HMV acquires 7digital stake in 7.7m deal
ENTERTAINMENT retailer HMV yesterday snapped up a 50 per cent stake in online music store 7digital in a £7.7m deal.
The digital media firm, founded by James Kane and Ben Drury, will now host HMV’s digital operations, including a new e-books store for its Waterstone’s brand.
HMV yesterday said 10 per cent of its sales were now digital, with consumers downloading an average 9,000 e-books a week.
Drury and Kane will continue to work at the business, which is expected to make a pre-tax loss of £1m in 2009.
Chief executive Simon Fox yesterday said the acquisition would “allow HMV to have a fantastic technology platform in a market which is set to grow”.
“The government is taking illegal downloading seriously, meaning now is the time to start building the download market,” he added.
The music, game and book retailer yesterday said total sales in the UK and Ireland had jumped 12.5 per cent in the 18 weeks to the end of August. Excluding sales added from the acquisition of Zavvi stores, like-for-like sales were up by 1.7 per cent.
But the group’s Waterstone’s division posted a 2.6 per cent drop in total sales and a 3.4 per cent fall in like-for-like sales as the book sector continues to struggle.
Fox yesterday refused to expand on his decision to remain at HMV, following fears he would be poached for the ITV chief executive post to replace Michael Grade.
He said: “I’m very happy where I am. I’ve got a big job to do, which I’m thoroughly enjoying.”
Meanwhile, HMV yesterday said it would open eleven new mobile phone concessions with Orange.
Fox said it was so far impossible to say how many customers were drawn in by the concessions, but said the tie-up was “a response to how customers consume entertainment”.