Sony Pictures Digital to Buy Sonic Foundry

CULVER CITY, Calif. & MADISON, Wis.--Sony Pictures Digital andSonic Foundry, Inc. (NASDAQ:SOFO) announced that Sony Pictures Digitalhas struck an agreement to purchase all of Sonic Foundry's desktopsoftware products and related assets for $18 million cash andassumption of certain trade payables, accrued liabilities and capitalleases associated with the desktop software business.

The acquisition of Sonic Foundry's desktop software follows therecent retail release of Sony Pictures Digital's Screenblast, MovieStudio, and Screenblast Music Studio video and music-mixingapplications created in conjunction with Sonic Foundry's award-winningsoftware team.

Sale of the desktop software assets includes Sonic Foundry'spopular, industry-leading ACID, Sound Forge, and Vegas series ofsoftware products, as well as other related assets. Sony anticipatesmaintaining the group's Madison, Wis. base. The Board of Directors ofSonic Foundry has approved the transaction and certain shareholdershave agreed to vote their shares in favor of the sale. Approval of theagreement may be subject to Sonic Foundry shareholder approval andother various conditions (see details below).

"During the past three years, we have come to recognize and admireSonic Foundry's engineering expertise and value their softwareapplications. We are excited to integrate this world-class team andtheir products into our ongoing efforts to produce and deliver the nextgeneration of consumer entertainment services," said Patrick Kennedy,executive vice president of Sony Pictures Digital.

"The sale of our music and video digital software products is a keymilestone in Sonic Foundry's history," said Rimas Buinevicius, chairmanand CEO of Sonic Foundry. "We couldn't pick a better partner than SonyPictures Digital to carry on the same passion and success we'veachieved over the past 12 years," he said. "Consummation of thisagreement will give us the cash we need to pay our debt and allow us tofocus our attention on writing the next successful chapter of SonicFoundry's story - rich media - and building upon the early successwe've already achieved with our Web presentation solution, Media SiteLive(TM)."

Sony Pictures Digital oversees the digital production and onlineassets of Sony Pictures Entertainment and leads its efforts to developand provide new forms of online content, games, interactiveprogramming, open-access video-on-demand and wireless entertainment.Screenblast, which first debuted in September 2001, gives the consumerthe ability to create, enhance and share their digital videos, musicand photos with a combination of a powerful software suite and aneasy-to-use online service for sharing and personalizing consumers'media. Screenblast Movie Studio and Screenblast Music Studio softwarehave been available through retail outlets since October 2002.

Sonic Foundry will file a proxy statement shortly with the SEC andmail to investors of record as of April 25 detailing the proposedtransaction up for possible approval at its June meeting in Madison,Wis. The company expects to close the transaction within a few daysfollowing the shareholder meeting.

The signed agreement marks a major milestone in Sonic Foundry'slonger-term strategy to concentrate on markets where rich mediasolutions are being embraced. The company will use the proceeds to payoff debt and fund its operations for its Web-based rich mediacommunications product, MediaSite Live and related offerings.

About Sony Pictures Digital

Sony Pictures Digital oversees the digital production and onlineassets of Sony Pictures Entertainment (SPE) and consists of four keyoperating business units: Sony Pictures Animation, Sony PicturesImageworks, Sony Online Entertainment and Sony Pictures DigitalNetworks which includes SoapCity, Screenblast, Sony Pictures mobile andwireless services, the studio's online promotional arm SPiN, and the UKinteractive television service GoPlayTV. By making information andentertainment available anywhere, anytime on any connected device, SonyPictures Digital is exploring new technology that links hardware withsoftware in ways that advance the current boundaries of theentertainment landscape. For more information, please visitwww.sonypictures.com.

About Sonic Foundry, Inc.

Founded in 1991, Sonic Foundry (NASDAQ:SOFO) is a leading providerof desktop and enterprise digital media software solutions. Itscomplete offering of media tools, systems and services provides asingle source for creating, managing, analyzing and enhancing media forgovernment, business, education and entertainment.

Sonic Foundry is based in Madison, Wis., with offices in SantaMonica, Toronto and Pittsburgh. For more information about SonicFoundry, visit the Company's Web site at www.sonicfoundry.com