV license and a VOD (Video-on-Demand) agreement for the use of the Company's content in the territory of German-speaking Europe.

Under the terms of the five-year Pay-TV Content Licensing Agreement, Private Media Group will receive 6 million euro, including 3 million euro in 2006 and 1.5 million euro in 2007, in exchange for Erotic Media's immediate and future access to a specified quantity of titles in Private's content library.

Additionally the two companies have also signed a five-year VOD agreement where Erotic Media will become Private's VOD content agent in German-speaking Europe whereby Erotic Media will have an unparalleled content offer in terms of both quantity and quality while obtaining maximum returns.

Bernhard Mueller, Delegate of the Board, Erotic Media Ag commented: "We have chosen Private as our long-term partner because of its well established brand in German-speaking Europe and its consistent track record of delivering top quality content to consumers. This, along with Private's unparalleled ability to support our aggressive timeline and demand for quality and reliability, sets Private apart from other suppliers."

"We are very excited about this strategic alliance and the business opportunities we will now be able to harness." Mueller concluded.

Berth Milton, CEO, President and Chairman of Private Media Group stated: "These two highly profitable agreements are important steps in the Company's video-on-demand and broadcasting activities, which today, among others, include the cooperation with Playboy TV International and the Portland Television Group."

Mr. Milton continued "With the impending IPTV/cable VOD explosion expected in Germany, we have selected to work with Erotic Media to benefit from their solid experience and true understanding of the German-speaking broadcasting market in Europe. This provides the best opportunity for both companies to maximize on actual and future market share and have the weight to best defend our interests at every stage."

Notes to the editors:

About Digital Cable, Satellite and IPTV Development in Europe

According to a March 2005 report from Strategy Analytics, Inc. (Digital TV in Western Europe: Market Outlook & Analysis), approximately 25 million households received digital satellite service and 7.6 million households received digital cable service at the end of 2004. The report estimates that by 2010 there will be 49.1 million digital satellite subscribers and 28.9 million digital cable subscribers. Based on the report, the total estimated number of digital cable and satellite subscribers in Europe for 2010 is approximately 78 million households, a growth of 139%. With respect to IPTV, Screendigest reports that in the first six months of 2005 the number of subscribers to European IPTV services has increased by 66%. IPTV growth rates over the next five years will see this new platform have a significant impact on most European Pay TV markets. In 2004 eight new IPTV services were launched in Europe, this is the highest number so far. According to MRG (Multimedia Research Group, Inc.), the number of global IPTV subscribers will grow from 3.7 million in 2005 to 36.9 million in 2009, a compound annual growth rate of 78 percent. Europe is leading the market and the number of IPTV subscribers will grow from approx. 2 million in 2005 to 15 million in 2009. Adding together digital cable and satellite and IPTV, the total number of Pay-TV subscribers in Europe is approaching 100 million by 2010.

Germany and Austria reflects some of Europe's strongest contrasts in the cable and telecom sectors. Germany has Europe's largest telecom market, while Austria's is one of the smallest yet most advanced and dynamic. Austria's mobile and broadband penetration is far greater than that of Germany, while its extensive cable footprint has placed it in a more promising position to accommodate the emerging triple play services on both the cable and Digital Subscriber Line (DSL) platforms in 2006 and beyond. However, with the recent developments in Germany with Deutche Telekom, scheduled to launch IPTV services based on the Microsoft solution this summer, and others investing extensively in digital broadcasting and IPTV (including VOD), Germany is set to experience a boom across all forms of digital broadcasting during the next few years.

About Erotic Media Ag

Erotic Media Ag is a Swiss company specializing in marketing erotic movies both through its own TV channels and third party channels. The company is the market leader in Germany and operates the only German XXX 24hr Satellite and Cable TV Pay-TV channels in the country. The channels are transmitted in both Germany and Austria and they are branded "Blue Movie", "Blue Movie Extra" and "Blue Movie Gay". The company also delivers content to On Demand Services throughout Europe. In addition Erotic Media is a major shareholder in Beate Uhse TV and the company is listed on the Frankfurt Stock Exchange.

About Private Media Group.

With its 40 year track record, Private Media Group is a world leading adult lifestyle company which distributes a wide range of erotic and semi-erotic multimedia content over several platforms, including wireless and broadcasting technologies, Internet, DVD and Magazines. Private Media Group also licenses its Private and silver girls trademarks internationally for a range of luxury consumer products and owns the worldwide rights to the largest archive of high quality adult content in the world, which it distributes all over Europe, North America, Latin America, South Africa, New Zealand and Australia.

Disclaimer

This release contains, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company's current judgments of those issues. However, because these statements are forward-looking and apply to future events, they are subject to unpredictable circumstances, which could lead to results materially different from those anticipated by the Company.

For further information please contact: Angela Carson Public and Investor Relations, Private Media Group Tel: +34 93 590 70 70 e-mail: Press@Private.com

Alejandra Moore Mayorga Grupo Albión Tel: +34 91 531 23 88

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