Circuit George Raymond (“CGR Cinémas”), one of France’s largest cinema chains and Arts Alliance Media (“AAM”), Europe’s leading provider of digital distribution services, have reached an exclusive agreement for the deployment of digital cinema in 100% of the circuit’s 400 screens, throughout France. The rollout is scheduled to begin in the first quarter of 2008, with a target of 200 screens during the first year.

This agreement signifies the highly anticipated start of a widespread commercial rollout initiative across Europe which will enable exhibitors, distributors and the entertainment industry at large to reap the substantial benefits of digital cinema: consistently high quality non-degradable prints, new programming opportunities - alternative content and premium ticket shows, notably 3-D films and live satellite events (opera, concerts, sports, etc), as well as vastly reduced print production and logistics costs.

Under the conditions of the agreement, AAM will create a fully integrated DCI-compliant digital cinema network within the CGR Cinémas infrastructure. The agreement requires AAM to procure, service and maintain all digital cinema systems deployed, including projectors and servers, central storage servers and a Theatre Management System.

CGR Cinémas is a leading and expanding cinema chain in France. The company is well known for the success of its multiplexes in many mid-size cities across the country, for the efficiency of its cost management and for its profitability. By becoming the first European cinema chain to join the AAM initiative and go fully digital, CGR Cinémas is demonstrating that it is an innovative company, ready to embrace new technology to deliver the best possible quality cinema experience.

This agreement between CGR Cinémas and AAM shows that the VPF-based business model has now been fully adapted to meet the particular requirements of the European exhibition market. The VPF business model is a means of financing the conversion to digital cinema, where both distributor and exhibitor contribute over time towards the total cost of the digital projection and server equipment, funded up front by the rollout entity (AAM). The VPF model has been proven in North America, with over 3,700 digital screens installed to date.

AAM is the only studio-backed digital cinema rollout entity in Europe. In June 2007, AAM signed Europe’s first long term digital cinema deployment agreements with Twentieth Century Fox and Universal Pictures International for the conversion of close to 7000 screens, and in October, Paramount Pictures International also committed to supporting AAM’s digital cinema rollout in Europe. AAM is in active negotiations with European distributors and other Hollywood studios for further deals, and announcements are expected shortly.

“We are delighted to be the first movers in the digital transition and to enter into a new era of French and European cinema,” said Jocelyn Bouyssy, Chief Executive Officer, CGR Cinémas. “CGR Cinémas is a forward thinking company and its ability to seize new opportunities makes it one of the most successful chains in the French exhibition market. I would like to thank Gwendal Auffret and AAM’s technical team, the staff at CGR Cinémas’, as well as the suppliers and installers for their innovation, creativity, skills and efficiency. This teamwork made such a historical agreement possible and now CGR Cinémas will embark on the great adventure of digital cinema in every screen in our circuit.”

Mr. Bouyssy continued, “Starting as soon as this Christmas, we will equip seven screens in different multiplexes across the chain, so our customers can immediately enjoy films in 3D, which I believe will play a major role in the future of cinema exhibition.”

AAM’s Chief Executive Officer Howard Kiedaisch said, “This agreement is an epic milestone for the industry, for AAM and for audiences Europe-wide. CGR is clearly a visionary leader in the European exhibition community and they are seizing the enormous opportunities that digital cinema offers to strengthen and sustain their business, as well as to revolutionize the movie-going experience.”

Gwendal Auffret, Managing Director, AAM Southern Europe added, “We are very honoured and extremely happy to have CGR as our first exhibitor partner. This should drastically accelerate the digitalisation of the European distribution and exhibition industry. Leveraging all our experience and expertise in rolling out digital cinema, coupled with our major studio agreements, we are ready to start the transformation immediately.”

AAM completed the UK Film Council digital cinema rollout of 240 screens, known as the Digital Screen Network, on April 30th, 2007. The company is also participating in two digital cinema trials, one in the UK at the Odeon Surrey Quays multiplex, since February 2007, and the other in Norway, in various cinemas across the country, since April 2006. To date, AAM’s in-house digital lab has encoded over 200 digital cinema titles and shipped over 3600 digital prints.