Gaylord Entertainment Company Business Information, Profile, and History

Company Perspectives:

Our vision is to provide a broad array of entertainment and hospitality vehicles, products, and services that create a positive difference in the lives of the people we serve. We will do this by integrating existing entertainment and hospitality businesses and acquiring and building businesses that can help make this vision become a reality.

History of Gaylord Entertainment Company

Gaylord Entertainment Company is a diversified entertainment and communications company whose holdings include the Grand Ole Opry, the Opryland Hotel, and Opry Mills, a massive retail and entertainment center in Nashville, Tennessee. Gaylord Entertainment also owns three Nashville radio stations and controls Christian web sites Musicforce.com and Lightsource.com.

Origins

The Gaylord and Dickinson families began what would become the Gaylord Entertainment Company in the Oklahoma Territory in 1903--Oklahoma would not become a part of the Union until 1907. The company was created as a newspaper publishing business to capitalize on the increasing demand for news in the burgeoning region. The two families incorporated the business in 1925 as the Oklahoma Publishing Company.

Realizing the future potential of radio, which was still in its infancy during the early 1920s, the Gaylords and Dickinsons branched out into the broadcasting industry in 1928 with the purchase of WKY-AM, a station in Oklahoma City. WKY, which started broadcasting in 1920, was the first radio station to operate west of the Mississippi and is the second oldest station in the United States. Shortly after Oklahoma Publishing bought it, WKY gained stature as a 'beacon of hope' in the Oklahoma Dust Bowl during the Great Depression. Interestingly, another radio station of import to Oklahoma Publishing's future was getting its start in the mid-1920s: WSM-AM, of Nashville, began broadcasting in 1925. It was WSM's announcer, George D. Hay, that gave birth to the renowned Grand Ole Opry with his country music radio show.

Under the direction of cofounder Edward King Gaylord, Oklahoma Publishing Company prospered during the early and mid-1900s with its radio and publishing operations. Beginning in the late 1940s, the company made a seemingly natural progression into the television broadcasting industry. In fact, television became a primary focus of the company during the 1950s and 1960s. Gaylord snapped up several stations, including KTVT in Dallas, WVTV in Milwaukee, Houston's KHTV, and KSTW in Seattle; at one point, the company was operating seven stations. Oklahoma Publishing Company's television and radio operations were organized under its wholly owned Gaylord Broadcasting subsidiary.

By the early 1970s, Oklahoma Publishing Company was a multimillion-dollar mini-conglomerate primarily comprising radio, television, and newspaper companies. Because the company was privately owned by the Gaylord family, financial and operating data was generally not made available to the public. Furthermore, the Gaylords led relatively private lives and had a reputation for keeping a firm grip on the company. Amazingly, Edward King Gaylord, who had helped start the company in 1903 at the age of 32, was still actively managing the company in the early 1970s. Edward King died in 1974 at the age of 101. His son, Edward L., became chief executive. An Oklahoma billionaire, Edward was described in the media as rich, ultra-conservative, and reclusive.

Acquisition of the Grand Ole Opry in 1983

Gaylord continued to successfully oversee the publishing and broadcasting business founded by his father. The company still owned its original radio station and newspapers and had added another television station the year of Edward King's death. But Gaylord also tried branching out into several new ventures. In the mid-1980s, for example, he made an unsuccessful bid to purchase the Texas Rangers baseball organization--because of his disdain for reporters, Gaylord had his Oklahoma newspapers carry stories (about the failed acquisition) from a Dallas newspaper. The business foray that would bring Gaylord the greatest amount of success and would thrust his company into the national spotlight was his 1983 purchase of Nashville-based Grand Ole Opry and the Opryland Hotel.

