Richard Branson will bid for Virgin Records, the music label he started in London in the 1970s, should Vivendi SA’s Universal Music Group sell the asset in an attempt to win regulatory approval to acquire EMI Group.
Branson would be one of several bidders and has held talks with Patrick Zelnik about bidding together, Nick Fox, Branson’s spokesman, said in an interview today. Zelnik started Virgin Records in France in the 1980s and is co-president of Impala, an independent record labels group based in Brussels.
“Richard Branson and Virgin have been assessing how to get back into the recorded music business for many years,” Fox said. “The potential disposal of Virgin Records by Universal Music offers a wonderful opportunity to recreate a dynamic independent label in the market.”
Branson’s desire to return to Virgin Records, whose artists have included Culture Club, Lenny Kravitz and Genesis, follows acquisitions in the past year by other companies in an industry that’s been hurt by online piracy and eroding CD sales. Warner Music Group and Sony Corp. have spent billions of dollars for the rights to music by artists including Coldplay, Katy Perry, Cee Lo Green and Bruno Mars.
“The top line of the industry is in decline and one response is consolidation, but that doesn’t take away the value of the assets there,” said Alice Enders, a media analyst at Enders Analysis in London.
Billionaire Len Blavatnik’s Access Industries Holdings bought Warner Music in May 2011 for $1.3 billion. A Sony-led group that includes billionaire David Geffen agreed to pay $2.2 billion for EMI’s publishing unit in November, and Universal Music agreed to pay $1.9 billion for EMI’s recorded unit
“I would consider there’ll be an active bidding war for Virgin Records with interest from private equity and industry insiders like Warner Music,” Enders said.
Virgin Records was an early part of Branson’s Virgin empire, which today includes planes, trains, holidays and mobile phones. It began when Branson founded a mail-order business in 1970, selling records by mail. He opened his first Virgin Record Shop in 1971 on Oxford Street in London and in 1973 released Mike Oldfield’s album “Tubular Bells,” which appeared on the soundtrack of the film “The Exorcist.”
After signing the Sex Pistols in 1977, Branson subsequently expanded into activities including Virgin Books, Virgin Games and Virgin Atlantic Airways.
Universal may submit a proposal to the European Commission as soon as today, offering to sell off some business units in order to eliminate antitrust concerns about the EMI deal, according to two people familiar with the situation.
Universal’s offer would then be circulated to rivals and customers before the commission makes a decision to approve the deal.
At an Impala board meeting yesterday, members voted to keep opposing Universal Music’s purchase of EMI, citing competitive issues in digital and physical markets as well as “access to media exposure for new artists, as well as the foreclosure of independents when it comes to signing artists,” according to a statement today.
“Impala agrees that digital companies are giants and need proper regulation, but the problem is that excessive concentration in the music sector would help Universal mould services towards its own interests and obtain more than its fair share of exposure,” the group said.
A Universal spokesman declined to comment today.