American Greetings Corp. Sets Strategic Entertainment Course with Investment in the Hatchery.

CLEVELAND & LOS ANGELES -- Combined Venture to Create, Acquire and Market Family and Children's Entertainment Franchises

For the first time in its 100-year history, American Greetings Corporation (NYSE:AM), one of the world's largest manufacturers of social expression products, has made a major equity investment in an entertainment company by acquiring a stake in The Hatchery, LLC. American Greetings, creator of properties including Strawberry Shortcake and the Care Bears, will become a co-owner in the Los Angeles-based entertainment production and marketing company headed by successful television industry executive Margaret Loesch and leading strategic marketing executive Bruce Stein.

The announcement was made jointly by Jeffrey Weiss, President and Chief Operating Officer of American Greetings Corporation, and Ms. Loesch and Mr. Stein, Managing Partners of The Hatchery. Under the new partnership Ms. Loesch and Mr. Stein will be Co-Chief Executive Officers.

The investment is strategically in line with and greatly enhances American Greetings' property-development initiatives. The Hatchery develops and produces original family and children's entertainment for all media, including film, television, direct-to-home video, video games, new media distribution and consumer products. In addition, the partnership will seek to acquire, develop and exploit new and existing brand franchises.

"This is an exciting opportunity to expand our all-family reach at American Greetings and to optimize our expertise in character development, retail merchandising and ability to reach customers on a variety of electronic platforms," said Mr. Weiss. "In The Hatchery we're adding a full-fledged entertainment production and development component to our company. Margaret and Bruce are exceptional creative and consumer marketing executives. By combining our vast resources, we're creating a business that will enable us to maximize our many existing creative properties and will provide unique access to new properties to exploit."

The new partnership, which will continue to operate as The Hatchery, LLC, leverages American Greetings' extensive catalog of intellectual properties, leading-edge creative resources and strong retail relationships with The Hatchery's significant experience in identifying and building successful franchises in family and children's entertainment and consumer products. Among American Greetings' most current creative properties are the popular Twisted Whiskers and the upcoming Maryoku Yummy franchises.

In addition, American Greetings provides an extensive -- and uniquely valuable -- consumer reach for The Hatchery's entertainment and branded projects through its 600 owned shops in the U.S. and Canada and 35,000 retail card departments in America's largest retailers. American Greetings' consumer reach also extends into interactive mediums with more than two million, paying subscribers to its websites: AmericanGreetings.com, Blue Mountain, EGreetings and Beatgreets. In addition, American Greetings reaches consumers through co-branded greeting sites on Yahoo, AOL and MSN, as well as in the mobile arena via Def Jam Mobile, Univision Movil, MidiRingtones, Kiwee and Blue Mountain Mobile.

Since launching in April 2003, The Hatchery has acquired more than 20 franchise properties, produced and released television and feature film projects and partnered in patented consumer products. Among their completed and in-production projects are the feature film Benji: Off the Leash, the television comedy game show "Balderdash" and the Canadian-produced action-adventure series "Young Blades" and a CGI educational series "Zula Patrol." Projects in various stages of development include feature films based on "The Great Brain" and the award-winning short film "The Freak"; the Sammy Keyes series of children's books; Blast Off Boy (in partnership with Jane Startz), a series of critically-acclaimed, Newberry Award-winning children's books; and a series of direct-to-home video feature films based on the best-selling horror anthologies Nightmare Hour and The Haunting Hour from award-winning and world's best-selling author R.L. Stine (Goosebumps).

Ms. Loesch said: "We are merging resources that are perfectly complementary. Through targeted acquisitions and focused strategies, we've positioned The Hatchery as a creative magnet, where we can provide an effective launching pad for family and children's entertainment concepts and help grow them into brands, and ultimately franchises."

Mr. Stein added: "This is a strategic and symbiotic partnership. Both companies instantly bring considerable creative, managerial and marketing resources to a mix that will enable us to complement our studio partners in a manner that optimizes the future business models of entertainment distributors and retailers alike."

Ms Loesch, an Emmy Award-winning producer and veteran network television executive, was most recently founding President/CEO of Crown Media U.S. and its cable television network, Hallmark Channel. Mr. Stein, a top strategic marketing executive, was formerly Worldwide President/COO of Mattel, Inc., CEO of Sony Interactive Entertainment and President of Kenner Products. Collectively, Ms. Loesch and Mr. Stein are responsible for creating some of the most successful franchises in family and children's entertainment and consumer products. Among them: "Mighty Morphin Power Rangers," "Goosebumps," "X-Men," "The Smurfs," the Fox Kids Network, toy lines for Batman, Jurassic Park, Starting Line-Up, Star Wars, the Care Bears properties and video games including Crash Bandicoot.

Mandalay Entertainment is the founding investor of and a co-owner in The Hatchery. Its Chairman, Peter Guber, and Vice Chairman, Paul Schaeffer, are Hatchery board members and serve on the company's Operating Committee. They bring the full range of strategic resources of Mandalay in theatrical film, television, professional sports, special events and large-format programming.

Emmy and Peabody Award-winning writer and producer Dan Angel is also a partner with Ms. Loesch and Mr. Stein in The Hatchery, LLC.

American Greetings Corporation is one of the world's largest manufacturers of social expression products. Along with greeting cards, its product lines include gift wrap, party goods, candles, stationery, calendars, educational products, ornaments and electronic greetings. Located in Cleveland, Ohio, American Greetings generates annual net sales of approximately $2 billion. For more information on the corporation, visit http://corporate.americangreetings.com.

Editor's note: For executive photos, please contact Mark J. Kern.