| overview
landmarks
related:
Viacom
CBS
|
overview
This profile considers the Westinghouse electrical and
media group.
It covers -
introduction
Electrical manufacturer and broadcaster Westinghouse Electric
- the smaller, less successful cousin of General Electric
(owner of NBC) - acquired CBS
in 1995 for US$5.4 billion. At that time Westinghouse's
'Group W' broadcasting arm had five television stations
and 18 radio stations.
Following
the CBS acquisition Westinghouse absorbed the Infinity
radio broadcasting and outdoor advertising group for US$4.7
billion and then changed its name to CBS. It continued
selling off traditional Westinghouse operations such as
power-generation equipment and light bulb manufacturing.
Reflecting increasing concentration among US radio broadcasters,
the new CBS acquired the American Radio Systems chain
for US$2.6 billion and the Nashville Network & Country
Music Television for US$1.55 billion in 1997, selling
17% of Infinity Broadcasting for US$2.9 billion a year
later and engulfing television program syndicator King
World Productions.
CBS
sold the former Westinghouse defence electronics arm for
US$3 billion, land development arm for US$430 million.
Knoll furniture for US$560 million, residential security
operations for US$430 million and Thermo King to Siemens
for US$2.6 billion. Infinity spent US$8.7 billion buying
billboard giant Outdoor Systems in 1999.
During that year CBS was acquired by Viacom,
discussed in more detail elsewhere on this site, for US$50
billion.
early history
Westinghouse traced its history to establishment of the
Westinghouse Air Brake Company in 1869. That business
was headed by George Westinghouse (1846-1914), an inventor
who was arguably more creative than rival Thomas Edison
but less successful in self-promotion.
In 1884 he formed the Westinghouse Electric Company (which
became the Westinghouse Electric & Manufacturing Company
two years later). Westinghouse acquired Tesla's electricity
patents, challenging Edison-inspired General Electric
(GE) through effective advocacy of alternating current
and expansion overseas. He initiated long-distance power
transmission and hydroelectric generation at Niagara Falls
in 1896; like GE the group subsequently had major stakes
in electricity and gas utilities before divestment after
1943 under the 1935 Public Utility Holding Co Act.
Westinghouse lost control of the group as part of the
1907 financial panic.
Research by Tesla and others into radio (and government
seizure of Marconi patents) was reflected in manufacturing
of military transmitters and receivers during the following
decade. In 1919 its Pittsburgh radio station 8XK received
an experimental licence. Westinghouse was one of the founders
of Radio Corporation of America (RCA), joining with GE,
US telecommunications giant AT&T
and United Fruit. It acquired the International Radio
Telegraph Co in 1920 and launched commercial radio stations
in Philadelphia, Newark, Pittsburgh and other locations.
In 1926 it took a 20% stake in NBC
(with 30% held by GE and 50% by RCA) in 1926 as the 1920s
'radio boom' gathered pace, subsequently buying radio
stations WGL and WOWO. The 16-station United Independent
Broadcasters (UIB) network had meanwhile been restructured
as the Columbia Broadcasting System (CBS), with 47 affiliate
stations.
Westinghouse rode the boom as a manufacturer of major
equipment (including locomotives) and appliances. Failure
to expand downstream into record and film production or
to establish a large-scale broadcast network reflecting
regulatory constraints, lack of enthusiasm by key investors
and the modus vivendi with competitor GE through the RCA
joint venture. RCA encompassed broadcast, recording and
film production interests.
In 1932 Westinghouse and GE exited from RCA under pressure
from the US Department of Justice. Westinghouse retained
its radio stations but was wary about expansion of its
holdings to form an independent network in competition
with NBC's two networks and CBS. The latter acquired the
independent Columbia Records in 1938.
Westinghouse emerged from the 1939 war as the world's
second largest electrotechnical group, with diverse manufacturing
operations. Broadcasting formed a visible but not dominant
element of the group, which like Matsushita
several decades later was driven by an engineering ethos
and an emphasis on large-scale manufacturing. Westinghouse
looked forward to peace for extension of its existing
international operations and deployment of technologies
such as television.
lights, cameras and nuclear reactors
The 1950s arguably saw Westinghouse at its peak. In 1945
it had been renamed Westinghouse Electric Corporation.
It rode the Eisenhower Boom by expanding production of
domestic appliances and power systems, underpinned by
establishment of Westinghouse Credit in 1954. That financier
was modelled on GE Credit, established in 1932, but was
significantly less successful than the GE arm and its
problem loans greatly contributed to Westinghouse's difficulties
during the 1970s.
In 1955 Westinghouse acquired DuMont's
Pittsburgh WDTV station for US$9.75 million, more implausibly
expanding into land development and softdrink bottling
during the 1960s. At the beginning of the 1970s Westinghouse
sold its small home appliance and then its large appliance
(eg stoves and refrigerators) operations. CBS more modestly
unloaded the New York Yankees sports team.
The middle of the decade saw Westinghouse in crisis, after
soaring uranium prices saw it renege on supply contracts
to purchasers of its nuclear power systems. (Westinghouse
responded to litigation by suing an alleged cartel of
uranium producers, including Australian miners). Westinghouse
sold its 45% stake in French nuclear plant builder Framatome
and its Econo-Car car rental agency.
