Warner Brothers International Cinema Announces China Film Group Takeover of 3 Cinemas

Shanghai -- Warner Bros. International Cinemas (WBIC), the international cinema division of Warner Bros., and China Film Group (CFG), a Chinese leading film industry player, announced today that CFG will take over three WBIC Cinemas in China. Located in Chongqing, Changsha and Nanchang, all the three cinemas are the joint projects of WBIC and SZITIC Commercial Property Co., Ltd. (SZITIC).

In November 2006, WBIC announced that it must stop its investments in cinemas due to a major regulatory change. Warner Bros. remains committed to its other businesses in China, including local language film production, a home video joint venture, consumer products and studio stores all of which have different legal structures, business models and regulatory requirements.

The equity transfer agreement was signed by CFG, WBIC, and SZITIC on January 19, 2007. According to the agreement, WBIC and SZITIC will both sell the totality of their shares to CFG, and CFG will become the sole owner of the 3 cinemas. The agreement is still pending to the approval of the Chinese government, and the process is expected to take approximately 60 working days.

“We are extremely proud of what our international cinema business has accomplished in just four years in China and proud to have been a catalyst in turning around a market that has since seen an explosion of new multiplex cinemas across the country,” said Mr. Millard Ochs, President of WBIC. “We believe that as a leading player in China film industry, China Film Group’s experience in cinema operation will help to achieve a smooth hand-over, and ensure that the cinemas keep their service standards and continue to provide improved consumer movie experience.”

Ding Liye, General Manager from SZITIC also showed the confidence by saying “We have every reason to believe that the cinemas will sustain its leading role in the market and attract more and more audiences.”

Mr. Han Xiaoli, Deputy General Manager from CFG also commented on February 15 that “WBIC has achieved good results in the past years. By taking over the Warner-SZITIC cinemas, China Film Group has shown our commitment and confidence to continue developing the Chinese cinema market. We will do our best to contribute to the prosperity of China film market.”

After the hand-over, all Warner Bros. Intellectual Properties and Warner logos will be removed from the cinemas and the cinemas will be no longer named by Warner Bros.