SOURCE: Broadcast International, Inc.

August 24, 2006 14:18 ET

Broadcast International Licenses Flash e-publishing and IPTV/WebTV Technologies

Additional Technologies Forward BI's Position in Becoming the World Leader in WebTV Enterprise Multimedia Networking; Company Also Completes Private Placement of Its Common Stock and Warrants

SALT LAKE CITY, UT -- (MARKET WIRE) -- August 24, 2006 -- Broadcast International Inc. ("Broadcast") (OTCBB: BCST) today announced that it has entered into a perpetual, worldwide, non-exclusive license agreement with Yang Lan Studio Ltd. ("YLS") for its flash-based, e-publishing reader technology in exchange for 4,000,000 shares of Broadcast's common stock. Broadcast also purchased an exclusive, worldwide (excluding Peoples Republic of China) distribution license for Internet Protocol TV ("IPTV") and WebTV platforms from BroadVision Global LTD., China's leading solutions provider of IPTV and WebTV solutions, specializing in integrated streaming platforms for service providers, multimedia/streaming media software and related services, in exchange for 2,000,000 shares of Broadcast common stock.

YLS' technology is a publishing and editing software for flash electronic magazines that operates under peer-to-peer technology, enabling the exchange of files between users without the interface of servers. The system was built on a Linux platform and uses object-oriented programming languages such as C++ and Java. A significant advantage of YLS' flash e-magazine systems is that it eliminates the need for multi-session downloading of files from centralized servers. Instead, file sharing and downloading is decentralized to the efficiency of a peer-to-peer session.

BroadVision's solutions include a leading-edge content management system designed to manage multimedia content and endow ownership of the Internet publishing cycle directly with the enterprise. The company's streaming media business platform (BroadVision-SOSS) provides standardized interfaces between business applications and data exchange. The SOSS platform provides broadband movie, video communication, on-line tutoring, network TV and other high-speed transmission solutions within an advanced managed framework. BroadVision's IPTV/WebTV solutions have been deployed by some of China's leading telecommunications companies, as well as government and military agencies and educational institutions.

"The addition of flash-based, e-publishing reader technology and IPTV and WebTV platforms are natural extensions of the robust content and delivery solutions Broadcast has perfected over the last 22 years. These technologies immediately transition Broadcast into an Internet based, enterprise, multimedia network service provider with a truly scalable revenue model and a more cost-efficient operating model," commented Rod Tiede, Broadcast's president and CEO. "In addition to Broadcast's legacy satellite network services, our technology portfolio now includes Internet application services that provide interactive capabilities and low cost of ownership for our clients. Our online publishing effectively puts them in control of their content, while providing the efficiencies of decentralized, peer-to-peer exchange. These additional technologies, coupled with our mature delivery and content solutions, should position Broadcast as the world's leading WebTV Enterprise Multimedia Networking."

The Company also announced that it has completed a private placement pursuant to a Securities Purchase Agreement with YLS, a Hong Kong corporation with headquarters in Shanghai, Peoples Republic of China. According to the terms of the agreement, YSL purchased 666,667 shares of Broadcast common stock and warrants to purchase 5,500,000 shares of its common stock generating initial gross proceeds of $1,000,000.

The warrants were issued in four series with exercise prices ranging from $1.60 to $3.00 per share, with the majority of warrants exercisable at prices between $2.10 and $3.00 per share. The warrants are callable by the Company when and if the market value of its common stock reaches certain price targets and is sustained at those prices (or higher) for a period of 30 consecutive days. The potential gross proceeds from exercise of the warrants aggregate approximately $12.7 million. The company has agreed to retire its existing convertible debt when and if it receives at least $10 million of proceeds from the exercise of the warrants, if the debt exists at that time.

Broadcast also entered into a stock exchange agreement with Sun Media Investment Holdings Ltd. ("SMIH"), the leading, privately held media company in China, in which Broadcast exchanged 3,000,000 (restricted) shares of its common stock for 1,515,544 (restricted) shares of common stock of Sun New Media Inc., one of SMIH's equity holdings. Sun New Media is China's leading multi-media powered marketing and channel management company building e-enabled distribution systems, transaction platforms and business communities in China's fastest growing verticals. This transaction makes SMIH the single largest shareholder in Broadcast.

