DHX Media To Acquire Cookie Jar Entertainment, Creating The World’s Largest Independent Library of Children’s Entertainment Content

Transaction significantly enhances DHX’s scale and digital distribution capabilities

Halifax, Canada – (August 20, 2012) – DHX Media Ltd. (“DHX” or the “Company”) (TSX ticker: DHX), has entered into a definitive agreement to acquire the business of Cookie Jar Entertainment (“Cookie Jar”) to create Canada’s largest children’s entertainment company. The combined company will own the world’s most extensive independent library of children’s entertainment, including more than 8,550 half hour episodes. The transaction implies an enterprise value for Cookie Jar of $111 million, to be paid through a combination of approximately 36 million DHX shares, $5 million in cash, and the assumption of $66 million of debt.

“The acquisition of Cookie Jar is a transformational event for DHX that will significantly enhance our scale and our growth opportunities,” said Michael Donovan, Chief Executive Officer of DHX. “Through this combination, we will strengthen our portfolio of brands, global reach, management depth and our position in the rapidly emerging digital distribution channels to become the market leader.”

Expected benefits of the transaction include the following:
• Significantly strengthens DHX’s capabilities in the rapidly growing digital segment, and broadens its relationships with distributors including Amazon, Comcast, DISH, Hulu, Netflix, Samsung, Telmex and Vivendi;
• Creates substantial scale with the addition of Cookie Jar’s approximately $56.7 million in revenue (unaudited, for the last twelve month period);
• Brings together two portfolios of globally recognized brands that can be seen in over 160 countries;
• Increases DHX’s current content library of children’s programming by a factor of more than three times, from approximately 2,550 to over 8,550 half-hour episodes; expands merchandising opportunities for owned properties as well as third-party brand management and licensing opportunities;
• Diversifies DHX’s revenue streams and generates significant cost synergies, currently estimated to be $8 million annually.

“Today is an exciting day for Canada’s children’s entertainment industry,” said Michael Hirsh, Cookie Jar’s CEO. “Cookie Jar joining forces with DHX results in a company that is an independent global market leader in all aspects of children’s entertainment from distribution to production to licensing and merchandising. There is an insatiable appetite for kids content in the new digital streaming universe and we are very well positioned with our extensive library of evergreen, popular and recognizable brands to satisfy the market demand.”

Cookie Jar has a significant content library and features some of the world’s most recognizable series including Caillou, Inspector Gadget, and Johnny Test. The company controls Cookie Jar TV, the weekend morning block on CBS. Cookie Jar has offices in Toronto, Los Angeles and in addition, throughout Western Europe, as part of its Copyright Promotions Licensing Group (“CPLG”), a leading licensor and merchandiser of third party brands and characters.

Cookie Jar has experienced significant growth in digital distribution, growing revenue from that channel to $8.0 million in the 12 months ending May 31, 2012 (representing growth of 353% vs. the prior 12 month period). Over the same 12-month period, Cookie Jar had total revenue of $56.7 million and EBITDA of $12.6 million (unaudited, see “Non-IFRS Measures” below). By combining operations of the two companies, DHX expects to realize cost synergies of at least $8 million annually which should be achieved within the first year following the closing of the transaction. Synergies are expected to be achieved from a consolidation of locations, marketing efficiencies and the integration of operations.

The definitive agreement provides that the current shareholders of Cookie Jar will receive consideration consisting of approximately 36 million common shares of DHX, representing pro forma ownership of approximately 40%, plus $5 million in cash. $66 million of existing Cookie Jar debt will be assumed and refinanced on closing of the transaction. Based on the volume weighted average price of DHX’s common shares for the 5 days ending on August 17, 2012 this implies a value of Cookie Jar of approximately $111 million. Funds managed by Birch Hill Equity Partners (“Birch Hill”), Cookie Jar’s controlling shareholders, have also agreed to certain restrictions over the DHX shares that they will receive in connection with the transaction.

“We believe this is an excellent strategic combination with great potential to create long-term value,” said John Loh, Partner at Birch Hill. “We are excited to become a significant shareholder in the combined business, and look forward to working with the DHX team to grow the company.” Concurrent with the execution of the definitive agreement, DHX has entered into a commitment agreement with RBC Capital Markets to provide a fully underwritten senior debt financing. The new financing package will consist of a $60 million four-year term loan facility to be used to refinance substantially all of DHX’s and Cookie Jar’s current indebtedness and a $20 million revolving credit facility for working capital and general corporate purposes.

Management and Board of Directors
Following the closing, Michael Donovan, current CEO of DHX, will continue to serve as CEO. Michael Hirsh, current CEO of Cookie Jar, will become Executive Chairman of DHX. Steven DeNure and Dana Landry will continue in their current roles of President & COO, and Chief Financial Officer, respectively. Cookie Jar’s current President & COO Toper Taylor will continue to focus on digital distribution and business development. Aaron Ames, CFO of Cookie Jar, will assume the role of Chief Integration Officer reporting directly to the CEO.

Upon the closing of the transaction, the Board of Directors will consist of eight directors including Michael Donovan and Michael Hirsh. Another four of DHX’s existing directors will continue serving on the Board and Birch Hill will have the right to appoint two additional directors. Completion of the transaction is subject to a number of conditions including the receipt of regulatory and Toronto Stock Exchange (“TSX”) approvals. Pursuant to TSX rules, the transaction must also be approved by a majority vote of DHX’s shareholders due to the number of DHX common shares issuable in consideration to the vendors.

Recommendation of the Board of Directors
Canaccord Genuity Corp., financial advisor to DHX’s Board of Directors, has provided its opinion that the acquisition consideration is fair, from a financial point of view, to DHX. The Board of Directors, based upon its investigations, including its consideration of that fairness opinion, has concluded that the transaction is in the best interests of DHX shareholders, and will be unanimously recommending that shareholders vote in favour of the share issuance resolution at the special meeting of shareholders. In addition, certain insiders including Michael Donovan who collectively hold 19.7% of the DHX shares outstanding have agreed to vote in favour of the transaction. Special Meeting and Information Circular DHX will be convening a special meeting of its shareholders to consider the transaction. DHX currently anticipates that the special meeting will be held on October 15, 2012 and that an information circular containing additional details regarding the business of the special meeting will be mailed to shareholders in mid-September, 2012.

Investor Conference Call
DHX Media will hold an analyst conference call to discuss the transaction on August 20, 2012 at 10am EDT. Media and others may access this call on a listenin
basis. Conference call details are as follows:
• To access the call via telephone, please dial (888) 231-8191 toll-free or +1 (647) 427-7450 internationally. Please allow 10 minutes to be connected to
the conference call.
• A telephone replay of the call will be available beginning approximately one hour after the call on (855) 859-2056 toll free or +1 (416) 849-0833, and
passcode 22762722, until midnight EDT August 27, 2012.