BMG Direct to Acquire The Columbia House Company
Acquisition signals milestone in BMG Direct’s growth strategy
New York, NY, May 10, 2005 – BMG Direct, a division of DirectGroup Bertelsmann,
announced today that it has reached an agreement with The Blackstone Group to acquire
The Columbia House Company. Terms of the deal were not disclosed. The transaction is
subject to certain government approvals and other customary conditions. Stuart
Goldfarb, President and CEO of BMG Direct, will serve as President and CEO of the
newly acquired company.
This move represents the coming together of two great brands with complementary
operational structures and business models. BMG Direct is the largest direct to consumer
retailer of recorded music in the U.S. while Columbia House is the largest specialized
retailer of DVDs. The combined expertise of these two leading direct marketing
companies will create broader product offerings for their members and a larger customer
base for both brands.
Ewald Walgenbach, CEO of DirectGroup Bertelsmann said, “Today is an important and
exciting day for both companies and this transaction is consistent with DirectGroup’s
commitment to grow our worldwide businesses. We are bringing together two of the
U.S.’s most respected and knowledgeable direct marketing media companies. The
combined BMG Direct and Columbia House entity will offer a broader selection of
products to a larger customer base, while at the same time creating cost efficiencies.”
Stuart Goldfarb said, “These two great brands share a focus on their customers, their
employees and their products. Columbia House is the market leader in the DVD
business; this transaction provides great opportunities for us and for our customers, who
now will be able to access a broad selection both of music and DVD titles with the same
level of customer satisfaction they’ve come to know and expect. “
BMG Direct has long-standing relationships with its customers and has a history of
expertise in being able to reach consumers personally with targeted entertainment offers.
The company mails over 68 million catalogues to customers each year and operates a
website (www.bmgmusic.com) which serves millions of customers online.
Scott Flanders, Chairman and CEO of The Columbia House Company said, “We are
proud of the fact that Columbia House’s continued success has led to the joining of these
two great brands. The pairing of BMG Direct and Columbia House will create a world
class experience for our members. We very much look forward to working with Stuart
Goldfarb and his team.”
The Blackstone Group served as financial advisor to Columbia House. Simpson Thacher
& Bartlett LLP provided Columbia House with legal counsel.
About BMG Direct:
Based in New York City, BMG Music Service and online music retailer CDNow form
BMG Direct which is a unit of DirectGroup Bertelsmann. BMG Music Service is one
of the world’s largest direct-to-customer retailers of music. In addition to the BMG
Music Service brand, the company operates four different specialty clubs – the BMG
Classical Music Club, the BMG Jazz Club, Sound & Spirit (Christian and Gospel
music), and Ritmo y Pasion (Latin music) - and offers a wide variety of listening choices
including pop, rock, R&B, adult alternative, easy listening, jazz, blues, classical, Latin,
hip-hop, country, Christian and many more. Customers are offered a selection of over
14,000 titles provided by the four major music groups and over 100 independent record
labels and can shop for music directly from catalogues or online at
www.bmgmusic.com.
About The Columbia House Company:
The Columbia House Company is the world`s largest direct marketer of music, videos
and DVD home entertainment product. With approximately 8 million offline and online
club members in the United States and Canada, the company provides direct-to-consumer
marketing of over 8,700 DVD titles and 8,000 music titles through its entertainment
clubs. The company`s Website, www.columbiahouse.com, is one of the premier ecommerce
brands and consistently ranks among the Web`s top 25 shopping destinations.
Since its inception in 1955, Columbia House Company has a proven record of excellence
in database marketing, market segmentation, credit screening and niche market
merchandising. Headquartered in New York City, The Columbia House Company is a
general partnership, indirectly owned by The Blackstone Group, the New York based
private investment bank.
About DirectGroup Bertelsmann:
DirectGroup Bertelsmann integrates Bertelsmann’s global media direct-to-customer
businesses. Roughly 32 million customer relationships secure DirectGroup’s position
among the largest enterprises in media commerce. The cornerstone of this success are
the book and music clubs in 22 countries incorporating strong brands like France Loisirs,
Book-of-the-Month, Der Club,. Circulo de Lectores and BMG Music Service. Members
have access to the clubs’ product range via catalogs, internet or one of the more than 600
worldwide club shops. Since August 2002, Ewald Walgenbach has headed the unit.
DirectGroup Bertelsmann is a division of German-based Bertelsmann AG. In fiscal year
2004, DirectGroup made 2.2 billion euros in revenues with more than 12,000 employees.
About The Blackstone Group
The Blackstone Group, a private investment and advisory firm with offices in New York,
Atlanta, Boston, London, Hamburg, and Paris, was founded in 1985. The Firm has raised
a total of approximately $32 billion for alternative asset investing since its formation.
The Blackstone Group’s six core businesses are Private Equity Investing, Private Real
Estate Investing, Corporate Debt Investing, Marketable Alternative Asset Management,
Corporate Advisory, and Restructuring and Reorganization Advisory.
www.blackstone.com
Contact:
Paula Batson
BMG Direct
212-930-4531
Paula.batson@bmgdirect.com
Andrea S. Hirsch
The Columbia House Company
212 -596-2700
Andrea_Hirsch@chcmail.com
John Ford
The Blackstone Group
212-583-5559
ford@blackstone.com
Lee Race
Hill & Knowlton
212-885-0330
lrace@HillandKnowlton.com
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