We are Sad : HMV Collapses – What for the entertainment industry and the dog!
by Asha
It was late last night, and I was surfing round facebook, posting up bit’s and bobs that the good folks who follow FUTURE ARTISTS on the social networks might be interested in, and I started to see a trend ‘HMV GOODBYE’ , ‘NOT ANOTHER ONE’ , ‘IS MY GIFT VOUCHER STILL VALID’, – something was up!
So I googled ‘HMV’, and low and behold, the Guardian had broke the story, HMV had called in the administrators, to hold off the creditors, and re-structure the business and find a buyer! – this is sad news, the chain employees 4,000 people, lots of students and part-time workers, I know quite a few of them in Manchester, who either work with Future Artists on projects, or come to our events, and so I decided to post up this blog, to have a look at what went wrong!
We will have all perspectives covered, from film-makers who have made films about records shops, to essays on the demise of HMV wrote last year to articles published today in the financial times, that show the extent of the market share about to collapse, what will this mean for Film production companies and music labels….
So First Exhibit
1) Jane Mcconnell wrote a featured article for Future Artists exactly this time last year – ‘Is his Master’s Voice about to Choke’ Can be viewed here https://app.futureartists.net/2013/01/01/hmv-special-his-master’s-voice-about-to-choke/
2) Jeanie Director and Producer of ‘SOUND IT OUT’ a documentary about the last record shop in Teeside, has this to say..
I’m sad about HMV closing, I’m sad about people losing their jobs and the impact it will have on bands and labels. Although downloading is widespread people still want to buy physical formats: in the UK in 2012 94% of video revenue, 65% of games revenue and 62% of music revenue came on physical formats. (Source- Spencer Hickman – Rough Trade)
Buying music should be a pleasurable and social experience – I love going into SOUND IT OUT records and coming out with something I didn’t know I wanted in the first place. You don’t get that experience pressing “click” on a website. HMV is a bit of a running joke in SOUND IT OUT.
As Tom says in the film “I’m the last man standing, there’s an HMV but we don’t really count them as record shops”. I think that says it all, they lost their way a long time ago by not focusing on music or the customer. Now more than ever it feels important to support local, independent record shops. Support a record label, buy on vinyl, get the download voucher and get something you didn’t know you wanted!
www.sounditoutdoc.com/morethanmusic
MORE THAN MUSIC is a worldwide memory bank of the record stores that
changed our lives.
Exhibit 3 – Can a slimmed down HMV come back….. or is this just an independent record shop? as seen in Sound it Out?
Hilco shows interest in HMV stores
By Andrea Felsted and Robert Budden (copyright of the Financial Times)
Hilco, the retail restructuring group, could be interested in rescuing HMV, providing some hope to the chain that plunged into administration on Monday.
Hilco, which already owns HMV Canada, could look at acquiring some HMV stores, although it is not thought to have been approached by administrator Deloitte.
Deloitte is expected to try to find a buyer for HMV. Hilco declined to comment.
HMV said late Monday it was to go into administration, delivering a further blow to Britain’s embattled high streets after suppliers refused a request for a £300m lifeline for the struggling retailer.
Deloitte, which has been advising HMV’s lending banks, was appointed as administrator to the chain and the company said its shares would be suspended. The move puts 4,000 jobs at risk.
The move continues the grim start to the year for the high street, following the collapse of Jessops, the camera retailer, which closed on Friday with the loss of 1,400 jobs.
Late last week, HMV asked its suppliers, which include music labels, game-makers and film companies, for about £300m in additional financing to pay off its bank debt, and fund an overhaul of the company’s business model. However, the proposal was turned down.
It had also been considering a company voluntary arrangement, which would have seen it shed stores, according to several people familiar with the situation, although one said that this plan had failed to win the support of lenders.
“The board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect,” HMV said in a statement on Tuesday.
The retailer, which has 230 stores, has been hit by the migration to purchasing music and films online. It sought to combat this trend, diversifying into live venues and consumer electronics, but this was not enough to stem the decline in its core market.
A year ago, suppliers stepped in to support HMV, taking a 5 per cent equity stake in the company to secure its position as the UK’s leading entertainment retailer.
Neil Saunders, managing director of Conlumino, the retail consultancy, said: “It has been a long time coming, but everyone has known that the writing was on the wall since the day someone first downloaded a digital song.”
He added: “People will be very sad to see it go because it is a very emotionally connected brand, which most of us have used and have a lot of resonance with. But the truth is it is just not a part of our purchasing habits as much as it used to be.”
The closure of HMV could strike a damaging blow to the UK retail market for video games, CDs and DVDs. According to Verdict, HMV’s share of the combined music and video market, defined as physical and downloaded products bought on and offline, was 22.2 per cent in 2012.
HMV’s market share and its sales peaked in 2009, following the closure of Woolworths in 2008. Its market share remained steady for the following few years, despite falling sales, as other competitors such as Zavvi fell by the wayside.
Chuka Umunna MP, Labour’s shadow business secretary, said: “HMV is a national institution that has been a feature of our high streets for over 90 years so this news is deeply worrying. For the sake of HMV’s employees, we hope a way can be found to keep the business going.
“The demise of HMV – a national institution – would be a sad loss for British retail.”
HMV warned last month that it was poised to breach its banking covenants, sending its shares down 40 per cent on the day, and putting its future under threat.
Concerns about HMV have intensified in recent days, after the company launched a big promotional sale at the weekend.
The company said in December it was facing a “probable covenant breach at the end of January 2013” and blamed poor sales in the run-up to the crucial Christmas trading period.
It looked at options, including a company voluntary arrangement – a deal with creditors to prevent administration – as well as the supplier support.
Trevor Moore, chief executive of HMV, is the former chief executive of Jessops, while non-executive director David Adams is the former chairman of Jessops.
The collapse of HMV would deal a further blow to the high street. Last year JJB Sports, Clinton Cards, Game Group, Peacocks and Blacks Leisure failed, although most were subsequently acquired in a slimmed-down form.