Sparrow Finds Markets Beyond Gospel : Entertainment: By adding exercise videos and Bible cartoons, the Chatsworth firm has cushioned the erratic cycle of record purchases.

About two years ago, Billy Ray Hearn realized that the contemporary Christian music business was slowing down. The Jim and Tammy Bakker scandal had the evangelical public skeptical about Christian stars, and big Christian recording artists weren’t releasing new albums, so the traffic slowed among those who visited the mom and pop “Christian bookstores” where most Christian music is sold.

So Hearn, who owns Chatsworth-based Sparrow Corp., one of the nation’s biggest Christian record companies, did what executives in all sorts of industries do. He diversified.

Hearn began offering something for today’s yuppified, health-conscious evangelicals: Christian exercise videos. “We have the Christian Jane Fonda,” Hearn boasts, referring to Stormie Omartian, the fitness promoter and backup singer for Cher who leads the videotaped aerobic demonstrations with Christian music backgrounds. Hearn says “Stormie Omartian’s First Step Workout Video” and its companion tapes are the best selling Christian videos on the market, with about 100,000 copies sold.

Hearn has also started selling videotapes for children. His new line is a series of cartoon Bible stories made by Hanna-Barbera--the Hollywood animation giant that produces the “Smurfs”--and distributed under a license agreement by Sparrow. He also pushed Sparrow into black gospel music recording and has started selling Christian sheet music as well. “I just saw the need to diversify,” Hearn said.

These moves have spearheaded much of Sparrow’s growth, as its sales have jumped from $14 million in fiscal 1987 to $20 million for its fiscal year that ended in June. The growth has made Sparrow one of the big three Christian record companies in the nation. Hearn, 60, is a former church choir director who founded Sparrow in 1976 after working as an executive producer at a rival gospel recording company.

One of Sparrow’s biggest stars is Deniece Williams, who sang “Too Much, Too Little, Too Late” with Johnny Mathis in 1978 and “Let’s Hear It for the Boy,” from the sound track of the movie “Footloose.” Williams is one of Christian music’s rare crossover artists who has made it big in the regular pop charts, and Hearn recently signed her to a complicated, shared recording deal.

Williams’ first Sparrow gospel record, “So Glad I Know,” sold 250,000 copies, producing more than $1 million in sales for the company. And her latest album, “Special Love,” is a gospel effort distributed by Sparrow to Christian bookstores and by MCA Records to conventional record stores.

But for all its growth, Sparrow still has to worry about the competition. Both its biggest competitors were in music publishing and black gospel before Sparrow, and one beat Sparrow to the video market as well. The biggest in the business is Word Inc., based in Dallas, a subsidiary of the entertainment conglomerate Capital Cities/ABC. Word has in its recording stable contemporary Christian music’s biggest star, Amy Grant. A spokeswoman declined to provide Word’s sales, but Word is recognized to be larger than Sparrow.

And then there is the Benson Co. in Nashville, a subsidiary of Harper & Row Publishers that is partly owned by Rupert Murdoch’s publishing empire. Benson also declined to release its sales figures. But along with Word and Sparrow, Benson probably fills in the top three companies of the business.

Contemporary Christian music is a long way from hymns and organ fugues. “Contemporary Christian music has nothing to do with the musical style,” Hearn said. “It has only to do with the lyrics.”

That gives artists considerable freedom. The music ranges from heavy metal and power rock to folk tunes, but it’s dominated by a sort of “adult contemporary”-sound, according to John Styll, editor of Contemporary Christian Music magazine, in Nashville.

But if the particular style is not all that important to contemporary gospel, the beliefs of listeners are. “They see themselves in conflict with the values of the world as a whole,” said Vince Wilcox, vice president of marketing for the Benson Co. That means companies such as Sparrow can count on a devoted audience that wants to buy Christian rock, but it also means they are not reachable through the ordinary distribution channels of rock radio stations, MTV or record stores.

Indeed, other than those of crossover exceptions such as Deniece Williams, you won’t find contemporary Christian CDs or records in Tower Records. So, like Word and Benson, one of Sparrow’s most important assets is a distribution system that gets its records to a very particular market: about 3,000 Christian bookstores nationwide.

“I built our own distribution system and that was the key to our success,” Hearn said. In fact, about 40% of Sparrow’s sales come from distributing recordings made by other companies.

But even the system wasn’t enough to protect Sparrow from trouble in 1987. “It was because of the Bakker scandal,” Hearn said. “A lot of the Christian people who were going to the stores just backed off for a while.”

Another problem was that Christian recording artists were mostly silent in 1987 and didn’t pull record buyers into the stores with their new releases. Sparrow lost money when new sales it had been counting on to pay for expansion didn’t materialize. Benson lost money too, according to Wilcox. So Hearn decided it was time to address an underlying problem--Sparrow’s reliance on just contemporary Christian music for its sales.

Word was already in the video market, and both Benson and Word were established in black gospel and music publishing. But Hearn figured that with Sparrow’s distribution system, the company was virtually guaranteed to succeed in the new areas. Said Hearn: “We just wanted our piece, and we got it.”

One of Sparrow’s first moves was to expand its repertoire in black gospel--a term Hearn uses to include contemporary Christian music mostly by black artists. Hearn also decided to take Sparrow into video distribution. The children’s Bible story tapes compete with a similar line put out by Word, but Hearn said videos--including both the stories and the exercise tapes--account for about 15% of Sparrow’s sales.

Another big new area for Sparrow is print music. Lyrics and sheet music sold mostly to church choirs have always been a staple for the competition--particularly Benson--but Hearn said it now accounts for about 12% of Sparrow’s sales as well.

Hearn got his start in contemporary Christian music as a choir director for a Baptist church in Thomasville, Ga., a town of about 20,000 near the Florida border, in the early 1960s. Despite a classical training--he started playing the violin at 5 and majored in music at Baylor University--Hearn recognized that the music children and teen-agers really listened to in those years was folk.

“Peter, Paul, and Mary, the Kingston Trio, the New Christy Minstrels and Bob Dylan, those people were really preaching with their music,” Hearn said. So Hearn started youth choirs complete with drums and guitars that played folk tunes in church--with lyrics altered, of course, to fit Christian themes. “It was radical,” said Hearn. “Some people hated it.”

But by 1968, when some Word executives saw Hearn traveling with one of his choirs, they invited him to join the company as a director of artists and repertoire--a sort of executive producer for records--to help them break into the budding contemporary Christian music scene.

In 1971, Hearn persuaded Word to start a record label devoted exclusively to Christian music. Five years later a publishing company asked Hearn to help them start a rival contemporary Christian music company called Sparrow. Hearn agreed, but in a year Hearn and one of his recording groups bought the company for about $250,000. In 1980, Hearn bought out his partners.

Even Sparrow’s early years were successful. From $705,000 in 1977, the company’s sales doubled by 1978 and doubled again by 1979 to $3.3 million.

Despite his success, Hearn said he has no interest in selling Sparrow or taking the company public. He’s more interested in keeping Sparrow--where his son Bill is vice president of marketing--a family business firmly in his control.

Said Hearn: “I’m doing all right. And it’s better to own it all.”