DG Systems Reports Record First Quarter Revenues and EBITDA; Revenues Rise 11%; EBITDA Increases by $938,000.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--May 11, 2000

DG Systems, Inc. (Nasdaq: DGIT), the leading digital distributor of advertising to the broadcast industry, today reported record operating results for the first quarter ended March 31, 2000.

Consolidated revenues for the quarter ended March 31, 2000 rose 11% to $12.7 million from $11.5 million in the same period last year. First quarter revenues benefited from increased digital video deliveries during the quarter. The Company's private digital video network now exceeds over 725 television stations. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2000 increased to $946,000, compared to $8,000 in the first quarter of 1999. The Company reduced its net loss for the three months ended March 31, 2000 by 71% to $868,000, or $0.03 per share, compared to a net loss of $3.0 million, or $0.11 per share, in the year-ago period.

Commenting on the results, Matthew E. Devine, Chief Executive Officer of DG Systems, stated, "First quarter results extend DG Systems' track record of positive EBITDA growth to five consecutive quarters and reflect another quarter of double-digit, year-over-year revenue growth. DG's presence in over 7,500 radio stations and 725 television stations brands our Company as the largest digital deliverer of short-form audio and video content in the country. DG's user-friendly technology provides our customers with the capability to bring time-sensitive audio and video spots to broadcasters within one and four hours, respectively, creating an unrivaled service standard that gives advertisers, agencies and dealers a convenient, reliable and fast way to reach their ultimate target - the consumer."

Mr. Devine continued, "We remain focused on enhancing shareholder value through several initiatives including generating continued operating improvements through top line revenue growth while maintaining financial spending disciplines. Additionally, we expect to develop a healthier balance sheet and undertake any appropriate strategic initiatives which support our goal of building shareholder value."

DG Systems operates a nationwide digital network for distributing audio and video content that links thousands of advertisers and hundreds of advertising agencies with approximately 7,500 radio and 725 television stations across the United States and Canada. DG Systems can be reached at 415-276-6600 or at www.dgsystems.com.

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 28, 2000.

                   Digital Generation Systems, Inc.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)

                                                   Three Months Ended
                                                        March 31,
                                                   ------------------
                                                      (Unaudited)
                                                    2000       1999
                                                    ----       ----

Revenues                                           $12,709    $11,460
                                                   -------    -------
Operating expenses, excluding
   depreciation and amortization                    11,763     11,452
                                                   -------    -------

Earnings before interest, taxes, depreciation
   and amortization                                    946          8

Depreciation and amortization                        1,584      2,490
                                                   -------    -------

Operating loss                                    $  (638)    $(2,482)
                                                   -------    -------

Interest expense, net                                  230        509

Net loss                                             $(868)   $(2,991)
                                                   =======    =======

Basic and diluted loss
   per common share                                 $(0.03)    $(0.11)
                                                   =======    =======

Weighted average common
   shares outstanding                               28,003     26,462
                                                   =======    =======