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The HMV media account is currently handled by Omnicom Group's OMD, while its sister agency PHD handles the Waterstones media brief.

Both agencies have been asked to pitch for the combined account, and it's understood that the retailer has also asked at least two other agencies to compete for the brief.

The HMV Group owns Waterstones and 730 stores in eight countries. All of the stores are wholly owned by the group, both in the UK and internationally.

The HMV dog and trumpet symbol is one of the best known on the UK high street.

Shares in HMV Group dropped nearly 10% when it announced a poor Christmas period.

According to the retailer, music is the group's largest product category, accounting for 37% of group sales for the year to April 2006, closely followed by DVD, which was 32% of group sales. Books, which comprise the vast majority of Waterstones' sales, contributed 24% of group sales in the same period.

The group said year-on-year sales in the five weeks until January 2007 fell 2.7%, compared to a 6.4% rise the previous year, led by a 5.5% sales drop at its core HMV stores. Alan Giles, the chief executive of the HMV Group, retired in December.