Telegraph sees hope for HMV

There's some cheerful news for HMV today, as the Telegraph has some words of encouragement about the chain's future:

It is understood Universal is liable for the rent on approximately 40 HMV stores after buying the retailer's former parent company EMI earlier this year. The rent liabilities highlight the close relationship between HMV and its suppliers, which are trying to support the retailer with a series of initiatives.

EMI guaranteed rental agreements on HMV stores when the retailer was spun out of the record label in 1998. It is understood that Universal then assumed these guarantees when it acquired troubled EMI.

Obviously this is good news of the 'you need chemo, but you look good in a hat' variety.

First, it's not actually anything to do with the core business - not about selling things, merely suggesting that as the decline continues the's a bit more strength in the props.

Secondly, Universal are obviously only one supplier to the chain - they might have an interest in keeping the thing alive (beyond the cash all the majors are pumping in to help Nipper keep his nose above water), but why would the other labels - or studios, or manufacturers of games or headphones - give a raspberry fart about how much extra hurt Universal would feel if the store vanished?

Sure, Universal has its mitts on a massive share of the music business, but if a store could survive by its catalogue alone, there would be Universal-branded shops on the high street.

Finally, the fact that the bill will only sting Universal if no new tenants are found for the stores - true, times are tough. But these are the 40 stores which HMV have stuck with since being spun out of EMI in the last century. Presumably the reason why these branches haven't moved or been closed already is because they're in great locations - Universal are underwriting the best bits of the network. And a good location for HMV is probably going to be no worse for a Sainsburys Local. It's hugely unlikely that Universal would have to pick up the tab for every place.

In short, then: less "good news for HMV", more "mildly discomforting news for Universal but they can always do with more tax write off".

Apart from anything: the likely cost of writing off an HMV failure would have been factored into the price Universal paid for EMI this year.