MediaBay Inc. Announces Fourth Quarter and Annual Results

Two Principal Operating Subsidiaries Post Positive Adjusted EBITDA

In Fourth Quarter



Apr 03, 2001, 01:00 ET from MediaBay, Inc.

    CEDAR KNOLLS, N.J., April 3 /PRNewswire/ -- MediaBay, Inc. (Nasdaq:   MBAY),
 a leading seller of spoken audio and nostalgia products, including audiobooks
 and old-time radio shows, through direct response, retail and Internet
 channels, announced today financial results for the fourth quarter and year
 ended December 31, 2000.
     On a consolidated basis, net sales for the fourth quarter ended
 December 31, 2000 were $11.3 million compared to $15.5 million in the fourth
 quarter of 1999, a decrease of $4.2 million.  This decrease was primarily a
 result of the Company's focus on achieving bottom line profitability through
 sales to its most profitable customers.  Although net sales declined, this
 focus resulted in both decreased return rates and increased gross profit as a
 percentage of net sales.
     In the fourth quarter of 2000, the Company reviewed long-lived assets and
 certain identifiable intangibles, including goodwill, for impairment in
 accordance with FASB Statement of Standards 121, "Accounting for the
 Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of"
 (FASB 121), believing that at that time, events or changes in circumstances
 indicated that the carrying amount of assets acquired in its various
 acquisitions might not be recoverable.  The Company determined that the
 expected discounted future values of cash flows from its acquisitions did not
 support the carrying value of its assets.  Accordingly, the Company wrote off
 $38.2 million of goodwill in the fourth quarter of 2000.  The net loss for the
 fourth quarter ended December 31, 2000, including the non-cash write down of
 goodwill of $38.2 million, was $41.7 million, or $(3.03) per share, as
 compared to a loss of $2.2 million, or $(.24), per share for the prior year.
     Net sales for the year ended December 31, 2000 were $44.4 million
 compared to $46.2 million in the prior year.  The net loss for the year ended
 December 31, 2000, including the non-cash write down of goodwill, was
 $54.6 million or $(4.30) per share, compared to a net loss of $6.7 million or
 $(.82) per share for the year ended December 31, 1999.
     EBITDA for the year ended December 31, 2000 was a loss of $(3.6) million
 compared to income of $4.6 million for the year ended December 31, 1999.
 Adjusted EBITDA (defined below) increased in 2000 to a loss of $6.9 million
 from a loss of $4.6 million in 1999.  (Loss) earnings before interest, taxes
 depreciation and amortization (EBITDA) for the fourth quarter ended December
 31, 2000 decreased $1.8 million to a loss of $902,000.  Adjusted EBITDA for
 the fourth quarter ended December 31, 2000 improved by $1.2 million from a
 loss of $1.8 million in the fourth quarter of 1999 to a loss of $576,000 in
 the fourth quarter of 2000.
     Adjusted EBITDA at both of the companies principal operating subsidiaries,
 Audio Book Club and Radio Spirits, was positive in the fourth quarter of 2000,
 in the combined amount of $1.0 million, principally as a result of the many
 strategic initiatives implemented by the Company in 2000.  Adjusted EBITDA is
 defined as income before depreciation and amortization, a non-cash write down
 of goodwill, net interest expense, a non-cash extraordinary loss on early
 extinguishment of debt and the net capitalization of deferred member
 acquisition costs.  The adjusted EBITDA in the fourth quarter of 2000 showed
 significant improvement over the previous three quarters of 2000.  Operating
 metrics in these subsidiaries that significantly improved over prior periods
 thereby driving these results include a decrease in overall return rates of
 approximately 2% and an increase in gross profit as a percentage of net sales
 of approximately 9%.  Other major improvements that have been made and
 successes achieved in 2000 through early 2001 by MediaBay and its subsidiaries
 include:
 
     Audio Book Club
     * Increased average unit product sale prices by over 50 percent without a
       significant reduction in net revenues.
     * Increased gross profit as a percentage of net sales by over 10 percent.
     * Lowered current costs to acquire a member over the Internet by
       67 percent.
     * Increased the direct mail response rates for acquisition of new club
       members by 60 percent resulting in a reduction of direct mail
       acquisition costs by over 50 percent.
     * Reduced overall product return rates by more than 7 percent.
     * Reduced the cost of monthly catalog mailings by over 25 percent.
     * Significantly reduced the number of SKU's in inventory.
     * Reduced the units in inventory by over 800,000.
     * Took steps to significantly reduce general and administrative expenses
       that the Company believes will have no material effect on operations,
       including the elimination of consultants, six  management positions and
       numerous staff positions.
     * Achieved positive earnings and cash flow.
 
