Shareholders OK Merger of ABC Into Capital Cities
The $3.5-billion acquisition of American Broadcasting Cos. by Capital Cities Communications was approved by shareholders of both companies in separate meetings here Tuesday.
The deal still requires approval of the Federal Communications Commission, but that blessing is expected and officials predict that the new company, to be called Capital Cities-ABC, will be under way by early next year.
Capital Cities shareholders approved the proposal by a vote of 10,192,514 shares in favor, 4,976 against and 356,977 abstaining. At the ABC meeting, the vote was 23,000,109 in favor, 105,152 against and 2,489,029 abstaining.
Capital Cities Chairman and Chief Executive Thomas S. Murphy said the meeting was a “watershed” for the New York-based communications firm, which was founded 31 years ago by broadcaster Lowell Thomas and Frank M. Smith, his business partner. Across town, ABC Chairman Leonard H. Goldenson said the merger opens a “new chapter” in the history of nation’s No. 3 TV network.
Immediately following the meeting, ABC’s directors authorized company officials to purchase up to $300 million worth of ABC stock if necessary. The authorization is intended to ensure that the company’s stock price remains near its current level while FCC approvals are pending and thus remove the chance that another bidder will attempt a takeover.
To meet a FCC requirement limiting ownership of multiple media properties, the companies have proposed to divest four television stations, 13 radio stations, Capital Cities’ Red Bank, N.J., Register newspaper and Capital Cities’ cable-TV division. The radio stations proposed for divestiture include four in Los Angeles: KLAC-AM, KZLA-FM, KABC-AM and KLOS-FM.
Goldenson said he cannot predict how many ABC employees will lose their jobs in the merger or which company units will see the most layoffs.
In addition to its television and radio operations, ABC is involved in publishing, video enterprises and motion pictures. Capital Cities owns eight daily and 10 weekly newspapers as well as its radio and television stations and cable-TV operations.