TIME-LIFE DEAL MAKES ZELNICK MARKETING MOGUL
New York Post 01.06.04
Tim Arango

January 6, 2004 -- A group headed by former BMG chief Strauss Zelnick purchased Time-Life Inc., the direct marketer owned by Time Warner, yesterday in a deal that will create a direct marketing giant with revenues of around $550 million.

Financial terms were not disclosed. The Zelnick group will immediately acquire a long-term license for the worldwide use of the Time-Life brand.

Time-Life sells music, videos and educational software through television advertisements.

ZelnickMedia and private equity firm Ripplewood Holdings teamed up on the deal. The two partners will combine Time-Life with Lillian Vernon, another direct marketer, which the group bought for about $60 million last year.

Time Life has about $350 million in annual revenues, while Lillian Vernon has about $200 million in yearly sales.

Lillian Vernon is mainly a catalog retailer of gifts, household appliances and gardening tools, but also operates 14 retail outlets.

"What all our products have in common is that they are all high-margin products," Zelnick told The Post. "We want to build up our portfolio of brands."

Zelnick said his firm plans more acquisitions in direct marketing. "This is more the beginning," he said.

The combination of Time-Life and Lillian Vernon will be called Direct Holdings Worldwide, and Zelnick will be chairman and CEO.

Time-Life was formed in 1961, primarily as a book division, but now is known more for selling music through TV commercials. ZelnickMedia plans to re-enter the book business.

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

Time Warner has been shedding assets to pay down debt, but a Time Warner source said yesterday's deal was unrelated to the debt reduction plan.

"It's more about getting out of a slow-growth business," this person said.

In addition to running BMG, Bertelsmann's music division, Zelnick has also served as president and chief operating officer of 20th Century Fox.