Holders of ION Media 9 3/4% Convertible Preferred Stock Propose Improved Capital Restructuring Plan

GREENWICH, Conn., May 2 /PRNewswire-FirstCall/ -- A group of holders of 9 3/4% Series A Convertible Preferred Stock of ION Media Networks, Inc. (AMEX: ION) has delivered to the Board of Directors of ION Media a restructuring proposal that includes a take-out offer for the Company's class A common stock, at the currently proposed price; infusion of liquidity; and a non-coercive exchange offer for the two senior series of preferred stock. Unlike the proposal announced by Citadel Limited Partnership and NBC Universal, the holders believe that this proposal does not pose regulatory risk, can be implemented more quickly and is fair to all constituencies.

The holders note that, according to published reports, the Company has received an offer from a large media company to purchase the Company for cash. The holders believe it is important for the board of directors carefully to consider all alternatives and not to make a rushed judgment that would be disadvantageous to the Company and all of its shareholders. The holders urge the Company promptly and fairly to disclose all proposals that it receives.

  The text of the holders' proposal follows:

  To:  The Board of Directors
       Ion Media Networks, Inc.

Contrarian Capital Management, Litespeed Master Fund, Ltd. and Ore Hill Hub Fund Ltd., individually or through their affiliates, are holders of shares of 9 3/4% Series A Convertible Preferred Stock of Ion Media Networks, Inc., and have formed an Ad Hoc Committee of Holders of this stock. Collectively, the members of the Ad Hoc Committee have approximately $8 billion under management.

The Committee is proposing a capital restructuring for Ion Media with these principal objectives:

  * A near term opportunity for existing common equity holders to cash out
    at a premium to current market, on the same terms as the Citadel/NBCU
    proposal.

  * A near term injection of new liquidity into the Company by a well
    capitalized and committed investment group, with flexibility for
    additional but prudent leverage as needed to accommodate the Company's
    operating goals.

  * Modification to the existing capital structure that --

    * upon expiration of the NBCU call option, will not require the consent
      of NBCU; and

    * respects the respective rankings of the various series of preferred
      stock.

  * A balance sheet without financial stress that will allow the Company to
    pursue, over the course of the next several years, an operating plan
    that will bring value to all constituencies.

  * Preservation of the existing rights of the various series of preferred
    stock, but with meaningful remedies, commensurate with ranking, where
    today they are lacking.

  * Allotment of voting rights in accordance with the financial stake and
    expectancy of the various classes and series of equity, consistent with
    applicable law.

  * A fair and proportionate opportunity for existing stockholders to
    participate in a rights offering to raise capital necessary for the
    repurchase of the class A common stock and the infusion of additional
    liquidity for general corporate purposes.

  * Absence of coercion.

The restructuring proposal is outlined in the accompanying term sheet. The proposal does not constitute a binding offer, is presented with the expectation of an opportunity for diligence and good faith discussions with the Company and representatives of other affected constituencies, will require the negotiation and execution of definitive documentation to embody enforceable agreements among the parties and is subject to compliance with applicable law, including in particular the rules and regulations of the FCC.

We believe that our proposal can be rapidly implemented, and we would welcome the opportunity to commence discussions immediately with members of the Company's special committee, its executives or the full Board. Please contact Ethan Schwartz of Contrarian Capital Management at 203-862-8272; Jamie Zimmerman of Litespeed Management at 212-808-7422; or Sumit Choudhury of Ore Hill Partners at 212-389-2348.

  We look forward to your prompt and favorable response.


                                              AD HOC COMMITTEE OF HOLDERS OF
                             THE 9 3/4% SERIES A CONVERTIBLE PREFERRED STOCK
                                                 OF ION MEDIA NETWORKS, INC.

  May 1, 2007 (revised)

                       RECAPITALIZATION TERM SHEET

             Term                        Description

  Structure                      The recapitalization will be accomplished
                                 through non-coercive offers of tender or
                                 exchange, to the extent that securities are
                                 proposed to be substituted or replaced.

