Hmv Group Regulatory News (HMV)

14 Jan 2009 16:59



14 January 2009

MAMA Group joins forces with HMV in the Live Venue Market

("MAMA Group" or "MAMA")

MAMA Group plc, one of the UK's leading independent music companies, today announces the creation of a new joint venture business with HMV Group plc ("HMV"), the UK's leading retailer of music, DVD, games and books.

MAMA Group is disposing of its interests in a number of subsidiary operating companies to a new venture, Mean Fiddler Group Limited ("MFG"). Those operating subsidiaries are responsible for the ownership and operation of 11 venues namely, The Hammersmith Apollo, The Forum, The Garage, Jazz Café, The Edinburgh Picture House, The Birmingham Institute, Heaven, G-A-Y Bar, G-A-Y Late, The Borderline and Aberdeen's Moshulu.

In consideration of this disposal, MAMA will receive 50 per cent. of the issued share capital of MFG and an initial cash consideration of £18.245m from HMV. This consideration may be subject to a maximum positive or negative adjustment of up to £3.281m in cash depending on the joint venture's EBITDA for the year ended 31 October 2009. In addition, MAMA may receive further cash consideration of up to a maximum of £5.5m from MFG dependent upon the level of debt assumed by MFG.

HMV will, under the terms of the agreement, receive naming rights in relation to certain of the venues.

MAMA Group management will continue to operate the venues on a day-to-day basis and it is intended that the joint venture partners will actively consider expansion where high-quality, larger venues become available.

 For the year ended 31 July 2008 the 11 venues contained within the joint venture had total revenues of £20.25m. The combined operating profits of the companies concerned for the year ended 31 July 2008, before central management charges from the MAMA group and interest, were £2.24m. This financial information is based on unaudited accounts for the year ended 31 July 2008 for the companies concerned, apart from the Heaven venue which was acquired in September, in which case the information is based upon management information prior to acquisition. 

Adam Driscoll and Dean James, Co-Chief Executives of MAMA Group commented:

 "We are delighted to be entering this joint venture arrangement with HMV, the UK's leading music retailer. This is a landmark deal that alters the face of the live venue business in the UK. 

"The engagement of artist and fan is the key driver of the music industry. That engagement is at its most evident at live events. Our venues are already key destinations for artists, promoters and fans. This new partnership between MAMA and HMV enables that live experience to be augmented by enabling us to offer the artist and fans a range of other opportunities to interact. 

"We believe that linking tickets, tracks and merchandise through a direct artist-to-fan relationship is a way to help the music industry grow and prosper. The new venture makes this a reality by partnering some of the best UK venues with the UK's leading entertainment retailer. Artists will perform at venues with a strong presence at the point of retail to help drive ticket sales and to offer incentives to their fans via HMV's online and store channels; fans will have more points of access to purchase tickets and the opportunity to build a closer relationship with their favourite artists.

"Additionally, the cash consideration that the Group is receiving for this deal is recapitalising the business at an ideal time. There are huge opportunities in the music market and we are ideally placed to take advantage of a number of them and ensure the continued growth of the Group."

Simon Fox, HMV Group Chief Executive, commented:

"Music is very much part of our DNA, and by extending the HMV brand into the growing live music and entertainment market, our customers will be able as never before to access and experience music in all of its forms via HMV.

"Our joint venture with MAMA Group to own and operate key venues in the UK uniquely positions HMV to offer our customers full access to live music. We have also today announced the development of HMV tickets which will enable us to offer our customers tickets to events at our Mean Fiddler Group venues as well as a range of other events. In addition, HMV will now be able offer to our existing and new live customers exciting bundled product offers, comprised of music CDs, DVDs, MP3 downloads, games, and related merchandise."

 For further information, please contact:

Notes:

About Mama Group plc

MAMA Group is the parent company of a diverse range of music and marketing businesses. The two key divisions are live music and artist services., In the live music sector the Group operates a number of leading UK venues including the Hammersmith Apollo, The Forum, The Jazz Café, The Edinburgh Picture House, Heaven, G-A-Y and the Barfly chain. The artist services business is responsible for the direct management of over 40 musical artists and via MAMA's stake in Nettwerk Music Group in North America, works with a further 60 artists from that territory. The Group has additional interests in publishing, recording, marketing, merchandising and sponsorship and is viewed as one of the UK's leading independent music businesses.

About HMV Group plc

HMV Group is one of the world's leading retailers of music, DVD and games and the leading retailer of books in the United Kingdom and Ireland in terms of total sales. As of 26 April 2008 it operated 379 HMV stores selling music, DVD and games in five countries and 313 Waterstone's stores, principally in the United Kingdom and Ireland. All of the Group's operations, both in the United Kingdom and internationally, are wholly owned.