Blackstone Near Deal to Buy Columbia House

Blackstone Group, a privately held investment group, is close to a deal to buy Columbia House, the music club owned by Sony Corp. and AOL Time Warner Inc., for about $450 million, sources familiar with the matter said.

The sources, who spoke on condition of anonymity, said a deal could be announced early this week, confirming published reports.

Spokesmen for Blackstone, Sony and Warner Music Group declined to comment.

Columbia House has been facing tough competition in its music sales business from Amazon.com and other online retailers. The music club had been in a deal to merge with music retailer CDNow in 1999, but that deal fell apart.

Sony and Warner have been looking for a buyer for Columbia House for the last few years. Bertelsmann, which runs a rival music club, BMG Direct, bought CDNow in 2000 for $117 million.

Columbia House went through a restructuring in early 2000 and closed a major compact disc and video distribution center last year, a move that cost 500 jobs. But business is believed to have picked up recently with a move to DVD sales.

Blackstone Group is an investment firm with stakes in real estate, Universal Studios Florida, Allied Waste and Centennial Communications. It was founded in 1985 by chairman Peter Peterson and CEO Stephen Schwarzman.

Columbia House was started in 1955 as a music club and now also sells TV and movie videos as well as DVDs.

It offers more than 14,000 music titles and has 14 million members in the United States, Canada and Mexico.