The Welk Group, Inc.

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The Welk Group, Inc.

2700 Pennsylvania Avenue
Santa Monica, California 90404
U.S.A.
Telephone: (310) 829-9355
Fax: (310) 315-9306

Private Company
Incorporated: 1955 as Teleklew Productions, Inc.
Employees: 1,350 (est.)
Sales: $45.4 million (2005 est.)
NAIC: 721110 Hotels (Except Casino Hotels) and Motels; 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities; 531311 Residential Property Managers; 512220 Integrated Record Production/Distribution; 512120 Motion Picture and Video Distribution; 531120 Lessors of Nonresidential Buildings (Except Miniwarehouses)

The Welk Group, Inc., owns record companies, resorts, a film studio, and other real estate assets, and also syndicates reruns of The Lawrence Welk Show for television. Its divisions include Welk Music Group, which consists of Vanguard, Sugar Hill, and Ranwood Records; Welk Resort Group, which operates a hotel/theater facility in Branson, Missouri, and two resorts in Southern California; marketing firm Klew Media; and Welk Syndication. The company was founded by bandleader Lawrence Welk and is owned and managed by his heirs, including CEO and Chairman Lawrence (Larry) Welk, Jr.

RURAL ORIGINS

The Welk Group traces its beginnings to 1955, when bandleader Lawrence Welk founded a firm called Teleklew Productions, Inc. to produce his ABC television program and manage his business affairs. Born in 1903 near Strasburg, North Dakota, Welk was one of eight children of poor, German-speaking immigrants from the Alsace-Lorraine region between Germany and France. He quit school in the fourth grade to work full-time on the family farm, where in the evening his father taught him to play the pump organ and an old button accordion.

At 13 Welk began playing music at social events in the area, and his father later bought him an expensive professional accordion on the condition that he turn over his earnings from music and remain on the farm until he was 21. At 17 he formed The Biggest Little Band in America with a drummer, and at 21 he began playing around the upper Midwest while starting to learn English, having spoken only German at home. The following year he made his radio debut on WNAX in Yankton, South Dakota, where he began appearing regularly for no pay in exchange for the chance to promote his public appearances.

Welk was a natural entrepreneur, and when not performing he also tried his hand at several small businesses, including a burger stand with an accordion-shaped grill that served "squeezeburgers." Music was his first love, however, and in the late 1920s and early 1930s he toured the country with groups like the six-piece Lawrence Welk and His Hotsy-Totsy Boys, Lawrence Welk and His Honolulu Fruit Gum Orchestra, and Lawrence Welk and His Novelty Orchestra, whose music generally consisted of polkas and popular tunes of the day arranged for dancing.

While playing in Pittsburgh in 1938, Welk's ten-piece band became known as The Champagne Music Makers after a radio listener wrote in to say that his music had the bubbly quality of champagne. Capitalizing on the theme, he soon hired a full-time "Champagne Lady" vocalist, recorded tunes like "Bubbles in the Wine" for Vocalion Records and other labels, and later added an onstage bubble-making machine. Welk's growing success also led to appearances in several short films, beginning with Paramount's 1939 "Champagne Music of Lawrence Welk."

THE LAWRENCE WELK SHOW DEBUTS IN 1955

The mid-to late 1940s saw Welk continue to tour the United States from his adopted home of Chicago, at the same time that many of the big bands of the 1930s were fading away. In 1951 his manager secured an engagement at the Aragon Ballroom near Los Angeles, and he soon decided to settle in the area. Welk also began appearing on television locally via KTLA, and in 1955 he was offered a 13-week summer replacement show on the national ABC network. Though few thought it would generate much interest, the program was a surprise hit and was quickly added to the fall schedule. Major sponsors of the evening Saturday show included the makers of Dodge cars and Geritol, a vitamin and mineral supplement that promised increased vim and vigor. To manage his business affairs and answer his fan mail, Welk founded Teleklew Productions, Inc., whose name combined part of the word "television" with his own name spelled backwards. The bandleader would serve as its chairman and president.

Though critics derided his music as bland and lacking in spontaneity, many Americans (especially those who were older, from a rural background, and with lower income and education levels) were hungry for Welk's brand of clean-cut entertainment with a nostalgic and often patriotic touch, and his German-accented phrases "ah-one an' ah-two" and "wunnerful, wunnerful" soon became part of the vernacular. His hit show and the attendant record albums and personal appearances proved highly lucrative, and in 1956 Welk's gross income reached $3 million. The bandleader's popularity was such that he was asked to play at the inaugural ball of President Dwight D. Eisenhower the following January.

Having grown up in poverty, Welk knew the value of money and kept a tight rein on his finances. Despite his success, he paid all of his musicians union scale, though he did vest them in a profit-sharing plan after ten years' service. None had a contract, and each could be replaced if their ranking on the bandleader's "fever chart" slipped or if they caused controversy, as Champagne Lady Alice Lon did in 1959 by wearing a skirt cut too short to suit Welk. He reasoned that the performers' associations with him brought the potential for lucrative personal appearance and recording contracts, and many did remain a part of "the Welk family" for decades despite the low pay.

