LARRY SCHWARTZ
It was oil and water. Baby-boomer and Generation X. Son of Russian-Jewish migrants and an heir to an Anglo-Australian dynasty.
James Rupert Murdoch was born in the year a 20-year-old Melbourne rock enthusiast called Michael Gudinski set up his own record label. The Harvard University dropout who would found his own label, Rawkus Entertainment, in 1995, was not yet involved when his father bought almost
half of Mushroom Records in 1993 for a reported $15 million.
His father is believed to have expressed an interest in Mushroom when Gudinski flew to America to interest him in funding a bid for FM broadcaster Triple M.
The media baron would have been prevented from bidding for the network by media cross-ownership legislation. He might have admired the younger man’s gumption.
At a time when record companies had little respect for local acts, Gudinski had secured a niche for his fledgling operation by keeping several interests (the label, management, publishing, merchandising and booking agent) under one roof.
In the 25 years to the release of Cold Chisel’s 1998 reunion album, The Last Wave, Mushroom chronology is punctuated with successes. Its artists included Skyhooks, Australian Crawl, Renee Geyer, Split Enz, Jimmy Barnes, Kylie Minogue and Peter Andre.
Already among the most powerful men in the Australian music industry, Gudinski might have imagined the partnership with the media giant would help secure the long-coveted Mushroom hit in America. He may have imagined himself head of a merger between Mushroom and News-
owned Festival Records. In the end – five years after signing with News and two years after the arrival of Murdoch’s second son – he shook hands on a $40 million deal that ensured he was cashed up, with key aspects of his operation still his. Gudinski kept one of his labels, Liberation,
Mushroom’s Albert Park premises, the Frontier touring company, Mushroom Pictures and Mushroom Publishing.
Gudinski held on to the Mushroom name. He successfully resisted News’ attempts to call its operation the Mushroom Group of Companies or Mushroom Record Group, now Festival Mushroom Records.
More than two years have passed since James Murdoch and Michael Solomon Gudinski announced the Murdoch group was to buy the rest of Mushroom Records.
A Victorian Supreme Court tussle between Gudinski and News has renewed speculation about tensions in the latter years of the partnership. Some observers say the court action, in which the Gudinski has sued for $2,925,000 and News has counter-sued for more than $5 million, follows
a difficult relationship in which Gudinski felt excluded by News, and the youngest son of Rupert Murdoch was irked the 1993 deal had not included the lucrative publishing division.
James Murdoch became a director of Mushroom in 1997, the year in which Gudinski withdrew a long-standing distribution arrangement from Festival Records, signing instead with rival Sony.
“In the music industry, you sleep with one person one day; the next day you hate them,” says an observer who would rather remain unnamed. “It’s acceptable. You don’t even waste one minute thinking about loyalty and betrayal and all that kind of shit.”
Gudinski had distributed through Festival from the early 1970s. He would have been pressured by some of his top artists, who expressed their dissatisfaction with Festival.
Hoodoo Gurus manager Michael McMartin says “a number” of managers had written to Gudinski before the distribution switch.
A former Festival staffer, Gill Robert, was general manager of strategic marketing at Sony when Gudinski switched distribution. “It was a great coup to get Mushroom,” he says. “They were an excellent record label. It’s like the history of Australian music there, just about.”
A switch in distribution is not so unusual in the music industry. But Gudinski’s action would have been a slap in the face, reflecting poorly on his partner.
The distribution change is not mentioned, either, in papers before the Supreme Court in which News alleges “a diminution of the value” of the outstanding half bought for a reported $40 million.
With Gudinski at the 1998 Australian Record Industry Association (ARIA) Awards were James Murdoch, then News Corporation vice-president of music, and Festival Records head Roger Grierson.
Although it had released locals, by the 1990s Festival was primarily an international music catalogue company. At the time of Grierson’s appointment as chairman and chief executive almost a year earlier, Murdoch had said News saw “the future of Festival as fostering local talent in Australia
…”
On the day of the ARIA nominations, media had been tipped there would be an important announcement on Mushroom. Gudinski told assembled journalists of the sale, attributing his decision partly to the impact of parallel-import legislation. Once he was the big fish in the small pond.
Why would he want to sell? He must have had an eye on the big pond. The 1993 sale would have helped Mushroom expand overseas; it set up a British office that year, headed by then Mushroom director Gary Ashley, who had been a 25 per cent partner in Mushroom’s publishing, management,
merchandising and the record company.
“One of the reason we sold the 49 per cent to Murdoch,” he says, “was to grow internationally and that was my understanding and that was what they always wanted to do. I always thought that was what Michael wanted to do. But what happened when I was in England and the Australian
company wasn’t doing very well was he (Gudinski) arrived at a particular point and wanted to shut the UK company down … It was him and them, News and him. I fought it and kept the company open but decided to leave.”
He says James’ elder brother, Lachlan, was involved at the time. And it was not until two years ago that he met the younger Murdoch.
“About two years ago … we had lunch in New York. I had never met the man. And meeting James and knowing Michael, I’m not surprised that they bang heads. They’re very strong characters. Michael is an entrepreneurial, spirited leave-me-alone-and-let-me do-my-thing … and I think
James is little more distant, involved in a lot of things, expects-results-immediately type of person.”
He says he is not surprised by the Supreme Court action, thinks Mushroom was not in good shape when Gudinski sold it, News overpaid and is “trying to get some money back”.The British market was fiercely competitive and the venture costly. Despite success including a UK number one
with Peter Andre’s Natural in 1996, News is believed to have pressured Gudinski to close the office.
With Ashley gone, News is believed to have insisted Gudinski travel to London once a month to oversee the UK operation.
News is believed to have finally withdrawn financial backing from the UK office, leaving Gudinksi to fund it himself. In 1997, James Murdoch is believed to have sought an additional 1 per cent of Mushroom Records but found Gudinski reluctant to sell.
Mushroom Records sued its founder late in 1999 for allegedly helping a former Mushroom executive set up a rival business. That matter has since been settled.
Gudinski’s solicitor Michael Brereton said recently of the Gudinski-News dispute: “What happens now is we go through interlocutory steps and we get it set down for what we think will be a fairly quick hearing.” He believes it will be resolved “certainly this year and that’s pretty quick”.
LINKS
THE CASE:
Among the issues cited by News are rights to Garbage, a popular American group.
News alleges it found after the 1998 purchase of the remaining half of Mushroom that it owned just a piece of Garbage. It allegedly thought it had it all.
It is not the music that is at issue in documents before the Supreme Court in which Garbage is mentioned by News Ltd among factors it says have caused “a diminution of the value”. News alleges that although it was under the impression Mushroom had distribution rights for Garbage,
vocalist Shirley Manson “did not have a binding contract with Mushroom, but instead an exclusive recording deal” with another label.
Subsequent payments to that label, Radioactive Records, are cited, along with factors including an outstanding Workcover bill of more than $230,000.
According to a statement of claim prepared by Michael Brereton and Co, News failed to pay on September 8, 2000, an agreed $2,925,000 plus interest accrued in the previous year.
“They say we’ve breached a warranty,” Brereton says. “What they say is we told them something which has not turned out to be accurate … We have disclosed everything to them. We don’t lie.”
Sydney solicitors Allen Allen & Hemsley, for News, allege their client is entitled to retain from the $3.8 million withheld from the purchase price “an amount equal to its best estimate (made in good faith)” or determined by experts to offset costs from any breach or default.
Mushroom made 8000 recordings by more than 400 artists in the 25 years after its debut release, a triple album, The Great Australian Rock Festival, Sunbury ’73.
The Sunday Age 08th of April 2001
Larry Schwartz Writer 