Richard Branson considers a return to his roots with bid for Virgin Records

By GARETH MACKIE
Published on 18/07/2012 00:00

SIR Richard Branson yesterday confirmed he was considering buying back Virgin Records, 20 years after he sold the label to fund his airline.

Universal Music, the world’s biggest recorded music firm, is drawing up plans to sell the business to persuade regulators to give the green light to its £1.2 billion deal for EMI, whose acts include the Beatles and Coldplay.

The Virgin Records label was launched in 1972 and released its first album, Mike Oldfield’s Tubular Bells, the following year. In 1977 it signed the Sex Pistols after they were dropped by EMI and is now home to stars including Bryan Ferry and Joss Stone.

In 1992, Branson sold the label to Thorn EMI for about £600 million to help fund Virgin Atlantic’s battle with British Airways, but now he is interested in recapturing the business.

He tweeted: “Looking into buying back Virgin Records – a wonderful opportunity to recreate a dynamic independent label.”

The entrepreneur has held talks about launching a bid with Patrick Zelnik, who started Virgin Records in France in 1980 and is co-president of Impala, the Brussels-based trade body for independent record labels.

Impala executive chair Helen Smith said yesterday that the group was opposed to the merger of Universal with EMI, adding: “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.”

US bank Citigroup took control of EMI last year from private equity firm Terra Firma and agreed to sell its recorded music division, which includes Virgin Records, to Universal, whose artists include the Rolling Stones and Take That.

The EU is believed to have sent Universal, which is owned by France’s Vivendi, a 194-page statement of objections over its proposed deal with EMI. The enlarged group would control an estimated 40 per cent of the music market in Europe and the US.

It is thought that Universal had hoped the deal would be waved through because music companies are under immense pressure from internet downloads, but sources have said the group will offer to sell EMI’s classical and jazz labels, along with Virgin Records, to appease regulators.

Branson founded Virgin Records in 1970 at the age of 20 as a mail order business geared towards students. The following year, after a postal strike threatened its future, he opened his first shop on London’s Oxford Street. The business launched as a record label in 1972, allowing artists to record at his 17th century house near Oxford.

Branson also owned Virgin Megastores until 2007, when he sold the music and entertainment retail chain to a management buy-out team led by managing director Simon Douglas and finance director Steve Peckham. The business was rebranded as Zavvi but went into administration on Christmas Eve in 2008 after the collapse of Entertainment UK, its biggest supplier.

The banking arm of his Virgin empire agreed to buy the “good bank” part of Northern Rock from the UK taxpayer for £747m last year. That figure is expected to rise to around £1bn once a number of conditional payments are factored in.