Finally, an Orderly Transition : Frederick Becomes RCA Chief, This Time as Planned

From the Washington Post

They've changed the nameplates in RCA Corp.'s executive suite again. However, for the first time in years, it's not a rush job.

This time, the transition was an orderly one: President Robert R. Frederick, who recently was named chief executive of the $10.1-billion communications and electronics company, was handpicked and groomed for the position by his predecessor, Thornton F. Bradshaw.

That's quite a difference from the last three changes of power at RCA, which had put the executive suite nameplates on a revolving door.

Bradshaw's predecessor, Edgar H. Griffiths, was ousted by the company's board in 1981. Griffiths had been preceded six years earlier by Anthony Conrad, who was forced out after 10 months on the job when it was revealed that he had not filed income tax returns for five years.

Stability Regained

And Conrad had replaced Robert Sarnoff, son of the company's founder, who was eased out because of philosophical differences with the board of directors.

The smoothness of Frederick's ascent to the chief executive spot compared to the tumult of the three previous changes is a metaphor for the strength and stability RCA has regained under Bradshaw.

The RCA that Bradshaw took over seemed to be tumbling wildly out of control, bloated by seemingly senseless acquisitions and diversified far beyond its core technological strengths.

"The company had lost its way," Bradshaw said in a recent interview. "Somehow or another during the 1960s and '70s, other fields looked greener, and it went into some ill-advised diversification efforts. . . . It was an over-diversification, under any standards."

Bradshaw has spent the last four years reshaping and pruning RCA, selling off many of those odd diversifications, such as the CIT financial services division, a greeting-card company and a frozen-foods outfit, and put most of the rest of the offshoots on the block.

He also has strengthened the company's existing businesses, moving RCA back to the fore in consumer electronics and breathing new life into the NBC television and radio operation by stabilizing its topsy-turvy management situation and giving the network the time to regain its health.

NBC's prime-time television schedule, the most important part of the network, is now No. 2 in the ratings after a long time as a poor third to rivals CBS and ABC.

"I just have to be very grateful for what has happened," Bradshaw said. "The major objectives were completed."

The company that Frederick takes over is a throwback to the RCA of 10 years ago: a company built around a strong technological base, with extensive interests in broadcasting, military and private communications and consumer electronics equipment--all areas that its leaders believe will provide a base for strong future growth.

"Everything is built on electronics, or will be in the future, and everything is dependent on communications," Bradshaw said. "We hope that . . . the company has enough balance so that, when one part of the company is doing less well, another part will be strong."

"What you want is more of the same, but faster," Frederick said. "We've had three years of making progress. We've got a long way to go."

Indeed, some analysts question whether RCA can keep up with the tough competition in many of its chosen fields, especially in light of the beating it took in the 1970s and the scars left from Bradshaw's overhaul of the company in the past few years. But RCA's leaders believe that the changes have strengthened the company.

When Bradshaw took over RCA, the company, once one of America's most respected, was suffering from high debt, low morale and a bad reputation on Wall Street. "It was in a very bad way," Bradshaw said.

Sold Off Units

So Bradshaw began selling off his predecessors' prized diversification attempts. The biggest piece of the company he divested was CIT Financial, a financial-services business picked up by Griffiths in 1980 for $1.2 billion.

The $1.5 billion brought in by the sale of CIT revived RCA's financial flexibility, and, once a couple of smaller remaining subsidiaries are sold, RCA will have about $1.5 billion in cash for corporate operating needs as well as any future acquisitions.

Bradshaw's goal was to rebuild the company around its strong technological base. The company's research and development arm has long been one of the best in the nation, in a class with Bell Labs and General Electric Co.'s R&D; Center. Because its research and development expertise traditionally has been in communications and electronics, Bradshaw decided to make these the cores of the company, along with broadcasting.

The only division outside the core businesses that RCA is keeping is Hertz, which Bradshaw once wanted to sell but now believes the company should keep because of its strong No. 1 position in the car-rental industry, its handsome cash flow and its handy--and large--investment tax credits. "If you're going to have a company that doesn't fit, it might as well be Hertz," he said.

Frederick hopes to use the company's know-how to carve out major shares in new related businesses. For example, RCA's expertise in television picture tubes--it is the nation's leading maker of color televisions--could pave its way into the fast-growing computer-monitor field.

Similarly, RCA developments in television cameras could create a new line of products--high-quality cameras used for security and industrial surveillance.

Videodisc Debacle

The company also hopes that its technology will enable it to expand its already strong satellite communications and defense electronics businesses and that know-how from its defense work will spill over into commercial applications.

Frederick speaks of improving the "linkage" between RCA's R&D; laboratories and its marketing force to get technology to the marketplace faster.

But RCA knows the pitfalls of bringing new technology to market too quickly and of misreading consumer demand. It learned the hard way, through a debacle in videodisc players that finally resulted in a $175-million write-off last year.

Frederick, 59, a longtime General Electric executive before Bradshaw recruited him for RCA, is somewhat lower-key than the affable Bradshaw. But both men have similar management philosophies.

Frederick calls it a "participative" style of management. "When I say participative, I mean that no one person runs RCA. Nor should he or she," he said.

"Anybody who thinks they know enough about everything to make a major decision is dangerous." Similarly, Bradshaw says of his subordinates: "I don't tell them how to run their business, but I know how they run it."

Although he will retain the title of chairman, Bradshaw doesn't intend to have to tell Frederick how to run RCA. "My first and foremost job will be to get out from under his feet," he said.

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