HMV Spotlights Luminar

On the eve of HMV presenting a formal offer document to Mama Group shareholders, it seems the British music and book retailer may also be trying to form a partnership with nightclub operator Luminar.

The two sides are believed to be discussing the possibility of setting up a small number of pilot initiatives in which HMV stores and Luminar clubs cross-market to each others’ customers, according to The Times of London.

The paper says analysts believe it could lead to a takeover of the embattled nightclub operator, comparing the idea with HMV’s tie-up with Mama Group.

The retailer set up a joint venture a year ago encompassing Mama’s 11 late-night venues, including the Hammersmith Apollo, and last month it made a £46 million bid for the whole group.

The Times cited one source from a leading financial institution saying HMV will likely trial the arrangement in a half-dozen locations to see if it blossoms into an outright takeover.

A deal with Luminar would take HMV chief exec Simon Fox closer to his stated aim of becoming a purveyor of “entertainment experiences” rather than simply CDs and books.

In its latest trading update, the group was expected to report its book sales have struggled, partly because of big discounts at the rival Borders chain in the run-up to its closure, but HMV has put in a resilient performance.

Luminar hasn’t done so well. Last month, it warned that the holiday period would determine whether it would meet market expectations –and the Arctic-type weather is likely to have caused many people to go out less often.

Relations between HMV and Luminar are not cordial. In Edinburgh, the two have been engaged in a long legal battle after Luminar sold The Gig, one of its two clubs in the city, to Mama, since renamed the HMV Picture House.

Luminar sold the site on condition that Mama booked live music there and not run weekend disco nights in competition with Luminar’s nearby Lava Ignite venue. Last year it sued Mama for breaching that agreement and lost the case, although the verdict was recently overturned on appeal.