     Radio Spirits
     * Eliminated an unsuccessful discounting program, which had depressed
       gross profit margins by greater than 5 percent per month.
     * Returned this subsidiary to positive profitability and cash flow.
 
     MediaBay.com
     * Took steps in 2000 to significantly reduce overhead costs in this
       subsidiary.
     * Converted the Company's content into digital formats for distribution
       over the Internet for desktop and mobile playback.
     * Transferred the maintenance and development of Audiobookclub.com and
       RadioSpirits.com from outside consultants to internal staff resulting in
       significant savings.
     * Expanded the presence of MediaBay.com as a leading provider of spoken
       audio downloads through numerous strategic relationships with retailers
       and digital audio device manufacturers.
 
     Commenting on the annual and fourth quarter results, Michael Herrick, CEO
 of MediaBay, Inc., stated, "The initiatives we have implemented are having a
 positive effect on our business.  Our priorities for the next twelve months
 are to continue to operate our core businesses on a more profitable basis and
 to improve cash flow.  We believe that we can continue to improve upon the
 tremendous progress made in the fourth quarter and the second half of 2000
 relating to the operating metrics of our two principal operating subsidiaries.
 MediaBay has two very strong and solid businesses both of which had positive
 adjusted EBITDA in the fourth quarter."  Mr. Herrick also stated, "We are very
 excited about the formation of our new RadioClassics subsidiary.  We believe
 that there exists tremendous opportunities for the Company to leverage its
 valuable content libraries including the distribution of this content across
 additional distribution platforms as provided for in its new RadioClassics
 subsidiary."
 
     HIGHLIGHTS (subsequent to the fourth quarter):
     * The Company formed RadioClassics, Inc., a new subsidiary to distribute
       MediaBay's proprietary old-time radio content across multiple
       distribution platforms including traditional radio, cable television,
       satellite television (DBS), satellite radio and the Internet.  The
       Company currently produces, distributes and syndicates three national
       "classic" radio programs, which are collectively heard on traditional
       radio on more than 500 stations, in more than 350 markets by over
       3 million listeners weekly.  The success of this programming led to the
       creation of this new subsidiary.  Working with MediaBay are three
       industry veterans: Lloyd Werner formerly Executive Vice President, Sales
       and Marketing, CBS Cable and one of the industry's most experienced
       executives, with expertise in distribution, marketing, advertising sales
       and media buying; Stanley Moger, co-founder of SFM Entertainment, the
       number one advertiser-oriented provider of television programming on a
       national basis and co-founder of SFM Media, the nation's second largest
       media buying company later sold to French-based Havas and Richard
       Brescia, former senior vice president of the CBS Radio Networks who
       pioneered the expansion of the network's basic service, including Monday
       Night Football and Super Bowl NFL broadcasts, Major League Baseball game
       of the week and the World Series, the NCAA Final Four Basketball
       Tournament, the CBS Mystery Theater, and the introduction of
       satellite-delivered programming.
 
     Michael Herrick, CEO of MediaBay, commented, "The success we enjoy on
 traditional radio with our three classic radio programs including 'When Radio
 Was' hosted by Stan Freberg provided the impetus to broaden our distribution
 efforts into the expanding channels of cable, satellite television and
 satellite radio.  The popularity for our old-time radio programs on the
 Internet, evident by the more than 300,000 audio streams we provide each month
 to website listeners, also inspired us to move aggressively into multiple
 distribution platforms.  Our library of old time radio programs, much of which
 is proprietary and exclusive to MediaBay, provides the content for all of this
 programming and the enormous exposure gained for this content library is
 expected to generate significant revenues and profits from advertising and
 old-time radio product sales."  Mr. Herrick continued, "The fact that three of
 the most highly successful and respected veterans of the broadcast cable,
 television and radio industries are working with us is a significant
 endorsement of RadioClassics.  Dick, Stan and Lloyd have a combined 100 years
 of experience in the industry and are truly an all star team to work with to
 build RadioClassics."
 
