ALLIANCE, SOURCE INTERLINK TO LINK UP

As had been expected, Alliance Entertainment and Source Interlink have announced plans to merge their two companies. Equity holders of AEC and shareholders of SI will each get 50% of the combined entity, with a yearly revenue of some $1.3 billion. SI CEO Leslie "Lie a" Flegal will continue in that role with AEC President/COO Alan Tuchman joining the SI team as EVP in charge of AEC’s operations.

Source Interlink is the largest direct-to-retail magazine distribution/fulfillment company in North America. It also provides magazine information and front-end management services for retail chains that operate some 80,000 stores nationwide.

AEC distributes music and video entertainment software to some 30,000 retailers, including Barnes & Noble, Toy R Us, Sears, Kmart, Meijers, Musicland, Trans World, Circuit City, Best Buy, AOL, BJ’s Wholesale Club, Blockbuster, Tower Records, Borders and Hastings Entertainment. They also have a myriad of other business, including an Internet data base All Music Guide, grocery music rack Fresh Picks and a huge consumer direct fulfillment business.

Fleigel adds: "Our merger with Alliance Entertainment will substantially expand our direct-to-retail distribution and fulfillment services beyond our existing magazine periodicals business. The company intends to capitalize on Source Interlink’s extensive market expertise at the front-end checkout and its strong relationships with supermarkets, drug stores, convenience stores, mass merchandisers and other retail outlets, to strengthen Alliance Entertainment’s leading position in distribution and logistics management of home entertainment. And now I can double my shipment of Barely Legal."

Says Tuchman: "Alliance Entertianment is excited to merge with a company with the market breadth of Source Interlink. Source Interlink’s strong retailer relationships are expected to increase our market potential and provide an expanded base to grow our logistics and infrastructure services business for home entertainment content products. And allow me more time to surf the Net for porn."

Many in the industry have noted that AEC parent company Yucaipa, run by Ron Burkle, was looking for an exit plan for some time, having owned AEC since it emerged from Chapter 11 bankruptcy in 1999.