Company Hoping to Build on Its History

Greystone Communications Inc. sells history-based television programming, but can it build a history-based retail empire?

The North Hollywood firm, a leading producer of cable-TV documentaries, has been selling its videos at a history-themed retail store near the battlefield at Gettysburg, Pa. It is planning to open a second Greystone American History Store this summer a few steps from the Alamo in San Antonio. Company executives see more such outlets--from Virginia’s Colonial Williamsburg to Hawaii’s Pearl Harbor--where streams of tourists eagerly revisit the past.

The privately held firm is diversifying in traditional Hollywood style--producing feature films and publishing books--and recently it moved into a suite of offices nearly triple the size of its old headquarters.

“People who had made the History Channel and the Discovery Channel popular [showed us] that when they went to a site like this they were interested in coming away with a video or a book [so] they could learn more about it,” said Greystone Chairman and Chief Executive Craig Haffner, a former program manager at KABC-TV in Los Angeles.

After producing the morning chat show “A.M./L.A.” for three years, Haffner went into TV documentaries in 1986 as a founding partner in Greystone, which produced the 26-episode syndicated “Secrets & Mysteries.” Viewers were already showing a taste for nonfiction TV, a genre that has boomed in the 1990s.

“The stigma started to fall away from the idea that documentaries had to be dry and boring and put people to sleep,” Haffner said.

Greystone quickly developed a knack for turning out low-cost but popular historical programs. It produced the series “The Real West” for A&E;, and then took aim at the war between the States in scores of episodes of “Civil War Journal” and later “The Unknown Civil War.”

The programs examined President Abraham Lincoln and Confederate Gen. Robert E. Lee and other well-known Civil War heroes and events. They eventually sifted through minutia about the storied 1863 Gettysburg battle, focusing on such things as underrated generals, a 15-year-old girl who got caught up in the fighting, even ghosts that locals claim are left behind.

The company’s videos make up a good deal of the inventory at the Greystone American History Store, which runs 18 VCRs showing samples, said store manager Bobby Housch. Shoppers can also access a database to look for information about ancestors who served in the war, Housch said.

The store draws about 130,000 shoppers annually--from the nearly 2 million Gettysburg visitors a year. Last year it registered a positive cash flow on sales in the high six-figures, said Greystone CFO and corporate counsel Frederick Brookwell. The store added to Greystone’s total revenue of just under $20 million in 1998, up from about $16 million in 1997, Brookwell said. He would not disclose profit figures.

The performance of the Gettysburg store prompted the decision to open the Alamo store, Haffner said. The mission where Texas separatists fought to the death against the Mexican army in 1836 attracts 2.5 million visitors a year. Greystone reasons that, as in Gettysburg, many tourists will recognize the company logo from cable-TV credits--for example, on the History Channel’s current series “Tales of the Gun”--and come in for a look.

There’s something to that strategy, even as e-commerce gains traction, said Mark Hardie, senior analyst at Cambridge, Mass.-based Forrester Research Inc.

“Traditional production companies [and] broadcasters are saying Web sites . . . have an audience for a couple of seconds and they click through,” Hardie said. “I’d argue that some of the real-world businesses still have as good a shot as anybody who’s been at it for a little while to create two-channel strategies.”

Yet entertainment-based retailing as a whole has been disappointing of late. Viacom in January shuttered a 15-store chain based on the Nickelodeon cable channel, while a story in Forbes last March reported that Walt Disney and Warner Bros. studio stores have been under-performing.

Another media player, Bethesda, Md.-based Discovery Communications Inc.--which operates the Discovery Channel and other major cable outlets--is reformulating an extensive retail operation acquired three years ago when it bought Nature Co.’s 117 specialty stores.

Some of those were closed and others remodeled into newly themed Discovery stores, which stock videos, books, educational items and toys, with an emphasis on science and natural history.

Discovery retail director Sheila Arnold said her division will open 18 new stores this year.

She also said the parent company has a thriving e-commerce position, although she would not disclose Internet sales figures.

Arnold acknowledged that the studio-store market seems crowded, but she expressed confidence in Discovery’s brand loyalty among consumers. “I think there’s an opportunity for us, in the position we’re in, to rise above the clutter . . . . There’s a ton of retailers out there right now and there is always an opportunity for someone to rise to the top of that.”

Greystone recently published its first book, the story of a little-known Civil War general, even as Discovery Communications is mapping out an aggressive publishing expansion of its own, forming partnerships with Random House, Penguin Putnam Inc., and the European-based Langensheidt Publishing Group.

Greystone also is planning diversification into feature films, including international co-productions, and in distribution of a festival film it completed last year, “Left Luggage.” It is also shopping for markets for a full-length animated children’s feature.

But Greystone’s core business remains nonfiction programming, with more than 100 hours of TV documentaries in various stages of production.

“There are [production] companies going under every year, and our feeling is that the survivors are going to be the people who find that when you run into a wall, you have to create a different direction,” Haffner said.

He picked up a copy of a trade paper and pointed out a full-page ad. “Look at this. It says TV, video, publishing, online, retail. It turns out that’s an ad for Discovery, but it describes us, too.”