     HIGHLIGHTS (during the fourth quarter):
     * The Company entered into a partnership agreement with Iomega
       (NYSE:   IOM), a global leader in data management solutions to develop and
       promote a co-branded download subscription service accessible through
       Club Iomega (http://www.clubiomega.com), allowing customers to download
       digital audio content to the Iomega HipZip(TM) digital audio player and
       the Iomega PocketZip(TM) disks.
     * The Company entered into an exclusive content distribution and marketing
       partnership with Creative (Nasdaq:   CREAF) to provide, on a preferred
       basis, spoken word audio content for Creative's savantium.com web site.
     * The Company's Radio Spirits subsidiary obtained the rights to an
       extensive catalogue of approximately 500 episodes of "The Red Skelton
       Show" including long-term exclusive broadcast, reproduction and
       distribution right to the 500 episodes of "The Red Skelton Show."  The
       programs include guest appearances by Humphrey Bogart, Clark Gable, Ann
       Sothern, Jack Benny, Alan Ladd, Robert Taylor, Vivian Leigh, Cary Grant
       and many other famous movie stars.
     * The Company entered into a "linking" agreement with Road Runner, the
       nation's pre-eminent broadband service provider enabling Road Runner
       customers to link directly to MediaBay.com to access free sample content
       and to purchase audio downloads or hard goods. MediaBay.com content will
       be featured prominently in various sections of the Road Runner
       subscriber web site.
 
     About MediaBay, Inc.
     MediaBay, Inc. is a leading marketer and seller of spoken audio and
 nostalgia products, including audiobooks and old-time radio shows, in hard
 goods and digital download formats via direct response, retail and Internet
 channels.  The Company markets and sells its products to its customer database
 of over 2.5 million names, its email address database of over 2.1 million
 addresses and its more than 2.0 million unique monthly website visitors.  The
 Company is one of the world's largest marketers of audiobooks through its
 Audio Book Club membership club, which markets and sells tens of thousands of
 audiobook titles to its 1.9 million member file through direct mail and the
 Internet at http://www.audiobookclub.com.  The Company is also one of the
 world's largest marketers of old-time radio shows and classic videos through
 its Radio Spirits subsidiary which markets and sells its content library of
 over 60,000 radio shows and 3,500 videos on audio cassette, compact disc,
 video cassette and DVD through direct mail to its more than 600,000 catalog
 customers, in over 4,750 retail outlets, on its nationwide traditional radio
 broadcasts and through the Internet at http://www.Radiospirits.com.  The
 Company's media download portal site, http://www.MediaBay.com, offers the
 Company's millions of customers and website visitors a single location for
 premium spoken word content available in streaming and secure digital download
 formats.  The Company's RadioClassics subsidiary has been created to
 distribute the Company's old-time radio programs through additional platforms
 including satellite radio, satellite television and digital cable television.
 
     Safe Harbor Statement Under The Private Securities Litigation Reform Act
 of 1995: The statements which are not historical facts contained in this press
 release are forward-looking statements that involve a number of known and
 unknown risks, uncertainties and other factors which may cause the actual
 results, performance or achievements of the Company to be materially different
 from any future results, performance or achievements expressed or implied by
 such forward-looking statements.  Such factors include, but are not limited
 to, the ability of the Company to successfully integrate newly acquired
 businesses into its operations and the uncertainty regarding the actual effect
 of acquisitions on the Company, risks relating to the Company's direct mail
 campaigns and the ability of its book club to retain members, risks relating
 to the Company's growth strategy, dependence on third party service providers,
 uncertainty of the scope of future product returns, collection and risks
 associated with selling products on credit, competition and other risks
 detailed in the Company's Securities and Exchange Commission filings.  The
 words "believe" and "should" and similar expressions identify forward-looking
 statements.  Readers are cautioned not to place undue reliance on these
 forward-looking statements, which speak only as of the date the statement was
 made.
 
