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Press Release

BACK MDC Partners Announces Financial Results for the Three and Six Months Ended June 30, 2004

TORONTO, Ontario (July 28, 2004) – MDC Partners Inc. (“MDC Partners”) of Toronto today announced its financial results for the second quarter and six months ended June 30, 2004. Consolidated revenue for the second quarter was $76.0 million, a decrease of 5% from the $79.6 million in the same quarter last year. Operating profit of $4.4 million was achieved, compared to a loss of $15.3 million reported for the second quarter of 2003. The prior year results included charges totaling $18.1 million associated with the write-down of certain fixed and other assets and goodwill. Net income for the quarter was $1.4 million, compared to net income of $22.8 million in 2003. Diluted earnings per share for the quarter ended June 30, 2004 was $0.06 versus $0.99 last year. The results and divestiture of Custom Direct (“CDI”) impacted the 2003 results.

For purposes of this discussion and analysis of the Company’s business operations, and due to the significant impact that certain operating affiliates have on the results of operations of the Company, the operating results have been presented with the equity-accounted affiliate operations of the Marketing Communications Division, principally Crispin Porter + Bogusky, consolidated (the “Combined” basis).

On a Combined basis and after adjusting for the sale of CDI, the remaining operations generated revenues of $89.1 million in the second quarter compared to $66.7 million, an improvement of 34% or $22.4 million, and operating profit of $7.0 million compared to an operating loss of $14.7 million for 2003.

Marketing Communications revenue on a Combined basis was $71.7 million for the quarter, 39% more than the comparable $51.6 million reported in the second quarter of 2003. EBITDA before minority interest and one-time charges was $12.9 million, an increase of 55% from the $8.3 million earned in the same prior-year period. On this basis, margins were 18.0% for the quarter versus 16.1% in the previous year. One-time charges comprised of three factors. The first was the investment spending of approximately $0.7 million related to a new initiative, Lifestyle Medical Marketing, a start-up venture between MDC Partners and a group of entrepreneurs, designed to build a one-of-a-kind healthcare marketing business enterprise focussing on lifestyle oriented conditions. The second was a one-time charge of approximately $0.7 million related to a marketing services operation in Eastern Europe that was closed during the quarter. Lastly, severance related charges of $0.2 million were incurred. EBITDA before minority interest after one-time charges was $11.3 million. After minority interests and one-time charges, EBITDA increased $2.1 million or 38% from $5.6 million to $7.7 million in the quarter.

“During the first quarter of 2004, the Company acquired a controlling interest in the integrated marketing communications group of agencies of Kirshenbaum Bond + Partners, LLC and an equity interest in the advertising agency Cliff Freeman + Partners LLC. During the second quarter of 2004, the Company acquired controlling interests in henderson bas, an interactive marketing agency, mono LLC, an advertising agency, Hello Design, LLC and Bruce Mau Design Inc., branding and design studios, and Banjo, LLC, a production studio. The 2004 acquired operations contributed $17.1 million of revenue on a Combined basis during the quarter,” said Miles S. Nadal, Chairman, President & CEO of MDC. “Net new business wins in the quarter represented annualized gross revenue in excess of US$10 million, and include such clients as Mohegan Sun, Equal and Snapple. We remain confident in our business model and believe our efforts of improving our creative talent and delivering services that enhance our customers’ businesses will positively impact results for the balance of the year and into 2005.”

“Despite higher investment spending and one-time costs, we are confirming our previous guidance of $35 million EBITDA for the marketing communications operations,” said Mr. Nadal.

For the second quarter of 2004, revenue attributable to Secure Products International (“SPI”) was $17.2 million compared to $33.8 million in the 2003 period. The decline was related to the 2003 disposition of CDI. After adjusting the 2003 results to remove CDI, revenues of the remaining SPI businesses improved by 21%. On the same basis, EBITDA before minority interests improved by $1.1 million as a result of increased production at Ashton Potter and an improvement in profitability at Mercury, partially offset by declines at Metaca. In response to the reduced volumes experienced by the Canadian card operation, management commenced the implementation of a plan to reduce costs and improve efficiencies of the operation. As a result, $0.2 million of severance and related charges were recorded in the quarter.

“We are pleased with the progress of SPI which is expected to deliver strong financial results in the second half of the year,” said Mr. Nadal. “We expect to realize increased cashflow returns from SPI based on the long-term contractual revenues, stable technology and predictable cashflows of these businesses. This asset continues to grow in value and we will monetize the asset when more favourable market conditions return.”

Corporate and other costs were higher than anticipated due to incremental staff and professional fees associated with the conversion to US GAAP reporting and compliance with Sarbanes-Oxley legislation and the consequent certification process which has required a significant investment of time and resources. Management anticipates overall costs related to increased regulatory requirements will increase costs over $2.0 million on an annualized basis.

The conversion of the $34.9 million outstanding convertible notes on May 5, 2004 through the issuance of approximately 2.6 million Class A subordinate voting shares has strengthened the balance sheet and provided a reduction of approximately $2.5 million of interest expense on an annualized basis.

During the quarter the Company renewed its normal course issuer bid, and to date has repurchased 399,500 shares at an average price of $11.38 per share for total cash consideration of $4.5 million. “MDC Partners is becoming a thought leader. We believe that large, multi-national, and integrated are no longer criteria for the selection of a marketing services firm. We continue to attract new people and new business and are seeing significantly more acquisition opportunities that meet our strict financial criteria than ever before,” said Mr. Nadal. “We will not compromise our formula, and are confident in our ability to continue to create innovative and effective marketing solutions to help our clients grow their businesses. We expect the momentum we are building will continue for the rest of the year and into 2005.”

About MDC Partners Inc.

MDC Partners is one of the world’s leading marketing communications firms. Through its partnership of entrepreneurial firms, MDC Partners provides advertising and specialized communication services to leading brands throughout the United States, Canada and the United Kingdom. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties which may cause the actual results or objectives to be materially different from those expressed or implied by such forward-looking statements. Such factors include, among other things, the Company’s financial performance; changes in the competitive environment; adverse changes in the economy; ability to maintain long-term relationships with customers; financing requirements and other factors set forth in the Company’s Form 40-F for its fiscal year ended December 31, 2003 and subsequent SEC filings.