Lehman Brothers Collection - Contemporary Business Archives

Harvard Business School Baker Library Historical Collections

Lehman Brothers Collection

Twentieth-Century Business Archives

American Broadcasting Companies, Inc. - Lehman Brothers Collection

American Broadcasting Companies, Inc.

List of Deals

The American Broadcasting Company was created in 1927 by RCA. It was originally called the Blue Network because by the late 1920s the RCA owned-National Broadcasting Company (NBC) had grown so large that RCA decided to split it into two networks, Red and Blue. In 1941 the Federal Communication Commission ruled that no single company can own more than one network, and NBC chose to sell the Blue Network to candy-magnate Edward J. Noble, who renamed it American Broadcasting Company (ABC). The network had only 100 radio stations and no big stars, and thus struggled to maintain a hold in the industry.

In 1953 Noble sold ABC to United Paramount Theatres, led by Leonard Goldenson, for $25 million. This new combined company was called American Broadcasting-Paramount Theatres, Inc., (AB-PT) and consisted of 708 movie theatres, a radio network with 355 affiliates, a television network with fourteen affiliates, and television and radio stations in five major cities. AB-PT was listed on the New York Stock Exchange that same year.

Goldenson signed a $40 million deal with Walt Disney in 1954, giving AB-PT access to the Disney film library, an exclusive programming alliance, and a 35 percent interest in the amusement park. In 1955 Warner Brothers began producing shows for the network. By 1957 the broadcasting division passed the theatre division as the largest revenue producer for the company. AB-PT expanded its Am-Par Records in 1961 by acquiring the Westminster classical records and by introducing the Impulse jazz label. It also created ABC Sports in that year.

The company lost over $120 million during the 1960s, due in part to the massive costs associated with converting to color broadcasting. In 1965 the company failed in its attempt to merge with International Telephone & Telegraph and successfully fought off an attempt by billionaire Howard Hughes to gain control of the company through a tender offer. AB-PT then changed its name to American Broadcasting, Inc.

ABC was divided into three separate divisions in 1968: entertainment, news, and sports. In 1972 the network became profitable for the first time in a decade with revenues exceeding $800 million and net earnings over $35 million.

During the 1970s ABC continued to develop new programming and enter new businesses. It created Anchor Records in 1973 and in 1984 it bought cable sports channel ESPN. In 1985 Capital Cities Communications, Inc., a communications company with one-quarter of ABC's sales, bought ABC for $3.5 billion. The name of the new combined corporation was changed to Capital Cities/ABC Inc.

In 1991 Capital Cities/ABC purchased HBJ Farm Publications from Harcourt Brace Jovanovich. By 1993, the company had annual revenue of nearly $5 billion. In 1996 the company officially changed its name back to ABC Inc.

Harvard Business School Harvard Business School Baker Library Histrorical Collections