Australian music service Guvera is under increasing scrutiny to honour the contract it agreed with Tesco on the purchase of Blinkbox Music – formerly Tesco’s music streaming service – after it was put into administration last week.
Guvera bought Blinkbox Music from Tesco in January, acquiring it for a reported £4m – significantly less than the £10m Tesco had invested in 2012. The Drum understands that Tesco’s reduction in price was on the provision that Blinkbox had funds to pay the 100-plus staff enhanced redundancy packages if needed.
However, Guvera has faced "significant financial pressure" in recent months and has “struggle[d] financially”, according to administrator Smith & Williamson. Attempts to rid itself of Blinkbox Music have been ongoing, with Guvera failing to achieve a quick sale of the business earlier this year.
The Drum understands that all but a handful of staff have been made redundant following the most recent round of cuts in May when over 50 employees are believed to have been let go.
According to sources close to the situation the agreement of enhanced redundancy terms was communicated to Blinkbox Music colleagues in a joint letter by Tesco and Guvera.
Sources The Drum has spoken to have been in agreement that Tesco has done all in its power to ensure its staff were protected.
Yet a source who contacted The Drum directly has claimed that Guvera has failed to compensate redundant staff as contractually agreed, “treating them as creditors”, and leading employees to seek their own legal representation.
However, a Guvera spokesperson has denied the claims, stating that the company is unaware of any pending legal action.
“We are working through the transition and hope to reach a fair outcome for all staff,” they said.
Tesco meanwhile is understood to have informed Guvera that it expects them to make the enhanced redundancy payments as stipulated in the contract with them.
Currently, eight staff remain in Blinkbox Music’s Oxford offices while the London office has closed completely.
Guvera claims Blinkbox Music has amassed 2.8 million members and more than 200,000 monthly active users – the main draw for originally purchasing it.
Guvera would not comment further on the redundancies due to confidentiality. Tesco declined to comment.