There’s hope for HMV yet

With a conglomerate of major labels offering to support the failing company, it seems that there may be a light at the end of the tunnel for HMV.

21.01.13

Having recently gone into administration it seems as if there may be hope for struggling high street retailer HMV. As the NME reported on Friday, administrators Deloitte have said that over 50 parties have expressed interest in HMV, a range which includes wealthy individuals, private equity groups and video game retailer GAME.

Now, The Sunday Times reports, a coalition of major labels are offering a multi-million pound support package to HMV to keep it afloat. Universal Music, Warner Music and Sony will offer “a host of helpful measures to the company, including more flexible credit terms and a lower rate on product.” A source close to the record companies is anonymously “quoted” as saying that the labels “don’t want their only choice to be Tesco or Amazon”.

Without knowing the ins-and-outs of the financials that surround distribution and the HMV plight, it’s hard to see why it would be worth the while of the labels to continue support a company whose demise may seem inevitable. However, major labels have been offering HMV support for a few years now, and have taken shares in the company as a way of repayment.

Additionally, as the BBC have reported, HMV pay their distributors after a 60-day period. Because of this, HMV would not have had to pay the bill for the stock shifted in the busy December period until springtime. If they were to close down completely, this bill might never get paid.

Furthermore, HMV used to be a part of EMI until 1998, when it was spun off as a separate entity. At the time, EMI agreed to guarantee rental agreements on some HMV stores. When EMI was acquired by Universal last year, the rent liabilities were shifted – and if these stores were shut down but not relet, Universal would be facing a rent bill in the tens of millions.

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