FESTIVAL RECORDS

Category: Australian independent label, 1952-2005 Ownership: Mainguard Ltd, 1952-60; News Ltd, 1960 - 2005 House labels: Festival, Infinity, Distributor for: Australian labels: Action, ATA, Billings Gate, Clarion, Downunder, Du Monde Kommotion, Leedon, Mushroom, Rex, Spin, Sunshine, Violet's Holiday Overseas labels: A&M (USA); Ampar (USA, from 1960); Atlantic (USA) until 1972; Brunswick (USA); Command (USA); Coral (USA); Dot (USA); Evolution (USA); Impulse (USA, 1960s); Island (UK); Liberty (USA); 20th Century Fox (USA), United Artists (USA), Scepter (USA), Top Rank (USA), Wand (USA)

Throughout the period covered by MILESAGO, Festival Records was Australia's leading local recording company, and much of the credit for the success of the local industry belongs to the artists, producers, engineers and other staff who recorded and worked for Festival in the 1950s, '60s and '70s. Through the combination its house labels, the independent Australian labels with which it was associated, and the overseas labels it distributed Festival was without question the most important Australian record company of the last 50 years.

Much is made of the company's status as an "independent" label, and it's a claim that is made more than once in the literature produced for the Powerhouse Museum's "Spinning Around" exhibition. Festival was independent in the sense that it was not owned by one of the major multinational companies that have controlled most of the music business for the last 40 years -- the Netherlands-based Polygram group, the three American-owned media conglomerates RCA (now BMG); ARC (later CBS and now Sony), Warner Bros (later WEA, now Time-Warner-AOL), and EMI, the British giant that had enjoyed a virtual monopoly over the Australian music scene between the wars. in his introduction to the Powerhouse Museum's "Spinning Around" book, former Festival executive Warren Fahey declared:

"The key term ... has been 'independent', fuelling its management, entreprenuerial spirit, power base and passion." (1)

While it's true that Festival was independent of these other major music companies and operated with relative independence on a day-to-day basis, it was not independent in any objective corporate sense -- for nearly all of its 55-year life, Festival was a wholly-owned subsidiary of Rupert Murdoch's News Limited (later News Corporation). On the plus side, News CEO Rupert Murdoch is reputed to have little or no interest in music, which doubtless accounted for the lack of attention that he paid to the company. Despite it being one of his most consistently profitable holdings, he reportedly visited Festival's Pyrmont head office only a handful of times during more than forty years of ownership. On the minus side, it has been asserted that Murdoch regularly siphoned off much of the company's operaing surplus during the good years in order to bankroll other ventures in his ever-expanding empire; according to Herald journalist David Higgins (2) this was as much as 90% of the company's annual profit.

What's not in doubt is that Festival played a crucial role in the formative years of the Australian pop-rock music scene. It was first Australian label to release the a "rock'n'roll" record in Australia (cannily picking up Bill Haley's "Rock Around The Clock" after it had been turned down by EMI), it was the first local company to have hits with rock'n'roll records, and the first local label to sign local rock'n'roll artists, beginning with the legendary Johnny O'Keefe. In the late 50s and early 60s, thanks to a former former Fetival A&R manager Bruce Gyngell, Festival formed a close and valuable relationship with Frank Packer's Nine Network, whose pioneering pop show Bandstand became a virtual shopfront for Festival artists -- most of the so-called "Bandstand Family" including Col Joye, Little Pattie, and Judy Stone, were Festival artists. After its aquisition by News in 1960 the company went from strength to strength, becoming a dominant force in Australian pop with its own Festival label and the various independent labels which it distributed, including Leedon, Clarion, Sunshine, Spin and Du Monde. 

The Beat Boom of the mid-60s was the golden era for Festival, although many of the classic recordings of the period were made by the independent labels Festival distributed. The Bee Gees began their recording career with Leedon (which fonuder Lee Gordon had sold to Festival soon before his death) and most of the leading artists of the period -- Tony Worsley & The Blue Jays, Ray Brown & The Whispers, Normie Rowe, Mike Furber, Ronnie Burns, Johnny Young and many others -- were nominally Festival artists. Of tremendous importance was the influence of Festival's staff producers -- Robert Iredale was their first, from the 50s and mid- '60s and he recorded many eary classics with local acts like O'Keefe and a young british-born vocal trio called The Bee Gees. 

