Premiere Radio Tuning In to New Ventures : Broadcasting: Sherman Oaks-based syndicator hopes to boost revenues by purchasing a station and presenting live shows.

Since it started five years ago, Premiere Radio Networks Inc. has become a profitable little venture by syndicating comedy and music countdown radio programs to stations around the country.

The Sherman Oaks company earned $1.16 million in 1992, up 33% from the year before, while its revenues rose 5% to $10.1 million. It is widely believed within the industry that Premiere is now the nation’s fifth-largest syndicator of radio programming behind ABC Radio Network, Westwood One, Unistar Radio Network and CBS Radio Networks.

But the market for the type of prerecorded programming that Premiere produces generates an industry total of only about $85 million in revenues a year, and the company’s chief executive, Steve Lehman, wants Premiere to reach $50 million in annual sales in five years.

So to grow, Premiere went public last April and used the cash to buy its first radio station. Now the company plans to launch a morning show by popular Nashville disc jockey Gerry House that it hopes to broadcast live, via satellite, on country music stations nationwide--sort of a country version of controversial radio personality Howard Stern, who proved that live radio need not be produced locally.

But as Premiere grows, Lehman might do well to remember Westwood One Inc., its much bigger rival.

Westwood One was also a success early on, but it had a few highly publicized fiascoes and is now a debt-heavy company that lost $24 million in 1992. The Culver City concern bought radio stations and networks for what critics say were inflated prices, and its failure with the Los Angeles radio station it calls Pirate Radio left it with egg on its face.

Will Premiere avoid the pitfalls that beset Westwood One?

Premiere’s Lehman, a former KIIS-FM disc jockey, says don’t touch that dial.

Lehman, 40, acknowledged that comparisons with Westwood One are inevitable. But he asserted: “We’ve been very calculated about growing this company. We’re creating things that are seen as cutting edge and not buying any big dinosaurs.”

Lehman founded Premiere in 1987 with a handful of other radio veterans, and the company quickly made its mark producing generic music “countdowns” that local stations edit into their own custom versions. The company is also known for its comedy programs that are tailored to country, rock, oldies and popular music formats.

Premiere produces 12 weekly shows that run on more than 1,100 stations around the country, as well as radio jingles and promotions. Instead of selling its programming for cash, Premiere is given advertising time, and then makes its money by selling the ad space. This barter system is common in the syndication market for prerecorded programming.

Renee Thomas, a spokeswoman for KZLA-FM, a local country music station, says Premiere’s programming is considered among the funniest in the business. After the last big Southern California earthquake, she recalled, Premiere’s “Earthquake Boogie” parody song turned into a big hit for the station. “We’ve dumped other comedy services in favor of Premiere.”

A couple other parody songs from Premiere: “Shopping at 7-Eleven” to the tune of “Stairway to Heaven,” and “Jeopardy” to the tune of “Yesterday.” Its comedy shows feature impressions of politicians and movie stars, gag “Celebrity Answering Machines” and commercial spoofs--like one for a fictional car called “Uranus.”

But to get bigger, Lehman said Premiere had to acquire stations. So earlier this month Premiere acquired a sleepy country music station in Denver for $3.55 million, and it is tinkering with the station’s format to appeal to a younger audience with fast-talking disc jockeys and music by hot young stars like Garth Brooks and Randy Travis. That way he hopes to win away listeners of Denver’s top-rated station, which has an older, more conservative country format.

Next, Premiere plans to use the Denver station to launch the Gerry House show into its first market outside Nashville. If successful, Premiere will have enough ammunition to market the show to stations that might otherwise balk at an unproven concept. Lehman said the costs of Premiere’s expansion will probably depress its earnings this year. But in the U.S. radio market there are nearly twice as many country music stations as any other type of format, so Premiere stands to score big in the long run if House is a hit.

Simon T, president of Beasley Broadcast Group in Naples, Fla., and a former Westwood One executive, said Premiere “is young, aggressive and on the cutting edge of what’s happening in radio. They found the guy in Nashville and grabbed him.”

