BMG Direct to Acquire The Columbia House Company

Posted on June 24, 2005

BMG Direct, a division of DirectGroup Bertelsmann, announced that it has reached an agreement with The Blackstone Group to acquire The Columbia House Company. Stuart Goldfarb, President and CEO of BMG Direct, will serve as President and CEO of the newly acquired company. The move combines two giant direct marketing brands with similar 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 Columbia House Company is a 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.

Based in New York City, BMG Music Service and online music retailer CDNow form BMG Direct which is a unit of DirectGroup Bertelsmann. 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).

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."