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HMV sales down as MAMA bidder speculation widens

By | Published on Monday 9 January 2012


HMV saw its pre-Christmas sales fall 8.2% year-on-year, despite the fact Christmas falling on a Sunday this time basically meant the Christmas shopping period had an extra Saturday in it (and despite me buying my sister an only slightly discounted stylophone for Christmas from one of HMV’s Fopp shops).

Nevertheless, HMV bosses were able to put a positive spin on their latest financials, pointing out that the 8.2% sales decline was better than the 13.2% fall they suffered in sales in the first half of the current financial year. They also added that tech product sales were up 51% in those stores where more floor space has been given to gadgets in the last year (I wonder if my sister’s stylophone counted as a tech sale?).

HMV big cheese Simon Fox told reporters: “The continuing actions to focus the business and to expand our technology offering are beginning to show through. We are seeing a combination of a slowing of the decline in music and film, and acceleration in the growth of technology. Undoubtedly trading conditions and the consumer environment remain challenging, but we remain confident in HMV’s future prospects”.

That optimism is unlikely to be shared by many City types, especially those who remember that HMV suggested last year’s disappointing pre-Christmas sales figures were an anomaly due to all the snow, and yet without any white Christmas this year’s sales were even worse.

Though the planned sale of HMV’s live division, the MAMA Group, should give the retailer a little room to breath and help Fox further develop his “look at all our gadgets” strategy. Which is good news. If you believe that strategy – rather than one that involved better integrating the firm’s high street, live entertainment, digital and artist partnerships interests – is a winner.

Talking of HMV Live, as speculation about the sale of the MAMA Group continues, a number of big music business players were added to the list of possible buyers over the weekend. That Live Nation and Festival Republic would be tipped as potential bidders for the venue operator and festival promoter was predictable, though reports in the Sunday Telegraph that both Sony Corp and Warner Music are also considering bidding are more surprising.

A Sony Corp bid seems unlikely, though there would be a logic to Warner – now the baby major in recorded and published music – entering the live and management space, and some of its more interesting artist partnerships have been struck through their UK division. Though a race for MAMA between private equity (maybe backed by MAMA co-founder and CEO Dean James) and the existing big players in live music seems more likely.

Live Nation, of course, owns half of Festival Republic, and the two sister companies could bid together, the former for MAMA’s venues the latter for the HMV division’s festivals business. That said, Live Nation acquiring MAMA’s London venue portfolio would cause all kinds of Competition Commission concerns.

Indeed, MAMA acquired its flagship venue, the Hammersmith Apollo, from Live Nation, when its rival was forced to sell it by competition regulators in order to get approval of its 2007 purchase of a slice of the Academy Music Group. Live Nation might argue that The O2, opened a few months after its 2007 AMG deal by rivals AEG Live, has altered the London live market, but getting deal approval would not be a foregone conclusion.

And while the Apollo is just one part of the MAMA pie, which also encompasses artist management, media and marketing interests as well as its venue network and festivals business, the Hammersmith venue will be key for many bidders, especially the existing players in live music.

Though, and this will depress most of you in CMU land, it’s worth noting Live Nation and AEG’s interest in the West London venue is more likely about the value of live stand-up than music. Comedy has become an increasingly important and profitable part of the live entertainment business in recent years, and the Apollo is synonymous with the boom in stand-up, thanks to the BBC’s free promotion of both the brand and the big name comedians it routinely hosts via its ‘Live From The Apollo’ franchise. Bet you wish you’d all paid more attention to our sister title ThreeWeeks’ annual coverage of emerging comedy talent now, don’t you?