But T also warned that radio is a volatile business, and “I’d caution them to look at other networks and the mistakes they’ve made as they grew.”

Case in point: Westwood One. Lehman says he knows that lesson and it’s that Westwood One’s flamboyant chairman Norman Pattiz became so mesmerized by the thought of becoming big that bad decisions were made.

Westwood One’s 1987 acquisition of the unprofitable NBC Radio Network for $50 million, for instance, is roundly considered the company’s biggest boondoggle. Nearly as bad was its $56-million acquisition of KQLZ-FM in Los Angeles in 1989, for which it hired New York disc jockey Scott Shannon as its morning star at a $1.5 million annual salary.

Pirate Radio, as it’s still known, got off to a good start, but its ratings soon faded and Shannon was fired two years into his 5-year contract. The station is now rumored to be up for sale.

By contrast, Premiere acquired KZDG-FM in Denver for $2 million less than its previous owner, former professional football player Willie Davis, paid for the station five years earlier.

Granted, Premiere is blessed with some luck in its timing. After all, Westwood One wasn’t the only company that grew rapidly in the 1980s, piled on debt and is now paying the price. For the past few years, the radio advertising market has been in a slump and prices for stations have declined as much as 50% in some markets.

“Premiere can avoid some of the Westwood One mistakes just by doing it today,” said Frank Kalil, a Tucson radio broker.

But Premiere has other advantages. The company has no long-term debt--it paid cash from the stock sale for the Denver station--it doesn’t pay big money for talent and isn’t forced to compensate stations for carrying its programming. Many other radio networks pay stations to run their shows, particularly those that produce news programs that radio stations are no longer required by federal regulations to carry.

Tom Taylor, managing editor of industry newsletter Inside Radio, said that Premiere’s expansion plan “makes a lot of sense.” Nationally syndicated live radio shows are the wave of the future, Taylor believes, and “every market where there’s a success story makes it easier to move on.”

Of course, there’s no guarantee that the Gerry House show will fly outside of Nashville. But Tom Bhiusano, general manager of Howard Stern’s flagship station, WXRK-FM in New York, said: “If the guy is talented enough, why not? Clearly as a concept, it’s proven it can work.”

Premiere isn’t the only radio network hoping to repeat the Howard Stern success. CBS Radio Networks, for instance, has taken its “Ron and Ron” morning team from its Tampa radio station into Orlando, and is planning to launch the show nationwide. “Syndication is a very difficult marketplace to be in,” said Bob Kipperman, CBS Radio’s vice president and general manager. “But there are windows of opportunity if you have the right on-air personality.”

On the air is where Lehman started his radio career while still a student at the University of Nevada. After graduating with a degree in communications, he did radio, advertising and music promotion work, then in 1980 returned to his native Los Angeles to produce radio programming. His first series was a soap opera spoof.

After stints at other Los Angeles radio stations and as sales manager for well-known disc jockey Jim Ladd’s nationally syndicated show, Lehman landed at KIIS. From 1984 to 1987, Lehman was the mid-day disc jockey.

While at KIIS, Lehman licensed the rights to the “National Lampoon” name and produced a radio show based on the magazine’s “True Facts” section featuring factual but unusual news items. He sold the concept to Mutual Broadcasting, but when Mutual was acquired by Westwood One in 1985, Lehman took the show back.

Lehman persuaded 250 stations to run “True Facts” in exchange for ad time, but he was down to his last $100 before he landed his first national advertiser. He later teamed with fellow KIIS disc jockey Tim Kelly to sell Kelly’s “plain wrap” music countdowns.

In January, 1987, Lehman founded Premiere along with Kelly, who is now executive vice president; Kraig Kitchin, a network radio veteran who is now vice president of sales, and Louise Palanker, Premiere’s creative director and a former writer for KIIS disc jockey Rick Dees. The company went public last April at $6 a share, raising $5.55 million in net proceeds. The stock currently trades at about $5 a share. Lehman’s 30% stake is worth about $4.5 million.

Not bad for a funny guy. But Lehman is serious when he says Premiere won’t be another Westwood One. “We don’t do things based on ego.”