HMV In Apollo Hammersmith Venue Sale

HHMV Group Plc (HMV), the UK’s biggest retailer of CDs, has sold the Hammersmith Apollo to Stage C, a company partly owned by Anschutz Entertainment Group (AEG), in a £32 million deal.

HMV Chief Executive Simon Fox is clear on HMV's strategy...but are we?

Although HMV’s debts are said to be one motivating factor behind the sale, there is some uncertainty surrounding the move.

Given that part of HMV’s strategy for growth is the development of HMV Live by “driving venues and festivals utilisation”, selling one of the world’s most iconic music venues may come as a surprise to some.

However, share price has increased 17% since the announcement, with investors clearly taking into account the benefits of the deal with regards to HMV’s capital structure and the extension of HMV’s existing £220 million bank facility.

But the sale of such an important venue may yet have its own consequences for HMV. The acquisition of the Apollo was at the time seen as a signal of intent from HMV, the venue which established HMV as a major player in the live market.

At the time, Chief executive Simon Fox said: “Whilst at an early stage, the three pillars of our new strategy to continue to evolve HMV’s product mix, grow in live (events) and ticketing, and turn around Waterstone’s are progressing.

That was in 2010. If Fox was serious about the new strategy being at an early stage, it is difficult to see the sale of the Apollo as being in line with the growth in live events.

However, the sale of book retailer Waterstones seems to have set a precedent in which growth in certain areas has been supplanted by a need to satisfy investors.

In fact, the sale of Waterstones in June 2011 is documented on HMV’s website as “focusing the Group on entertainment retailing and live”. Selling a 8,500 capacity venue doesn’t seem to fulfil these points of focus.

Upon the announcement of HMV’s full year results in June 2011, Chief Executive Simon Fox said, “We have taken decisive action to restructure and successfully refinance the Group.

“HMV remains a world-class entertainment brand, and we now have a very clear focus and strategy to…further diversify the Group into the growth areas of live, ticketing and digital”.

If selling the Apollo is evidence of further diversification, Fox must be pleased with progress.

Samuel Agini is the Editor of Andrew Apanov’s Dotted Music.