Tesco deal hits a wrong note for staff owed £10m

Blinkbox fiasco as new owner fails to honour grocer’s deal on payouts

STAFF at Tesco’s former music streaming service Blinkbox are owed £10million because its new owner has failed to honour a deal struck with the grocery giant.

Blinkbox was sold off earlier this year as part of efforts by new chief executive Dave Lewis to make the vast Tesco empire more efficient.

The online music arm was bought by Australian company Guvera in January with a £1million discount to the price in exchange for a guarantee that staff would get enhanced redundancy payouts if the business failed.

The new owner rapidly spent all the cash in the business, which then went into administration in June. The pledge to about 100 staff was not met and administrators at accountancy firm Smith & Williamson say former workers are still owed £10million.

Tesco received just £300,000 from Guvera for the online music arm of Blinkbox in January, having given the buyers the £1 million discount.

Blinkbox had £3.5million in its bank account when it was sold. The administrators said: ‘Most of these funds had been spent within the first few months of ownership by the Guvera Group.’

Guvera later tried to strike a deal with former staff, offering cash and shares in Guvera Limited, the Australian parent, but this was rejected.

Blinkbox started out in 2007 as We7, set up by former Genesis frontman Peter Gabriel. Tesco bought We7 in 2012 for £10.8 million, renaming it Blinkbox Music and aiming to create a streaming service to rival Spotify. The business lost more than £30million before Tesco sold it.

The Blinkbox business was an initiative of former chief executive Phil Clarke who quit last year after an accounting scandal. Tesco declined to comment and Guvera Group could not be reached.

Separately, the grocery giant was on the verge this weekend of selling its South Korean business to a local consortium, with a deal reportedly likely early tomorrow morning.