Famous entertainment retailer HMV has said it is going to buy 14 Zavvi stores, funded by selling new shares.

HMV are also looking to take out a stake in the live music market in the form of helping to run 11 venues including Hammersmith Apollo, with its 5,100 capacity. The Apollo would become the HMV Apollo in a naming rights deal.

HMV is also seems to be one of the few stores not suffering too much so far in the economic downturn. In the five weeks leading up to January 3rd, their sales were up by 2.9%.

The Zavvi stores that HMV are planning to buy are all prime location, profit making stores in areas where HMV do not currently own a store.

Nine of the stores are in the UK and two in the Irish Republic. Administrators in charge of Zavvi say that the deal would save 269 jobs.

HMV expects the purchase to cost £2 million including the cost of re-fitting and re-branding the stores.

Zavvi went into administration shortly after its main suppliers, Woolworth’s unit Entertainment UK, went into administration in November. Since this, Zavvi have had problems sourcing stock and have been forced to enter new trading arrangements.

On Wednesday, Zavvi announced it was to close a further 18 stores, resulting in 353 job losses. But the remaining 74 Zavvi stores will remain open and the administrator is hoping to sell the business.

HMV will form a new business deal with MAMA as part of its live music deal. MAMA currently deals with ownership and operation of the venues, including The Forum in London’s Kentish Town, the Birmingham Institute and Moshula in Aberdeen.

Between July 2007 and 2008, the 11 venues attracted a couple of million visitors, and had combined revenue of £20.25 million, making a profit of £2.24 million.

HMV are also going to set up a division to sell tickets for events for the venues.

Simon Fox, chief executive, said the deal was about more than just rebranding some of the venues.
“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.”

One of the incentives HMV are planning on using is that loyalty card holders will be able to earn tickets to gigs as rewards.

MAMA is hoping that HMV will “alter the face of the live venue business in the UK.”
They added that: “the engagement of artist and fan is the key driver of the music industry and that engagement is at tis most evident at live music events.”

It also aims that joining with HMV will link tickets, music and merchandise. It said “a direct artist-to-fan relationship is a way to help the music industry grow and prosper.”