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Former Chief of BMG to Purchase Time Life Inc.

Time Warner will be paid some cash and receive royalties from the music and video direct marketing unit.

January 06, 2004|From Reuters

A partnership run by the former chief executive of BMG Entertainment is buying Time Life Inc., the music and video direct marketing arm of Time Warner Inc., the companies said Monday.

Financial terms were not disclosed, but the deal provides for Strauss Zelnick, who once ran BMG, a division of German media giant Bertelsmann, to immediately acquire a long-term license to use the Time Life brand around the world.

The Time Life unit was founded in 1961 as a book division, but now is known for selling video and music compilations such as "Best of Saturday Night Live" and "Sounds of the '80s" via television commercials.

"This is an historic brand known by 93% of households in America," Zelnick said. "It owns its own brands and ideas and has 2 million active customers."

Time Warner will be paid some cash and will receive royalties from Time Life, which had revenue of about $350 million in 2003, according to Jim Friedlich, a partner in Zelnick's ZelnickMedia.

With the backing of private equity firm Ripplewood Holdings, Zelnick will combine Time Life with Lillian Vernon, the specialty catalog retailer he acquired last year.

Zelnick will serve as chairman and CEO of the combined company called Direct Holdings Worldwide, as well as retain his role managing other ZelnickMedia portfolio companies, such as Japan-based Columbia Music Entertainment.

"The nature of media is more and more going to be a direct relationship with a household or a consumer," Zelnick said. Direct Holdings will reach consumers through direct mail, catalogs, the Internet and TV, he added.

"Time has pulled back from the book business in the past few years in the United States, but our intention is to reenter the book business," Friedlich said.

Time Warner, the world's largest media company, has been selling assets to pare debt and to concentrate on fewer businesses.

"Given our desire to concentrate on high-growth opportunities in Time Inc.'s core magazine business and brands, selling the Time Life direct marketing division to the right buyer made strategic sense," said Ann Moore, Time Inc.'s chairwoman and CEO.

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