Sign in Subscribe
Internet services

CMG Information Services and Hollywood Entertainment Announce Strategic Acquisition and Investment

Strategic Insights

— 2 min read

CMG Information Services and Hollywood Entertainment Corp. have announced a major acquisition and investment deal, with CMG acquiring a significant stake in Reel.com and purchasing 5 million shares of Hollywood Entertainment Common Stock. The deal highlights the growing importance of the digital market in the entertainment industry and cements CMG's position as a major player in the online video market.

The acquisition of Reel.com, the leading video store on the Internet, provides Hollywood Entertainment with a significant competitive advantage in the electronic commerce market. Reel.com's movie information, selection, pricing, and convenience have established it as the preferred place to shop for movies on the Internet. By combining the largest video store on the Web with the 25 million Hollywood Entertainment customers, a new video powerhouse will be created, ensuring strong growth for both Web traffic and retail traffic.

Key Takeaways:

  • CMG Information Services will acquire a 34% stake in Reel.com, converting it into stock in Hollywood Entertainment, making CMG the largest shareholder in the company.
  • The transaction will make CMG the largest shareholder in Hollywood Entertainment, with 25 million customers and a strong retail business.
  • The acquisition of Reel.com will provide Hollywood Entertainment with a major competitive advantage in the electronic commerce market.
  • The combined entity will create a new video powerhouse, ensuring strong growth for both Web traffic and retail traffic.
  • CMG will invest $45 million in cash in the acquisition, in addition to its existing 34% stake in Reel.com.
  • The acquisition is expected to be completed in 1998.
  • CMG will appoint David Wetherell and Scott Beck to the Hollywood Entertainment Board of Directors.
  • The acquisition highlights the growing importance of the digital market in the entertainment industry.

Statistics:

  • Reel.com is the leading video store on the Internet.
  • Hollywood Entertainment operates the largest video store chain in the United States, with over 1,000 superstores in 43 states.
  • Hollywood Entertainment averages approximately 7,500 square feet per superstore and carries approximately 10,000 titles and 16,000 videocassettes per store.
  • The company operates the highest volume stores in the country, with 121 new stores opened in 1995, 250 new stores in 1996, and 356 new stores in 1997.
  • CMG Information Services, Inc. (NASDAQ:CMGI) holds minority positions in Microsoft, Intel, and Sumitomo.
  • CMG's CMG @Ventures investment affiliate has significant interests in Lycos, Inc. (NASDAQ:LCOS), blaxxun, Vicinity, GeoCities, Parable LLC, Planet All, KOZ, Silknet, Chemdex, Speech Machines, Softway Systems, TicketsLive Corporation, Critical Path, Mother Nature, and Visto Corporation.

Sources:

  • CMG Information Services, Inc. press release dated July 31, 1998
  • Hollywood Entertainment Corp. press release dated July 31, 1998
  • Business Wire article dated July 31, 1998

Read more