BMG Direct Acquires The Columbia House Company

New York, NY – BMG Direct, one of the world’s largest direct-to-customer distributors of music, closed the previously announced acquisition with The Blackstone Group , a private investment and advisory firm, of The Columbia House Company, the largest direct marketer of DVDs. BMG Direct has acquired 100 percent of The Columbia House Company. Terms of the transaction were not disclosed.

About BMG Direct:

Based in New York City, BMG Music Service and online music retailer CDNow form BMG Direct which is a unit of DirectGroup Bertelsmann. BMG Music Service is one of the world’s largest direct-to-customer distributors of music. 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) – and offers a wide variety of listening choices including pop, rock, R&B, adult alternative, easy listening, jazz, blues, classical, Latin, hip-hop, country, Christian and many more. Customers are offered a selection of over 14,000 titles provided by the four major music groups and over 100 independent record labels and can shop for music directly from catalogues or online at www.bmgmusic.com.

About The Columbia House Company:

Headquartered in New York City, The Columbia House Company is the world’s largest 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. The company’s Website, www.columbiahouse.com, is one of the premier e-commerce brands and consistently ranks among the Web’s top 25 shopping destinations. Since its inception in 1955, Columbia House Company has a proven record of excellence in database marketing, market segmentation, credit screening and niche market merchandising.

About DirectGroup Bertelsmann:

DirectGroup Bertelsmann integrates Bertelsmann’s global media direct-to-customer businesses. Roughly 32 million customer relationships secure DirectGroup’s position among the largest enterprises in media commerce. The cornerstone of this success are the book and music clubs in 22 countries incorporating strong brands like France Loisirs, Book-of-the-Month, Der Club,. Circulo de Lectores and BMG Music Service. Members have access to the clubs’ product range via catalogs, internet or one of the more than 600 worldwide club shops. Since August 2002, Ewald Walgenbach has headed the unit. DirectGroup Bertelsmann is a division of German-based Bertelsmann AG. In fiscal year 2004, DirectGroup made 2.2 billion euros in revenues with more than 12,000 employees.

About The Blackstone Group

The Blackstone Group, a private investment and advisory firm with offices in New York, Atlanta, Boston, Los Angeles, London, Hamburg, Mumbai, and Paris, was founded in 1985. The firm has raised a total of approximately $34 billion for alternative asset investing since its formation. The Blackstone Group’s six core businesses are Private Equity Investing, Private Real Estate Investing, Corporate Debt Investing, Marketable Alternative Asset Management, Corporate Advisory, and Restructuring and Reorganization Advisory. www.blackstone.com