HMV says Mama, I don't need you

That poor dog must be staring into the gramophone horn with hungry eyes these days: the troubled home entertainment group reported a £38.6m loss for the year ended April 28, and is now paying its debts by selling Mama Group. The group cost £46m in 2010 and handles most of HMV’s remaining live music assets – including the Jazz Café, the Forum and Barfly in London, the Ritz in Manchester and the Lovebox festival. And HMV’s selling all that for a meager £7.3m.

It’s not the first time HMV has ditched its live assets. In June, it offloaded Mama’s Hammersmith Apollo for £32m, which enabled the group to extend a £220m bank facility to late September 2014. As part of this latest deal HMV has also danced away from its 50% stake Mean Fiddler, a joint venture it held with Mama, which runs 11 other venues. The deal doesn’t include the clubs G-A-Y and Heaven, which it’s hoping to sell separately.

It shows how warped HMV’s record is these days: the live arena is pretty much the only place where music is making any money at the moment, with recorded music becoming almost ubiquitous and going for free in so many places. The value is now in the touring, the spectacle and the merchandise. In abandoning that to concentrate on its retail presence it must see a lot of value in its other offerings, like Blu-Rays and video games. It previously told investors that its total investment in the live music division was £62.5m. And that buys a lot of dog biscuits.

While HMV is focused on retail, Mama clearly sees live music as the way to go: chief exec Dean James has been backed by LDC in a management buy-out. He wants to grow the organisation in the UK, Asia and America with a ‘buy-and-build’ strategy. It’ll start from a good footing: it already organises more than 2,700 events annually in the UK, including Global Gathering and Lovebox, with up to 1m people visiting its venues and 150,000 attending its festivals every year.

Sounds thriving. By contrast we couldn't help noticing the ominous symbolism of the HMV Christmas ad, in which the dog and the gramophone are out skating - on thin ice. That said, HMV reckons it’ll make a profit this year. Mama mia…