100 staff laid off at Blinkbox Music Ltd as Guvera dumps UK office

Australian streaming company Guvera acquired its UK rival Blinkbox Music in January from Tesco in a multi-million pound deal.

Michael de Vere, Guvera’s Global Chief Operating Officer, commented at the time: “The acquisition of Blinkbox Music adds significant firepower to our product – both in terms of technical expertise and an established and loyal audience in the UK.”

Since then, things haven’t gone smoothly for the remaining operation, which continued to trade as Blinkbox Music Ltd.

It was confirmed yesterday that the company has now fallen into administration, with 100 staff laid off in total.

MBW understands that it has gone under owing labels significant licensing fees.

This collapse follows failed attempts by Guvera to sell the business throughout this year.

Why would Guvera consider offloading Blinkbox so soon after buying it?

Because Guvera acquired more than 2m customers when it bought Blinkbox for a reported £4m in January.

Sources tell MBW that it was Blinkbox’s impressive user base – rather than its staff or custom-built digital radio platform – which Guvera primarily wanted to acquire.

And that like most streaming music services, Guvera was interested in making back some cash for any overhead/resource/assets that were surplus to requirements.

Remember when Blinkbox boasted of having amassed over 10m registered users worldwide? This number included Blinkbox subs.

MBW’s tip: keep a close eye on where what now amounts to a 2.8m user-base ends up. Guvera will not want to hand them over.

“Blinkbox music has faced significant financial pressure in recent months since its acquisition by the guvera group.”

Fibarr O’Connell, administrator

Clearly, keeping the loss-making Blinkbox UK operation going has not been easy for Guvera.

Following January’s Blinkbox buyout, two executives emerged as leaders of the Guvera UK business, MBW understands: Michael de Vere, who became its MD, and Guvera Chief Commercial Officer Michael Wallis-Brown.

Wallis-Brown left the UK company in March, less than three months after the buyout.

Michael De Vere followed him out the door last month.

Sources suggest these executives departed after failing to mount a successful management buyout (MBO) of the Blinkbox Music assets from Guvera’s Australian business.

Michael de Vere’s attempted MBO was ultimately rejected by the Guvera board in Australia last month.

Sources tell us that 15 ex-Blinkbox employees were let go in March, followed by another 50+ in mid-May.

Ex-employees have told MBW that a condition of Tesco’s original sale of Blinkbox was that Guvera kept provisions to pay a redundancy package.

All Blinkbox employees were apparently given a copy of a letter signed by both Guvera and Tesco in January to this effect.

It is unclear how this is affected by Guvera’s decision to place Blinkbox UK into administration – or whether Guvera will be permitted to keep the BlinkBox subscriber base.

>Finbarr O’Connell and Adam Stephens at Smith & Williamson have been appointed as joint administrators.

O’Connell said: “The company has faced significant financial pressure in recent months, since its acquisition by the Guvera group. This is a highly competitive industry and despite an active user base the business has continued to struggle financially.

“It has sought to undertake a financial restructuring, and has reduced staff numbers. However, these financial pressures have continued to grow, and the company’s director, after trying to achieve a quick sale of the company/business, was faced with little choice but to place the company into administration.”

Stephens, joint administrator added: “We are currently retaining the company’s Oxford based staff while we search for a buyer. We expect to undertake an accelerated sales process and are trying to work with all stakeholders to preserve value in the business.”Music Business Worldwide

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