Opryland was the culmination of over 50 years of the Grand Ole Opry, which began in WSM-AM radio. Although the Opry was dealt a nearly lethal blow by the popularity of television and rock music during the 1950s, by the mid-1960s the show was regaining its appeal to a mainstream audience. By the late 1960s, in fact, interest in the Opry was surging to such an extent that WSM Inc., its owner, elected to build a new complex to replace the decaying Ryman Auditorium. It also wanted to capitalize on the Opry's popularity by offering related tourist attractions. WSM purchased a 406-acre site and broke ground on an Opry theme park in 1970. The theme park, a musical show park that emphasized live country music, opened in 1972. Two years later, the Grand Ole Opry moved into its new home not far from the theme park. In 1977, moreover, WSM opened the Opryland Hotel to accommodate a growing supply of tourists.

Opryland's vigorous expansion during the late 1970s and early 1980s caught the eye of Gaylord, who viewed the Opry's broadcasting and entertainment operations as a comfortable fit with Gaylord Broadcasting. When WSM's parent corporation went hunting for a buyer for the Opry complex, Gaylord made himself available. In September 1983, Gaylord purchased the Opry properties for $250 million; the transaction would later be called one of the entertainment industry's better bargains. Gaylord renamed the complex Opryland USA. He also maintained the savvy management team that directs the enterprise and develops a strategy designed to help the Opry exploit the rising popularity of country music. Although Nashville locals feared that Dallas-based Gaylord Broadcasting might start selling off Opry properties, Gaylord soon allayed their worries.

Gaylord assumed a minimal role in the management of Opryland, choosing to leave E.W. 'Bud' Wendell in charge of the complex. Wendell had started out selling insurance for WSM's parent corporation. After a series of transfers and promotions, the 56-year-old Wendell found himself in charge of WSM's Grand Ole Opry in the late 1960s. Wendell served as general manager of the complex during its development and was promoted to president of WSM in 1978. He began reporting to Gaylord after the 1983 acquisition. In addition to Wendell, several other executives that had helped build the enterprise were retained by Gaylord. For example, Tom Griscom, who had been with WSM since 1950, remained as head of the Opry's broadcast operations. Hal Durham, a 20-year Opry veteran, retained his role as manager of the Grand Ole Opry, and Julio Pierpaili remained manager of the Opryland theme park.

Two figures instrumental in the early success of the important Opryland Hotel also stayed with Opryland. Mike Dimond and Jack Vaughn had left coveted positions in the mid-1970s to join the Opryland team and to try to position the complex as a heavyweight convention and tourism center. Vaughn abandoned his leadership spot at the Century Plaza in Los Angeles and Dimond left a good job at Hyatt. Those two, like many of their co-managers at the Opry complex, had put their reputations on the line in an effort to build what they viewed as an innovative and promising venture. 'Most people thought [Dimond] was crazy to leave such a stable background with Hyatt to come to Nashville and build a hotel in a cow pasture,' said Jerry Wayne, vice-president of marketing at the hotel in an October 1993 issue of Nashville Business Journal.

The Opryland Hotel achieved a healthy 78 percent occupancy rate during its first year of operation and grew at a rapid pace during the 1980s. One of Vaughn's and Dimond's savviest moves after the Gaylord acquisition was the creation of the Country Christmas, which brought country music stars in for a special, seasonal event. That program boosted December hotel occupancy, which had historically lagged at 30 percent, to more than 90 percent. As a result of growth, the hotel continued to add new rooms and expand related facilities. Indeed, although it was originally planned to be a 250-room complex, the Opryland Hotel ballooned in size during the 1980s and early 1990s to almost 2,000 rooms, making it one of the largest and most successful hotels in the world.

The success of the Opryland Hotel was as much a reflection of the overall growth of Opryland USA as it was the ability of its managers. Indeed, as Gaylord beefed up the Opryland complex and stepped up promotional activities, attendance at the Grand Ole Opry and the theme park mushroomed. In addition, Gaylord began extending Opryland's reach in several other directions in an effort to build an entire Opryland enterprise founded on country music. In 1983, Gaylord started beaming The Nashville Network (TNN), an advertiser-supported cable television network featuring country lifestyles and entertainment. By 1993, TNN was reaching a whopping 59.2 million American households and generating sales of nearly $200 million. In 1985, moreover, Gaylord opened the 1,200 passenger General Jackson riverboat, the largest paddlewheel showboat in the world.

