California Court Allows Vivid Entertainment to Proceed with Lawsuit against Playboy Enterprises

Business Wire, July 19, 2006

LOS ANGELES -- A Superior Court judge in California has issued an order that allows the leading adult film studio, Vivid Entertainment Group, to go forward with a major lawsuit against Playboy Enterprises (NYSE: PLA).

Superior Court Judge Ralph W. Dau ruled in the case, filed in April, in which Vivid has alleged that Playboy violated terms of a 10-year film output agreement for broadcast of Vivid films on cable TV networks, including the Playboy Channel, and as part of video on demand adult television packages.

"This is the first victory in a lawsuit that will show that Playboy did not pay us what they owed us and did not keep proper records," said Bill Asher, co-chairman of Vivid Entertainment. "The judge's action means that we can proceed to sue for recovery of amounts owed us as well for damages. The suit will affirm that we had the right to terminate an agreement that Playboy has violated and we are now free to negotiate with third parties and to compete with Playboy. We anticipate that the eventual result of this lawsuit could be worth tens of millions of dollars to Vivid and we are looking forward to proceeding to the discovery phase."

Mr. Asher said Vivid will vigorously press its original suit, which alleges Playboy failed to pay significant amounts mandated by agreements that were part of Playboy's purchase of three cable TV networks from Vivid in 2001.

About Vivid:

The Vivid Entertainment Group is the world's leading adult film company. Founded in 1984, Vivid pioneered the "Vivid Girl" concept, under which top adult film stars are signed to exclusive agreements that are styled on the old Hollywood contract star system. Vivid has always placed heavy emphasis on high quality erotic film entertainment for the couples market. It has created wide brand-name awareness through its films and through a licensing and marketing program that extends to advertising, apparel, book publishing, virility supplements, condoms, snowboards, calendars and comic books. The company is known for its innovative technological advances such as full function DVDs, a fast growing wireless program that is already active in 20 countries, its Burn-to-DVD technology and its popular website vivid.com. Vivid is a major supplier of content for pay-per-view networks in North America and internationally. The best selling hardcover book How to Have a XXX Sex Life: The Ultimate Vivid Guide, was co-authored by the Vivid Girls and published by HarperCollins. The company started the Vivid-Alt imprint in 2006. For more information contact rm@vivid.com.