DG Systems Partners with Telestream to Support All-Digital TV Station Environment; Three Broadcast Facilities in New York are the First to Integrate New Service Offering.

DALLAS -- DG Systems, Inc. (Nasdaq: DGIT) today announced the availability of a new workflow solution for television broadcasters and cable networks that enables the new DG Spot Box(TM) to interact directly with station automation and play-to-air systems via Telestream's FlipFactory(TM) TrafficManager.

Under an exclusive license agreement with Telestream, DG will begin offering a unique version of Telestream's FlipFactory TrafficManager with its new DG Spot Box to fully automate the movement of advertisements to the TV broadcasters' play-to-air and automation systems. WNYW-TV, WWOR-TV and WUTB-TV will be the first affiliates to integrate the new service offering.

By combining the advertising industry's most powerful network for electronically distributing spots with innovative broadcast automation tools, DG Systems and Telestream have automated the entire process of media receipt, notification, tracking, previewing, formatting and storage at the station level. TV stations, cable systems and broadcast and cable networks will enjoy the benefit of an integrated workflow solution that enables real-time interaction between the DG network and a station's storage, trafficking, automation and play-to-air systems.

Scott K. Ginsburg, Chairman and Chief Executive Officer of DG Systems commented, "Telestream's FlipFactory TrafficManager is the perfect complement to the DG SpotBox network and the Company's universal deployment initiative. DG is committed to connecting every TV station, cable system and broadcast and cable network to its digital network. Integrating smart tools like TrafficManager into our service offering extends that drive to a number of key destinations."

Dan Castles, President and CEO of Telestream, commented, "We are pleased to be partnering with DG Systems on the expansion of their digital delivery services, which broadens the sales and distribution channel for our FlipFactory TrafficManager. This agreement also makes an all-digital workflow solution within the broadcast facility a reality for select DG customers."

With the ability to securely receive television commercials via the Internet, satellite or physical means, a clear and intuitive interface, secure firewall protection, multiple storage options, and software that optimizes network performance, the DG Spot Box powers the advertising industry's most flexible and robust network for electronically distributing spots. DG's drive to achieve universal deployment for its network showcases the Company's commitment to eliminating off-line deliveries with a superior electronic alternative that delivers the farthest reach and highest levels of speed, capacity, reliability, efficiency and digital quality available.

Telestream's FlipFactory TrafficManager picks up where digital delivery services leave off, providing a dynamic tool that automates the entire commercial ingest workflow at the station level, from receipt to broadcast. After electronically notifying operators of a delivery, TrafficManager processes the media into the required digital formats for proxy viewing, approval and file transfer to destination systems - eliminating the need for manual intervention by station personnel. The agreement with DG Systems enables DG to offer a DG-specific version of FlipFactory TrafficManager while Telestream continues to offer its full-featured FlipFactory TrafficManager system as a stand-alone product.

About DG Systems, Inc.

DG Systems and the Company's AGT-Broadcast and StarGuide divisions provide the standard in Digital Media Exchange services for the advertising and broadcast industries, featuring dependable satellite and Internet transmission technology and a suite of digital media asset management tools. DG's extensive digital network is the largest in the advertising and broadcasting industries, reaching more than 5,000 advertisers and agencies, over 3,000 television, cable, and network broadcast destinations and over 10,000 radio stations with innovative delivery and management solutions for short-and long-form audio and video content. More information is available at www.dgsystems.com.

About Telestream (www.telestream.net)

Telestream products have set the standard with the world's leading media and entertainment companies, corporations and government institutions for the encoding, organizing and delivery of digital media. Customers rely on Telestream products for convenient, cost-effective, and robust digital media access and exchange over IP networks. ClipMail MPEG appliances enable peer-to-peer worldwide media delivery. FlipFactory(R) software applications provide universal transcoding and metadata exchange between professional video systems. Telestream MAP(TM) media organizers enable workgroups to capture, find, organize, re-purpose, and share video/audio files. Telestream's proven automation applications and smart media organization solutions streamline workflows for demanding broadcasters and media companies, as well as content owners and creators in government, higher education and corporate markets. Telestream and its team of video experts are located in Nevada City, the "video valley" region of Northern California. Telestream is privately-held.

This release contains forward-looking statements relating to the company, including the expansion of its digital distribution network, and the demand among certain clients for digital audio and video delivery services. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to DG Systems' business are set forth in the company's Form 10-K filed with the Securities and Exchange Commission on March 12, 2004.