After the departure of Iredale, multi-talented former independent producer Pat Aulton was hired as Festival's main pop producer, and he scored hit after hit from the mid-60s to the early 70s; he had also produced many hits for the Spin and Sunshine labels before joining Festival in 1967 and besides as the many Australian classics he oversaw, he also worked with big international names like Neil Sedaka. Moving into the 70s, Festival continued to thrive with another former independent, Martin Erdman, who produced Festival's biggest succeess of the period, Sister Janet Mead's international smash hit "The Lord's Prayer". Another very important name in this period was staff engineer-producer Richard Batchens, who worked on many early hits for Sherbet as well as progressive landmarks like Blackfeather's At The Mountains Of Madness and most of the classic mid-70s recordings by Richard Clapton.

History

The early years: 1952-60

The Festival story began after WWII with former Australian Army commander Paul Cullen (d. 2007), who founded Mainguard, one of Australia's first merchant banks. Mainguard was an entrepreneurial outfit, and during the late 1940s it set up a variety of businesses in insurance, building and construction was well as financing high-risk ventures including a rice farm in the the Northern Territory, a whaling company in Moreton Bay, and Solar Salt Ltd, a scheme to recover salt from sea water.

Cullen hired old two army buddies, John Dalhunty and Cyril Beavis, as "investigating accountants" to look for ailing businesses that could be bought cheaply and then worked back into the black. Dalhunty found a likely candidate in Casper Precision Engineering in Redfern, and thought that it might be made profitable by converting it into a record pressing plant. Dalhunty knew that the new vinyl microgroove LP record sales were booming overseas and he also knew that EMI, then the dominant label in Australia, seemed to have no interest in the new technology, although a couple of Aussie firms were doing a brisk business pressing the new format, including Melbourne engineering company White & Gillespie who were pressing LPs for a number of local companies and for their own house label W&G.

Dalhunty then sought the opinion of Les Welch, the popular and prolific Sydney bandleader who had already recorded some 200 songs for Sydney's Pacific label, one of the three main house labels of The Australian Record Company (ARC). Dalhunty was acting on the advice of on the advice of Cullen, who had seen Welch perform in 1950 and told him that "if you can get Les Welch you can have your record company". Welch seconded Dalhunty's opinion that there was money to be made in the record business and he recommended that Mainguard also purchase two 10-inch record presses which he had knew were being held in bond on a Sydney wharf. Mainguard took over Casper Engineering, installed the presses, put Welsh on the payroll and launched into business producing custom pressings of 10", 78 rpm shellac discs.

In late 1951 John Dalhunty went overseas on a buying trip and came back with a swag of licencing and distribution deals with prominent American and European labels including Westminster, Remington, Savoy, Regent, Atlantic, Vox and Metronome. The new name for the company was suggested by Dalhunty's wife Judith. With John Dalhunty as its first managng director, Festival Records Pty Ltd was incorporated on 21 October 1952, with its first office was located on the fourth floor of 126 Phillip St, Sydney, formerly the home of the famous Smith's Weekly.

Festival rented (and subsequently bought) a old cinema at Gladesville where they installed ten presses, and production started in March 1953. A young Sydney electronics wiz called Robert Iredale was hired as the company's first recording engineer. After several months of experimentation and struggles with the presses, they began manufacturing the various recordings they had licenced, although they had little success at first. To overcome the resistance of local publishers and radio stations, Festival adopted a strategy that was to become a standard procedure for years to come -- recording cover versions of well known overseas hits by local artists.

Their first record on the Festival label was Les Welch's "Meet Mr Callaghan", released on 14 November 1952. Its catalogue number FM-1019 was a sleight of hand -- Festival gave it a higher number rather than the expected FM-0001 to give the impression that the company already had a number of releases to its credit. It sold very strongly, some 10,000 copies withing six weeks, ...

Early years

Festival was established by one of Australia's first merchant banking companies, Mainguard, founded by Paul Cullen, a former Australian army officer. Mainguard had a wide range of investments including one of Australia's first supermarket companies, and a whaling business. It also backed famed Australian film-maker Charles Chauvel.

The origin of Festival was Mainguard's purchase of a small record pressing company, Microgroove Australia, one of the first local companies to produce the new vinyl microgroove record format. After buying Microgroove, Cullen founded Festival Records on October 21, 1952 and soon after he appointed popular bandleader Les Welch as artists and repertoire (A&R) manager.[2] Another early staff member was Bruce Gyngell, who was later hired to help found Australia's first commercial TV station, TCN-9 in Sydney. The connection between Nine and Festival would reap great benefits for the label in the late 1950s and early 1960s.

