(FORTUNE Magazine) – COUNTRY MUSIC used to be strictly truck-stop fare. Not today. You are just as likely to hear twanging at a Connecticut clambake or poolside in L.A. A group of young stars singing mainstream lyrics has caught the ear of mellowing baby- boomers and broadened country's appeal. Nobody is promoting the music more than the folks at Gaylord Entertainment in Nashville, which owns the venerable Grand Ole Opry and two country cable networks, plus cable systems and TV stations. Since going public in October 1991, Gaylord's stock has risen at a 72% annual rate. Operating cash flow, a key measure for companies with cable properties, has more than doubled over four years to an estimated $150 million for 1992. Gaylord relies on a simple strategy to get cash from the corn: Concentrate on the country franchise. Result: The company is now the top dog of country music. Gaylord, which is still 57% controlled by Oklahoma City billionaire Ed Gaylord, bought the 68-year-old Opry in 1983. Today about 800,000 fans a year make a pilgrimage to this country mecca. Although the Opry grossed only about $13 million last year, Mary Kukowski, a security analyst at First Boston, says you should ''think of Gaylord as a country music wheel with the Grand Ole Opry as the hub.'' Smack-dab next to the Opry in Nashville is one of the nation's largest and most profitable inns, the Opryland Hotel. Its 1,891 rooms have an occupancy rate of almost 90%, about 20 points higher than the national average. Other spokes in Gaylord's wheel include the Opryland theme park and a giant Mississippi River-style paddle boat. A country music publishing business with annual sales of $12 million completes the entertainment division, where operating cash flow is climbing 14% annually. The star of Gaylord's $170 million cable programming business is TNN (The Nashville Network). Operating income, which should hit $42 million this year, is growing 20% annually. Ad sales are increasing at the same pace. The network is also an ideal place to advertise the Opry, the hotel, and the theme park. Two years ago Gaylord bought 67% of MTV's country cousin -- CMT (Country Music Television). CMT features young swashbucklers like Grammy winner Garth Brooks, who draws in those all-important twentysomething viewers; lately CMT is running about even with MTV in prime-time ratings. By the end of 1994, Gaylord CEO E. W. ''Bud'' Wendell expects CMT to have 30 million subscribers, at which point the company will begin attracting bigger advertisers. Wendell says revenues could double, to $24 million. Gaylord recently launched CMT in Britain, where country music accounts for 8% of all record sales, vs. 13% in the U.S. ''There's no question country music can be exported,'' says analyst Edward Hatch of UBS Securities. ''It's a great way for Gaylord to expand the core business.'' The further the company strays from the country franchise, the less successful it is. Gaylord's four TV stations -- a mature business if ever there was one -- are not big moneymakers; in 1991 they earned just $8 million on $138 million in sales. As for the cable business, Gaylord loaded up on debt to buy it in 1989 at a pricey $2,600 per subscriber (about 35% more than today's cost). The public offering and the company's strong cash flow have trimmed debt to $310 million, about 1.5 times stockholders' equity. But Gaylord still has to amortize $50 million of goodwill and depreciation annually for five more years. Wendell says the company will tinker with its wheel during the next few years. It might expand the hotel by 300 to 500 rooms. It might increase its stake in the newly opened San Antonio Fiesta Texas theme park from 14% to 50%. Or it might sell off the closest thing it has to a sour note, the TV stations. Wendell wants to make sure Gaylord stays country to the core.

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