Following last week’s news that long-running UK music retailer HMV is going into administration, with nearly 4,000 jobs across 239 stores at risk after the retailer was denied a £300 million (approx $AU 450m) loan from creditors to rescue it from its financial woes, record labels in Britain are scrambling to purchase the doomed music chain amidst serious concerns for the music industry.

Deloitte has been named as the administrator for HMV Group, and is currently planning to keep the hundreds of stores in the UK and Ireland operational while it seeks a potential buyer, and as Billboard reports, major labels Warner Music, Sony, and Universal Music – that inadvertently owns rental stakes on over 238 HMV stores in the UK – are forming a rescue effort for the company.

Music record companies and film studios have provided about £40m (approx. $65 million) in financial support to HMV to ensure its ongoing survival as a major supplier of their physical stock, against the likes of supermarket chain Tesco and discount online retailers. The labels are cutting the price of CDs and DVDs supplied to HMV to help them in their current crisis, including letting them pay for consignment costs for stock -meaning they only pay for what they sell – as well as giving greater access to back catalogues.

Essentially, the suppliers – who have a combined 5% stake in HMV – are attempting to keep the company afloat until it can be purchased, if the company can’t maintain its finances in keeping its staff on, and its stores open, then the record labels could in turn suffer a financial blow as HMV is liquidated into bankruptcy.

The financial boost from product suppliers is a move seen to be led by Universal Music, who are liable for the rent on approximately 40 HMV stores, and could face heavy financial costs if the retail chain was to be officially liquidated to pay off its assets. Universal Music was made responsible for the HMV outlets after purchasing the retailer’s former parent company EMI last year.Music record companies and film studios have provided about £40m (approx. $65 million) in financial support to HMV to ensure its ongoing survival

The rental agreements between HMV and EMI were forged in 1998 from the retailer’s record label arm, and Universal assumed those guarantees when it acquired EMI during its own troubled financial woes. Universal is allegedly liable for a larger share than most of the entertainment retailer’s suppliers, who are up for £150 million (approx. $242 million) in obligations if HMV goes bankrupt.

Meanwhile, Music Week reports that a number of names have emerged as potential buyers for HMV, including Hilco – who already owns the Canadian arm of the retail chain, unaffected by the British company – and private equity groups Endless and Better Capital, Apollo Global Management (who have a 10& stake in HMV shares), along with Time Out owner Oakley Capital.

The latter investment firm already have links to the HMV Group, having been involved in the sale of HMV Live in January last year, one of several of the company’s assets that were sold to front ailing financial burdens.

The potential closure of HMV marks a drastic shift in the music industry, putting an end to a retailer with nearly 100 years history, dating back to the first retail store opening in London’s Oxford Street in 1921. Despite a healthy expansion of the company in the 1990s, branching into books, live music venues, festival promotions, and overseas chains, the drop in physical sales with digital overtaking music consumers’ tastes has seen some disastrous outcomes for the music retail world.

The Australian leg of HMV operations disappeared in 2005, purchased by rivals Sanity Music, with the final store, a Brisbane HMV outlet, closing in 2010, and by October 27th 2012, underlying net debts stood at £176 million (approx $AU 268m), with the company selling off its live entertainment business sector to stay afloat.

The retailer had hoped that they usually booming Christmas retail period would provide a last minute saviour, but when economic conditions proved too tough for another holiday spending spree for consumers, HMV instead went the opposite direction with a month-long sale that saw shares in the company sinking to an all-time low, valuing the company at a measly £5 million (approx $AU 7.6 m) at its nadir.

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