Capital Cities/ABC was a significant player in the American media landscape, formed through a groundbreaking merger in 1985. This article explores the historical development of Capital Cities/ABC, highlighting key milestones from its inception to its acquisition by Disney.
Origins and Early Years
Capital Cities Communications began as Hudson Valley Broadcasting Company in 1946, founded by Hyman Rosenblum, Lowell Thomas, and Frank Smith. Over the years, it evolved through
various stages, becoming Capital Cities Broadcasting in 1959 and later Capital Cities Communications in 1973. The company was involved in radio broadcasting, television broadcasting, publishing, and recording, establishing a strong presence in the media industry.
In 1985, Capital Cities Communications made a bold move by acquiring the much larger American Broadcasting Companies, Inc. for $3.5 billion. This acquisition was a shock to the media industry, as ABC was four times bigger than Capital Cities at the time. The merger was facilitated by Warren Buffett, who financed the deal in exchange for a 25% share in the combined company.
The Capital Cities/ABC Era
Following the merger, the newly formed Capital Cities/ABC had to navigate FCC ownership limits, as the combined entity owned more television stations than allowed. The company opted to keep outlets in Philadelphia, Houston, Durham, and Fresno, while divesting others to comply with regulations. This period marked a significant expansion of Capital Cities/ABC's broadcasting portfolio, including the addition of Fairchild Publications and several newspapers.
Capital Cities/ABC also made strategic moves in the publishing and entertainment sectors. In 1991, it acquired Harcourt Brace Jovanovich Inc.'s farm publishing group, and in 1992, it sold Word Inc.'s music and book publishing to Thomas Nelson. The company formed a television production joint venture with Brillstein-Grey Entertainment in 1993 and acquired a majority ownership in animation studio DIC Animation City.
Acquisition by Disney
In 1995, The Walt Disney Company announced its intent to acquire Capital Cities/ABC for $19 billion, a merger that was completed in 1996. This acquisition led to the formation of ABC, Inc., integrating ABC's television and radio stations, ESPN, and other media properties into Disney's portfolio. The merger marked the end of Capital Cities/ABC as an independent entity, but its legacy continued under Disney's umbrella.
The acquisition did not include certain publishing assets, which were spun off to foreign interests in 1997. Despite the changes, the impact of Capital Cities/ABC on the media industry remains significant, having set the stage for future developments in broadcasting and entertainment.
