Peace Arch Completes Acquisition of Indie Film Companies

TORONTO, January 2: Peace Arch Entertainment Group has
completed the acquisition of the independent film companies Castle Hill
Productions and Dream LLC.

The deal gives Peach Arch the rights to some 500 titles, as
well as a U.S. distribution and licensing operation. Dream/CHP President Mark
Balsam will join Peace Arch as head of U.S. distribution. The purchase was a
combined cash and stock transaction valued at approximately $9.5 million
inclusive of closing costs. Among the titles in the Castle Hill/Dream libraries
are Glengarry Glen Ross, The Marx
Brothers' A Night In Casablanca,
Bruce Bereford's Breaker Morant,
John Sayle's Matewan and two Jack
Nicholson films, The Shooting and
Ride in the Whirlwind.

"The addition of these assets should greatly increase
Peace Arch's revenue base, bring critical mass to our worldwide sales
operation, enhance our existing library value and provide a steady source of
future earnings and cash flow," said Gary Howsam, the CEO of Peace Arch
Entertainment. "We also believe that the addition of accomplished
entertainment industry veteran Mark Balsam will enhance all of these new
opportunities."

Howsam continued, "Peace Arch has now gained some very
significant assets that we believe will add substantial value for our company
and our shareholders. Included in those assets is a proven North American sales
operation, greater management depth and a film library with considerable rights
available for immediate licensing through our existing Canadian and
international distribution operations. All of these assets provide significant
support to our developing internet distribution activities."