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CDnow/N2K: It's official
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March 18, 1999: 12:17 p.m. ET
Newly merged online music retailer will compete with Amazon.com
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NEW YORK (CNNfn) - CDnow and N2K, two big names in online commerce who were once rivals, have officially merged to create a force in online music retailing.
The new company, CDnow/N2K Inc., should ratchet up the competition in a growing industry that company officials say will see $7.3 billion in sales by 2002.
Speaking to CNNfn Thursday, two executives of CDnow/N2K said the new concern has a customer base of nearly 2 million people who buy and listen to music online. As such, the company may threaten Amazon.com, also a major Internet music seller, with $33 million in music sales in the fourth quarter.
But CDnow/N2K Chairman Jon Diamond and Jason Olim, president and CEO, spoke not of Amazon (AMZN) but of the benefits of joining forces.
"We'll have a better music store than any music store separately." Diamond said. "It will be better than either site individually."
With growth prospects for the online music industry strong, large media and recording companies have expressed interest in moving into online music sales.
Asked about a rumor that Time Warner (TWX), the parent of CNNfn, was eyeing CDNow/N2K, Diamond said only, "We've had inquiries from most major media companies."
Olim added, "We are not commenting on any rumors of investments."
Unlike Amazon.com, neither company's stock has seen stellar performance, with N2K (NTKI) actually falling 40 percent over the last 52 weeks.
But both executives attributed this drop to the months of merger work that kept them from pitching their company to the investment community. Analysts, they said, soon will take notice. The company has also said that the cost reduction of the merger, such as saving money on portal fees from companies like Yahoo!, also may benefit shareholders.
Although officially combined, it won't be until May that CDnow/N2K goes online as one unit.
Under the deal announced in October, existing N2K shareholders received 0.83 share of common stock in the new company for each N2K share. Existing CDnow shareholders, meanwhile, got one share of common stock in the new company for each CDnow share. 
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CDnow
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