AOL and Sony Close in on Columbia House Sale

07 March 2002

Investment banking firm Blackstone Group is said to be close to reaching a deal with AOL Time Warner and Sony to buy their direct-sales music and video joint venture Columbia House.

Blackstone, say sources, has forged a preliminary agreement to buy a majority stake in Columbia for $400–$500 million (€456m–€570m; £282m–£352m), with AOL and Sony retaining a minority interest. However, the final details are still being discussed and a done deal is far from guaranteed.

Two other offers are on the table: one from Goldman Sachs with Edgar Bronfman Jr (the soon-to-step-down vice chairman of Vivendi Universal); the other from private equity group Providence Equity Partners.

Columbia's music operations have suffered in recent years in the face of increased competition from internet operators and chief rival BMG Direct, though its video and DVD sales have boomed to make up around half its $1.1 billion annual revenues.

AOL and Sony – both expected to forge long-term supply agreements with Columbia for their music and movie units – have talked to a series of potential buyers over the last few years, but have consistently failed to offload the unit.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff