Growth and consolidation
In January 1971, Festival established a new progressive music label,[4] Infinity Records (not related to the U.S. MCA affiliated label of the same name, see Infinity Records.) Early Infinity releases included Kahvas Jute, Billy Thorpe & the Aztecs and Blackfeather. Infinity's biggest successes were Sydney band Sherbet, who became the most popular and successful local band of the early Seventies and one of the most successful Australian groups of all time, and singer-songwriter Richard Clapton; both acts were produced by Richard Batchens, who succeeded Pat Aulton as Festival's main house producer. In 1979 Mark Moffatt replaced Batchens as house producer, bringing much of the Mushroom recording in house.
Another notable success for Festival in this period was Sister Janet Mead. The Adelaide-based nun was an experienced music teacher who had been using pop music in religious ceremonies to involve young people and had provided music for "rock Mass" events. In 1973 Mead came to Sydney to record with Festival house producer Martin Erdman and one of the tracks from that session, a rock arrangement of "The Lord's Prayer", was released as the B-side of her first single. After being picked up by radio it became one of the surprise hits of the year, reaching #3 on the Australian Singles Chart (Kent Music Report) in 1974.[5] It was also a huge success in America, reaching No. 4 on the Billboard Hot 100, becoming the first Australian recording to sell over one million copies in the United States,[6] earning a Gold Award for Sister Janet Mead and Martin Erdman. It also earned a Grammy Award nomination and Golden Gospel Award[7] in 2004.[8]
Although the American-owned companies Warner Music Group and CBS considerably expanded their local presence and market share during this period, Festival enjoyed continuing success during the late 1970s and mid to late 1980s under the helm of managing director Jim White, and also thanks in part to its alliance with the Melbourne based Mushroom Records label and the Sydney-based Regular Records label, whose roster included top selling bands such as Icehouse, Mental As Anything and the Cockroaches (which later evolved into the hugely successful children's act The Wiggles). Both Mushroom and Regular recorded much of the best new Australian music of the time.
In the late 1980s change swept through the music industry and vinyl was rapidly supplanted by the new compact disc format which Festival embraced. However it started to lose manufacturing revenue at this point because of how predominant its vinyl and cassette pressing business was and because of the lack of CD manufacturing facilities for Festival, whose revenue was also dented by the loss of many of the successful independent overseas labels it had formerly distributed, notably Island Records, A&M and Chrysalis; some deals ended due to overseas labels opening local branches, while others were lost when these former independents (e.g. Virgin, Charisma) were taken over by major labels like PolyGram, BMG (Bertelsmann Music Group), Sony Music, Warner Music Group (which would absorb Festival), and EMI. The loss of these overseas labels took a sizeable chunk out of Festival's profits, a problem compounded by Murdoch's persistent siphoning-off of Festival's profits, leaving it without the cash reserves it needed to invest in new plant, new acts and new labels.
In 1995, Alan Hely was nearing retirement, but he agreed to stay on to tutor Rupert Murdoch's younger son, James, who, to the surprise of many in the industry, was appointed as Festival's chairman despite then being only 23 and with no significant business experience. James Murdoch had a reputation as the Murdoch family rebel; he bleached his hair and for some time sported an eyebrow stud and, to his family's dismay, he had just dropped out of Harvard University to set up a hip-hop label, Rawkus Records, which for a time was the United States' premier hip-hop label, boasting Mos Def, Company Flow and others.
Hely stayed on for some time after the appointment, but he resigned earlier than he had planned after disagreements with Murdoch; MD Bill Eeg took the reins for a short period before but resigned after the appointment of Roger Grierson, a one-time member of Sydney '80s new wave band The Thought Criminals and a former manager of Nick Cave.
In 1997, Grierson set about rebuilding Festival's profile, negotiating new licensing/distribution/promotion deals with a group of prestige Australian independent labels including W.Minc, Half a Cow, Reliant Records, Global Records, and Psy-Harmonics as well as international licences including TVT Records, Walt Disney Records/Hollywood Records/Mammoth Records, Chris Blackwell's Palm Pictures, V2 Records and later on prestigious Australian label Albert Productions, the home of AC/DC
Under Grierson and Murdoch's management, Festival bought out Michael Gudinski's controlling 51% share of Mushroom Records in 1999. The two companies were then merged and renamed Festival Mushroom Records (FMR).
Several notable industry figures were hired as executives, including Jeremy Fabinyi (former artist manager and ex-head of AMCOS), Paul Dickson, former head of Polygram Australia, respected musician Mark Callaghan (ex-Riptides, GANGgajang) and industry veteran and former Larrikin Records boss Warren Fahey. The company also established an online music site, Whammo, which offered online CD sales as well as hosting an online version of Ian McFarlane's Encyclopedia of Australian Rock and Pop. The company had #1 records with Motor Ace, 28 Days, George, Amiel, Kylie Minogue and others under licence and distribution arrangements including Moby, Madonna, Britney Spears and Michael Crawford. They also had the highest selling album of 2002 with the soundtrack to Baz Luhrmann's Moulin Rouge. "Addicted to Bass" went to #2 in the UK charts and the band had top ten records in Japan through a licence arrangement with Sony Music Japan. In 2002, FMR had more #1 singles and more #1 albums than any other company.
In 2000, James Murdoch was appointed to head Star TV and moved to Hong Kong.
Festival celebrated its fiftieth anniversary in 2002 with a major museum exhibition and a series of commemorative CDs. News Ltd poured millions into Festival in the decade between 1995 and 2005; James Murdoch reportedly spent A$10 million on artists and repertoire. The company won both the Song of the Year and Songwriter of the Year ARIA award in 2004 with Powderfinger and Amiel.
Despite these successes, revenues continued to fall and by 2006 the company was in dire financial straits. In October, FMR announced that its recorded music assets had been sold to Warner Music Australia.[9] Festival Mushroom's offices in five cities were closed and 43 of the company's 54 remaining staff were retrenched, with eleven senior management, promotions and marketing staff moved into positions at Warner.
The combined Festival Mushroom Records–Warner Bros. Records recording archive contains a large proportion of the most important Australian pop and rock music of the late 20th century, and the collection is said to contain more than 20,000 master tapes, including music by Johnny O'Keefe, the Bee Gees, Peter Allen, Sherbet, Olivia Newton-John, Timbaland, Nelly Furtado, Madonna, Mika and Kylie Minogue.[3]
Another major FMR asset, Festival Studios, was acquired by ex-Festival Studios engineer Tom Misner, who acquired Studios 301 the same year. Similarly, Festival Music Publishing, was acquired in November 2005 by Michael Gudinski's Mushroom Publishing, for an undisclosed sum.[10]
