Frugality Helps TV Company to Survive : Burbank: Having prospered with low-cost TV specials, Dick Clark Productions is still focusing on its elusive goal to diversify.

In the high-tech, over-spending, let’s-do-lunch world of TV, Dick Clark Productions is a pencil-pushing, brown-bagging conservative.

The company’s frugal strategy helped it survive the difficult television market of the last several years, when a dozen other small production firms went belly up.

“I’d like it to be the middle-sized survivor of independent companies,” said Clark, 63, talking fast in an overstuffed chair in a conference room decorated like an English pub. “The big companies get bigger and bigger, but there’ll always be a function for those of us this size that would be boutiques. It will never be a huge thing.”

Dick Clark’s bread-and-butter has been a series of low-cost awards programs that the company has produced over the past 20 years, including “The American Music Awards” and “The Annual Academy of Country Music Awards.” Last year its “American Bandstand 40th Anniversary Special” aired on the Fox Broadcasting Network.

Founded in 1957 to capitalize on deejay Dick Clark’s position as host of the “American Bandstand” television show, Clark’s company now has no long-term debt and $25 million in cash and marketable securities. “They have been ultra-conservative in a business in which that is a very rare trait,” said Jeffrey Logsdon, an analyst with Seidler Amdec Securities in Los Angeles. “These are guys who have made some nice money along the way and not taken big risks.”

But as the competition in TV syndication--Dick Clark Productions’ main business--intensifies, the Burbank-based company must deal with the flip side to its conservatism: big rewards require big risks.

While Dick Clark has established itself firmly as a producer of network specials, it has not come up with the kind of cash cow that a successful dramatic or comedic series would have produced. And its efforts to diversify into other businesses--such as a ‘50s-style restaurant chain with the “American Bandstand” theme--haven’t been successful yet.

That is partly reflected in the company’s stock. First sold to the public at $6.50 a share in 1987, it closed Monday at $4 per share. “It’s a bit of a disappointment,” said Francis La Maina, president of Dick Clark Productions.

In 1988 the company lost $2.4 million. It has been profitable each year since then, posting a record $3.1 million profit on $36.6 million in revenue for its fiscal year that ended on June 30.

What the company does best is produce lower-cost TV specials and awards programs. This focus helped the company survive the television slump of recent years, as cable and home video gained in popularity and left local stations and major television networks--traditional purchasers of series, syndicated programs and specials--with less money to spend.

At the same time, many independent producers and studios were paying wildly inflated costs to make situation comedies and dramatic programs. As a result, a number of producers and distributors--including Fries Entertainment, Quintex Entertainment and Heritage Entertainment--filed for bankruptcy protection.

La Maina avoids what he calls deficit-financed programs and sticks to those that cost so little that the company doesn’t have to borrow money to produce them.

So, Dick Clark has cut back on its plans to produce traditional situation comedies and dramatic series, saying that they are too costly to make, and instead is developing inexpensive, “reality-based” series. Like “Unsolved Mysteries” on NBC and “Cops” on Fox TV, these relatively less expensive news-style shows enabled some production companies to survive the downturn in TV.

Dick Clark made one reality-based program in fiscal 1992, “The World’s Biggest Lies,” a special that aired on the Fox Broadcasting Network.

“They’re sticking to their knitting, which has long been specials,” said Paul Bricault, an analyst with the entertainment securities firm Paul Kagan Associates. “It’s what they’re good at. And that helps generate a level of operational cash flow which keeps the company going. That’s the basis of the conservative philosophy.”

Currently, Dick Clark Productions is developing two situation comedies, for ABC and CBS, and three made-for-TV movies. Another film, “Elvis and the Colonel: The Untold Story,” is scheduled to air on NBC in January.

But with the exception of a blooper series and a variety show, Dick Clark has had little success developing major network series.

“We will continue to remain very serious about our television development because the rewards are so great,” La Maina said. “If you’re successful in developing a series for television, it can go on for a number of years and can be quite lucrative for the company.”

But it has been the company’s goal for a long time to diversify so more stable markets than television will be able to keep the firm going during fickle TV seasons.

So far, however, that has proved difficult.

In 1990, the company started what it still hopes will be a chain of rock ‘n’ roll-themed restaurants, inspired by Clark’s old “American Bandstand.” But the American Bandstand Grill restaurants have been a disappointment. The company has only two restaurants--in Miami and Kansas City--and as of June 30 they were losing money. Although La Maina said the restaurants are now profitable, and the company plans to open a new one near San Jose, the field is fiercely competitive.

Another diversification effort a few years ago was for Dick Clark Productions to become a distributor of other firms’ TV productions, but that plan has been abandoned.

Now Dick Clark is excited about getting into the cosmetics business--like the restaurants, a field where the company has no prior experience. The company is working on a plan to begin licensing and marketing skin care products, and Clark talks of marketing the products on cable TV.

The most stable new business in the company is corporate film production, which has long been considered more reliable than entertainment production.

Last year, Dick Clark’s industrial film and events unit was hired to produce 10 films and shows for conventions and annuals meetings. Clients include Sunkist orange growers, IBM and computer software companies such as Borland International.

For his efforts, Clark, who is chief executive, was paid $900,000 last year, and La Maina got $475,000. The company’s insiders--mostly Clark and La Maina--control 85% of the company’s stock, and it is too thinly traded, La Maina says, for the market price to be an indication of the company’s value.

Clark is a man who never expected to wind up in show business. Before “American Bandstand,” the rock ‘n’ roll television show that shot him to fame at 26, suddenly injecting him into the heart of the East Coast’s budding music industry, Clark was a business student at Syracuse University.

He worked his way through college as a disc jockey, took another job spinning records in Philadelphia to make ends meet after graduation, and wound up as the clean-cut host of a local TV dance show after its previous deejay was bumped for being too wild.

Clark said his conservative approach keeps the company a more secure place for his 60 full-time employees to work.

“We don’t owe anybody any money,” Clark said. “We have a certain amount of money in the bank. It doesn’t lead you to have to be cutthroat competitive. So we are very competitive outside, not inside.”

Dick Clark Productions at a Glance Dick Clark Productions is a Burbank-based entertainment production company. Founded in 1957 by then 26-year-old Richard W. (Dick) Clark to produce “American Bandstand” for ABC, the company now makes mostly television specials-including “The American Music Awards” and other awards programs. Clark took the company public in 1987, but its stock is now trading below its $6.50 per share offering price. In 1988, the company posted a loss of $2.4 million, but it has been profitble each year since then. Source: Company reports