In conjunction with this share exchange agreement, Broadcast agreed to add Dr. Bruno Wu, Sun Media Investment Holding's chairman, to Broadcast's Board of Directors, and to include Dr. Wu in its slate of directors for re-election at Broadcast's annual meetings over the next three years. Dr. Wu replaces Reed L. Benson, who resigned from the Board to allow the Board to appoint Dr. Wu. Mr. Benson will continue in his positions as vice president, secretary and general counsel for Broadcast.

Dr. Wu has been at the forefront of media entrepreneurs for several years in Asia. He founded and is chairman of the leading, privately held media company in China, Sun Media Investment Holdings Ltd. He also served as co-chairman of the world's largest Chinese Internet media company, SINA Corporation. Prior to this, Dr. Wu served as chief operating officer of ATV, one of the two Hong Kong free-to-air networks. He is a member of both the International Council and the Foundation of The International Academy of Television Arts & Sciences in the United States; a member of the International Council of Museum of Television and Radio in New York and Los Angeles; and serves as a Trustee of the Foreign Affairs University of China. Dr. Wu received his Diploma of Studies in French civilization from the University of Savoie, France. He received a Bachelor of Science in Business Administration-Finance from Culver-Stockton College in Missouri; a Master of Arts in International Affairs degree from Washington University, Missouri; and a Ph.D. from the International Politics Department of College of Law, Fudan University, Shanghai, China.

The shares provided to both Yang Lan Studio Ltd. and BroadVision Global Ltd. as payment for the respective licenses are restricted shares and are subject to a lock-up agreement through January 1, 2008, after which trading of the shares will be limited to five percent of the average daily trading volume for the preceding 30 trading days.

"The private placement furnishes an immediate infusion of working capital into the company, while the warrants provide a potential resource of additional working capital as Broadcast's business model progresses, said Rod Tiede, Broadcast International's president and CEO, commenting on the stock transactions. "We have also gained important strategic investors and the addition of Dr. Wu to our board of directors, who has broad experience in media and technology as an entrepreneur and an investor."

Dr. Bruno added, "Broadcast appears to be on the edge of a new video delivery standard that should revolutionize the industry. Broadcast's CodecSys™ technology is causing a paradigm shift from the traditional single generalist codec compression approach to a multi-codec technique approach, in which the most suitable technologies available are applied. The aggregation of IPTV and WebTV technologies will significantly advance the deployment of CodecSys™. This pioneering technology will further fortify Broadcast's position as a world leader."

About Broadcast International

Broadcast International is a leading provider of video-powered business solutions, including IP and digital satellite, Internet streaming, and other types of wired/wireless network distribution. In addition, BI assists clients with video production, rich media development and a full range of network support services. BI also possesses a patented technology, CodecSys, which provides enhanced video at current bandwidths or reduces the cost of bandwidth while maintaining quality.

Broadcast International was founded in 1984 and is a public company (OTCBB: BCST) headquartered in Salt Lake City, UT. For more information and to learn more about Broadcast International and CodecSys on the Web go to www.brin.com and www.codecsys.com.

About Sun New Media

Sun New Media is a leading Chinese multi-media powered marketing and channel management company. Sun New Media builds e-enabled distribution systems, transaction platforms and business communities in fast growing Chinese vertical markets, connecting buyers and sellers with a suite of turnkey digital media, e-commerce, and information management solutions. Companies leverage Sun New Media's web-based business media communities to access vital industrial intelligence and forge trading relationships with suppliers and buyers that promote cost efficiencies and increased distribution reach. Learn more at www.sunnewmedia.net.

All statements in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption "Additional Factors That May Affect Our Business" in the Company's most recent Form 10-K and 10-Q filings, and amendments thereto. In addition, we operate in a highly competitive and rapidly changing environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise any forward-looking statement.

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