(BARCELONA, SPAIN) -- Private Media Group Inc. (NASDAQ Nm: PRVT) a worldwide leader in premium-quality adult content, announced increase in net income to Eur 1.2 million for the three months ended June 30, 2004 compared to Eur 0.1 million for the comparable period in 2003.

For the three months ended June 30, 2004, net sales were Eur 9.3 million compared to Eur 10.1 million for the comparable period in 2003. The change is attributable to a decrease in Video sales of Eur 2.3 million, which was not fully offset by DVD sales although DVD sales increased.

The reason being a combination of the general industry decrease in Video sales and 40% less titles being released by the Company on Video in 2004 compared to 2003 as a result of fewer new movie productions available for sale. The reduction in new movie productions available for sale did also affect DVD sales.

The Company has managed to offset a large part of the negative effect on Video and DVD sales in both the first and the second quarter of 2004 by opening additional distribution channels, thereby increasing sales on a per release basis. In 2003 and the first half of 2004, investment in new movie productions was subject to temporary containment of costs due to reduced cash-flow as a result of overspending in 2002 and 2003. Going forward and as cash-flow strengthens, the Company will be able to attain optimum release frequency of new movie productions.

The decrease in Video sales was offset by increases in DVD, Broadcasting and Internet sales totaling Eur 1.5 million. Magazine sales remained stable at Eur 1.3 million. Internet sales increased 22% to Eur 1.3 million as a result of the Company's decision to move to a new it solution provider in an effort to ensure down-time to be kept to a minimum in order to maximize revenues. Broadcasting sales increased 128% to Eur 1.3 million primarily as a result of the broadcasting launch of our proprietary Pay-Per-View Satellite & Cable Television Channel, the Private Fantasy Channel, in the United States in February 2004. We expect to be able to resume normal release frequency of new movie productions during the fall of 2004. We believe that the growth in DVD, Broadcasting and Internet sales compared to 2003 will continue through the remainder of 2004.

Berth Milton, President and CEO, said, "We are very happy to see that the temporary cutback of new movie productions released had a limited effect on our Video and DVD sales as a result of the increased sales per title released and we are also pleased to see that the elimination of low margin sales has greatly improved our gross profit/sales ratio. Our operating profit of Eur 1.2 million for the second quarter confirms the successful implementation of the operational restructuring targeted at strengthening core businesses while reducing selling, general and administrative expenses.

"Increasing operational profitability, coupled with our disposal of non-core assets- such as real estate-, will enhance our new movie production capacity which will directly impact positively both sales and gross profits, with hardly any effect on our SG&A."

[Second Quarter 2004 Financial Highlights - Table Redacted]

About Private Media Group

With its 40 year track record, Private is a leading global adult entertainment company that distributes its content over a wide range of media platforms, including narrow and broadband Internet, DVD and video, magazines, broadcasting and wireless technologies. It owns the worldwide rights to the largest archive of high quality adult content in the world, which it physically distributes in over 40 countries.

Disclaimer

This release contains, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company's current judgments of those issues. However, because those statements are forward-looking and apply to future events, they are subject to such risks and uncertainties, which could lead to results materially different than anticipated by the Company.

For further information please contact
Alejandra Moore Mayorga
Tel +34 91 531 23 88
AMoore@GrupoAlbion.net
Private.com