Bertelsmann acquires Columbia House music club

10th May 2005, Comments 0 comments

10 May 2005, GUETERSLOH - Media group Bertelsmann AG announced on Tuesday it has reached a deal to acquire the US DVD and music club Columbia House.

10 May 2005

GUETERSLOH - Media group Bertelsmann AG announced on Tuesday it has reached a deal to acquire the US DVD and music club Columbia House.

Bertelsmann did not reveal the price of the acquisition, which would be the biggest in the US market since the company bought Zomba Records in 2002.

In New York, where Columbia House is based, the Wall Street Journal estimated that the purchase price would be in the range of USD 400 million (EUR 311 million).

Columbia House, which would become part of Bertelsmann's book club division BMG and its US unit BMG Direct Group, has annual sales of EUR 625 million and some 8 million club members.

The US company is 85 percent owned by the Blackstone Group.

Bertelsmann said Stuart Goldfarb, chief executive of BMG Direct, would become the new president and CEO of Columbia House.

Analysts see the deal as a further sign of confidence in the BMG division at Bertelsmann. After years of running in the red, the unit last year turned a profit of EUR 32 million.

"In BMG Direct and Columbia House, two profitable businesses are being merged," commented BMG Direct chief executive Ewald Walgenbach. He said BMG sees strong potential for customer sales and growth.

"The DVD market is very attractive, with significant growth rates," Walgenbach said.

DPA

Subject: German news

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