Amplified to Purchase Assets of Checkout.com
Struggling Internet retailer Checkout.com will announce today that its assets will be acquired by an Atlanta-based rival, a deal that essentially ends the new-media marriage between former Hollywood super-agent Michael Ovitz and supermarket tycoon Ron Burkle.
Privately held Amplified Inc., which supplies hundreds of thousands of digital music tracks to Internet retailers and other customers’ Web sites, will pay an undisclosed amount of stock for the bulk of Checkout’s assets.
Checkout’s 50 employees are expected to keep their jobs, boosting Amplified’s work force to 140.
Amplified plans to use Checkout’s technologies to improve its online presence and ultimately help usher in what many see as the future of music distribution: digital downloading.
“Music and entertainment retail is where we’re focusing right now, but I expect us to expand into other industries by the end of the year,” said Chris Melton, Amplified’s chief executive.
Ovitz could not be reached for comment Wednesday. Burkle sounded relieved to be done with the matter.
“Checkout and its technology has more value now than when we started, something I attribute directly to [former CEO] Richard Wolpert and [Chief Technology Officer] Edmond Mesrobian,” Burkle said. “We have a sale today because of [them].”
Burkle has been getting out of the dot-com world and refocusing on retail. He resigned from the board of supermarket giant Kroger Co. last week, and his Yucaipa Cos. investment firm disclosed Tuesday that it led an investment group that purchased a 6% stake in Kmart Corp., worth $206 million on Wednesday.
Burkle said he is on the lookout for other retail-industry stocks.
The sale of Checkout’s assets marks a somber ending to the once-ballyhooed tale of high-tech Hollywood. Checkout was supposed to benefit from synergies with Burkle’s supermarket chains and Ovitz’s entertainment ties.
The strategy, said officials at the Beverly Hills company’s 1999 launch, was to build a customer base by tapping into the thousands of frequent-shopper cardholders at Burkle’s Ralphs and Food 4 Less supermarkets. Not only would Checkout have access to a potentially huge group of consumers, it also could avoid high postage and handling costs by using the supermarkets as pickup centers for customers who ordered music and videos from Checkout.
That heady plan never became a reality, and the venture--like other Burkle-Ovitz investments--was plagued with problems.
Wolpert, a former Disney Online executive whom Ovitz introduced to Burkle, initially headed Checkout and was involved with the pair’s other online ventures: Scour Inc., the controversial Internet music company, and GameSpy Industries, an online video game firm based in Orange County.
Wolpert stepped down from his chief executive position at Checkout in July. He had quit his seat on the board of directors at Scour in late 1999 after a $55-million buyout offer from RealNetworks Inc. went sour.
Scour was faced with a multibillion-dollar copyright infringement lawsuit filed by eight film studios and 16 record labels. Out of money and unable to pay at least $4 million in outstanding bills, the company filed for bankruptcy and last month sold its assets.
