So far, the talks haven't advanced and the chances of a deal being finalized anytime soon are slim, people close to the situation said.

Spokesmen for Bertelsmann's BMG Entertainment music unit and Columbia House declined to comment. The talks come as the record-club business is in serious decline, hit by a combination of online music sales and the maturity of the compact-disk format, which has reduced the number of people buying CDs to replace their vinyl records. Columbia House, long the dominant record club, has particularly suffered as BMG Direct has adopted more aggressive marketing tactics in recent years. Of the two clubs, Columbia House is the biggest, with 16 million members, although much of its business comes from video sales that BMG Direct, with 11 million members, doesn't offer.

Talks described as "casual conversations" between BMG and Time Warner, New York, were held late last year, before Time Warner announced its merger with America Online Inc., of Dulles, Va., in January. Time Warner is reluctant to pursue the deal further while the AOL deal and a pending merger of Warner Music Group with EMI Group PLC's music businesses are reviewed by antitrust regulators, these people said. Time Warner expects the deals will close by year's end.

Sony's approval needed
Any Columbia House deal would also require approval of Sony Corp., which owns the other 50% of the venture. The Japanese company's attitude isn't known. A Sony spokesman declined to comment.

BMG is open to a possible deal, according to a person familiar with the situation, while Time Warner has said it is looking at all its options to help turn around Columbia House's declining performance. The U.S. media giant is even open to selling its Columbia House stake, a person familiar with the situation said. One executive close to the situation said the U.S. record industry can't support two record clubs.

Neither club regularly reports financial results, although Time Warner and Sony said last year that Columbia House earned about $100 million before interest, taxes, depreciation and amortization in 1998 on revenue of about $1.4 billion. BMG Direct accounted for about 20% of BMG Entertainment's North American revenue of $2 billion last year, according to a person familiar with the situation.

Collapse of merger plan
Uncertainty about Columbia House's future has increased since a planned merger with online music retailer CDnow Inc. collapsed last month. The deal was negotiated last summer to help Columbia House improve its online presence.