In 1957 Teleklew Productions spent a reported $200,000 to buy the Harry Von Tilzer music publishing company of New York. Welk would go on to buy many such firms, assembling a library of copyrights that brought him increasing amounts of royalty income. His own music recordings were also doing well, and he enjoyed a run of several dozen chart-making albums as well as a number one single in 1961 with "Calcutta."

KEY DATES

1955:: The Lawrence Welk Show debuts on ABC-TV; Teleklew Productions, Inc. formed.
1957:: Welk starts music publishing acquisitions with Harry Von Tilzer catalog.
1961:: Teleklew moves into new headquarters building in Santa Monica, California.
1964:: Acquisition of mobile home park and golf course near San Diego, California.
1970:: Welk acquires Jerome Kern song catalog for $3.2 million.
1971:: Lawrence Welk Plaza opens with 21-story office, 16-story apartment buildings.
1971:: ABC cancels Welk's TV show; successful 11-year syndication run begins.
1979:: Welk buys Ranwood Records.
1986:: Vanguard Records acquired.
1987:: Reruns of Welk's show begin airing on PBS.
1988:: Music publishing business sold for $25 million.
1992:: Lawrence Welk dies at 89; ownership of firm passes to his family.
1994:: Branson theater/hotel complex opens.
1998:: Sugar Hill Records acquired.
2004:: Welk Group buys movie production facility in L.A. for $10 million.

In addition to music publishing, Welk was also beginning to invest in real estate. In 1961 Teleklew Productions moved its offices to the top floor of the newly built six-story Lawrence Welk-Union Bank Building on Wilshire Boulevard in Santa Monica. In 1964 Welk bought a mobile home park for retirees in Escondito, California (near San Diego), which had 104 home sites, a nine-hole golf course, a clubhouse, and a small restaurant. Over the next several years he doubled the number of sites, expanded the restaurant and golf course, and added a hotel. Featured on one of his TV shows in 1965 and mentioned frequently thereafter, it became a tourist attraction in its own right, and its gift shop would do a strong trade in Welk souvenirs and recordings.

The 1960s also saw Welk's music publishing holdings expanded dramatically, with a total of 16 firms acquired by 1970 that held copyrights to 4,600 songs. That year Welk made his largest purchase to date, paying $3.2 million for the catalog of Jerome Kern, which included standards like "Smoke Gets in Your Eyes" and "Ol' Man River."

NEW BUILDINGS, TV SYNDICATION IN 1971

Welk's real estate empire was continuing to grow as well, and 1971 saw the completion of Lawrence Welk Plaza, a joint venture between Teleklew and architects/engineers Daniel, Mann, Johnson, & Mendenhall. The Santa Monica project consisted of the 16-story Champagne Towers apartment building, which boasted ocean views and a rooftop pool, and a 21-story office tower that would house the headquarters of both General Telephone and Teleklew. In addition to producing the TV show and overseeing Welk's music publishing and real estate operations, the firm also managed his and his band members' personal appearances and operated a marketing unit that sold products like "Lawrence Welk Musical Spoons." Welk himself had recently published the first of several books for Prentice-Hall, an autobiography cowritten with Bernice McGeehan called Wunnerful, Wunnerful.

In early 1971 the ABC television network, responding to pressure from advertisers seeking a younger demographic, announced that it would end the 16-year run of The Lawrence Welk Show in the fall. Though the program's ratings had declined, it was still frequently among the top 20 each week, and angry fans swamped the network with more than one million telegrams, letters, and phone calls. Buoyed by the support, Welk quickly lined up a group of stations to show the program in syndicated form, and it began to run on more than 180 outlets around North America. This number eventually topped 250, more than had carried it on ABC, and Welk reportedly earned more from its syndication than he had with the network.

In 1979 Welk began a $12 million upgrade to his mobile home park that would boost the number of units to 452, expand the hotel and restaurant, and add stores, a museum of memorabilia, and a new 300-seat dinner theater. Lawrence Welk Country Club Village was the second-most popular tourist attraction in Southern California after Disneyland, drawing more than 40,000 people each month.

Also in 1979 Welk purchased Ranwood Records, a Nashville-based label that had been founded in 1967 by Lawrence Welk, Jr., and Randy Wood. It recorded country, pop, and easy listening artists like Pete Fountain, The Mills Brothers, and Lawrence Welk himself.

In February 1982 Welk's syndicated television program taped its last new show and the 79-year-old bandleader officially retired. His son Lawrence "Larry" Welk, Jr., had already taken control of his business interests by this time.

In 1983 the company formed a joint partnership with Ira Pittleman to launch Heartland Music to sell records via direct marketing. One of Heartland's best-selling artists was a Romanian panflute virtuoso named Gheorghe Zamfir, whose recordings were hawked incessantly on late-night cable TV. During the mid-1980s his albums of sentimental standards (with titles dictated by Heartland) sold 750,000 copies.