Group W and TelePrompter
During
1981 Westinghouse Broadcasting & Cable acquired the
TelePrompter cable television group for US$646 million
(including some US$70 million to Jack Kent Cooke).
TelePrompter was rebadged as Group W Cable but proved
disappointing, with cashflow not compensating for pressures
to upgrade the network.
Westinghouse sold its WOWO radio station and its lighting
operations. CBS was concurrently selling
its stake in Satellite Network News, buying a stake in
the SportsChannel regional sports networks with Washington
Post, and forming Tri-Star Pictures
with HBO (Home Box Office) and
Columbia
Pictures.
a decade of churn
1984 initiated a decade of churn, as a succession of chief
executives and advisers grappled with demands for higher
growth and improved strategic direction.
During that year Westinghouse unloaded its industrial
fan operations and its education products arm, buying
robotics manufacturer Unimation. In 1986 it sold Muzak,
buying a Los Angeles TV station. A year later it sold
Group W Cable to Comcast, AT&T
and TCI. It bought radio stations
in Sacramento and Chicago, a waste-disposal business and
electrical equipment operations. Asset-shuffling gathered
pace with sale of its elevator division to Schindler,
its transmission division to ABB Asea Brown Boveri, its
rail/peoplemover division and 7Up bottling division.
CBS, after coming into the orbit of cigarette to insurance
conglomerate Loews, had meanwhile been streamlining through
sale of its book publishing and music publishing arms.
CBS Records was sold to Sony for
US$2 billion. In contrast, Westinghouse acquired a grab-bag
of assets, including Legacy Broadcasting Company, Shaw-Walker
and Reff furniture, Knoll International furniture.
In 1994/5 for example it sold the Westinghouse Communities
land development arm and its electrical supplies and distribution
& controls arm, borrowed US$3 billion from GE Credit
and bought the Norden electronic systems division of the
United Technologies conglomerate. It established a partnership
with CBS for management of its broadcasting stations.
CBS to Viacom
In 1995 Westinghouse acquired CBS,
buying the Infinity radio broadcasting and outdoor advertising
group for US$4.7 billion during the following year. That
acquisition - which made Infinity's CEO Mel Karmazin,
later Viacom CEO, its largest
shareholder - was offset by disposal of Knoll and Westinghouse's
defence electronics and security systems arms (bringing
in some US$4 billion).
A year later, amid announcements of further major sales,
Westinghouse was renamed CBS.
The change was emphasised by purchase of the American
Radio Systems chain for US$2.6 billion and the Nashville
Network & Country Music Television for US$1.55 billion,
increasing CBS' radio holdings to 175 stations, and disposal
of the Thermo King refrigerated transport arm for a similar
amount.
In 1998 it sold 17% of Infinity Broadcasting for US$2.9
billion, also swapping several radio stations with Entercom.
In 1999 CBS bought King World Productions, a leading television
program syndicator, for US$2.5 billion and Outdoor Systems
billboard group for US$8.7 billion. During the same year
Viacom acquired CBS for US$50 billion. The group's history
since that time features in the separate Viacom profile
on this site.
Ironically, the sale of the CBS nuclear power arm to BNFL
(British Nuclear Fuels) was finalised in 1999, with that
unit being rebadged as Westinghouse Electric Company.
studies
George Westinghouse has attracted less hagiographic treatment
than Edison or Tesla. Three points of entry are Richard
Moran's Executioner's Current: Thomas Edison, George
Westinghouse and the Invention of the Electric Chair
(New York: Knopf 2000), Henry Thomas' George Westinghouse
(New York: Putnam 1960) and Inventing the Electronic
Century: The Epic Story of the Consumer Electronics and
Computer Industries (New York: Free Press 2001) by
Alfred Chandler, Takashi Hikino & Andrew von Nordenflycht.
For Westinghouse's early broadcasting activity see Susan
Douglas's Inventing American Broadcasting 1899-1922
(Baltimore: Johns Hopkins Uni Press 1987). Context
is provided by Erik Barnouw's journalistic three volume
A History of Broadcasting in the United States
(New York: Oxford Uni Press 1966-70), Robert McChesney's
Telecommunications, Mass Media, and Democracy: The
Battle for Control of US Broadcasting, 1928-1935
(New York: Oxford Uni Press 1993) and Hugh Aitken's The
Continuous Wave: Technology and American Radio 1900-1932
(Princeton: Princeton Uni Press 1985). His Tube of
Plenty: The Evolution of American Television (New
York: Oxford Uni Press 1975) is less engaging than David
Fisher's Tube: The Invention of Television (Washington:
Counterpoint 1996).
Fred MacDonald's One Nation Under Television: The
Rise & Decline of Network TV (New York: Pantheon
1990) and Ken Auletta's Three Blind Mice: How The
Television Networks Lost Their Way (New York: Random
House 1991) offer perpectives on network developments.
More detailed pointers feature in the CBS
profile.
For the uranium imbroglio see in particular Debora Spar's
The cooperative edge: the internal politics of international
cartels (Ithaca: Cornell Uni Press 1994).
 next
page (chronology)
|
|