Festival was able to gain a foothold in the Australian music market mainly thanks to Welch, who cannily acquired the Australian rights to the epoch-making Bill Haley record "Rock Around The Clock". The song been turned down by EMI in 1954, when it was first released in the USA, but Welch was able to secure the Australian rights for Festival in 1955, after the song became a smash hit in America and Britain thanks to its inclusion in the film Blackboard Jungle. "Rock Around The Clock" went on to become the biggest-selling record ever released in Australia up to that time, reportedly selling over 100,000 copies, and it established Festival as a significant new player in the emerging pop-rock market.

When Mainguard began diverting Festival's profits into its other businesses, Welch resigned. He was replaced by disc jockey and former record store clerk Ken Taylor. Like Welch, Taylor didn't like rock'n'roll but he was an astute spotter and marketer of new talent. Thanks to Taylor, Festival was the first local label to sign Australian rock 'n' roll acts, including Australia's "Big Three" of the 1950s -- Johnny O'Keefe and the Dee Jays, Col Joye and the Joy Boys and Dig Richards and the R'Jays. Festival's sales trebled, but by this time Mainguard was in serious financial straits and in 1957, Cullen sold Festival to property magnate L.J. Hooker.

Hooker was a music fan and reportedly took a keen personal interest in the company, even establishing his own boutique imprint, Rex, named after the Sydney hotel he owned. During this time, Festival had its first home-grown hit, Johnny O'Keefe's "Wild One" (aka "Real Wild Child"), a song later covered by Iggy Pop, and this was followed by four #1 hits in 1959 for the Col Joye & the Joy Boys. But despite the chart success, Festival continued to lose money due to poor management and a lack of international acts on its roster, and Hooker eventually sold it on to Rupert Murdoch's News Limited in early 1960.

Golden Years: The Sixties and Early Seventies

At the turn of the 1960s Festival almost became the local subsidiary of a US corporation. Australin media industries were becoming icreasingly colonised by US interests as the global influence of the UK waned after WWII. RCA Records had established an Australian subsidiary around 1956 and at the time that Hooker decided to sell Festival, several other American recording companies were planning to expand internationally, including ABC-Paramount (Ampar), the recording division of the ABC-Paramount media corporation. 

A few months before Murdoch bought Festival there was a major change in the structure of the Australian recording industry when CBS Records, the recording division of the giant American CBS radio and TV conglomerate, took over the Sydney-based Australian Record Company (ARC) in February 1960. ARC, arguably Festival's major local rival, was a leading manufacturer and distributor of records in NSW. It had acquired the Australian rights to the CBS cartalogue in 1956 after Capitol was bought by EMI and by 1960 CBS had decided to make the arrangment permanent.

Meanwhile the young Rupert Murdoch was starting to build up his own media empire and was eyeing the lucrative Sydney media market, hoping to acquire a major newspaper and an all-important TV licence. He achieved the former aim but failed in the latter beacuse of Australia's tough cross-media ownership laws, but along the way he picked up what turned out to be one of the best bargains of his career -- Festival Records.

Murdoch had business links with ABC-Paramount and knew that they were hoping to set up a full-scale recording operation in Australia, but had learned that L.J. Hooker wanted to sell Festival and was keen to acquire the company for himself, so he made a private approach to Hooker, who indicated that he was interested in selling. On 30 September 1960 News Ltd purchased all shares in Festival Records, but ABC-Paramount was still interested in taking over the label and on 11 October 1960 News Ltd sold 50% of its Festival shares to them. However, Paramount's planned global expansion did not eventuate and a year later, in 1961, they sold their share back to News Ltd, which remained the sole owner until Festival was liquidated in 2005.

In late 1960 Festival made its first major acquisition with the purchase of one of the independent labels it distributed, Leedon Records, founded in 1958 by American entrepreneur Lee Gordon. He had made a major name for himself in Australia with his company Big Show Pty Ltd, which promoted a string now-legendary jazz, popular and rock'n'roll package tours. Gordon had achieved many spectacular successes but by 1960 his career was faltering and he was heavily in debt, so he went over the head of his business manager Alan Heffernan and sold Leedon to Festival for £10,000. Leedon had been little more than a vanity project up to this time, but under Festival's control it developed into an important subsidiary label which played a major role in the company's success in the early-mid 1960s.

As with "Rock Around The Clock" a few years earlier, Festival's fortunes were turned around again in 1962 by the surprise success of another American act, Herb Alpert & The Tijuana Brass, who had been recommended to Festival in 1962 by top Sydney DJ Bob Rogers. Their breakthrough single "The Lonely Bull" became a worldwide hit, and its success in Australia enabled Festival to sign a crucial distribution deal with Alpert's newly founded A&M Records label, who went on to supply Festival with a stream of top-selling US acts such as The Carpenters.

