Columbia House Unveils E-C Strategy

Mail-order music and video retailer The Columbia House Co. Monday
announced a restructuring of its organization, in conjunction with its pending merger with CDNOW Inc.

The reorganization is designed to create a more streamlined company with an
emphasis on e-commerce. When the merger is completed, there will be three
divisions of the new company — Columbia House, columbiahouse.com and CDNOW
(CDNW).

Columbiahouse.com will be designed to accelerate online migration of
Columbia House members. Scott Flanders, who will be
chairman and chief executive officer of the merged company, said the
site will make it easier to acclimate Columbia House’s 13 million members to
its online presence.

“We are making a significant strategic investment in columbiahouse.com to
enhance the value of online membership and to offer new services that will
make it easier for more people to buy more products from us than ever
before,” Flanders said.

“We also anticipate substantially lowering our infrastructure and
transaction costs as customers take advantage of our expanded online
services.”

In addition, Richard Wolter, current chairman and CEO of Columbia House,
will step down after 34 years with the company upon the completion of the
merger. After the merger, Wolter will stay on as a consultant to the
company.

In July, CDNOW was acquired by Sony Corp.
and Time Warner Inc., owners of
Columbia House, with the intention of creating a new public company. The new company, which has yet to be named, will be
owned 37 percent each by Sony and Time Warner. CDNOW’s existing stockholders
will own the remaining 26 percent.

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