Audio Book Club, Inc. Acquires Columbia House Audiobook Club
Business Wire - January 04, 1999 09:02
BOCA RATON, FL--(BUSINESS WIRE)--Jan. 4, 1999--
Acquisition To More Than Double Audio Book Club's Revenues Increase Company's Member File To Over 1,000,000 Names
Audio Book Club, Inc. (AMEX: KLB) today announced that it expects to more than double its annual revenues through the acquisition of the Columbia House Audiobook Club from the Columbia House Company, a joint venture of Sony Music Entertainment Inc., a subsidiary of Sony Corporation (NYSE: SNE), and Time Warner Inc.'s Warner's Music Group (NYSE: TWX). Terms of the acquisition, which included a combination of cash and stock, were not disclosed.
Founded in 1955, Columbia House is the worlds largest direct marketer of entertainment products. Columbia House's Audiobook Club was launched in 1994 and has a total customer file of over 600,000 names. Combined with Audio Book Club's 400,00 total member names, the total number of customer names is now in excess of 1,000,000. As part of the agreement, Audio Book Club will be able to utilize Columbia House's extensive compact disc, VHS, laser and DVD membership lists in its new member acquisition campaigns. In addition, Audio Book Club will have the right to insert new member acquisition materials into Columbia House's member mailings to its various clubs. Audio Book Club will be the Columbia House recommended source for audiobooks in a club format.
Commenting on the acquisition, Norton Herrick, Chairman and CEO of Audio Book Club, stated, "This is truly a 'McGwiresque' deal for Audio Book Club. This acquisition marks a major milestone for Audio Book Club and, we believe, solidifies our position not only as the leading club for audiobooks, but as the leading seller of audiobooks in the world. By increasing our member file to over 1,000,000, we believe we can quickly realize the full benefit of an expanded customer base as well as substantial economies of scale. We anticipate these scale economies will come from the ability to spread the Company's fixed costs over a much larger membership base as well as from volume discounts from suppliers. Another benefit, and one which will enhance the effectiveness of our new member recruitment program, is our access to the Columbia House customer files of approximately 20 million names. Mr. Herrick continued, "By combining our two clubs as one entity, we believe we can offer current and potential members the largest selection of audiobook titles as well as the highest levels of quality, member service and satisfaction we have become known for. Additionally, we believe this transaction will considerably enhance our Internet strategy as our combined member file includes many individuals accustomed to using the Internet. The additional total member database and our dedicated focus on the audiobook market will enable us to further the growth of our business through interactive media utilizing the ever-expanding and seemingly limitless potential of the web and e-commerce."
Audio Book Club, Inc. is a marketer of audiobooks through membership clubs which market and sell audiobooks via the Internet at www.audiobookclub.com and www.BooksAloud.com, and by mail order. Audio Book Club, Inc. is also a publisher of audio and video content including classic radio and video programs and markets and sells that content on audio cassettes, CDs and video cassettes via numerous distribution channels including the Internet, catalogues, radio shows, retail and other outlets. Since commencing operations in January 1994, Audio Book Club, Inc. has engaged in an aggressive membership recruitment program to establish a core Audio Book Club member base. Audio Book Club, Inc. currently has a combined membership and audio buyer database of over 1,300,000 names.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements which are not historical facts contained in this press release are forward looking statements that involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Audio Book Club, Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, the ability of the Audio Book Club, Inc. to successfully integrate the newly acquired businesses into its operations and the uncertainty regarding the actual effect of the acquisitions on the Audio Book Club, Inc. risks relating to the Company's direct mail campaigns and its ability to retain members to its book club, risks relating to the Company's growth strategy, dependence on third party service providers, uncertainty of the scope of future product returns, collection and risks associated with selling products on credit, competition and other risks detailed in the Company's Securities and Exchange Commission filings. The words "believe" and "should" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date the statement was made.
CONTACT: John Levy, Chief Financial Officer
Audio Book Club
Telephone: (973) 539-9528
or
Jeffrey Volk
Rubenstein Investor Relations
Telephone: (212) 843-8086
jvolk@rir1.com
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