Gaylord's success in Nashville prompted him to focus his organization's efforts on Opryland during the late 1980s. Nevertheless, his television operations boosted income during that period. In fact, Gaylord was able to unload one of his television stations in 1987 for a high $365 million. He even saved $100 million in taxes on the deal by selling it to a minority-owned company. An unfortunate corollary of that tax break was that he had to roll the proceeds over into a media-related purchase within two years. Gaylord beat the deadline by acquiring a California cable television company for a pricey $418 million.

Expansion in the 1990s

In 1990, Gaylord Broadcasting and its subsidiaries garnered $512 million in sales. However, only $6.5 million of that amount was netted as income, largely because of the heavy debt load incurred by Gaylord when he purchased the lagging cable division. The debt was burdening his balance sheet and eating away at his profits. Lowering Gaylord's $550 million in debt, among other objectives, prompted the media mogul to take his company public in October 1991. Although he sold 22 percent of the equity in his company, he kept more than 60 percent and structured the offering in such a way that he retained voting control of the company. Oklahoma Publishing Company remained a separate company, but all of its broadcasting and entertainment holdings were folded into a new holding company, Gaylord Entertainment Company. The entity's headquarters were moved closer to its base of profits, Nashville.

Gaylord's stock offering in 1991 drew skepticism from some stock brokers who viewed the company as a large, marginally profitable concern dominated by an aging, out-of-step executive. 'This company does a lot of revenues and doesn't make much money,' exclaimed a Nashville stock broker in the October 14, 1991, issue of Nashville Business Journal, 'I will not spend a lot of time cruising through that prospectus.' Other analysts predicted that the move signaled the likely exit of Gaylord and his family from ownership of the company.

Despite some negative speculation about Gaylord Entertainment's stock sale, Gaylord continued to focus on bolstering the company's strength in country-related enterprises. In 1991 the company purchased a controlling interest in Country Music Television (CMT), a cable television station similar to TNN but geared toward country music videos. In 1992, Gaylord went international with CMT Europe, which offered the network's videos to viewers primarily in the United Kingdom and Scandinavia. By 1993, CMT Europe was also reaching viewers in Czechoslovakia, Poland, and Slovenia, among other nations. The company also initiated several major expansion projects related to its hotel and theme park and announced plans to renovate the old Ryman Auditorium.

To the dismay of Gaylord's detractors, Opryland management's aggressive, long-term growth efforts during the 1980s and early 1990s began to bear fruit. Gaylord's sales rose to $524 million in 1991 before jumping eight percent in 1992 to $564 million. Furthermore, 1992 net income gushed to nearly $30 million and Gaylord's total long-term debt tumbled to a manageable $300 million. Gaylord's performance in 1993 accelerated--sales bolted to $622 million and net income topped $27 million. By the end of 1993, Gaylord Entertainment had become a diversified media and entertainment conglomerate that was on the road to becoming virtually dominant in the country music industry.

As he prepared to lead his company into the mid-1990s, the 72-year-old Gaylord showed no signs of slowing down. Gaylord maintained an active management and ownership role going into 1994. Wendell restructured the company in 1993 to prepare it for more aggressive expansion, separating the company into four divisions: attraction, communications, music, and production. In addition, the company embarked on a number of new ventures that complemented its country music core. In 1994, Gaylord opened Wildhorse Saloon, a nightclub, restaurant, and television production studio. Gaylord hoped to expand the club internationally. It also initiated several other undertakings, including golf courses, river taxis, new convention facilities, and sports programming.

