Capital Cities Communications

Capital Cities Communications (sometimes referred to as "CapCities") was an American media company best known for its surprise purchase of the much larger American Broadcasting Company in 1985. It became Capital Cities/ABC, Inc. Its successor is Disney-ABC Television Group, a unit of the Walt Disney Company, which purchased CapCities in 1996.

History

Capital Cities' origins traced earlier as 1946, when Hyman Rosenblum, a local Albany businessman, founded Hudson Valley Broadcasting Company. He was also instrumental in help co-founding Hudson Valley Community College in Troy several years later. The company was incorporated on April 5, 1946.^[1] when the company received a license for WROW radio in Albany, New York. In October 1953, it opened the Albany-Schenectady-Troy area's second television station, WROW-TV on channel 41. In the late fall of 1954, a group of New York City-based investors, led by legendary radio broadcaster and author Lowell Thomas, bought majority control of Hudson Valley Broadcasting. Thomas' manager/investing partner, Frank Smith became the President of the company.

Capital Cities

In 1956, WROW-TV moved from channel 41 to channel 10 and became WCDA. In 1957, Hudson Valley Broadcasting merged with Durham Broadcasting Enterprises, the owners of WTVD television in Durham, North Carolina.^[2] The new company took the name Capital Cities Television Corporation effective November 8, 1957,^[1] as both WCDA (now WTEN) and WTVD served the capital regions of their respective states. Capital Cities then began purchasing stations, starting with WPRO-AM-FM-TV in Providence, Rhode Island (another capital city) in 1959.^[3]

On December 23, 1959, the company's name was changed to Capital Cities Broadcasting.^[1] During the 1960s, Capital Cities' holdings grew with the separate 1961 purchases of WPAT-AM-FM in Paterson, New Jersey, and WKBW radio and WKBW-TV in Buffalo, New York;^[4] and of the Goodwill Stations, which included WJR-AM-FM in Detroit, WJRT-TV in Flint, Michigan, and WSAZ-AM-TV in Huntington, West Virginia, in 1964.^[5] CapCities entered the Los Angeles market in 1966 with its purchase of KPOL (later KZLA) and KPOL-FM (later KZLA-FM and now KXOS).^[6]

As a result of the Goodwill Stations purchase, and to adhere to Federal Communications Commission rules limiting ownership of VHF television stations to five per company, Capital Cities spun off WJRT-TV to Poole Broadcasting, a company owned by former CapCities shareholder John B. Poole.^[7] Poole Broadcasting would later purchase two other television stations from CapCities: the second was WPRO-TV (now WPRI-TV) in 1967, coinciding with CapCities' purchase of KTRK-TV in Houston from the Houston Chronicle in June of that year.^[8][9]

In 1968, Capital Cities entered the publishing business by acquiring Fairchild Publications, publisher of several magazines including Women's Wear Daily.^[10] The following year the firm purchased its first newspaper, The Oakland Press of Pontiac, Michigan.

The following year, the company made another big purchase—acquiring WFIL-AM-FM-TV in Philadelphia, WNHC-AM-FM-TV in New Haven, Connecticut, and KFRE-AM-FM-TV in Fresno, California from Triangle Publications.^[11][12] Capital Cities would immediately sell the radio stations to new owners, and changed the television stations' calls to WPVI-TV, WTNH-TV, and KFSN-TV respectively. The acquisition of WPVI and WTNH gave them seven VHF stations, two stations over the FCC limit, and WTEN and WSAZ-TV were respectively spun off by CapCities to Poole Broadcasting and Lee Enterprises not long after the Triangle purchase was finalized.^[13][14] WSAZ radio in Huntington was divested to Stoner Broadcasting (it is now WRVC), also as a result of the Triangle deal.^[15] To reflect the diversity of their holdings, the company changed its name to Capital Cities Communications on May 4, 1973.^[1]

In 1974, Capital Cities bought WBAP and KSCS-FM in Fort Worth, Texas, along with its purchase of the Fort Worth Star-Telegram.^[16] The firm also increased its newspaper and publishing holdings during the middle-1970s. In 1974, Capital Cities acquired the Oregon-based Jackson Newspapers chain, which included the Albany Democrat-Herald, the Ashland Daily Tidings, and several other local newspapers and magazines. The Kansas City (Missouri) Star was acquired in 1977, and the following year CapCities bought The Times Leader of Wilkes-Barre, Pennsylvania.

In 1977, the company filed a lawsuit against the Canadian Radio-television and Telecommunications Commission over the simultaneous substitution rules (more can be found here).

Returning to broadcasting, WBIE-FM (now WKHX-FM) in Marietta, Georgia, was bought in 1981.^[17] WROW radio in Albany, the company's first station, and its FM counterpart (which is now WYJB) were sold in 1983,^[18] and in 1984 the company made its last pre-ABC-merger purchases with independent television station WFTS in Tampa, Florida^[19] and KLAC radio in Los Angeles (concurrent with the sale of KZLA).^[20]

Capital Cities/ABC

Capital Cities' announced $3.5 billion purchase of ABC on March 18, 1985, stunned the media industry, as ABC was some four times bigger than Capital Cities was at the time. Berkshire Hathaway chairman Warren Buffett helped to finance the deal in exchange for a 25 percent share in the combined company.^[21][22]

The newly merged company, known as Capital Cities/ABC^[1] (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Between them, ABC and CapCities owned more television stations than FCC rules allowed at the time. Also, the two companies owned several radio stations in the same markets.^[23] Of the former Capital Cities television stations, the new company opted to keep the outlets in Houston, Durham, and Fresno. WFTS and ABC's WXYZ-TV in Detroit were divested as a pair to the E.W. Scripps Company. WTNH and WKBW-TV were sold separately to minority-owned companies;^[24] WKBW-TV would also be owned by E.W. Scripps by 2014. WTNH would have had to be sold in any event due to a significant city-grade signal overlap with ABC flagship WABC-TV in New York City. At the time, the FCC normally did not allow companies to own two television stations with common coverage areas (known commonly as the "one-to-a-market" rule), and would not even consider granting a waiver for a city-grade overlap.

