MTG Offloads Sonet Film Business

STOCKHOLM, December 14: Modern Times Group (MTG) has reached
a deal to sell its Sonet Film Swedish production and distribution operation to
Svensk Filmindustri (SF) for an undisclosed sum in cash.

Announcing the deal, Hans-Holger Albrecht, the president and
CEO of MTG, commented: “The sale of the Sonet Film business is in line with the
ongoing focus on our core broadcasting operations, and reflects the current
consolidation in the Nordic production and distribution industry. Sonet has
produced and distributed a number of internationally acclaimed feature titles,
and we wish the company every success with its further development as part of
the regional market leader in this area.”

Sonet Film generated net sales of SEK 42 million for the
nine months ended September 30, 2007, representing less than 1 percent of MTG’s
revenues, with an operating loss of SEK 19 million for the period.

MTG said today that the transaction will give rise to a non-recurring
preliminary net loss of approximately SEK 35 million, which will be reported in
MTG’s results for the fourth quarter and full year ended December 31, 2007. The
loss reflects cash closure costs, as well as the writing down of library film
title rights.

The deal, which is not subject to any regulatory approval
requirements, is expected to close next year.

SF, which owns a library of 1,200 feature films, has
appointed Peter Possne as CEO of a new production entity to be named Sonet
Film. Possne has been CEO of Sonet Film since its founding in 1984.

“Sonet Film and Peter Possne have for many years shown an
extraordinary capability to tie up new exciting projects and talents that
[have] generated a number of successes at the Swedish cinema,” said Rasmus
Ramstad, the president and CEO of Svensk Filmindustri. “For us it is of utmost
importance that Peter continues to develop the Sonet profile and keep a close
relationship with existing partners in the Swedish film environment. Through
the new production entity we will further strengthen our involvement in Swedish
film production and I am convinced that we will bring a lot of new exciting
feature films to the screen in the future.”

Under SF, Sonet aims to produce two to three high-quality
feature films per year with commercial box-office potential. Titles in
development include The Hunters 2, a
sequel to the Swedish box-office hit The Hunters (Jägarna)
in 1996, and Att skjuta arbetare,
based on a 1993 bestseller by Kerstin Thorwall’s novel. Sonet Film will operate
independently from SF’s own production department.

—By Mansha Daswani