  Treatment of Securities        Term Loans and Senior Secured
  Generally                      Floating Rate Notes:

                                 To remain outstanding with no change, with
                                 change-of-control provisions to be
                                 addressed either consensually or through
                                 refinancing.

                                 14 1/4% Preferred Stock:

                                 An offer to exchange for each $10,000 in
                                 accreted value of the 14 1/4% Preferred
                                 Stock one share of 12 1/4% Senior Preferred
                                 Stock [description omitted].

                                 If all holders of 14 1/4% Preferred Stock
                                 participate in the exchange, the holders
                                 will receive an estimated total of $664
                                 million in value of 12 1/4% Senior
                                 Preferred Stock, assuming a closing at June
                                 30, 2007.

                                 9 3/4% Preferred Stock:

                                 An offer to exchange for each $10,000 in
                                 accreted value of 9 3/4% Preferred Stock
                                 (a) 0.78 of a share of 12 1/4% Senior
                                 Preferred Stock, and (b) 0.22 of a share of
                                 12 1/4% Junior Preferred Stock [description
                                 omitted].

                                 If all holders of 9 3/4% Preferred Stock
                                 participate in the exchange, the holders
                                 will receive an estimated total of $140
                                 million in value of 12 1/4% Senior
                                 Preferred Stock, and $39 million in value
                                 of 12 1/4% Junior Preferred Stock, assuming
                                 a closing at June 30, 2007.

                                 11% Preferred Stock:

                                 To remain outstanding with no change.

                                 Class A Common Stock:

                                 An offer to purchase for cash Class A
                                 common stock, at an offer price equal to
                                 higher of (i) $1.45 and (ii) the price
                                 provided under the Amended and Restated
                                 Stockholder Agreement among the Company,
                                 the Paxson interests and NBCU.

  Rights Offering                Holders of the 14 1/4% Preferred Stock and
                                 the 9 3/4% Preferred Stock will have the
                                 pro rata right to subscribe for an
                                 aggregate of an additional (i) $100 million
                                 in value of 12 1/4% Senior Preferred Stock,
                                 and (ii) $75 million principal amount of 12
                                 1/4%  Senior Subordinated Notes.
                                 [description omitted]  The rights offering
                                 will be back-stopped by certain holders of
                                 the 14 1/4% Preferred Stock and 9 3/4%
                                 Preferred Stock.

  Conditions                     The recapitalization will be conditioned
                                 upon --

                                 * receipt of all necessary regulatory
                                   approvals;

                                 * satisfactory arrangements with respect to
                                   the change-of-control provisions of the
                                   term loans and senior secured floating
                                   rate notes.

                                 * requisite waivers under the term loans
                                   and senior secured floating rate notes
                                   for issuance of the 12 1/4% Senior
                                   Subordinated Notes.

                                 * expiration without exercise of the option
                                   under the Call Agreement between the
                                   Paxson interests and NBCU.

                                 * the retirement of all Class B common
                                   stock;

                                 * exit consents from a majority of the
                                   holders of each of the 9 3/4% Preferred
                                   Stock and the 14 1/4% Preferred Stock
                                   approving the issuance of the 12 1/4%
                                   Senior Preferred Stock;

                                 * if desired (but not required), exit
                                   consents from a majority of the holders
                                   of each of the 14 1/4% Preferred Stock,
                                   the 9 3/4% Preferred Stock and the Class
                                   A Common Stock approving the necessary
                                   amendments to the 14 1/4% Preferred Stock
                                   and 9 3/4% Preferred Stock, limiting each
                                   such series to two directors for all
                                   defaults in existence immediately
                                   following the recapitalization.

  Management Participation         To be discussed.

  Public Company Registration      To be discussed, depending on the
                                   response to the Class A common stock
                                   tender offer.

  Board of Directors               To be reconstituted upon closing of the
                                   offers, subject to the right of any
                                   series of preferred stock to class
                                   representation on the board.

  Fees and Expenses                Customary reimbursement.