Valley-Based Syndicator Wants to Make Waves : Radio: Premiere Radio Networks’ chief shrugs off a local rival’s run-in with red ink.

In the five years since its inception, Premiere Radio Networks Inc. has become a major syndicator of radio programming and a profitable venture, with more than $1 million in earnings last year.

Still, it’s a little company--$10 million in revenue--in a relatively tiny--$85 million a year--industry.

Steve Lehman, chief executive of the Sherman Oaks-based provider of comedy and music countdown programs, is thinking bigger: say, $50 million in revenue in the next five years.

To that end, Premiere, estimated to be the fifth-largest syndicator of radio programming, just bought Denver’s sleepy KZDG-FM country music station, and plans to launch a live morning show featuring popular Nashville disc jockey Gerry House--sort of a country version of controversial, syndicated radio personality Howard Stern.

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

Culver City-based 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.

Will Premiere avoid the pitfalls that beset Westwood One?

Don’t touch that dial, says Lehman, a 40-year-old former KIIS-FM disc jockey.

He 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. 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 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, then makes its money by selling the ad space, a system 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. “We’ve dumped other comedy services in favor of Premiere.”

Premiere’s successful growth depends largely on how Lehman does with the Denver station--a $3.5-million purchase financed with proceeds from a Premiere public offering last April.

Premiere is tinkering with the station’s format, adding fast-talking disc jockeys and music by hot, young stars such as Garth Brooks and Randy Travis to appeal to a younger audience.

The Denver station will also launch the Gerry House show in its first market outside Nashville, a test that will determine Premiere’s chances of signing up other stations.

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.”

Lehman says he knows well the lesson of Westwood One. Westwood One’s flamboyant chairman, Norman Pattiz, became so mesmerized by the thought of becoming big that he made bad decisions, Lehman says.

In contrast to the high prices Westwood One paid for properties, Premiere acquired KZDG for $2 million less than its previous owner, former professional football player Willie Davis, paid five years earlier.

Granted, Premiere is blessed with some luck in its timing. For the last few years, the radio advertising market has been in a slump and prices for stations in some markets have declined as much as 50%.

“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--notably no long-term debt.Tom Taylor, managing editor of the industry newsletter Inside Radio, said Premiere’s expansion plan “makes a lot of sense.” Nationally syndicated live radio shows are the wave of the future, he said.

Of course, there’s no guarantee that the Gerry House show will fly outside Nashville.

“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 pursuing a communications degree at the University of Nevada. Before landing at KIIS as a midday disc jockey from 1984 to 1987, he worked in radio advertising, promotion, production and sales.

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.

Lehman’s 30% stake in Premiere is now worth about $4.5 million.