also from this week's Chronicle: As you learned here last week, long-beleaguered local label Watermelon Records filed for Chapter 11 on December 31, 1998, enabling the company to have legal protection from creditors during a period of financial restructuring. So what's up next for the label? How about a merger with their distribution-mates at Sire, local blues label Antone's Records? One disgruntled former Watermelon employee calls it "the blind leading the blind," but Antone's Christie Warren confirms rumors that the latter label has been contacted by the former -- though nothing is confirmed at the moment. "We're big fans of theirs," she says, "and anything we can do to help them we're going to do." Watermelon President Heinz Geissler is a bit more vague on his plans, worried that premature talk could jinx his ideas for the future. "We're working on something right now," he allows, but declines to say whether it's with Antone's or another party. Whoever it is, he says he had hoped to have ink on paper this week, and expects to have solid news on Watermelon's fate to report in the very near future. He could have more trouble in the wind, however; Tom Pittman of the Austin Lounge Lizards says that he fears his band may be forced to sue Watermelon. Pittman claims that the band canceled its contract with the label in late 1998 after the label failed to pay a sum that was owed within the contractually agreed time. The Lizards hope to take their catalog to Sugar Hill Records, but, says Pittman, "[Watermelon is] resisting us, so it looks as though we're going to have to sue." Geissler, on the other hand, says that not only are the Lizards still under contract with the label "forever," he believes the two parties "have a good working releationship." Given Pittman's statement, I'd have to say I've seen better ones. Don't expect Watermelon/Waterloo Records' owner John Kunz to figure highly in the label's plans. Kunz says that while he will remain a shareholder in Watermelon, he doesn't expect to be involved with the newly restructured company as he has in the past. Then again, he just may have his hands more than full with competition threatening Waterloo Records; rumor has it that a Virgin Megastore may be one of the planned businesses in the big shopping center in the works catty-corner to Waterloo at Sixth and Lamar. Calls to Virgin headquarters went unreturned, and Kunz says he doesn't wish to comment until he knows for sure the chain is building here, but he admits that he, too, has heard the rumors. In any case, the store wouldn't actually be open for a couple of years, one supposes, and by that time we should have time to decide on where to found a New Austin anyhow. (And whose brilliant idea was it to build at that spot and escalate the already overwhelming traffic situation at that uber-congested intersection? Ah, well, at least the Electric Lounge will have more potential customers -- if they're still there, that is).