BLACKSTONE BUYS
COLUMBIA HOUSE

Blackstone Capital Partners announced today that it has reached a definitive agreement with Warner Music Group and Sony Music to acquire a majority interest in Columbia House. The move had been expected (hitsdailydouble.com 3/5, 5/13).

As part of the deal, both Sony and Warner Music Group will retain minority interests in Columbia House, the world's largest direct marketer of music, videos and DVD products. In addition, Sony and AOL Time Warner will remain important suppliers of music and video content to Columbia House. The terms of the transaction were not disclosed but insiders place the deal in the $450 million range.

"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."

Scott Flanders, Chairman and CEO of Columbia House, said: "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. 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."

Financing for the transaction, which is expected to close in June and is subject to certain government approvals and other customary conditions, is being arranged by UBS Warburg LLC and Banc of America Securities LLC.