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UPDATE - Sainsbury's signs music deal with 7digital

Supermarket giant Sainsbury’s is revamping its online music offering in a deal with AIM-listed 7digital.

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--adds detail, broker comment--

Supermarket giant Sainsbury’s is revamping its online music offering in a deal with AIM-listed 7digital (LON:7DIG).

The UK grocer, which stopped selling physical CDs on the web last year, has secured access to an online library of 31mln tracks.

7digital will provide the catalogue of digital tunes and power music platform, offered as white-label service with Sainsbury's paying a monthly fee

The platform will bolt onto Sainsbury’s existing online entertainment offering, which already allows users to download music, books and films.

"I am very pleased to be able to announce an important new customer in Sainsbury's,” said Simon Cole, chief executive of 7digital.

“We look forward to working with the business as it develops its online entertainment offering.”

Meanwhile, Cole’s online music-outfit added that its existing deal with Guvera - the streaming service offered on Lenovo tablets and mobiles - had been expanded to cover Europe.

It is currently powered by 7digital in the UAE, Saudi Arabia and India, and Guvera added a further eight emerging markets last summer. Now, 7digital covers 16 territories.

In its final results, sent out today, 7digital reported how 25 contracts had been won valued in aggregate at £3.4mln in in the last 12 months.

These included Guvera, i.am, Spanish Broadcasting System, Inc, The Overflow and ROM Mobile.

The music-outfit's catalogue now contains over 32mln licensed tracks, it highlighted.

Turnover was down 12% to £10.2mln in the year, as the group continued to move away from low margin download stores.

High margin monthly recurring revenues - its new focus - were up 14% to £4.4mln.

The adjusted operating loss was reduced 15% to £3.8mln while cash at the end of the year stood at £5.32mln compared to £1.29mln in 2013.

"These results represent a year in which we successfully created a new company from the merger of UBC Media and 7digital; we have ended it in a position ahead of the predictions we had made during the merger," said Cole.

"Our success and growing customer base is proof of the developing market for streamed music services and the coming together of the radio and music industries as technology and consumer habits change."

Investec sent out a Buy rating on the firm following the results.

"One for the playlist," said the broker. "7digital looks a nice B2B play on the fast growth and disruptive music streaming market."

Shares added 5.61% to 14.125p in early deals.

Quick facts: 7Digital Group PLC

Price: 0.455 GBX

AIM:7DIG
Market: AIM
Market Cap: £11.17 m
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