January 19, 2001, 12:00 AM

CDNow Has A New CEO To Lead Its Dance Card

Don Davis

Editor in Chief

Scott N. Flanders has been named to lead the planned integration of CDNOW and Columbia House and to become chairman and CEO of the new public company that will result from their proposed merger, it was announced today by Mel Ilberman, executive vice president of Sony Music Entertainment, and Richard Bressler, chairman and CEO of Time Warner Digital Media.

     In July, CDNOW, Inc., entered into a definitive agreement with Sony Corporation of America and Time Warner Inc. to merge with Columbia House, the leading club-based direct marketer of music and videos, which is owned equally by Sony Corporation and Time Warner Inc.. The new public company that will result from the proposed merger will be owned 37% each by Sony and Time Warner. CDNOW's existing stockholders will own the remaining 26%.

     Prior to the completion of the merger, Flanders, 42, will serve as the Columbia House board representative responsible for overseeing management's operation of Columbia House's businesses and preparing Columbia House for its pending merger with CDNOW. Following completion of the merger, Flanders will become chairman and CEO of the new company and a member of its board of directors.

     Flanders, the former president of Macmillan Publishing USA, the world's largest computer and reference publisher, joins Columbia House from Telstreet.com, an online vendor of wireless products and services, where he was chairman and chief executive officer since 1998.

     The proposed new company will have a 12-member board of directors, composed of Flanders, four designees each from Sony and Time Warner, CDNOW's President and CEO Jason Olim, and two independent directors. Olim also will serve as CEO of the new company's Online/Retail division and Richard C. Wolter, the chairman and CEO of Columbia House, will head the club operations of the new company.

     Sony Music Entertainment's Mel Ilberman said: "Scott is a talented executive with the background and foresight necessary to successfully integrate Columbia House and CDNOW's core businesses to create an e-commerce engine that will drive the new company's online sales. He is fully conversant with all aspects of intellectual property in the electronic age, which will enable the new company to provide its customers with the widest selection of music and video software available online or offline." Time Warner's Richard Bressler said: "Scott is an outstanding executive with a proven combination of entrepreneurial drive, innovative thinking, and strong management skills. He also brings with him a unique perspective and vision on the future of the online world and its relationship to the direct marketing business. Throughout his career, he has worked to develop and utilize new electronic publishing techniques and has been a key driver in the use of technology to help build digital businesses."

     Roger Ames, who was recently named chairman and CEO of Warner Music Group, said: "We're very pleased that an executive as able as Scott will be leading this important new venture. We look forward to working with him as we begin to realize the enormous potential that online marketing and e-commerce have for our business, and to providing Scott a full measure of Music Group support."

     Commenting on his new position, Flanders said: "I am looking forward to this exciting opportunity to create one of the world's leading music and video e-commerce companies through the planned alliance of Columbia House and CDNOW. We will be able to build a world-class new enterprise that will take advantage of the enormous growth opportunities imminent in the digital world."

     Prior to joining Telstreet.com in 1998, Flanders was president of Macmillan Publishing USA from 1994 to 1998. Previously, he served as president of Macmillan Computer Publishing from 1990 to 1993. With Flanders as president, Macmillan Publishing grew to become the world's largest computer and reference publisher, with significant growth realized in international and electronic markets. In addition to its 16 imprints, Macmillan Computer Publishing also created a leading Internet site. While at Macmillan, Flanders also formed Macmillan Digital to capitalize on the electronic aspects of the company's intellectual property.

     Flanders was previously president of Que Corporation, a computer book publisher that was sold to Macmillan in 1986. Before joining Que, he was a tax and business consultant at Coopers & Lybrand.

     An attorney and C.P.A., Flanders received a B.A. degree from the University of Colorado in 1979 and a J.D. degree from Indiana University in 1982.

     Backed by two of the world's largest media companies, the merger of Columbia House with CDNOW will create a major entertainment, e-commerce and direct marketing company by bringing together a leading music web destination and the largest music and video club in the U.S. and Canada. The board of directors of CDNOW has unanimously approved the merger. The merger agreement is subject to CDNOW's shareholder approval and customary conditions, including clearance by U.S. and Canadian antitrust authorities. The parties anticipate completion of the transaction by year end.

     Last year, Columbia House directly distributed approximately 200 million music and video units to its membership base from its existing fulfillment operations.

     CDNOW, which currently serves an online music community of 2.3 million customers, was formed by the merger of CDNOW Inc. and N2K Inc. in March of 1999.

     Sony Corporation of America, based in New York City, is the U.S. subsidiary of Sony Corporation, headquartered in Tokyo. Sony Corporation is a leading manufacturer of audio, video, communications and information technology products for the consumer and professional markets. Its music, motion pictures, and computer entertainment operations make Sony one of the most comprehensive entertainment companies in the world. Sony recorded consolidated annual sales of over $56 billion in the last fiscal year ended March 31, 1999.

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