Under the astute direction of long-serving company chairman Alan Hely, Festival quickly rose to become one of the top pop labels in Australasia (the New Zealand operation was a standalone company with differing ownership and management). By the late 1960s Festival's sales rivalled and often surpassed those of its major rival, market leader EMI. Hely built up a strong roster by cultivating Australia talent and establishing distribution deals with important local independent labels like Spin Records and Clarion Records in the Sixties and Mushroom Records in the early Seventies. He also signed crucial distribution deals with major overseas labels like Island Records, Chrysalis Records and Virgin Records that gave Festival exclusive Australian rights to a steady stream of international hit albums and singles.

Festival played a major role in the Australian pop scene of the mid-to-late 1960s, and it competed vigorously with its major rivals, EMI, ARC (CBS) and RCA. Either directly or through licencing deals, Festival released some of the most popular Australian acts of the decade, including Normie Rowe, Billy Thorpe, The Bee Gees, Ray Brown & The Whispers, Tony Worsley & The Fabulous Blue Jays, Jimmy Little, Noelene Batley, Mike Furber, The Dave Miller Set, Johnny Young, Wild Cherries and Jeff St John.

A crucial factor in the company's success in this period was its manufacturing and distribution deals with independent pop labels such as Sunshine Records, Kommotion Records, Spin Records and the WA-based Clarion Records. Many of these recordings were made by producer Pat Aulton, initially the 'house' producer for Sunshine, Kommotion and Spin, who became Festival's house producer from 1966 until the early 1970s. Aulton was probably responsible for more Australian-made hits than any other record producer of his era.

1970s-1990s: growth and consolidation

In 1970, Festival established a new progressive music label, Infinity Records, and early releases on the label included Kahvas Jute, the "new" Billy Thorpe & The Aztecs and Blackfeather. Infinity's biggest success was 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.

Although the American-owned companies Warner Music and CBS considerably expanded their local presence and market share during this period, Festival enjoyed continuing success during the late 1970s and early 1980s, thanks in part to its alliance with the Melbourne-based Mushroom Records label, which recorded much of the best new Australian music of the time.

But in the late Eighties change swept through the music industry as vinyl was rapidly supplanted by the new compact disc format. Festival's revenue was also dented by the loss of most of the successful independent overseas labels it had formerly distributed (notably Island, A&M and Chrysalis) which were bought up by major labels like CBS-Sony, PolyGram 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 was -- to the surprise of many in the industry -- appointed as Festival's Chairman, despite the fact that he was then only 23 and had no significant business experience. James 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 US's 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, and MD Bill Egg took the reins and then resigned after the appointment of Roger Grierson . Under Grierson and Murdoch's management, Festival bought out Michael Gudinski's controlling 51% share of Mushroom Records in 1999 for a reported AU$60 million. The two companies were then merged and renamed Festival Mushroom Records (FMR).

Notable figures were hired as executives, including Jeremy Fabinyi, former head of AMCOS and 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 the internet version of Ian McFarlane's Encyclopedia of Australian Rock & Pop. The company had #1 records with Motorace, 28 Days, George, Amiel, Kylie Minogue and others under licence and distribution arrangements including Moby, 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 Japan. In 2002, FMR had more #1 singles and more #1 albums than any other company. Festival Music, won both the Song of the Year and Songwriter of the Year in 2004 with Powderfinger and Amiel.

The 2000s: Decline and fall

In 2000 James Murdoch was appointed to head Star TV and he moved to Hong Kong. Festival soldiered on, gearing up to celebrate its fiftieth anniversary in 2002 with a major exhibition at the Powerhouse Museum n Sydney (which later toured Australia) and the launch of a new series of commemorative CDs compiling the best of the company's vast archive of recordings.

News Ltd. undoubtedly poured tens of millions into Festival in the decade between 1995 and 2005; James Murdoch reportedly lavished AU$10 million on artists and repertiore, plus another AU$43 million to buy-out Gundinski's controlling share of Mushroom[3]. Yet, by 2005, the company was insolvent, and it ceased trading in October.

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, Peter Allen, Sherbet, Olivia Newton-John, Nelly Furtado, Madonna and Kylie Minogue. [4]

In October 2005, it was announced that the Festival Mushroom group had been acquired by Warner Bros. Records [5]. The terms of the sale were not disclosed but sources at other labels estimated that the deal was worth between AU$5 million and AU$10 million. 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 Bros. Records.

FMR's other major asset, Festival Music Publishing, was acquired in November 2005 by Michael Gudinksi's Mushroom Publishing, for an undisclosed sum.[6]

Discography