Will HMV survive after the takeover?
By Joe Harker
Well known music retailer HMV went into administration in late 2018, with some fearing that the long standing fixture of the British high street would disappear for good this time. However, HMV has been bought by Canadian retailer Sunrise Records, owned by Doug Putman.
Putman previously bought HMV Canada, though had to close some stores and downsize the business, resulting in the loss of their flagship store. The same story appears to be unfolding in the UK as 27 unprofitable locations will be closed immediately with 455 jobs lost. The flagship Oxford Street store is one of those shutting down.
Sky News reports that HMV has been "rescued" by Putman's takeover, even though they will lose the flagship store and a number of other locations.
Sports Direct boss Mike Ashley had looked interested in buying HMV and demanded a six month rent free period for all stores if he took over but was pipped to the post by Putman. There will be no name change to the business so the HMV signs will still hang on the high street.
Rent is a serious problem for a lot of HMV stores and many of the unprofitable ones being closed by Putman are struggling because of high rents. He said some outlets weren't breaking even and weren't expected to do so in the future so they couldn't keep them open.
Putman said he was confident that physical media would persist as a force in the market and insisted his "immediate concern" was to support HMV employees who had been made redundant.
The Counter Claim:
HMV is a big name in the music business and on the high street but it has suffered through two administrations in less than six years, that is not the sign of a healthy business thriving in the current market.
People love HMV but too many have moved to the internet for their music and no longer need physical copies of entertainment products. Music, films and TV shows are available to stream online, making physical copes take up space and often represent a more expensive option.
The high street is also in a precarious position, with 2019 shaping up to be another year of job losses and closed stores. HMV might be able to survive by shedding unprofitable stores but if the state of the high street slips further then more stores might fall into unprofitable territory.
HMV has been struggling to operate without closures for several years. In 2011 they sold Waterstones and closed 40 stores in an attempt to cut costs, the decline of the physical CD market was blamed as a significant reason for their problems,
In 2013 the business went into administration and more stores were closed to keep HMV afloat. Their debt was bought by Hilco UK, who subjected HMV to restructuring before a second fall into administration in 2018.