Britain's major music retailer HMV seeks rescue from bankruptcy
90-year-old business suspends trading
LONDON (AP) — British music and entertainment retailer HMV admitted defeat on Tuesday after more than 90 years in business, suspending trading in its shares and calling in administrators to try to salvage any viable parts of the business.
HMV is the last big retail chain selling recorded music in Britain and employs more than 4,000 people working in 238 stores, which will remain open for the time being.
The company's management confirmed that it had failed to gain agreements with lenders and suppliers to continue trading. It has appointed three partners of Deloitte LLP to administer the business.
The name HMV stands for "his master's voice," from the company's trademark of a dog named Nipper staring intently at the bell of an early gramophone player. The first HMV music store was opened in London in 1921. In 1986 the company opened a store in Canada, and later moved into the United States, Japan, Australia, Hong Kong and Singapore.
The company's shares closed at 1.1 pence in London trading on Monday, down from a high of 4 pence a month ago.
"HMV's notice of administration was inevitable with online retailers, downloads and supermarkets combining to marginalize a brand which has become out-priced and outdated, despite its strong heritage," said Julie Palmer, partner at recovery and restructuring specialist Begbies Traynor.
HMV suffers from the high costs of running too many shops in high-rent city centers, while competitors selling online have lower overheads.
Despite steadily losing market share to Internet sellers, HMV still has about 20 percent of the U.K. music and video market, which includes both downloads and discs.
The same pressure of rapidly changing technology, combined with Britain's sluggish economy, recently swamped two other major British retailers, appliance dealer Comet and the Jessops camera shops.
The British Retail Consortium says that about 10 percent of the nation's shop buildings now stand vacant, and Begbies Traynor says 140 U.K. retailers on are its critical list.
An HMV shop on Oxford Street in London played a crucial part in the launch of The Beatles.
The group's manager, Brian Epstein, went there in 1962 with audition tapes which had failed to impress Decca Records. An acquaintance at the store suggested Epstein have the tapes converted to an acetate disc, which could be done in the building.
According to "Shout," Philip Norman's book about the group, the engineer who made the disc was impressed and sent Epstein upstairs to meet Syd Coleman, head of EMI's publishing company, who in turn connected the manager with producer George Martin. Intrigued by "something very peculiar" in the sound, Martin arranged an audition.
After meeting the group, Martin said he thought: "Well, let's put them under contract. I can't lose much."
Copyright (2012) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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