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Bertelsmann to Acquire Columbia House

10 May, 2005 By: Holly J. Wagner

Music club BMG Direct has made a deal to buy The Columbia House Co., fusing the country's two largest mail-order disc retailers into one super entity.

Terms of the acquisition from the Blackstone Group were not disclosed. The transaction is subject to government approvals and other routine conditions.

Columbia House is the largest specialized retailer of DVDs in the U.S., with more than eight million regular customers, by its own account. It offers the DVDs from most of the major studios. BMG Direct, a subsidiary of DirectGroup Bertelsmann, is the largest direct-to-consumer distributor of recorded music in the U.S.

“The acquisition of Columbia House is a major milestone in DirectGroup's growth course. This move gives us strategic access to the growing business with DVDs, as well as broadening our customer base in the U.S. market,” said DirectGroup Bertelsmann president and CEO Ewald Walgenbach. “In bringing together BMG Direct and Columbia House, we are combining two profitable businesses.”

BMG Direct president and CEO Stuart Goldfarb will serve as president and CEO of the newly acquired company.

“These two great brands share a common focus on their customers, their employees and their products,” he said, adding the deal will allow the companies to offer greater selection.

Columbia House offers more than 8,700 DVD titles and 8,000 music titles through its entertainment clubs. BMG Music Service and online music retailer CDNow form BMG Direct, which offers more than 14,000 titles from the four major music groups and more than 100 independent record labels.

BMG Direct reaches out to customers with targeted offers tailored to their music preferences. The company mails more than 68 million catalogs to customers each year.

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