Peace Arch Completes Dufferin Gate Acquisition

TORONTO, July 30: Peace Arch Entertainment Group has
completed the acquisition of the Toronto-based production company Dufferin Gate
Productions for C$6 million ($5.6 million).

Under the terms of the deal, Peace Arch acquires all of the
shares of Dufferin Gate for approximately C$5.4 million in cash and C$600,000
of Peace Arch common stock.

Launched in 1994, Dufferin Gate Productions has furnished
production services on more than 150 cable movies, television series and
feature films for such studios as Showtime Networks, Paramount Pictures, Viacom
Productions and Peace Arch, including The Tudors.

The privately held company owns property and a 72,000-square-foot
building in Toronto's West End with production and post-production facilities.
Peace Arch will immediately acquire 40.01 percent of the shares and 50 percent
of the votes of Dufferin Gate.

"Peace Arch is very pleased to announce the completion
of this truly milestone acquisition for Peace Arch as it continues to create a
successful vertically integrated entertainment company," said Gary Howsam,
the CEO of Peace Arch Entertainment. "Dufferin's exemplary management,
longstanding industry relationships and incomparable expertise in all aspects
of the Canadian production industry gives Peace Arch a unique opportunity to
expand our already robust production operations and provide more content to our
rapidly growing distribution and sales divisions."

John Weber, the president and CEO of Dufferin Gate, will
remain president of Dufferin Gate, which will be renamed Peace Arch Studios,
and he will continue to oversee its day-to-day operations. He also joins Peace
Arch as executive VP of production. He will report to Lewin Webb, the president
of Peace Arch's production division.