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HMV And Mama Group Join Forces

LONDON (VIP-NEWS) — HMV has partnered with venue operator the Mama Group on a joint venture that will see the U.K. entertainment retailer sharing profits at 11 mid- to large-size venues.

The 5,100-capacity Hammersmith Apollo will be renamed the HMV Apollo and the agreement also includes naming rights for the London Forum and several others.

"Live is the growing part of the music value chain," said HMV Group chief executive Simon Fox during a conference call. "This is a way for us to remain a significant player." He said the market value of live music in the U.K. is £1 billion.

HMV is investing an initial £18.25 million for the 50% share in the JV, which includes 10-year naming rights. The investment will come from an equity placement of 20 million shares, 5% of HMV Group's issued share capital, with Fox saying that was the preferred option over financing the deal by debt. It is equivalent to £25.5 million.

"We just felt the time was right to do a small equity placement," he said. The equity placement is set to be completed by January 15th.

The venues will be promoted in-store, while HMV's online CD customers will provide a database for marketing opportunities for its concerts. HMV has recently entered into an arrangement with ticketing agency Seatem, to sell tickets at its 250 stores and online via to events for the JV and other events and venues.

"Not only will we sell tickets, we will also sell merchandise [in-store]," said Fox. "We will also be using the best seats as rewards for our loyalty card members."

The other venues in the deal include London venues the Garage, Jazz Café and Borderline, as well as the Picture House in Edinburgh, Institute in Birmingham and Moshulu in Aberdeen. Mama Group management will operate the venues.

HMV also announced the acquisition, for £700,000 of 14 Zavvi stores from the rival U.K. entertainment retailer's administrators, which will secure 270 jobs. It covers nine stores in the U.K. and five in Ireland and their stock.

Fox said it was "hard to read" any benefit to HMV over the Christmas period from the problems at Zavvi and Woolworths. Both businesses went into administration, roughly equivalent to Chapter 11 bankruptcy protection in the U.S.

Despite the surprise move into the live business, HMV Group's interim management statement and trading update also showed that the traditional music market performed well for them over Christmas.

"We sold this year, over Christmas, 7% more albums than we did last year," said Fox. "So the music market is not dead. Digital is growing, of course, but it still represents less than 10% of the music market." He said the 7% increase over Christmas resulted in total sales of 9 million CDs for that period.

HMV U.K. and Ireland experienced 3% like for like sales growth in the five weeks to Jan. 3 compared to last year. Total sales increased 5.8% over the five weeks. Over the same period, the international division had a 6.6% like for like sales decline and the combined U.K., Ireland and international like for like figure was an increase of 1.4%.

For the 10 weeks ending Jan. 3, HMV U.K. and Ireland had like for like sales growth of 0.6% compared to last year; the total sale growth was 3.4%. Over the 10 weeks, the international division had a 5% like for like decline, and the combined U.K., Ireland and international like for like figure was a decrease of 0.3%.

HMV Group – the company includes bookseller Waterstone's — had 0.5% like for like sales growth over the five-week period and a 1.3% like for like decline over the 10-week period. According to Billboard