<PAGE>
Exhibit 99.1
------------
For Immediate Release
---------------------
DG Systems and StarGuide Digital Networks to Merge Creating Leading
Digital Broadcasting and Delivery Company
DALLAS & SAN FRANCISCO, July 10, 2000--Merger Closely Aligns CoolCast
Platform with Advertisers, Agencies and Broadcasters; Combined Entity Enables
Significant Operational, Financial and Technological Synergies
DG Systems, Inc. (Nasdaq: DGIT), the leading digital distributor of
advertising to the broadcast industry, and privately-held StarGuide Digital
Networks, Inc., a leading provider of long form audio and digital network
services to the broadcast industry, announced today that they have entered into
a definitive agreement to merge in a tax free stock-for-stock transaction.
The combined entity will form the broadcasting industry's premiere
delivery solution for digital multimedia content featuring proprietary satellite
and Internet transmission technology; the CoolCast video-enhanced Internet
portal aggregating live, high quality video and CD-quality digital audio for PC
users; and, service relationships with over 5,000 advertisers and agencies,
7,500 radio stations and 725 television stations across the United States and
Canada. In the twelve months ended December 31, 1999, the combined entity
generated revenues of approximately $61.8 million.
Under the terms of the agreement, StarGuide will merge with DG Systems
through the issuance of approximately 1.7 DG Systems shares for each outstanding
share of StarGuide Common Stock. In aggregate, DG Systems will issue
approximately 41.3 million basic shares and assume options and warrants covering
approximately 10.1 million shares. Upon consummation of the merger, the new
entity will have approximately 79.4 million fully diluted shares outstanding.
Upon consummation of the transaction, current DG Systems shareholders will own
approximately 40.75%, while current StarGuide shareholders will own
approximately 59.25% of the combined enterprise.
The combined DG Systems/StarGuide Digital is expected to achieve
significant operating, financial and technological synergies based on the
combination of the two companies' respective digital distribution technologies.
By providing 24/7 short- and long-form digital delivery capabilities over an
expanded and more powerful private network, the new entity anticipates realizing
significant cost-saving opportunities through the elimination of duplicative
facilities and overlapping technology and personnel. With common revenue sources
(advertisers), distributors (broadcasters), business targets (consumers),
ownership and StarGuide's extensive intellectual property portfolio, the
combination will pursue significant cross-promotional, delivery and new
application opportunities.
A centerpiece of the new entity is StarGuide's CoolCast division
(www.coolcast.com) which delivers live, join-in-progress streaming video and
----------------
audio to broadband Internet users, providing entertainment and information
without sacrificing productivity for desktop PC users. Using
<PAGE>
StarGuide's innovative digital broadcast technology, CoolCast allows millions of
simultaneous users to access its compelling streaming content without the
service delays or interruptions frequently associated with streaming media on
the Net.
Scott K. Ginsburg, Chairman of DG Systems and StarGuide Digital and the
largest individual shareholder of both DG and StarGuide commented on the
transaction, "We have worked diligently to build both DG and StarGuide into
leaders in their respective market niches. The recent CoolCast launch in
Cincinnati demonstrates proven broadcast technology which fulfills the promise
of the Internet and more closely aligns advertisers, broadcasters and consumers'
interests. We expect significant contributions to our shareholder base as the
CoolCast application evolves. Combining the assets, management and offerings of
these organizations creates substantial near- and long-term synergies and growth
opportunities for the combined entity and its shareholders. We are delighted
that as a stock-for-stock transaction, DG and StarGuide shareholders will be
able to participate fully in what we believe is the tremendous upside potential
of the combined enterprise."
The combined senior executive management team includes: Chairman Scott
K. Ginsburg; Chief Executive Officer Matthew E. Devine; and Chief Financial
Officer Omar Choucair. It is currently contemplated that other senior management
and operating management of DG Systems and StarGuide Digital will retain similar
roles in the new entity.
Significant shareholders of the new entity will include Scott K.
Ginsburg with approximately 35%; current public shareholders of DG Systems which
include certain entities affiliated with Pequot Capital Management, Technology
Crossover Ventures and London Merchant Securities, with approximately 36%; and
the remaining StarGuide shareholders with approximately 29%.
The merger has been unanimously approved by the Board of Directors of
DG Systems following recommendations by a special independent committee of the
Board composed of disinterested members, and by the Board of Directors of
StarGuide Digital Networks.
Chase H&Q has advised DG regarding the merger and Morgan Stanley Dean
Witter & Co. has advised StarGuide Digital Networks regarding the merger.
The transaction is expected to be consummated in the fourth quarter of
2000, subject to a vote by stockholders of both companies, regulatory approvals
(including expiration of the applicable Hart-Scott-Rodino waiting period), and
other customary closing conditions.
CoolCast is an Internet broadcaster that delivers live,
join-in-progress streaming media combined with regular web content to PC users.
The CoolCast service is currently available to thousands of broadband Internet
users nationwide through partnerships with DSL service providers such as
Broadwing Inc.'s (NYSE: BRW) ZoomTown.com and BRE Properties (NYSE: BRE).
Additional partnerships and content relationships are pending.
StarGuide Digital Networks, Inc. is a leading developer of innovative
next-generation delivery solutions utilized by content broadcasters around the
world.
<PAGE>
DG Systems operates a nationwide digital network for distributing audio
and video content that links thousands of advertisers and hundreds of
advertising agencies with approximately 7,500 radio and 725 television stations
across the United States and Canada. DG Systems can be reached at 415-276-6600
or at www.dgsystems.com.
-----------------
This release contains forward-looking statements relating to the
company, including the expansion of its digital distribution network, and the
demand among certain clients for digital audio and video delivery services.
These forward-looking statements involve risks and uncertainties, which could
cause actual results to differ materially from those projected. These and other
risks relating to DG Systems' business are set forth in the company's Form 10-K
filed with the Securities and Exchange Commission on March 28, 2000.
CONTACT: DG Systems, Inc.
Omar Choucair
Chief Financial Officer
415/276-6600
972/402-4800
StarGuide Digital Networks, Inc.
Jeffrey A. Dankworth
President
775/686-5050
Jaffoni & Collins Incorporated
Joseph N. Jaffoni or Stewart A. Lewack
212/835-8500
[email protected]