                                 MEDIABAY, INC.
   Consolidated Statements of Operations(In thousands, except per share data)
                                  (Unaudited)
 
                              Three months ended             Year ended
                                 December 31,                December 31,
                              1999          2000          1999         2000
 
     Sales                      $20,819      $14,725       62,805     $59,881
     Returns, discounts
      and allowances              5,281        3,450       16,578      15,455
     Sales, net                  15,538       11,275       46,227      44,426
     Cost of sales                8,650        5,295       23,687      23,044
     Gross profit                 6,888        5,980       22,540      21,382
 
     Expenses:
     Advertising and promotion    2,762        2,927        8,118      11,023
     General and administrative   3,195        3,955        9,799      13,964
     Depreciation and
      Amortization                1,950        2,057        6,812       7,984
     Non-cash write down of
      goodwill                       --       38,226           --      38,226
     Operating loss             (1,019)     (41,185)      (2,189)    (49,815)
     Interest expense, net        1,156          562        4,518       2,681
     Loss before
      extraordinary item        (2,175)     (41,747)      (6,707)    (52,496)
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --     (2,152)
     Net loss                  $(2,175)    $(41,747)     $(6,707)   $(54,648)
 
     Weighted number of
      common shares outstanding   9,161       13,756        8,205      12,718
 
     Basic and diluted loss per share
     Loss before
      extraordinary item         $(.24)      $(3.03)       $(.82)     $(4.13)
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --       (.17)
 
     Net loss                    $(.24)      $(3.03)       $(.82)     $(4.20)
 
     Calculation of loss before depreciation and amortization, a non-cash write
 down of goodwill, net interest expense, a non-cash extraordinary item and the
 net capitalization of deferred member acquisition costs:
 
                                  Three months ended          Year ended
                                     December 31,             December 31,
                                  1999         2000         1999        2000
 
     Net loss on a GAAP basis  $(2,175)    $(41,747)     $(6,707)   $(54,648)
     Depreciation and
      amortization                1,950        2,057        6,812       7,984
     Non-cash write
      down of goodwill               --       38,226           --      38,226
     Net interest expense         1,156          562        4,518       2,681
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --       2,152
     EBITDA                         931        (902)        4,623     (3,605)
     Net capitalization of
      deferred member
      acquisition costs         (2,725)          326      (9,254)     (3,285)
     Adjusted EBITDA           $(1,794)      $ (576)     $(4,631)    $(6,890)
 
     (*) In April 2000, the Company repaid $20,293 of its bank debt out of the
         net proceeds from its follow-on primary offering, representing the
         remaining term portion of such debt.  Accordingly, the Company
         recorded an extraordinary loss of $2,152 relating to the write-off of
         deferred financing fees incurred in connection with such debt.
 
 

SOURCE MediaBay, Inc.
    CEDAR KNOLLS, N.J., April 3 /PRNewswire/ -- MediaBay, Inc. (Nasdaq:   MBAY),
 a leading seller of spoken audio and nostalgia products, including audiobooks
 and old-time radio shows, through direct response, retail and Internet
 channels, announced today financial results for the fourth quarter and year
 ended December 31, 2000.
     On a consolidated basis, net sales for the fourth quarter ended
 December 31, 2000 were $11.3 million compared to $15.5 million in the fourth
 quarter of 1999, a decrease of $4.2 million.  This decrease was primarily a
 result of the Company's focus on achieving bottom line profitability through
 sales to its most profitable customers.  Although net sales declined, this
 focus resulted in both decreased return rates and increased gross profit as a
 percentage of net sales.
     In the fourth quarter of 2000, the Company reviewed long-lived assets and
 certain identifiable intangibles, including goodwill, for impairment in
 accordance with FASB Statement of Standards 121, "Accounting for the
 Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of"
 (FASB 121), believing that at that time, events or changes in circumstances
 indicated that the carrying amount of assets acquired in its various
 acquisitions might not be recoverable.  The Company determined that the
 expected discounted future values of cash flows from its acquisitions did not
 support the carrying value of its assets.  Accordingly, the Company wrote off
 $38.2 million of goodwill in the fourth quarter of 2000.  The net loss for the
 fourth quarter ended December 31, 2000, including the non-cash write down of
 goodwill of $38.2 million, was $41.7 million, or $(3.03) per share, as
 compared to a loss of $2.2 million, or $(.24), per share for the prior year.
     Net sales for the year ended December 31, 2000 were $44.4 million
 compared to $46.2 million in the prior year.  The net loss for the year ended
 December 31, 2000, including the non-cash write down of goodwill, was
 $54.6 million or $(4.30) per share, compared to a net loss of $6.7 million or
 $(.82) per share for the year ended December 31, 1999.
     EBITDA for the year ended December 31, 2000 was a loss of $(3.6) million
 compared to income of $4.6 million for the year ended December 31, 1999.
 Adjusted EBITDA (defined below) increased in 2000 to a loss of $6.9 million
 from a loss of $4.6 million in 1999.  (Loss) earnings before interest, taxes
 depreciation and amortization (EBITDA) for the fourth quarter ended December
 31, 2000 decreased $1.8 million to a loss of $902,000.  Adjusted EBITDA for
 the fourth quarter ended December 31, 2000 improved by $1.2 million from a
 loss of $1.8 million in the fourth quarter of 1999 to a loss of $576,000 in
 the fourth quarter of 2000.
     Adjusted EBITDA at both of the companies principal operating subsidiaries,
 Audio Book Club and Radio Spirits, was positive in the fourth quarter of 2000,
 in the combined amount of $1.0 million, principally as a result of the many
 strategic initiatives implemented by the Company in 2000.  Adjusted EBITDA is
 defined as income before depreciation and amortization, a non-cash write down
 of goodwill, net interest expense, a non-cash extraordinary loss on early
 extinguishment of debt and the net capitalization of deferred member
 acquisition costs.  The adjusted EBITDA in the fourth quarter of 2000 showed
 significant improvement over the previous three quarters of 2000.  Operating
 metrics in these subsidiaries that significantly improved over prior periods
 thereby driving these results include a decrease in overall return rates of
 approximately 2% and an increase in gross profit as a percentage of net sales
 of approximately 9%.  Other major improvements that have been made and
 successes achieved in 2000 through early 2001 by MediaBay and its subsidiaries
 include:
 
