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overview
This page considers the US American Broadcasting Company
(ABC) network, now part of the Disney conglomerate.
It covers -
A
profile of the unrelated Australian public broadcaster
ABC - the Australian Broadcasting Corporation - is here.
introduction
ABC's history is a trajectory from beginnings as the
'second network' of a joint venture by GE
and Westinghouse, through
acquisition by a confectionary magnate, a failed merger
with conglomerate ITT, capture by affiliate stations and
absorbtion by Disney.
That
trajectory illustrates fashions in US investment (notably
the creation and dismantling of conglomerates), the cost
of competition and the significance of regulation by the
FCC and other bodies.
establishment of the ABC Network
The ABC was originally established during the 1920s
as the second radio network - the so-called Blue Network
- of the National Broadcasting Corporation (NBC),
a subsidiary of RCA.
An earlier and unrelated American Broadcasting Company,
based in Seattle, had been formed in 1927 but was stricken
by the 1929 Wall Street Crash, with some stations being
absorbed by NBC's short-lived 'Brown Network'.
In 1941 the Federal Communication Commission, seeking
to increase competition, ordered that NBC spin off one
of its networks. That decision was upheld by the Supreme
Court in 1943. The company understandably disposed of
the less successful Blue Network, selling it to confectionary
manufacturer Edward Noble (1882-1958) for around US$8
million.
Problems with affiliates and programming meant that Noble
was unable to reap significant profits from ABC. In 1948
the five Warner Brothers considered buying ABC but did
not proceed with the deal.
A year later the US Department of Justice ordered the
major Hollywood studios to spin off their cinema operations,
a decision that is often regarded as the deathknell for
the 'studio system'.
Paramount
Pictures - the studio, distribution and cinema group that
had earlier taken a stake in the fledgling DuMont
television network - established United Paramount Theatres
(UPT) as the vehicle for its cinemas. Paramount's studio
and distribution arms were subsequently major components
of the Viacom conglomerate.
To comply with DOJ requirements UPT had to sell some of
its assets and was thus sufficiently cashed-up to take
ABC off Noble's hands in 1951 for US$25 million, after
an abortive bid from telecommunications group ITT. That
deal was formally approved by the FCC in 1953, with the
group being identified as ABC.
The
group's radio stations underpinned expansion of ABC television
through owned-&-operated and affiliated stations.
Although audience share and profitability initially trailed
that of NBC and CBS, under chief
executive Leonard Goldenson the group was one of the three
dominant networks. It progressively sold off its cinemas
and in contrast to its major competitors didn't dissipate
management attention and capital through expansion into
car rentals, book publishing, frozen food or other diversification.
Its major venture outside broadcast was a relationship
with Disney, the group that eventually
acquired ABC, and acquisition of ESPN.
During
the late forties and early fifties the viability of Disney
Studios was uncertain, with poor labour relations and
a bailout from Howard Hughes. Disney failed to interest
Wall Street in his Disneylandia theme park vision. In
1954 ABC invested US$500,000 in cash and guaranteed Disney
bank loans. In return it received 35% ownership of Disneylandia
and all profits from the park's food concessions. (Interest
in those concessions reflected experience in US cinemas,
where most profit often came from retailing drinks, popcorn
and other items rather than from ticket sales.)
By
1960 Disneyland's 'at-the-gate' cash flow was so large
that Disney could buy out the network.
merging with ITT?
In
1965 ABC agreed to merge with ITT, which by then had expanded
wildly from telecommunications into hotels, baking, insurance
and car rentals in emulation of RCA.
ITT had previously expressed interest in absorbing the
latter network.
The
supposed rationale was that a rich parent would enable
the network to compete more effectively with NBC and CBS,
in particular bearing the expensive of new programming
that would lift revenue at the network's own stations
and secure the support of affiliates.
The
merger was approved by the Federal Communications Commission
but opposed by the federal Department of Justice, which
eventually sought to involve the Supreme Court.
ITT
withdrew, achieving notoriety during the following decade
for alleged financial impropriety, breaches of campaign
funding rules and subversion of Chile's democracy. It
grew to become the 18th largest US corporation before
being dismantled, despite the claim of former CEO Harold
Geneen that it "could be run by a monkey if I wasn't
there".
Capital Cities-ABC and Disney
In
1986 Capital Cities Communications bought a by-then ailing
ABC for US$3.5 billion, creating Capital Cities-ABC. The
network had enjoyed periodic success in the ratings -
particularly in the mid-1970s with programming that was
a model for the later Fox network - but suffered from
high production costs that it was unable to pass on to
its affiliates in an increasingly competitive market.
In 1995 Capital Cities-ABC was in turn engulfed by Disney
for US$19 billion.
A chronology of ABC is here.
Studies
There are no major studies of ABC from its establishment
to absorption by Disney.
Ken Auletta's Three Blind Mice: How The Television
Networks Lost Their Way (New York: Random House 1991)
extends the account in David Halberstam's The Powers
That Be (New York: Knopf 1979) about the three major
US networks and papers such as the Washington Post
in the 1970s to the early 1990s. Mice is richer
than Auletta's disappointing The Highwaymen - Warriors
of the Information Superhighway (New York: Random
House 1997).
UPT and ABC chief executive Leonard Goldenson's Beating
the Odds: The Untold Story Behind the Rise of ABC (New
York: Scribner 1991) offers an account of the television
rating wars. For us it is more engaging than Sterling
Quinlan's Inside ABC (New York: Hasting House 1979)
and Huntington Williams' Beyond Control: ABC &
the Fate of the Networks (New York: Atheneum 1989).
The
standard history of ITT - the very model of the bad telco
and conglomerate - remains Anthony Sampson's Sovereign
State: The Secret History of ITT (London: Coronet
1974). It can be supplemented by Robert Sobel's less critical
ITT: The Management of Opportunity (New York: Times
1982) and Rand Araskog's apologia The ITT Wars: An
Insider's View of Hostile Takeovers (New York: Holt
1989).
James Baughman's 'The Weakest Chain & the Strongest
Link: The American Broadcasting Company & the Motion
Picture Industry 1952-60' in Hollywood In The Age of
Television (Boston: Unwin Hyman 1990) edited by Tino
Balio is concise and lucid. For the following decade see
Les Brown's Television: The Business Behind the Box
(New York: Harcourt Brace 1971).
For studies of Disney's history, output and operation
see the separate Disney pages
on this site. These include Ron Grover's The Disney
Touch: Disney, ABC & the Quest for the World's Greatest
Media Empire (Chicago: Irvin 1997) and Michael Eisner's
intensely self-regarding Work in Progress (New
York: Random 1998) - of value for Disney's decision to
buy ABC.
 next
page (ABC chronology)
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