Leading French music and entertainment firms are disputing media watchdog CSA's approval of a re-branding exercise involving Richard Branson's Virgin Group.

The CSA last week validated a corporate name-change, which sees French national radio Europe2 and digital terrestrial television channel Europe2 TV become Virgin Radio and Virgin 17, respectively. The re-branding should be effective by the end of the year.

The two firms belong to Lagardère Active, a subsidiary of French media conglomerate Lagardère, which has signed a brand licensing deal with the Virgin Group. Terms were not unveiled.

The CSA decision, however, has been challenged by several companies in France.

French media and radio conglomerate NRJ Group reacted vigorously. "This is unfair competition for the groups that developed their own brand," NRJ Group chairman Jean-Paul Baudecroux tells Billboard.biz, suggesting that the CSA decision paves the way for entrepreneurs to simply create a media and enlist the name of powerful brands such as Coca-Cola or Carrefour.

In an open letter, NRJ has requested a meeting with French president Nicolas Sarkozy to discuss the Virgin situation and others involving CSA.

Meanwhile, giant French entertainment retailer Fnac is considering seeking annulment of the CSA decision with the highest French administrative court, Conseil d'Etat, Billboard.biz has learned.

Although Fnac has no media operations, the chain is concerned about Virgin Megastore, Fnac's main challenger in France, being indirectly advantaged by Virgin's brand enforcement.

Lagardère explains that the deal does not include any content exchange and the formats of the two media outlets will remain unchanged.

"We wanted to have a powerful, modern and dynamic brand," Lagardère Active director of music Christophe Sabot tells Billboard.biz. " A strong brand is indispensable to get through the digital transition, considering the increasingly overwhelming media offer available through digital radios, podcasts, and the like."

In a statement issued by Lagardère, Virgin group president Sir Richard Branson commented, "Our association with Lagardère Group should allow us to create two of the best radios and TVs in France."

Lagardère's subsidiary Hachette bought Virgin's retail assets in France in 2001.

Unconfirmed local reports suggest Lagardère is considering selling some Virgin outlets, with Fnac looming as a potential buyer.

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