Merger With GE Marks a Homecoming for RCA

Things were almost strangely quiet at RCA lately. Even as its fellow media conglomerates--most notably, ABC and CBS--were caught up in a merger craze, RCA remained independent with no takeover efforts in sight.

Even Forbes magazine felt compelled to ask in its most recent issue: “Why haven’t the sharks tried to swallow RCA or at least eat a piece of it?” Its conclusion: “Today, RCA is more likely to acquire than be acquired.”

Events didn’t turn out that way. General Electric Co., long rumored to be interested in RCA or CBS, finally made its move.

The merger marks a homecoming of sorts for both RCA and its chief executive. GE and Westinghouse created RCA’s predecessor company, Radio Corp. of America, in late 1919. And RCA’s chief executive, Robert R. Frederick, returns to General Electric, where he worked for 34 years. He started in its advertising department, where he extolled the virtues of its toasters, and rose to executive vice president for international operations.

And in RCA, General Electric gets a plum: a company that seems to have gotten its act together by sharpening its business focus, ending its legendary corporate turmoil, building a strong defense business and shoring up its prized network. NBC, which now leads in overall TV ratings with such hits as “The Cosby Show” and “Miami Vice,” turns in more than 40% of the RCA’s profit.

RCA today is a far different animal from what it was in 1981, when Thornton Bradshaw left his post as president of Los Angeles-based Atlantic Richfield to take operating control of a dissension-wracked RCA. Bradshaw became RCA’s fourth chief executive since 1975. Matters were so bad as early as 1976 that one director that year told another: “I’m beginning to think the RCA board is one I would be willing to pay not to be on.”

Directors removed Robert Sarnoff, son of the company’s founder, Gen. David Sarnoff, in 1975. Chief Executive Anthony L. Conrad , who had failed to file income tax returns for five years, resigned 10 months later. Successor Edgar Griffiths, known for his contentious personality, was forced out in 1981. The previous year, Griffiths himself had fired RCA’s No. 2 man and Jane Cahill Pfeiffer, chairman of NBC.

Sold CIT, Hertz

Griffiths began restructuring the company by selling off several businesses. But the divestiture campaign accelerated under Bradshaw. During Bradshaw’s tenure, eight large non-communications companies, including CIT Financial and Hertz, were sold, and the company’s sights were set firmly on electronics, communications and entertainment. He also fired NBC President Fred Silverman, under whom the network’s competitive position declined.

“The company had lost its way,” Bradshaw said in an interview early this year. “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.”

In part because of Bradshaw’s efforts--and consistent policies carried out by Frederick, who took over as chief executive this year--RCA’s stock price has more than tripled and its earnings have soared eightfold in the last five years. The company now more closely resembles what it was in its early days.

RCA was born in late 1919 as Radio Corp. of America, a child of Westinghouse and General Electric. Radio Corp. promptly acquired the assets of Marconi Wireless Telegraph Co. of America and jumped into the fledgling broadcast industry, selling radios and owning some of the nation’s first radio stations.

Famous Trademark

In 1926, National Broadcasting Co. was organized to handle the company’s radio broadcast operations. Three years later, through the purchase of Victor Talking Machine Co., Radio Corp. acquired its famous trademark--the white-and-black mutt named Nipper, who peers into the horn of a cylinder phonograph.

GE and Westinghouse divested Radio Corp. in 1930. The two firms also sold Radio Corp. some manufacturing facilities and rights.

Radio Corp. developed the first black-and-white television set in 1939 and began selling TVs commercially after World War II.

The company continued to grow over the years, becoming a major defense contractor in the 1950s and eventually expanding into such diverse areas as food production, greeting cards, book publishing, financial services and the rental car business.

But the wide diversification caught up with RCA, as the company later became known. By the 1970s, the mixture of unrelated, low-margin businesses was causing RCA to turn in year after year of below-average performances.

A MERGER OF TWO GIANTS RCA AT A GLANCE RCA operates five business segments: electronics (49% of sales), communications (4%), entertainment (30%), transportation (14%) and other (3%). The New York-based company has restructured significantly in recent years, selling its CIT Financial and Hertz operations. Its NBC television network has risen to No. 1 in the ratings and profits have jumped.

9 months ended Sept. 30 Year ended Dec. 31 1985 1984 1983 1982 1981 1980 Revenue Billions of dollars 6.4 10.1 9.0 8.2 8.0 8.0 Net income Millions of dollars 274.7 246.4 240.8 222.6 54.0 315.3

Assets: $4.2 billion Employees: 119,000 Shares Outstanding: 89.7 million 12 month stock price range (NYSE): $34.50-$63.50 Wednesday’s-close: $63.50 GENERAL ELECTRIC AT A GLANCE Based in Fairfield, Conn., the company is a diversified manufacturer of high-technology electrical and related products and has stakes in various service enterprises. Its businesses are involved in major appliances, power systems, aircraft engines and plastics products for the auto industry. It also owns GE Credit Corp., a major finance company, and an insurance company.

9 months ended Sept. 30 Year ended Dec. 31 1985 1984 1983 1982 1981 1980 Revenue Billions of dollars 19.6 27.9 26.8 26.5 27.2 24.9 Net income Millions of dollars 1.7 2.3 2.0 1.8 1.7 1.5

Assets: $24.7 billion Employees: 170,000 Shares outstanding: 455.4 million 12-month stock price range (NYSE): $53.00-$69.00 Wednesday-close: $67.875