The new company originally planned to retain WPVI-TV in Philadelphia, but FCC rules could have forced a sale of that station as well due to a large signal overlap with WABC-TV. Citing CBS' ownership of television stations in New York City (WCBS-TV) and Philadelphia (at the time WCAU-TV) under grandfathered status, Capital Cities/ABC requested, and received a permanent waiver from the FCC allowing it to keep WPVI. If the request were disallowed, WXYZ-TV would have been retained instead.^[25][26][27]

WPVI and KTRK had long been ABC affiliates (in fact, two of ABC's strongest affiliates), while WTVD and KFSN, longtime CBS affiliates, respectively switched to ABC in August and September 1985.

On the radio side, new owners were found for CapCities' WPAT stations (Park Communications was the buyer), WKBW (Price Communications, the new owner, changed its call letters to WWKB) and KLAC and KZLA-FM (to Malrite Communications), and ABC's WRIF-FM in Detroit (to a minority-owned concern), among others.^[28]

The purchase was completed on January 3, 1986. Capital Cities/ABC, Inc. was organized into Capital Cities Media Inc. and Capital Cities/ABC Video Publishing, Inc. subsidiaries and the CC/ABC division of ABC Cable and International Broadcasting Group, ABC Entertainment, ABC News, ABC Radio, ABC Sports, NILS Publishing Company and Short Line. Capital Cities Media was divided into Fairchild Books and Visuals and Fairchild Publications.^[10]

In May 1991, CC/ABC's Farm Progress Cos. closed on its purchase of the 12-magazine farm publishing group of Harcourt Brace Jovanovich Inc.^[29] In February 1993, the company formed a TV production joint venture with Brillstein-Grey Entertainment to tap into their managed talent and to take advantage of relaxed production regulations.^[30][31] In July, CC/ABC purchased a majority ownership in DIC Entertainment.^[32] Later in July, CC/ABC reorganized into 4 groups, ABC TV Network Group, CC/ABC Publishing Group, the CC/ABC Broadcast Group, and a newly formed CC/ABC Multimedia Group overseeing the network, magazines & newspapers, stations and new technology & miscellaneous operations respectively. Network Group president Bob Iger was also promoted to executive president of CC/ABC.^[33]

CC/ABC in December 1994 agreed to a $200 million seven-year TV production joint venture with the new DreamWorks SKG studio.^[34]

The Walt Disney Company bought Capital Cities/ABC in February 1996,^[35] and changed the corporate name to ABC, Inc in September 19, 1996.^[1]

Structure at Disney acquisition

• ABC Television Network Group
  • ABC News
  • ABC Sports
  • ABC Entertainment
  • ABC Daytime
  • ABC Children's Programming
• CC/ABC Broadcasting Group
  • ABC Radio Network
  • eight TV stations
  • 21 radio stations
• ABC Cable and International Broadcast Group
  • ESPN Inc. (80%)
    • Eurosport (33.3%, England)
    • TV Sport (10%, France; Eurosport affiliate)
    • The Japan Sports Channel (20%)
  • A&E Television Networks (37.5%)
  • Lifetime Television (50%)
  • Tele-Muchen (50%, Germany)
    • RTL-2 20%
  • Hamster Productions (33%, France)
  • Scandinavian Broadcasting System (23%, Luxembourg)
• CC/ABC Publishing Group
  • Fairchild Publications
  • Chilton Publications
  • multiple newspapers from a dozen dailies and more weeklies
    • Ft. Worth Star-Telegram
    • The Kansas City Star
  • dozens more publications in the fields of farm, business and law trade journals
  • LA Magazine
  • Institutional Investor
• CC/ABC Multimedia Group^[36]

Former Capital Cities-owned stations

Stations are listed alphabetically by state and city of license.

Notes:
1. Two boldface asterisks appearing following a station's call letters (**) indicate a station that was built and signed-on by a predecessor company of Capital Cities;
2. This list does not include WTVG in Toledo, Ohio. That station was purchased by Capital Cities/ABC in 1995, and was completed just before Disney's acquisition of the combined group was finalized. In addition, WJRT-TV was reacquired in the same deal. However, in November 2010, Disney/ABC reached an agreement to sell the two stations back to previous owner SJL Broadcasting, which was completed on April 1, 2011.

Television stations

Radio stations

NOTE: All stations currently under ownership of Cumulus Media were previously owned by Citadel Broadcasting before Cumulus acquired the company on September 16, 2011. Most of these same stations were owned by the Walt Disney Company until Citadel's purchase of ABC Radio Networks and these stations on June 12, 2007 (except for WPRO-AM-FM, which were sold by Capital Cities/ABC in 1993 and acquired by Citadel in 1997).

Financial results

1. ↑ Following the acquisition of ABC

References