New Chief’s Goal: Keeping Live on Track : Entertainment: Wayne Patterson will try to fill the shoes of Jose Menendez, the firm’s former chairman, who was murdered last year.

In April, when Wayne Patterson was appointed chairman of Live Entertainment Inc., the Van Nuys home video concern had been without a permanent leader for eight months.

Last August, Chairman Jose Menendez and his wife were murdered in their Beverly Hills home. It was a big loss for the company because Menendez, an aggressive but highly respected executive, had in three years built Live into a thriving force in the home video industry.

The chairman’s post had been temporarily filled by Peter Hoffman, president and chief executive of Carolco Pictures Inc., the independent production company--best known for the “Rambo” movies--that owns 48% of Live. But a permanent successor to Menendez was needed.

“It was important to get a leader, whether it was me or somebody else,” said Patterson, 44, former chairman of Pace Membership Warehouse Inc., which owns discount membership warehouse stores.

Patterson has no experience in the home video industry, but at Pace he showed he knew how to keep tight fiscal controls in place while a company was growing rapidly.

Those skills should come in handy at Live, where rapid expansion will force the company to make some changes in the way it is managed. For one thing, Patterson said, Live will focus on digesting some of its recent acquisitions.

Patterson, former managing director of Colorado operations for the accounting firm of Touche Ross, joined Pace in 1986. During his tenure, he took Pace from $600 million in sales to $2 billion, while selling everything from food to paper towels. More important, he returned the company to profitability. Pace was acquired by K mart Corp. last fall.

Patterson said his lack of experience in Hollywood won’t hold him back. “Clearly, I’m not an entertainment guru,” he said. “But I do know how to put in the right management processes, the right structures, the right control environment and the right reward systems.”

While the spotlight has focused on the sensational Menendez murders and the upcoming trial of their two sons on charges of shooting their parents, Live has quietly continued to follow Menendez’s blueprint for becoming a dominant player in the home video business. That involves obtaining video rights to feature films, then selling the videotapes in retail outlets as well as distributing them.

“Obviously Jose is terribly missed and his overall charisma and ability have been lost,” said David Lieberman, a Live director. “But the business really kept right on ticking and hardly missed a beat. His legacy is he put strong people in place.”

In 1989, Live’s earnings rose 11% to $19.4 million on a 24% increase in revenue--to $427.3 million. “Clearly, the right structures were put in place,” Patterson said.

Keith Benjamin, an analyst at Silberberg Rosenthal & Co., said the exploitation of the “Teenage Mutant Ninja Turtles” phenomenon is an example of Live’s shrewd strategy. So far, a Live subsidiary has sold 5 million home videos of the animated TV series, 7 million promotional videos and will release the video of the popular motion picture in the fourth quarter. The success of that video will pass through to Lieberman and to the retail operations, Benjamin said.

“Essentially, they’re making money every which way on ‘Teenage Mutant Ninja Turtles,’ ” he said.

Last year, Live launched its retail division with the acquisition in June of Strawberries Records, Tapes and CDs, a Northeastern chain of music and video shops. The overcrowded retail video business is dominated by large chains run by companies such as Blockbuster Entertainment.

So far, 1990 is shaping up as a good year for Live. First-quarter profit rose 16% to $1.8 million, while sales doubled from a year earlier.

Live has continued making acquisitions. In January, it added Navarre, a personal computer software distributor, and another East Coast chain of music and video stores, bringing the number of stores in the retail division to 125.

Live had its origins in Carolco’s 1986 acquisition of International Home Video (IVE), which buys video rights to motion pictures. Carolco recruited Menendez to run the company, which was later merged with Lieberman Enterprises, a supplier of videos and recorded music to mass merchandisers such as Wal-Mart and Sears. In 1988, Live was formed as the parent company of IVE and Lieberman.

Before Patterson’s arrival, Live arranged to make its first move into Europe with the purchase of a controlling interest in VCL Communications GmbH, a German home video company. That deal closed in May. Also, Patterson recently signed a deal to distribute children’s videos through a British firm, Abbey Family Home Entertainment.

Analysts say Live is well positioned to take advantage of an expanding market. While growth in the video rental business is slowing, sales of home videos--where Live is concentrating its efforts--will likely triple from 1989 levels to $6.2 billion by 1995, said Tom Adams. He is an analyst at Paul Kagan Associates, a Carmel-based entertainment research and consulting firm.

Video sales are expected to be helped by their growing availability in supermarkets, convenience stores and other nontraditional outlets.

Adams said Live is also increasing its market share in acquiring rights to home videos, a business dominated by big Hollywood studios such as Warner Bros. and Disney. “This year, they’ll clearly be the largest independent,” said Adams, adding that Live “may knock a few studios down.”

Live’s anticipated move up the ladder will be helped by key titles scheduled for video release this year, including Carolco’s “Total Recall” with Arnold Schwarzenegger and the “Teenage Mutant Ninja Turtles” film from New Line Cinema.

All of which hasn’t escaped the notice of investors. Live’s stock, which fell from a high of $25 a share before Menendez’s death to $13.375 last November, has recovered to $23.125.

Patterson acknowledged that “the strong performance of the company has nothing to do with my arrival.” But, he added, now that Live is on the verge of becoming a very large concern, the way the company is managed will have to change.

Patterson said Live’s focus in coming months will be on digesting newly acquired businesses--the company has more than $200 million in long-term debt.

However, talks are continuing between Live and Vestron, a home video company that is up for sale. Patterson is interested in Vestron’s catalogue of films, which could be sold on video.

But Patterson still has some things to worry about. Glenn Greene, president of Culver City-based Media Home Entertainment, which vies with IVE for the title of top independent home video company, said IVE’s success this year is due to a couple of hit videos. “It’ll be tough to keep it up,” he said.

Greene also questioned Live’s move into retail-store ownership. He suggested that Lieberman, which supplies about 3,000 mass merchandisers, might risk alienating its customers now that it also supplies some of Live’s stores.

But analyst Adams said Live has done a good job of limiting its risks--through its ties to Carolco and by developing relationships with other independent movie producers, such as Gladden Entertainment, Scotti Bros. Entertainment Industries and New Visions Pictures. Adams also argued that Live has hedged its bets through its diversification into the retail arena, because that business isn’t dependent on the success of IVE titles.

Live also has the video rights to some movies set to open in theaters in 1991, including “Air America” with Mel Gibson and Robert Downey Jr., a new Sylvester Stallone movie, “Terminator II” with Arnold Schwarzenegger and “The Doors,” an Oliver Stone film on the 1960s rock group.