[1] Festival was established by one of Australia's first merchant banking companies, Mainguard, founded by entrepreneur and former Australian army officer Paul Cullen.

[2] Mainguard had a wide range of investments including one of Australia's first supermarket companies, and a whaling business and also backed famed Australian filmmaker Charles Chauvel.

After buying the two companies Cullen reincorporated them as Festival Records on 21 October 1952; soon after he appointed popular Sydney bandleader Les Welch as the label's first artists and repertoire (A&R) manager.

"Rock Around the Clock" became the biggest-selling record ever released in Australia up to that time, and it established Festival as a significant emerging player in the popular music market.

[2] Festival played a major role in the Australian pop scene of the mid-to-late 1960s, and it competed strongly with its overseas-owned rivals EMI, CBS and RCA.

Lindsay received citations and awards from Festival management and the Australian Record Industry in the 1960s and 1970s for outstanding record sales and his promotion of country music nationally and internationally] the Delltones, Warren Williams, Billy Thorpe, the Bee Gees, Ray Brown & the Whispers, Tony Worsley & the Fabulous Blue Jays, Jimmy Little, Noeleen Batley, Mike Furber, Olivia Newton-John, the Dave Miller Set, Johnny Young, Jamie Redfern, Wild Cherries and Jeff St John.

Aulton supervised the installation of Festival's new 4-track studio at Pyrmont later that year and he oversaw most of the company's pop/rock output between 1967 and 1970, including producing an album and an Australian hit single for American singer-songwriter Neil Sedaka.

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.

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.

[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).

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.

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,[citation needed] 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.

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.

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.