So, with Hilco buying the debt, it looks like they are going to run things at HMV from now on. That could be good news. They’ve done a good job in Canada. I suspect the administrators are still involved, because there are assets that Hilco could sell that would be better going to the administrators (to distribute to creditors) than going into Hilco’s coffers. For example, the lease on 150 Oxford Street could be worth selling as it has a value of around £12 million. These things will be sorted out in the next few weeks, but couldn’t be resolved in the timescale available, without further damaging the business. (Hilco UK sold the HMV Vancouver store because of its immediate value). So, that’s the immediate future sorted.

Longer term, Hilco need to recruit the best senior management - probably not all of the current lot! Then close loss-making stores like the Piccadilly Circus one, and find a cheaper central London location that isn’t so high profile/expensive. Sell off any store that will give a huge immediate premium. They then need to use this money to improve the remaining stores and introduce CD/DVD/Games burning (with a full range of products). I know I’ve gone on about in-store burning, but it’s the only way to ensure every store has virtually every title on-demand. (Before commenting, please go to a Tesco that has CD burning and see the quality. You really can’t tell the difference between in store manufactured and factory manufactured product!).

The Video and Record Industries are being very supportive.

It doesn't look like many posters on this website are that interested in HMV, or at least they don't heve opinions.

Well, my view is that Hilco WANT to buy the business, but obviously need to have supplier support on-going, (like they’ve got in Canada), and want access to a decent estate of shops.

The problem is Deloitte has identified that the estate of shops has a value in its own right, so can’t just sell the business to Hilco. (And then watch Hilco sell off a few stores for more money than they paid for the business).

By Hilco buying the debt for £40 m, (25p in the £), it puts them significantly ahead of others who are looking at the HMV assets, and it now gives time for Hilco to negotiate a more complicated deal. It may lead to Hilco ending up with most of the stores, but leaving a number with Deloitte to either close down (because they are loss making and have no value), or the leases have a lot of value in their own right, so the administrator can sell them for more than Hilco would want to pay for them. (E.g. Oxford Circus, which has a value of £12 m.) A third option would be that Hilco take the valuable stores, but in the event they sell the leases within, say 5 years, then part of the premium they get should be forwarded to Deloitte’s. (Messy, but that’s one of the reasons it’s going to take a while to get a deal).

Of course, I’m sure, as well as talking to Deloitte’s, they are talking to the suppliers. They need terms that make the business viable. At the moment, the sticking point is the price the administrators pay for the stock already in the stores. Also, what Deloitte will pay for new stock. My understanding is no new stock is going in. (This is a dangerious situation. If the stores' sales start to slow - because of no stock, or even the weather - then Deloitte will close stores or even the whole chain - like what happened to Jessops).

In Canada, Hilco bought the business from HMV, which made things easier - but they went on to sell some key locations, including their flagship store in Vancouver. It meant Hilco got the better end of the deal than HMV did. (Hilco only paid £2.05 m)

So, that’s the problem. HMV’s store estate looks like being worth more that the business. If the estate is worth, say £120 m, then Hilco have got to pay more. And running a music/video/games retail business may just not be worth that!

N.B. This is just my opinion.

What's the role of the UMG in this? They bought with EMI the obligation to pay the rent for (some) shops, so they (should) have some control over the leases?

DJones wrote:
What's the role of the UMG in this? They bought with EMI the obligation to pay the rent for (some) shops, so they (should) have some control over the leases?

UMG have no say, regarding the leases. It is standard commercial lease practice that if you were the previous leaseholder of a CURRENT lease, if the current tenant fails, it reverts to previous lease holders. In this case EMI - now owned by UMG. On saying that te media as blown up UMG's exposure. HMV has a good estate so most stores will be re-let quickly. UMG as a wall exposure.

Bit confused by your last statement Dixie.

The problem with all retail, as you've pointed out in your "burning CDs" comments, is that they have NOT moved with the times.

Easy to do; the changes in the past 5 years have been extraordinary.

Just like making music - the majority simply try to replicate current success (boy bands? girl bands? copy and paste) where my philosophy has always been - do something nobody else is doing.

We haven't heard or seen a solo retro young girl singer for ages. So watch CHARLEY sing Only Love Can Break Your Heart on You Tube. Something to make radio listeners sit up, increase the volume and stay tuned to your station. Surely, just what you want if you programme music radio?

First of all, apologies for the typos in my previous message. It was composed on a mobile device.

Secondly, from Retail Week, this is an interesting perspective:

Following reports yesterday that Hilco has acquired the debt of collapsed entertainment retailer HMV, Chris Moody, creative director at global brand and innovation agency Wolff Olins, shares his thoughts on what HMV needs to do next to thrive again.
The news on Sunday that a group of music and film companies were looking to come together to save HMV by discounting products to sell in store is a cause for concern. The music and the film industries are even more broken than retail.
Don't forget that music and film are exactly the same industries that didn't come up with disruptive innovations like Amazon and Spotify. This move has the potential to perpetuate a broken business model for HMV. But now that Hilco has acquired HMV’s debt, which effectively gives Hilco control of the retailer, what can it do to begin to change the game.
HMV has spent the last few years making its high street presence mini identikit versions of an Amazon warehouse, each one stocking the same anodyne guff I can buy cheaper online - I'm only likely to go in if I know what I want. There’s a parallel in the world of fast food or fast fashion: the Byron hamburger chain sell patties all over London but no two restaurants are the same because no two sites are the same, Topshop has different stock in every store. What if HMV in Hackney had exclusives that HMV Kings Road didn't?
HMV has some iconic retail locations, but there is no reason to meet your mate in the once brilliant Oxford Street store. Taking its cue from unique cinema chains like Ritzy, HMV could stop acting like a supermarket and became a destination again. A place you want to hang out in and experience the passionate, exciting and escapist world of music that shaped young identities and returns spirit to old ones. In-store gigs, record label take-overs, second-hand sellers, boutique concessions. Give His Masters Voice some personality again.
Starbucks match its stores to its locations. They're places where people hang out and meet others. And while some of HMV's current stores might be the wrong size, there is still a place for various sizes and shapes of HMV stores up and down the country.
And even better if they're staffed by passionate experts, like the wine lovers at Majestic. People that live and breathe the product, where a conversation with someone in store always leads you to walking away with more great discoveries. Celebrate difference and discovery. Amazon proudly claims to never have accidents but I have discovered some my favourite bands by accident, HMV can be the place where I do that again.
Finally, embrace digital. Not as a competitor to the retail store, but something that works alongside it that gives people more of what they want. Just like our music tastes are a mixed bag of obscure artists and guilty pleasures, so too are our listening habits including Spotify, vinyl, iTunes and good-old radio. We're listening to more music than ever before. HMV can be one of the brands at the very top of the tree that helps people get more into music and become fans. Real fans feel music and will follow it everywhere. And that’s a powerful place to build a brand.

Exactly my feelings and the philosophy behind my SHOP!! format and concept.