Audio Book Club Inc. has purchased the Columbia House Audiobook Club for an undisclosed amount of cash and stock from New York-based Columbia House Inc., a joint venture of Time Warner Inc. and Sony Corp.
"This is a perfect fit for us," said John Levy, chief financial officer of the Audio Book Club. "It allows us to more than double our members and our revenue without adding a single individual or any additional overhead. We believe it positions us as the dominant audiobook seller and provides us with an opportunity to grow our business both in direct mail and on the Internet."
As part of the agreement, the Audio Book Club can use Columbia House's video, laser disc, compact disc and DVD club lists to acquire new members and can include inserts promoting its club in mailings to existing Columbia House club members.
Prior to the acquisition, Audio Book Club had 450,000 members; the addition of Columbia House's 600,000 brings the company's roster to more than a million customers. Audio Book Club also recently purchased Radio Yesteryear/Video Yesteryear, Radio Spirits and Adventures in Cassettes -- companies that sell tapes of old-time radio shows -- which had a combined customer base of 300,000.
The acquisition of Columbia House, which had sales last year of about $30 million, will more than double Audio Book Club's annual revenue, to about $50 million, according to chairman/CEO Norton Herrick. With its other recent acquisitions, the company estimates its 1999 revenue to be about $60 million. The company has lost money every year since its 1994 inception but it expects to turn a profit next year. For the first nine months of 1998, the company had a net loss of $4 million on sales of $11.5 million.
Audio Book Club acquires members both through direct mail and via its Web sites (audiobookclub.com and BooksAloud.com). The company recently entered into marketing agreements with a number of Internet sites and content providers, including America Online, Excite, Netscape, Yahoo! and msnbc.com.
