FOR IMMEDIATE RELEASE
Port Washington, May 10, 2005 – KOCH Entertainment ("KOCH") announced today that it has entered into a definitive agreement to be purchased by the ROW Entertainment Income Fund ("ROW"). KOCH Entertainment is one of America’s largest independent record, music publishing and distribution companies as well as a fast-growing independent video label and distributor. The announcement was made today by Michael Koch, founder and CEO of KOCH Entertainment.
ROW is buying the business for a total purchase price of approximately US$80 million, including $20 million of ROW Fund Units, $55 million of cash and $5 million of assumed liabilities. The acquisition, which has been approved by the Trustees of ROW, is immediately accretive to ROW’s Fund Unit holders and is scheduled to close by June 1, 2005. The combined businesses would have had pro forma revenues of US$563 million for the twelve months ended December 31, 2004.
KOCH ACQUISITION HIGHLIGHTS
KOCH Entertainment, based in New York, is a fast-growing and the only independent full-service recording, publishing, video and music distribution company that has operations in both the U.S. and Canada. Its record company, KOCH Records, headquartered in New York City, had the largest number of Billboard TOP INDEPENDENT albums chart positions during each of the last four years. Through KOCH Vision, the company has expanded into home video production and distribution. The company is vertically integrated and distributes its own content as well as third party audio and video labels on an exclusive basis.
Founded 19 years ago by Michael Koch, KOCH Entertainment has built unique strengths in the development, acquisition, production, marketing and distribution of recorded music and home video. KOCH’s recording and music publishing business produces and markets, under Koch’s own private labels, Adult Contemporary, Country, Urban, Hip-Hop/Rap and children’s music. KOCH also has a controlling interest in DRG Records Inc., a leading independent theater music label based in NYC. KOCH is a market leader among independent labels in the U.S. and Canada and the largest independently-owned music and video distribution company.
Through the KOCH acquisition, ROW will expand its reach into the U.S. market where KOCH Entertainment is one of the largest independent entertainment content providers and distributors and benefit from ownership and control over a significant amount of content for the home entertainment industry. ROW will integrate its private label business into KOCH’s Canadian operation, further strengthening ROW’s leadership position in the Canadian market.
The acquisition will provide ROW with a platform to penetrate the U.S. market for home entertainment. The resulting expansion into the U.S. will provide ROW with increased product distribution capabilities, further diversifying its customer base, and provide increased opportunities within the growing DVD sector.
In commenting on the KOCH acquisition, Darren Throop, President and CEO of ROW, stated, "The titles from Koch’s music publishing business will be available for distribution both in Canada and in the U.S. by our various businesses. In addition, the acquisition of KOCH will enhance our position as one of the leading suppliers of home entertainment in Canada and now the U.S. market, one of the largest globally."
Michael Koch, principal and founder of KOCH Entertainment, added "I am excited to join forces with ROW Entertainment, because I will be able to continue to run KOCH in the same successful fashion as in the past, while also finally being afforded access to the capital markets when the right acquisition opportunity arises." Michael Koch will continue to serve as CEO of KOCH Entertainment. In addition, the KOCH management team, including Bob Frank, President KOCH Records, Michael Rosenberg, President KOCH Entertainment Distribution and KOCH Vision, Dominique Zgarka, President KOCH Entertainment Canada and Alan Grunblatt, Executive Vice President KOCH Records, will remain in place.
ABOUT ROW ENTERTAINMENT INCOME FUND
ROW Entertainment is the largest wholesaler in Canada of CDs and DVDs, and the largest specialty retailer of CDs and DVDs in secondary markets in Canada. The Fund Units are listed on the Toronto Stock Exchange under the symbol ROW.UN.