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Investment Bank Buys Major Columbia House Interest

14 May, 2002 By: Holly J. Wagner

AOL Time Warner Inc.'s Warner Music Group and Sony Corporation's Sony Music Entertainment Inc. will sell a majority interest in mail order media provider The Columbia House Co. to Blackstone Capital Partners III LP, an affiliate of New York-based private investment bank The Blackstone Group, the companies announced today.

“This transaction is a tremendous opportunity for our investors and our management team as we capitalize on the explosive growth of the market for DVDs,” Columbia House chairman and CEO Scott Flanders said. " It is also a unique opportunity for all of us at Columbia House to work with a first-rate financial partner in Blackstone, while continuing what has been a productive partnership with Sony and AOL Time Warner."

Sony and Warner Music Group will retain minority interests in the music, video and DVD direct marketer and will remain important suppliers of music and video.

“This is an exciting opportunity for us to invest behind a first-class management team and a strong brand name,” said Howard A. Lipson, senior managing director of The Blackstone Group. "We look forward to working with Columbia House, and with two of our longest standing corporate partners, Sony and AOL Time Warner, in this transaction."

The terms of the transaction were not disclosed. Financing, which is expected to close in June subject to certain government approvals and other customary conditions, is being arranged by UBS Warburg LLC and Banc of America Securities LLC. Blackstone was advised by UBS Warburg and Pathway Ventures.

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