Capital Cities and ABC Finalize Their Merger

Times Staff Writer

It was business as usual Friday at ABC except for one thing: The biggest broadcasting takeover to date became official as Capital Cities Communications and American Broadcasting began business together as Capital Cities/ABC Inc.

The new company--the result of Cap Cities’ $3.5-billion takeover of ABC--said it had filed a certificate of merger with New York officials and registration papers with the Securities and Exchange Commission in Washington. It marks the first time that one of the three major television networks has changed ownership. NBC is scheduled to change owners later this year when its parent firm, RCA, merges with General Electric.

Neither Thomas S. Murphy, formerly Cap Cities’ chairman and now chairman of the new company, or Leonard H. Goldenson, founder of ABC and formerly its chairman, commented Friday on completion of the merger, which was originally proposed last March. Goldenson now will serve as chairman of the executive committee.

Newly Streamlined

In preparing for its takeover by a company known for its lean, cost-conscious, decentralized style of management, ABC began last July to streamline itself when it said it would trim its work force by 3%. By year-end, it had laid off 350 employees and eliminated 250 other jobs with early retirement or by not filling vacancies.

ABC now has 12,500 employees and Cap Cities 7,500, spokesmen for both companies said.


Asked about the possibility of more cuts now that the merger has become final, a spokeswoman for the network said Friday that “nothing is planned at the moment.”

Despite the uncertainty over whether still more staff reductions are in store now that Cap Cities executives are in charge, there seems “no unease” or visible anxiety about that at the network, one high-ranking ABC source in New York said.

“There’s a bit of nostalgia, but no one’s come to me and said, ‘Am I still going to have a job?,’ ” the source said.

West Coast Visit Set

Another network source in Los Angeles also reported seeing no signs of jitters among ABC employees here, but wryly added, “We’ll get that on Jan. 13.”

That’s when, the source said, Cap City executives are scheduled to visit ABC’s West Coast operations, meet staff members and inspect the company’s facilities.

The takeover of ABC had been approved by stockholders of both companies in June. The Federal Communications Commission added its approval in November.

As part of the merger, Capital Cities/ABC sold four television stations and eight radio stations that the two companies owned in order to meet FCC rules that bar ownership of more than one media property in a market area.

The new company owns eight television stations, including KABC-TV in Los Angeles, and nine radio stations. It also has seven other radio outlets formerly owned by ABC, but it will have to sell them within 18 months under terms of a waiver granted by the FCC last year. Those include KABC-AM and KLOS-FM in Los Angeles.

The start of Capital Cities/ABC marks the end of an era for ABC, which was formed in 1953. In its early years, it scrambled with the equally weak DuMont network for affiliates not linked with the much-larger CBS and NBC.

While DuMont eventually folded, ABC hung in, slowly building up its station lineup and ratings and finally dominating the ratings in the mid-1970s with such sitcoms as “Happy Days” and “Laverne and Shirley.”

But with the onrush of revitalized NBC in 1984, ABC slumped last season to third place in the prime-time ratings. It is still third in the season-to-date prime-time ratings averages, which show NBC leading and CBS in second place.