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Sir Richard Branson is considering joining a bid for Virgin Records, the business with which his Virgin Group began, if Universal Music sells the EMI-owned label to secure regulatory approval for its £1.2bn takeover of the British music group.
The entrepreneur has held talks with Patrick Zelnik, who launched Virgin Records in France in 1980 and now runs Naive Records, a French independent label, people familiar with the discussions said.
“If Universal is ready to sell Virgin Records, then Richard Branson will support a transaction and support me in doing it,” Mr Zelnik told the Financial Times. “He wants Virgin to be in my hands,” he said, adding that he would merge Naive and Virgin Records if he succeeded.
People familiar with the discussions cautioned that Sir Richard had not committed to making an offer, and may only take a small stake in such a deal. He had made no formal approach to Universal, which is owned by Vivendi, the French media and telecoms group, they added.
“Richard’s a good businessman. He has to see the business plan and the price before committing,” one said.
Any offer may only cover Virgin Records’ European assets, another said, adding that some artists signed to Virgin in the UK, such as Katy Perry, are released by EMI’s Capitol Records in the US and might not move with Virgin in a change of control.
Sir Richard started Virgin Records in 1970 as a mail-order delivery service for albums, then opened a shop on London’s Oxford Street. In 1972 he launched the label with Mike Oldfield as its first artist, later putting out albums by Culture Club, Phil Collins and Janet Jackson.
The costs of Virgin Atlantic’s battle with British Airways forced Sir Richard to sell Virgin Records to the then Thorn-EMI for £510m in 1992.
The news of his interest came as Mr Zelnik, a former opponent of music industry consolidation, came out in favour of the Universal-EMI deal in a Financial Times article. The acquisition ”could be just what the sector needs” if it included measures to boost independent labels and digital music retailers, he said.
Mr Zelnik is co-president of Impala, a European lobby group known for objecting to past attempts to merge EMI with Warner Music and its long battle against the Sony-BMG merger that formed Sony Music.
Other Impala members have argued against allowing Universal, the market leader, to buy EMI. Martin Mills, whose Beggars Group puts out Adele’s albums in the UK, told a Senate subcommittee Universal was a monopolist seeking more power.
An Impala meeting on Monday failed to break the deadlock, with 14 out of 24 members voting in favour of the deal – short of the 75 per cent majority needed for the organisation to support it.
Universal and Vivendi executives are expected to meet European regulators including Joaquín Almunia, the EU’s competition commissioner, this week to pitch what Lucian Grainge, Universal’s chief executive, has called a “manifesto” to restore industry growth including disposals and behavioural concessions.
The Commission has traditionally preferred structural remedies such as disposals to reduce buyers’ market share over behavioural promises, which are harder to enforce.
Additional reporting by Alex Barker in Brussels