Sources: Deal worth up to $7.6M.

Warner Music Australia today (Oct. 20) acquired Australian independent label Festival Mushroom Records from Rupert Murdoch's media giant News Corp. The integration of the two companies will take place through the closing months of 2005 and is subject to clearance from the Australian Competition Consumer Commission.

Financial terms of the deal were not disclosed. Sources at other labels say the deal is worth A$5 million-A$10 million ($3.8 million-$7.6 million). No announcement has yet been made on FMR's staff or artist roster, which is the local label home to Australian pop star Kylie Minogue and New Zealand rapper MC Scribe.

In a statement, Ed St. John, president/CEO of Warner Music Australia, said, "We are absolutely delighted to acquire this iconic Australian music company. FMR and its foundation labels have been the home for Australian music since the dawn of our industry."

In recent months, Warner Music Australia -- which distributes FMR in Australia -- has made a series of moves which industry observers saw as a precursor to a buyout. Warner appointed FMR New Zealand's managing director Mark Ashbridge as its Sydney-based VP, marketing and promotions and hired FMR Australia's managing director Michael Parisi as its president of A&R, with effect from Jan. 1, 2006.

Lachie Rutherford, president of Warner Music Asia Pacific, commented, "FMR is an important independent label. In making this transforming acquisition, Warner Music Australia is well positioned for the years ahead."

FMR is the amalgamation of three companies. News Corp. originally took over Festival Records in 1962. Soon after, the label signed acts as the Bee Gees, Peter Allen, Rolf Harris and Olivia Newton-John and licensed international labels as Chrysalis, Island, Fantasy and A&M.

In the early 1990s, News Corp bought 49% share of Michael Gudinski's Mushroom Records and Mushroom Distribution Services. In 1997, News Corp bought out Gudinski and set up FMR under a new management. The company continued to have hits with new signings Motor Ace, Eskimo Joe, George, Scribe and P-Money.

FMR was put on the market earlier this year. It is understood that Sony BMG Entertainment Australia and Richard Branson's V2 Records were interested buyers. Sony BMG is understood to have baulked at News Corp.'s original price tag of A$20 million ($15.2 million).

Warner Music International chairman/CEO Paul-Rene Albertini said, "Warner Music was committed to the development of the strongest roster of English language repertoire in the world, "whether it comes from the U.S., the U.K., Canada or Australasia."

Albertini added Warner Australia's move allows it to plug into "a global A&R matrix that is committed to developing global careers. This purchase takes an already strong company and makes it even stronger."