HMV sells UK media business

Struggling retailer HMV said it had sold UK music and media business, MAMA Group, for 7.3m pounds.

Struggling retailer HMV said it had sold UK music and media business, MAMA Group, for 7.3m pounds.

The deal, of which £3.5m will be deferred for 12 months, includes its separately held interest in 50% of Mean Fiddler Group.

The proceeds of sale will be used to reduce the company's debt.

HMV said the sale was "a further step in the disposal of the HMV Live Business and follows the disposal earlier this year of the Hammersmith Apollo".

Having already completed the disposal in August of the Hammersmith Apollo for £32m, HMV has club businesses G-A-Y Group and Heaven left, where discussions are ongoing.

Whilst raising much-needed cash, the sale of the business, which HMV only bought in 2010, didn't impress some analysts.

Kate Calvert at Seymour Pierce said HMV retail remained under structural pressure with management last reporting for the 20 weeks ended 15th September that like-for-like sales were down 11.6%.

"We see no reason to change our 'sell' recommendation as we are unconvinced that the shift in mix towards portable digital technology will be enough to offset the structural pressures on its core business of music, vision and gaming," she said.

"In addition, while the disposal proceeds of HMV Live will be used towards debt reduction and management has a £220m bank facility due September 2014, the business remains highly indebted with net debt of £167m at year end of full year 2012," Calvert added.

"We continue to see HMV as a value trap with potentially insurmountable structural issues."

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