Valley Media Continues Focus on Core Business

Business Wire, Oct 25, 2001

Business Editors

WOODLAND, Calif.--(BUSINESS WIRE)--Oct. 25, 2001

Valley Media, Inc. (Nasdaq:VMIX) today announced that it is temporarily reducing its operations at its Louisville, KY, distribution center. This decision was due to the general decline in market conditions coupled with Valley's decision to re-direct its sell-through video business towards deep catalog video offerings and away from the highly price-sensitive new release market.

Valley Media, Inc. remains a leader in the one stop audio markets and internet fulfillment. The company will continue to support all its customers from its Woodland, CA, distribution facility with audio and catalog video products.

These changes have resulted in the elimination of approximately 25 sales, marketing, purchasing and support positions in Woodland and at various East Coast locations. The reduced operation in Kentucky resulted in the furloughing of approximately 400 employees.

About Valley Media, Inc.

Valley Media, Inc. is a distributor of music, video and DVD product, offering Full-line distribution, Independent distribution and New Media fulfillment services for e-commerce, in addition to publications and proprietary database products. Valley Media operates facilities in seven states with primary distribution facilities in Louisville, KY, and Woodland, CA, where its corporate headquarters are located. Additional information about Valley Media is available at www.valley-media.com.

This release includes forward-looking statements, including statements concerning compliance with Nasdaq National Market's continued listing requirements. These statements are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, including but not limited to, the following: our ability to achieve or sustain profitability; general economic and business conditions, including growth in our e-fulfillment business group, the failure of net sales to increase, the loss of any one of our largest customers, competitive pricing pressures in our industry; and such other factors that are more fully detailed in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended March 31, 2001.