AMC Forms American Southwest Music Distribution Subsidiary Projected to Add an Estimated $30M in Gross Sales SANTA FE SPRINGS, Calif., May 12 /PRNewswire-FirstCall/ -- AMC American Music Corp. (AMCT.PK) announces the formation of American Southwest Music Distribution, Inc., a wholly owned subsidiary. Through American Southwest, AMC will distribute prerecorded music and DVD's for various independent record companies and motion picture production companies seeking worldwide retail distribution. AMC's management projects that American Southwest will add an additional $30 million in gross sales with estimated pre-tax earnings of approximately $5 million, in the first twelve months of operations. American Southwest will operate and distribute from their facility in Houston, Texas, and AMC's headquarters in Santa Fe Springs, California. AMC will transfer operating assets acquired in September 2003 from Southwest Wholesale Distribution to American Southwest to begin operations. American Southwest plans to hire several experienced former employees of Southwest Wholesale in Houston. Through distribution contracts, American Southwest will become the worldwide exclusive distributor for various independent labels. American Southwest will sell products, throughout the United States and Canada, using its own sales force and sub-distributors, and will have the right to license products to foreign sub-distributors. AMC will seek the right, under each contract, to move any successful album or artist from American Southwest's distribution to distribution by AMC through Alternative Distribution Alliance, (ADA). ADA is a division of the Warner Music Group, a subsidiary of AOL/Time Warner. David Michery, President and CEO of AMC, commented, "This is an important step in meeting the objectives of our business plan. By adding the ability to distribute our products through both American Southwest and ADA, we gain a distinct advantage over other independent record companies. American Southwest's direct to retail distribution capabilities creates additional retail distribution channels for the Company and allows us to distribute a wider range of entertainment products, such as motion picture DVD's. This fits into our plans to become a full scale media entertainment company. "As we further integrate the operations of American Southwest and AMC's ADA distribution, AMC will begin using our ADA distribution relationship for certain "front line" products. Management believes the "front line" product is best served by the distribution leverage provided by the ADA system. American Southwest provides us the opportunity to identify successful new artists, production companies and label with very little risk to AMC. AMC will also have the flexibility of distributing catalog albums and products through the less expensive distribution channel available to it through American Southwest." About AMC American Music Corporation AMC American Music Corporation was founded in 1995. The Company primarily sells its products to consumers through retail record stores and wholesale distribution, under the label names of Direct Music Group, AMC, and WWIII. Through its affiliate, Direct Music Group, AMC distributes its records through Alternative Distribution Alliance. AMC acquires the exclusive worldwide rights to commercially market, sell and distribute all copies of recordings produced by recording artists, producers, and third-party labels. AMC American Music will continue to develop, publish and market popular Rock, Hip Hop, Gospel and Latino Music, and distribute that music through a domestic distribution agreement with Direct Music Group, and Alternative Distribution Alliance, (ADA). ADA is a division of the Warner Music Group, a subsidiary of Time Warner Inc. For more information please visit http://www.amcamericanmusiccorp.com/. Safe Harbor The Private Securities Litigation Reform Act of 1995 may provide a "safe harbor" for forward-looking statements. Certain information included in this press release contains statements that are forward-looking, such as statements related to the future anticipated direction of the industry, plans for future expansion, various business development activities, planned capital expenditures, future funding sources, anticipated sales growth, and potential contracts. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to development and expansion activities, dependence on existing management, financing activities, and domestic and global economic conditions. DATASOURCE: AMC American Music Corporation CONTACT: David Zazoff, FOCUS Partners LLC, +1-212-752-9445, for AMC American Music Corporation Web site: http://www.amcamericanmusiccorp.com/

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