     Audio Book Club
     * Increased average unit product sale prices by over 50 percent without a
       significant reduction in net revenues.
     * Increased gross profit as a percentage of net sales by over 10 percent.
     * Lowered current costs to acquire a member over the Internet by
       67 percent.
     * Increased the direct mail response rates for acquisition of new club
       members by 60 percent resulting in a reduction of direct mail
       acquisition costs by over 50 percent.
     * Reduced overall product return rates by more than 7 percent.
     * Reduced the cost of monthly catalog mailings by over 25 percent.
     * Significantly reduced the number of SKU's in inventory.
     * Reduced the units in inventory by over 800,000.
     * Took steps to significantly reduce general and administrative expenses
       that the Company believes will have no material effect on operations,
       including the elimination of consultants, six  management positions and
       numerous staff positions.
     * Achieved positive earnings and cash flow.
 
     Radio Spirits
     * Eliminated an unsuccessful discounting program, which had depressed
       gross profit margins by greater than 5 percent per month.
     * Returned this subsidiary to positive profitability and cash flow.
 
     MediaBay.com
     * Took steps in 2000 to significantly reduce overhead costs in this
       subsidiary.
     * Converted the Company's content into digital formats for distribution
       over the Internet for desktop and mobile playback.
     * Transferred the maintenance and development of Audiobookclub.com and
       RadioSpirits.com from outside consultants to internal staff resulting in
       significant savings.
     * Expanded the presence of MediaBay.com as a leading provider of spoken
       audio downloads through numerous strategic relationships with retailers
       and digital audio device manufacturers.
 
     Commenting on the annual and fourth quarter results, Michael Herrick, CEO
 of MediaBay, Inc., stated, "The initiatives we have implemented are having a
 positive effect on our business.  Our priorities for the next twelve months
 are to continue to operate our core businesses on a more profitable basis and
 to improve cash flow.  We believe that we can continue to improve upon the
 tremendous progress made in the fourth quarter and the second half of 2000
 relating to the operating metrics of our two principal operating subsidiaries.
 MediaBay has two very strong and solid businesses both of which had positive
 adjusted EBITDA in the fourth quarter."  Mr. Herrick also stated, "We are very
 excited about the formation of our new RadioClassics subsidiary.  We believe
 that there exists tremendous opportunities for the Company to leverage its
 valuable content libraries including the distribution of this content across
 additional distribution platforms as provided for in its new RadioClassics
 subsidiary."
 
