LONDON - Virgin Group founder Richard Branson has expressed his interest in a potential bid for the Virgin Records label he founded.
Vivendi's Universal Music Group is meeting with European regulators in Brussels this week to discuss possible concessions to win approval for its proposed $1.9 billion bid for EMI's recorded music business. As reported, a sale of some labels, including Virgin Records, could be among the concessions.
"Richard Branson and Virgin have been assessing how to get back into the recorded music business for many years," a Branson spokesman said. "The potential disposal of Virgin Records by Universal Music offers a wonderful opportunity to recreate a dynamic independent label in the market."
The Financial Times first reported that Branson has made a general expression of interest, but talks are at a preliminary stage. If the British serial entrepreneur does indeed make a bid for the music label, Branson would do so with French music executive Patrick Zelnik, who owns independent label Naive Records in Paris, the paper said. Zelnik is also the co-president of Impala, the trade group representing independent music labels.
If and what UMG may offer for sale is far from clear at this stage, as Virgin in the U.S. is part of EMI's Capitol Records.
A spokesman for UMG declined to comment.
Branson sold Virgin Records to EMI in 1992. He continued to own the Virgin Megastores music retail chain until 2007. He has since focused on his various other ventures that also all carry the Virgin brand name.
Interestingly, yesterday Zelnik penned an op-ed for the Financial Times in support of the transaction titled "A Universal EMI Merger Could Rescue the Music Business." In the opinion piece, Zelnik qualified his support for the merger saying that if Universal commits to "transparent, non-discriminatory, easy licensing to new platforms" and " targeted, surgical divestitures to independents" and "direct financial support for industry groups that aid in leveling the playing field between small and large labels" then the merger could be "just what the sector needs."
The op-ed took many by surprise, as IMPALA has strenuously opposed the merger and has issued several statements saying so. Zelnik made no mention of his interest in bidding for Virgin Records.
A story in today's Music Week reported that 56% of IMPALA's board members support the Universal-EMI merger despite the organization's public stance against the deal. A bloc of 75% of the organization's members favoring the merger would be required to reverse the organization's current position.
In an email to Billboard.biz from IMPALA, however, following the publication of this article, the independent label organization took issue with Music Week's story, saying they never polled their board members on whether or not to support they UMG-EMI merger, only whether or not they agree that the remedies to the merger Zelnik offered in his Financial Times op-ed are "enough to solve the competition problems." The majority of IMPALA's board members did vote in favor of Zelnik's remedies to Universal's proposed EMI Music buyout, the email said, "but they also agreed this should not change their position of opposition to the deal."
In an o fficial statement from IMPALA entitled "IMPALA continues its opposition to the Universal/EMI merger," the association was sure to differentiate its position from its co-president's: "Our board took a clear decision yesterday to continue its opposition to the Universal/EMI merger, rejecting remedies which do not deal with the specific problems set out in the EC's statement of objections," said Helen Smith, Executive Chair of IMPALA in the statement. "The issue isn't just digital, it's physical and access to media- exposure for new artists, as well as the foreclosure of independents when it comes to signing artists. We all respect Patrick Zelnik's view, but the FT article is the Naive [label] position, not the Impala position."
The statement added that, "IMPALA has made its position clear to the European Commission. The rules governing the European Commission's approach to dealing with remedies are set out in a remedies notice, which it is obliged to comply with."
Merlin, the international digital rights agency representing independent rights owners, also reiterated its opposition to the deal in a statement today, arguing that it would severely threaten the development of the digital music business.
"In a market already hampered by Universal's exploitation of its market leading position, this proposed acquisition could only serve to damage the digital ecosystem, not only for our members, but also for potential investors and consumers," CEO Charles Caldas said in the statement.
"The Merlin Board's latest decision underlines that we remain committed to our belief that the proposed deal would put even more power in the hands of the company already most likely to try and shape music services to its own advantage and would severely damage the digital music market just as it approaches the crucial tipping point where digital takes over from physical. We trust and believe that the European Union and U.S. regulators reviewing this transaction understand the devastating impact this transaction would have on the digital music market and will act accordingly."