New KZLA Owner Rises Up the Charts.

Bucking a weakened advertising environment and a market reluctant to embrace country music, Emmis Communications Corp. has engineered a surprising turnaround at its recently acquired KZLA-FM 93.9. And the ascension of the station has encouraged the Indianapolis-based media company to look for more radio properties in Southern California.

"The upside we can create with KZLA is remarkable," said Jeff Smulyan, chief executive at Indianapolis-based Emmis. "It was ranked 22nd when we bought it, and today it's 11th. KZLA has passed nine radio stations that out-billed us by an average of $12 million."

Since Emmis acquired KZLA in November in a four-for-one station swap with Bonneville International Corp., management has made a number of changes to the station's format. In January, it also hired former KABC-AM 790 talk show host Peter Tilden as its morning-drive host.

"A refocused playlist, adding Peter Tilden in the mornings and a lot of marketing have helped us increase our share of the audience," Smulyan said. "You have to remember that Los Angeles has never really been a hotbed for country music, but that's changing."

Steve Lee. KZLA's marketing director, said the station dropped old-timers like Mac Davis, Johnny Cash and the Eagles from its play list in favor of more contemporary performers like Tim McGraw, the Dixie Chicks, Shania Twain and Faith Hill.

The moves have made KZLA the nation's hottest country station, according to Arbitron Inc. The winter 2001 Arbitron Ratings, which were released in April, found that KZLA is the most listened-to country station in the United States, with more than 760,000 people tuning in each week.

That, in turn, has had a direct impact on the bottom line.

"KZLA has made a big effort to change, which has helped them attract advertisers," said Amy Nizich, executive vice president at Initiative Media North America, a media buying company. "Also from book to book they are trending up, and advertisers want to buy stations that are trending up."

The company's other Los Angeles station, KPWR-FM 105.9, is ranked fifth overall in the market and billed about $40 million last year. R.J. Curtis, KZLA's program director, expects the country station to eventually catch up with Power 106 in total billings.

"We feel pretty good about what we are doing with our stations," he said. "We would eventually like to own a total of five stations in Los Angeles."

Emmis owns 23 radio stations in some of the nation's largest media markets, including Los Angeles, New York and Chicago. The company also owns 15 television stations, Los Angeles Magazine and other magazines.

Any expansion, however, may not come for some time. Emmis is expected to announce its first quarter earnings on June 26, and Lehman Brothers analyst William Meyers said he projected a loss of 25 cents per share for the period, attributed largely to costs associated with expansion and a weak advertising market.

"When it comes to expanding, media companies are being a little more cautious given the economic environment," said Meyers. "I don't expect the company to announce any deals before the economic conditions begin to recover in the second half of the year."

For now, KZLA's new focus has helped its ratings increase in every targeted demographic. With adults 25 to 54, the station has enjoyed a 7 percent increase, according to Arbitron. Women 25 to 54 increased 9 percent, while men in 25 to 54 increased by a modest 4 percent.

"I also think it shows that the country audience in Southern California is a viable one," said Curtis, "and with consistent aggressive marketing and attention to our product, we can continue to grow the country brand in Los Angeles and Orange counties."

Emmis Communications Corp.

Emmis' shares have not fluctuated significantly. Business: Diversified media company

Headquarters: Indianapolis, Ind.

CEO: Jeff Smulyan

Market Cap: $1.48 billion

Dividend Yield: N/A [*]

Total Liabilities: $1.6 billion

P/E Ratio: 336.6

Long-Term Debt: $1.3 billion

(*.) Emmis Communications does not pay dividends