MERGER: Columbia House Reorganizes
AS A RESULT of the Columbia House Co.’s pending merger with CDNOW, the company has undertaken a sweeping reorganization designed to streamline its existing business and emphasize e-commerce. The new firm will be divided into three divisions: Columbia House, columbiahouse.com and CDNOW. Columbia House’s longtime chairman and CEO Richard Wolter will retire after spending 34 years with the company. Scott Flanders has been named chairman and CEO. In addition, Tom Beauchamp has been named to the newly created position of senior vice president, chief information officer. Brian Wood has been appointed president of Columbia House to oversee the music and video division, which has 13 million members and generates $1 billion in annual revenue. Bill Ostroff has been named president of columbiahouse.com. Columbiahouse.com is expected to build on the firm’s existing Web business, which ended 1999 with sales of $100 million and over three million active accounts. One goal is to accelerate t! he online migration of Columbia House members who order music and videos by mail. In July 1999 CDNOW, a music and video commerce, content and community Internet site, entered into an agreement with Sony Corp. of America and Time Warner Inc. to merge with Columbia House, which is owned equally by Sony and Time Warner. The new public company that will result from the proposed merger will be owned 37% each by Sony and Time Warner. CDNOW’s existing stockholders will hold 26%. The merger is expected after receipt of necessary regulatory and shareholder approval.