     HIGHLIGHTS (subsequent to the fourth quarter):
     * The Company formed RadioClassics, Inc., a new subsidiary to distribute
       MediaBay's proprietary old-time radio content across multiple
       distribution platforms including traditional radio, cable television,
       satellite television (DBS), satellite radio and the Internet.  The
       Company currently produces, distributes and syndicates three national
       "classic" radio programs, which are collectively heard on traditional
       radio on more than 500 stations, in more than 350 markets by over
       3 million listeners weekly.  The success of this programming led to the
       creation of this new subsidiary.  Working with MediaBay are three
       industry veterans: Lloyd Werner formerly Executive Vice President, Sales
       and Marketing, CBS Cable and one of the industry's most experienced
       executives, with expertise in distribution, marketing, advertising sales
       and media buying; Stanley Moger, co-founder of SFM Entertainment, the
       number one advertiser-oriented provider of television programming on a
       national basis and co-founder of SFM Media, the nation's second largest
       media buying company later sold to French-based Havas and Richard
       Brescia, former senior vice president of the CBS Radio Networks who
       pioneered the expansion of the network's basic service, including Monday
       Night Football and Super Bowl NFL broadcasts, Major League Baseball game
       of the week and the World Series, the NCAA Final Four Basketball
       Tournament, the CBS Mystery Theater, and the introduction of
       satellite-delivered programming.
 
     Michael Herrick, CEO of MediaBay, commented, "The success we enjoy on
 traditional radio with our three classic radio programs including 'When Radio
 Was' hosted by Stan Freberg provided the impetus to broaden our distribution
 efforts into the expanding channels of cable, satellite television and
 satellite radio.  The popularity for our old-time radio programs on the
 Internet, evident by the more than 300,000 audio streams we provide each month
 to website listeners, also inspired us to move aggressively into multiple
 distribution platforms.  Our library of old time radio programs, much of which
 is proprietary and exclusive to MediaBay, provides the content for all of this
 programming and the enormous exposure gained for this content library is
 expected to generate significant revenues and profits from advertising and
 old-time radio product sales."  Mr. Herrick continued, "The fact that three of
 the most highly successful and respected veterans of the broadcast cable,
 television and radio industries are working with us is a significant
 endorsement of RadioClassics.  Dick, Stan and Lloyd have a combined 100 years
 of experience in the industry and are truly an all star team to work with to
 build RadioClassics."
 
     HIGHLIGHTS (during the fourth quarter):
     * The Company entered into a partnership agreement with Iomega
       (NYSE:   IOM), a global leader in data management solutions to develop and
       promote a co-branded download subscription service accessible through
       Club Iomega (http://www.clubiomega.com), allowing customers to download
       digital audio content to the Iomega HipZip(TM) digital audio player and
       the Iomega PocketZip(TM) disks.
     * The Company entered into an exclusive content distribution and marketing
       partnership with Creative (Nasdaq:   CREAF) to provide, on a preferred
       basis, spoken word audio content for Creative's savantium.com web site.
     * The Company's Radio Spirits subsidiary obtained the rights to an
       extensive catalogue of approximately 500 episodes of "The Red Skelton
       Show" including long-term exclusive broadcast, reproduction and
       distribution right to the 500 episodes of "The Red Skelton Show."  The
       programs include guest appearances by Humphrey Bogart, Clark Gable, Ann
       Sothern, Jack Benny, Alan Ladd, Robert Taylor, Vivian Leigh, Cary Grant
       and many other famous movie stars.
     * The Company entered into a "linking" agreement with Road Runner, the
       nation's pre-eminent broadband service provider enabling Road Runner
       customers to link directly to MediaBay.com to access free sample content
       and to purchase audio downloads or hard goods. MediaBay.com content will
       be featured prominently in various sections of the Road Runner
       subscriber web site.
 
     About MediaBay, Inc.
     MediaBay, Inc. is a leading marketer and seller of spoken audio and
 nostalgia products, including audiobooks and old-time radio shows, in hard
 goods and digital download formats via direct response, retail and Internet
 channels.  The Company markets and sells its products to its customer database
 of over 2.5 million names, its email address database of over 2.1 million
 addresses and its more than 2.0 million unique monthly website visitors.  The
 Company is one of the world's largest marketers of audiobooks through its
 Audio Book Club membership club, which markets and sells tens of thousands of
 audiobook titles to its 1.9 million member file through direct mail and the
 Internet at http://www.audiobookclub.com.  The Company is also one of the
 world's largest marketers of old-time radio shows and classic videos through
 its Radio Spirits subsidiary which markets and sells its content library of
 over 60,000 radio shows and 3,500 videos on audio cassette, compact disc,
 video cassette and DVD through direct mail to its more than 600,000 catalog
 customers, in over 4,750 retail outlets, on its nationwide traditional radio
 broadcasts and through the Internet at http://www.Radiospirits.com.  The
 Company's media download portal site, http://www.MediaBay.com, offers the
 Company's millions of customers and website visitors a single location for
 premium spoken word content available in streaming and secure digital download
 formats.  The Company's RadioClassics subsidiary has been created to
 distribute the Company's old-time radio programs through additional platforms
 including satellite radio, satellite television and digital cable television.
 