In 1984 a new round of expansion was begun at Welk's Escondito property that included several hundred time-share condominiums, a second golf course, another theater, and more shopping. Over the next several years some 15,000 people would pay between $10,000 and $14,000 to own one of the condos for a week per year.

VANGUARD RECORDS ACQUIRED IN 1986

In 1986 Welk purchased the highly respected Vanguard Records, which had been founded in 1950 by brothers Seymour and Maynard Solomon. It was best known for folk music by artists like Pete Seeger and Joan Baez, but had also issued blues, rock, jazz, and classical recordings. Welk would reissue most of its catalog on the new compact disc format, as well as sell some recordings through Heartland Music.

In 1987 The Lawrence Welk Show found a new life on public television, where old episodes were aired with new "wraparound" segments featuring original cast members. The program's return was greeted enthusiastically by Welk's fans, and it soon became a regular weekend offering on many stations.

In 1988 Welk's music copyrights were sold to PolyGram International Music Publishing for a reported $25 million. The sale included some 27,000 copyrights that had originally been held by 103 different publishing houses. In 1990 the firm also sold Vanguard Records' classical music catalog back to Seymour Solomon, who had founded a new classical label called Omega.

The late 1980s and early 1990s saw the company, now known as the Welk Group, expand its time-share condominium offerings with a 162-unit converted hotel in Palm Springs called Lawrence Welk's Desert Oasis and a 58-unit joint venture in Hawaii called the Maui Schooner. The company's annual revenues were now estimated at $100 million.

In May of 1992 89-year-old Lawrence Welk died of pneumonia. He was survived by his wife of 61 years, Fern, two daughters, and son Larry, who would continue to run a business empire that had reportedly made his father the richest man in Hollywood after Bob Hope.

BRANSON RESORT OPENS IN 1994

In 1993 ground was broken on another new project, the $20 million Welk Resort Center in Branson, Missouri, which had recently become a prime destination for those seeking family-friendly entertainment. The facility would include a 160-room hotel, the 500-seat Stage Door Canteen restaurant, and the 2,300-seat Champagne Theater. Nearly two dozen members of Welk's television family, including accordionist Myron Floren, pianist Jo Ann Castle, and vocalists The Lennon Sisters, began appearing there in two daily shows after it opened in 1994, with outside acts later booked as well. That same year the Northridge earthquake in California caused structural damage to the firm's 16-story Champagne Towers apartment building, which was subsequently closed for repairs and later sold to the Irvine Company.

In 1995 the firm's Welk Music Group unit bought a children's record label, Music for Little People, but two years later it was sold back to founder Leib Ostrow. At the same time a 50 percent stake in Heartland Music was sold to Time-Life, Inc.

In 1998 the Welk Group acquired Sugar Hill Records, a 20-year-old label that was home to bluegrass and country artists like Doc Watson and Ricky Skaggs. After the purchase, label founder Barry Poss would continue to run it from Durham, North Carolina. The Sugar Hill acquisition took place as the firm was also beginning to reinvigorate Vanguard, which had primarily sold back-catalog material since being acquired. Now run by Larry Welk's son Kevin, 29, and with former Columbia Nashville executive Steve Buckingham handling artist development, a number of new performers were signed including Patty Larkin and John Hiatt. In future years Vanguard would add 1990s hitmakers Blues Traveler and Hootie and the Blowfish, while Sugar Hill found success with contemporary bluegrass group Nickel Creek. Both labels were distributed by sister unit Welk Music Distribution.

In 2001 the firm's resort unit started a four-year, $33 million project to add 200 more time-share condominiums and a 3,500-square-foot recreation center to its Escondito property. Two years later Heartland Music was purchased by Infinity Resources, Inc. In 2004 the company spent $10 million to buy the Barwick film production facility in Los Angeles, whose 5.4-acre lot included four sound stages. Renamed Welk Studios, it was leased to production services company Quixote Studios. Also in 2004 the company formed a partnership with SullivanShows called Welk-Sullivan Productions to manage and promote the firm's Branson resort.

In 2005 the Welk Group submitted a winning $2.5 million bid for 26 acres of coastal property a few miles north of Los Angeles. Before it could be developed, the company would face significant cleanup costs to remove toxic wastes that had accumulated during the site's use as a metal recycling plant. The year 2005 also marked the 50th anniversary of the network debut of The Lawrence Welk Show, reruns of which continued to be aired weekly by 277 public stations around the United States to an audience of some 2.5 million viewers.

Over 50 years The Welk Group, Inc. had evolved into a diverse organization that included real estate, music, television, and other interests. CEO Larry Welk, Jr., was following his father's business model of making prudent investments that had the potential for long-term growth, and the firm was solidly positioned for future profitability.

PRINCIPAL SUBSIDIARIES

Welk Resort Group; Welk Music Group; Welk Syndication; Welk Studios LP; Klew Media.

PRINCIPAL COMPETITORS

Marriott Vacation Club International; Cendant Corp.; Bluegreen Corp.; Rounder Records; Rebel Records; Red House Records; Herschend Family Entertainment Corp.; Syncor Entertainment, Inc.; Shoji Entertainment, Inc.; Moon River Enterprises, Inc.