Buffett Built Own Empire From Scratch : The Wizard Behind Scenes in ABC Deal

As news spread Monday that Capital Cities Communications Inc. was acquiring American Broadcasting Cos., a company more than twice its size, an unexpected name emerged at the center of the deal--though back a few steps from the footlights.

Warren Edward Buffett, an Omaha-based stock market wizard famous for writing uncommonly candid annual reports, was being described by those close to the deal as instrumental in making the merger come together.

Listed Among 400 Richest

Buffett, regularly listed by Forbes magazine as one of the 400 richest men in America, will put up more than $500 million in exchange for an 18% stake in the newly merged Cap Cities-ABC company and a seat on the board.

Buffett became involved, sources said, when he was approached by Capital Cities Chairman Thomas Murphy. Murphy, a longtime friend, wanted Buffett to help invest in the deal.

Buffett's office in Omaha refused to comment Monday on his participation in the merger.

Buffett, 54, is chairman of Berkshire Hathaway Inc., an Omaha company that originally was a textile company in Massachusetts when he acquired it in 1965.

Under Buffett, Berkshire began to act like an investment fund with major holdings in insurance and media, including Buffett's ownership of more than $100 million worth of the stock of Washington Post Co., where Buffett sits on the board.

Berkshire Hathaway has enjoyed a compound annual growth rate of 22% in the 19 years Buffett has controlled it.

The story has it that Buffett bought his first stock at age 11 and turned a profit. He launched a family investment firm at age 25, dissolving it in 1969 after increasing its value 30 times.

"He's a very astute buyer of stocks in media," said Anthony Hoffman, an entertainment industry analyst with the New York brokerage firm of Cralin & Co. "If 10 years ago you made it a practice to only invest in things he was investing in, you would be a wealthy person today."

Downplays Accomplishments

Among Buffett's most renowned accomplishments are his letters to shareholders contained in Berkshire's annual reports. He admits mistakes, tends to minimize his own accomplishments and has plenty to brag about.

"In retrospect," Buffett wrote in 1982, "our major accomplishment of the year was that a very large purchase to which we had firmly committed (fell through) for reasons totally beyond our control.

"Your company had a very good year in 1982," Buffett wrote that year. "Some of it was due to luck; some of it was due to good planning and management. We hope you enjoy the numbers and pictures."

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