The latter half of the 1990s saw Gaylord Entertainment continue to pursue new business opportunities and development projects. The last years of the decade also saw Gaylord Entertainment abandon some existing businesses, including the closure of one of the company's signature properties. A $175 million expansion of the Opryland Hotel--the third major expansion in the hotel's 18-year history--was completed in mid-1996. The addition, a skylighted area covering 4.5 acres known as The Delta, made the Opryland Hotel the seventh largest hotel in the country and the largest, in term of number of rooms, outside Las Vegas. In 1997--a busy year for the company--Gaylord Entertainment appointed a new chief executive officer, company veteran Terry London, who had previously served as chief financial officer. The change in leadership marked the end of Wendell's 19-year tenure as the company's leader and the beginning of strategic changes that altered the composition of Gaylord's holdings.

Before Wendell's retirement, Gaylord Entertainment began to carve a niche for itself in Christian-related businesses. In January 1997, the company acquired Word Entertainment, a Christian music label. Two years later, the company pursued the same angle under London's leadership, purchasing 51 percent of the Christian music web site Musicforce.com. Concurrently, Musicforce.com acquired 100 percent of Lightsource.com, a Christian-content provider for the spiritual channel of broadcast.com. Gaylord Entertainment's online activities were subsequently organized into a new division called GETdigitalmedia, a venture that was expected to generate $20 million in revenue in 2000.

As the company developed its presence as an online Christian content provider, it severed its ties to several other businesses. Cable networks TNN and CMT were sold to Westinghouse Corp.'s CBS Cable unit in October 1997, but the biggest news of the year was the announcement that Gaylord Entertainment had decided to close the Opryland Themepark. Citing declining revenues and attendance, the company closed the park on the last day of 1997, deciding to invest its resources instead in a massive retail complex called Opry Mills. After teaming up with Arlington, Virginia-based The Mills Corp., Gaylord Entertainment broke ground on the Opry Mills project in October 1998, a $200 million, 1.2-million-square-foot retail and entertainment complex. On the site where the park once stood, Opry Mills opened in May 2000. The sprawling mall was expected to draw 17 million visitors annually to Nashville, compared to the two million visitors the theme park attracted in 1997.

As Gaylord Entertainment geared itself for the first years of the 21st century, construction crews were busy erecting vital components of the company's future. In late 1998, Gaylord Entertainment announced two new hotel-development projects, a 1,500-room Opryland Hotel in Grapevine, Texas, and a 1,400-room Opryland Hotel in Osceola County, near Orlando, Florida. The Texas and Florida Opryland Hotels, scheduled to open in 2003 and 2002, respectively, were the first of between five and seven hotels the company planned to establish in the future. While construction was underway at the two sites, the company announced plans for the $500 million Opryland Hotel Potomac, a 2,000-room hotel and convention center slated to be a prominent feature of National Harbor, a 543-acre site in Maryland's Prince George's Country. Construction was scheduled to begin in 2002 for a grand opening in 2004.

Principal Subsidiaries: Opryland USA ; Acuff-Rose Music Inc.; Blanton Harrell Entertainment; General Jackson Showboat; New Gaylord Entertainment Co.; Opryland Productions Inc.; WSM Inc.; Opry Mills.

Principal Divisions: Gaylord Broadcasting Division; Gaylord Cable Networks Division; Gaylord Digital Division (GETdigitalmedia); Gaylord Entertainment Division; Syndicom Entertainment Group.

Principal Competitors: Integrity Incorporated; Viacom Inc.; The Walt Disney Company.

Chronology

• Key Dates:

• 1903: The Gaylord and Dickinson families enter the newspaper publishing business.
• 1925: The two families incorporate their venture as Oklahoma Publishing Company; WSM radio begins broadcasting the 'WSM Barn Dance.'
• 1928: 'Barn Dance' is renamed Grand Ole Opry.
• 1972: Opryland Themepark opens.
• 1977: Opryland Hotel opens.
• 1983: Gaylord purchases Grand Ole Opry and the Opryland Hotel for $250 million; the Nashville Network is launched.
• 1985: Acuff-Rose Music Publishing is acquired.
• 1991: Country Music Television is acquired.
• 1997: Opryland Theme Park closes and The Nashville Network and Country Music Television are merged with CBS.
• 2000: Opry Mills celebrates grand opening.