Founder Michael Gudinski went on to become the leader of the Mushroom Group, the largest independent music and entertainment company in Australia, with divisions such as Frontier Touring.

Its inaugural release was an ambitious triple live album of the 1973 Sunbury Pop Festival, and over the first few years of its existence Mushroom signed a number of important Australian acts including Madder Lake, Ayers Rock, and MacKenzie Theory.

[4] Around the same time, Gudinski was convinced to sign expatriate New Zealand band Split Enz, who had recently relocated to Australia.

[6][better source needed] In 1981, Gudinski started another subsidiary, White Label Records, to release what might now be called post-punk music, with signings such as Hunters & Collectors, Machinations, Painters and Dockers, Kids in the Kitchen and The Stems.

After selling 49% of the company to News Corporation in 1993, Garbage signed to the label via Koda Marshall's UK operation, followed by Pop Will Eat Itself, Ash, The Paradise Motel and Peter André.

[citation needed] Gudinski sold the remaining 51% share of the label to News Corporation in 1998 for a sum reported to have been around A$40 million.

With the reorganisation into Festival Mushroom Records, a number of international operations and joint ventures were either shut down or sold.