Mogul could take former label in wake of UMG-EMI concessions

Richard Branson could re-enter the record label biz with a repurchase of Virgin Records if divestiture of the company is mandated for the completion of Universal Music Group’s $1.9 billion purchase of EMI Music’s label interests.

In a savory twist, Branson’s partner in the acquisition would be Patrick Zelnik, co-president of the Euro indie trade body Impala, who made a sudden about-face and expressed support for the EMI purchase in a Financial Times opinion piece on Monday.

Distancing itself from Zelnik, Impala reiterated its opposition to the EMI purchase yesterday.

Branson himself acknowledged his interest in taking back the label — sold to EMI two decades ago for $1 billion — in a blog post on the Virgin Group website. Post quoted a Virgin press rep’s statement that the buy-back represented “a wonderful opportunity to re-create a dynamic independent label.”

Quoting unnamed sources, a Sunday New York Times story said that Virgin Records and EMI Classics were likely to be divested in order to convince the European Commission to approve UMG’s pending buy of the EMI labels. The companies were set to present their remedies to regulators on Tuesday.

After concession selloffs of certain publishing catalogs, the Sony/ATV-led purchase of EMI’s pubbery interests was approved in late June (Daily Variety, July 2).

Billionaire Branson’s empire — which today encompasses airlines, hotels, a mobile phone service, film and TV production and video gaming among other diversified interests — was built on the Virgin label.

Founded in 1970 by a 20-year-old Branson, the company scored an immediate hit with Mike Oldfield’s instrumental album “Tubular Bells.” The label later signed the Sex Pistols and enjoyed success with a variety of pop, punk and reggae acts.

Branson still holds an interest in Virgin Megastores, the high-end music and home entertainment retail chain, which folded its U.S. operations in 2008.

If he can, in fact, buy back the Virgin label, Branson will be partnered with longtime business ally Zelnik. In 1977, after beginning his music biz career as marketing director at Polydor in France, Zelnik helmed Virgin’s first European branch, Virgin France. In the late ’80s, he served as president of Virgin’s retail unit. He formed his own multimedia company, Naive, in 1997.

Zelnik has been co-president of Impala since 2006. In a statement that took many observers by surprise, he reversed himself on the UMG-EMI deal in the FT piece.

He said, “For 12 years at Impala …I have fought concentration in the music industry. However, as Universal Music awaits regulators’ verdict on its £1.2 billion bid for EMI’s recorded music division, I think it could be just what the sector needs… I can see that in the right circumstances this merger could create a more competitive industry, while offering stability to EMI’s artists.”

Impala has been the most vociferous foe of the UMG-EMI merger. The trade org pushed back at Zelnik in another strongly worded statement from executive chair Helen Smith on Tuesday.

“Our board took a clear decision yesterday to continue its opposition to the Universal/EMI merger,” Smith said. “The issue isn’t just digital, it’s physical and access to media… We all respect Patrick Zelnik’s view, but the FT article is the Naive position, not the Impala position.”

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