Lionsgate Intensifies Image Proxy Battle

SANTA MONICA/VANCOUVER, October 6: Lionsgate has sent
another letter to other Image Entertainment stockholders urging them to focus
on the "central issues" of the current proxy challenge and to elect
the six independent candidates nominated by Lionsgate to replace Image's
current board of directors at Image's annual stockholders' meeting on October
10.

The letter follows the recommendations by the proxy advisory
services Institutional Shareholder Services (ISS) and Glass, Lewis & Co.
that stockholders reject Image’s board directors and instead elect Lionsgate’s
six candidates.

Among the “central issues” that Lionsgate wants stockholders
to consider are that Image, a home entertainment distribution outfit, “is
unprofitable,” Lionsgate says, reporting a 11 cent loss per share in the first
quarter; its “operating margins continue to deteriorate;” its “overhead is
bloated” and that its stock is underperforming.

Further, Lionsgate believes that Image’s stockholders have a
conflict of interest and do not have shareholders best interests at heart.
“Image has had a Special Committee in place for the past year to examine
strategic alternatives for maximizing shareholder value, and they have proposed
nothing to stockholders,” the letter continues. “It appears that Image's
current board is either unwilling or unable to identify ways of maximizing value
to its stockholders.”

“It's time for a change,” the letter further notes. “After
hearing presentations from both Image and Lionsgate, the leading proxy advisory
service Institutional Shareholder Services (ISS) … recommended DO NOT VOTE for
ANY director on Image's slate. The other leading proxy advisory service Glass,
Lewis & Co. concluded today that ‘the incumbent board has presided over an
extended period of poor operating performance and we believe that it has taken
a lackadaisical approach to its review of strategic alternatives.’ They, too,
recommended DO NOT VOTE for ANY director on Image's slate.”