Purchase of 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.
The newly merged company, known as Capital Cities/ABC (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.
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.
The new company originally planned to retain WPVI-TV in Philadelphia, but FCC rules could have forced a sale of that station because its signal overlapped with that of ABC's New York City flagship station. 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). 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 them to keep WPVI. If the request were disallowed, WXYZ-TV would have been retained instead.
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 (Roy H. Park Communications was the buyer), WKBW (Price Communications, the new owner, changed its call letters to WWKB) and KLAC and KZLA-FM, and ABC's WRIF-FM in Detroit, among others.
The purchase was completed on January 3, 1986. The new company retained ABC's radio and television combinations in New York City (WABC-AM-TV and WPLJ), Los Angeles (KABC-AM-TV and KLOS), Chicago (WLS-AM-FM-TV), and San Francisco (KGO-AM-TV), along with WMAL and WRQX-FM in Washington, D.C.; CapCities' aforementioned television outlets and the Detroit, Providence, Marietta, and Fort Worth radio stations, Fairchild Publications, the Fort Worth Star-Telegram and the Kansas City Star; and other broadcasting and publishing properties.
The Walt Disney Company bought Capital Cities/ABC in February 1996, and changed the corporate name back to ABC.
Read more about this topic: Capital Cities Communications
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