     Safe Harbor Statement Under The Private Securities Litigation Reform Act
 of 1995: The statements which are not historical facts contained in this press
 release are forward-looking statements that involve a number of known and
 unknown risks, uncertainties and other factors which may cause the actual
 results, performance or achievements of the Company to be materially different
 from any future results, performance or achievements expressed or implied by
 such forward-looking statements.  Such factors include, but are not limited
 to, the ability of the Company to successfully integrate newly acquired
 businesses into its operations and the uncertainty regarding the actual effect
 of acquisitions on the Company, risks relating to the Company's direct mail
 campaigns and the ability of its book club to retain members, risks relating
 to the Company's growth strategy, dependence on third party service providers,
 uncertainty of the scope of future product returns, collection and risks
 associated with selling products on credit, competition and other risks
 detailed in the Company's Securities and Exchange Commission filings.  The
 words "believe" and "should" and similar expressions identify forward-looking
 statements.  Readers are cautioned not to place undue reliance on these
 forward-looking statements, which speak only as of the date the statement was
 made.
 
                                 MEDIABAY, INC.
   Consolidated Statements of Operations(In thousands, except per share data)
                                  (Unaudited)
 
                              Three months ended             Year ended
                                 December 31,                December 31,
                              1999          2000          1999         2000
 
     Sales                      $20,819      $14,725       62,805     $59,881
     Returns, discounts
      and allowances              5,281        3,450       16,578      15,455
     Sales, net                  15,538       11,275       46,227      44,426
     Cost of sales                8,650        5,295       23,687      23,044
     Gross profit                 6,888        5,980       22,540      21,382
 
     Expenses:
     Advertising and promotion    2,762        2,927        8,118      11,023
     General and administrative   3,195        3,955        9,799      13,964
     Depreciation and
      Amortization                1,950        2,057        6,812       7,984
     Non-cash write down of
      goodwill                       --       38,226           --      38,226
     Operating loss             (1,019)     (41,185)      (2,189)    (49,815)
     Interest expense, net        1,156          562        4,518       2,681
     Loss before
      extraordinary item        (2,175)     (41,747)      (6,707)    (52,496)
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --     (2,152)
     Net loss                  $(2,175)    $(41,747)     $(6,707)   $(54,648)
 
     Weighted number of
      common shares outstanding   9,161       13,756        8,205      12,718
 
     Basic and diluted loss per share
     Loss before
      extraordinary item         $(.24)      $(3.03)       $(.82)     $(4.13)
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --       (.17)
 
     Net loss                    $(.24)      $(3.03)       $(.82)     $(4.20)
 
     Calculation of loss before depreciation and amortization, a non-cash write
 down of goodwill, net interest expense, a non-cash extraordinary item and the
 net capitalization of deferred member acquisition costs:
 
                                  Three months ended          Year ended
                                     December 31,             December 31,
                                  1999         2000         1999        2000
 
     Net loss on a GAAP basis  $(2,175)    $(41,747)     $(6,707)   $(54,648)
     Depreciation and
      amortization                1,950        2,057        6,812       7,984
     Non-cash write
      down of goodwill               --       38,226           --      38,226
     Net interest expense         1,156          562        4,518       2,681
     Extraordinary loss on early
      extinguishment of debt (*)     --           --           --       2,152
     EBITDA                         931        (902)        4,623     (3,605)
     Net capitalization of
      deferred member
      acquisition costs         (2,725)          326      (9,254)     (3,285)
     Adjusted EBITDA           $(1,794)      $ (576)     $(4,631)    $(6,890)
 
     (*) In April 2000, the Company repaid $20,293 of its bank debt out of the
         net proceeds from its follow-on primary offering, representing the
         remaining term portion of such debt.  Accordingly, the Company
         recorded an extraordinary loss of $2,152 relating to the write-off of
         deferred financing fees incurred in connection with such debt.
 
 SOURCE  MediaBay, Inc.