Capital Media Group Ltd. and Unimedia S.A. execute letter of intent to acquire Harmony Holdings, Inc.

LONDON--(BUSINESS WIRE)--April 30, 1996--Capital Media Group Limited (OTCBB: CPMG), Unimedia S.A. (privately-held) and Harmony Holdings, Inc. (NASDAQ: HAHO), announced today that they have signed a letter of intent which provides for Capital Media and Unimedia to jointly acquire Harmony for a combination of cash and stock valued at approximately $21 million.

The terms of the agreement provide for a purchase price of $3.50 per share. Harmony shareholders will receive one third in cash and two-thirds payable in common stock of CPMG. The value of the CPMG common stock to be issued in the transaction will be the average closing price for the five trading days prior to the date of shareholder approval.

The proposed acquisition is subject to the satisfactory completion of due diligence review by all involved parties, the execution of a definitive agreement and the approval of both Capital Media Group's and Harmony Holdings' Boards of Directors, Harmony Holdings' shareholders, and other customary approval requirements.

Capital Media Group is an independent media holding company with interests in emerging and developed European media markets. It counts among its subsidiaries: ONYX Television, and 18-hour-per-day music television station transmitting in Germany; Blink T.V., a London-based producer and broadcaster of lifestyle programming at large entertainment venues; and Tinerama, a Romanian-based print media group and radio station operator. In addition, Capital Media Group has an important strategic relationship with AB Productions (ABP), a leading French producer of television programming for the European market. ABP, which holds a 12.6% stake in CPMG, produces more than 1,300 hours of television programming per year. It also owns AB SAT television, which recently launched eight satellite channels in France and is expected to launch twenty additional channels in Europe via satellite and cable.

Harmony Holdings, Inc., is a Los Angeles-based, television commercial and music video production company, with production offices in Los Angeles and New York. It is among the largest public television commercial production companies in the United States. In its seventeen year history, Harmony subsidiaries (Harmony Pictures, Inc., Curious Pictures, Inc. and The End, Inc.) have produced more than 2,500 commercials for clients of virtually every leading advertising agency in the country. It has among its credits, commercials for Coca-Cola, IBM, Mastercard, McDonald's and Sony, among others. Harmony Holdings was named one of the 25 fastest growing public companies in Los Angeles by the L.A. Business Journal in 1995.

The acquisition of Harmony Holdings will provide state-of-the-art production capability for the development of commercials, films and other products for distribution through the holdings of both Capital Media Group and Unimedia S.A. The synergies among the three companies include opportunities to develop and own product that will be broadcast and accessed through the Internet and other multimedia services. It is anticipated that the combination could provide a major step forward in Capital Media Group's goal of becoming a vertically integrated media company in the international marketplace.

Charles Koppel, president and chief executive officer of Capital Media Group, commented, "I expect the combination of companies to produce the sought-after synergies between media production and distribution." He added, "We will be adding enormous creative talent and production capability to our other key assets in an effort to capture the financial gains of vertical integration and product ownership."

Harvey Bibicoff, Harmony's chairman and chief executive officer, said, "We are very pleased and excited about the opportunities created by this merger. It is anticipated that our award-winning creative team will be offered the opportunity to extend its reach beyond television commercials and music videos into film and other media product." He added, "We believe this combination will allow us to more fully exploit each of our existing assets in the international media marketplace."

Gilles Assouline, chairman and chief executive officer of Unimedia S.A., noted, "The joint acquisition allows for the marriage of advanced multimedia technology, state-of-the-art production capability and distribution in international media markets. We believe the combination should put us in a very competitive position in terms of entering and expanding new geographical markets and emerging multimedia activities."

Unimedia is a French registered high-tech company with a unique expertise in designing turnkey integrated solutions for multimedia interactive off-line and on-line applications and services, including home and virtual shopping, distant interactive education and interactive TV and video games.

Capital Media Group is a media holding company with subsidiaries in Germany, Romania and the United Kingdom. The subsidiaries' businesses include television and radio broadcasting, newspaper titles and printing operations and program production.

CONTACT: Capital Media Group Ltd., London

Charles Koppel, 011-44-171-495-8662

or

Harmony Holdings, Los Angeles

Harvey Bibicoff, 310/446-7707

or

Coffin KCSA, Sherman Oaks, Calif.

Doris Banchik, 818/789-0100