Deals in Radio

Last week Radio Corp. of America approximately doubled its number of shares outstanding, divided its new shares between General Electric Co. and Westinghouse Electric & Manufacturing Co. In so doing Radio Corp. gave the two electric companies a majority of its stock, and in return received from them patent rights and manufacturing facilities essential to the production of radio sets. Although David Sarnoff, president of Radio Corp., called upon President Hoover, presumably in connection with the transaction. and although Senator Clarence C. Dill, Democrat, of Washington demanded an inquiry by the Department of Justice, the connection between General Electric, Westinghouse and Radio Corp. has long been obvious. The significance of the deal lay in the growth of the General Electric Westinghouse interest into an actual control, and in the future of Radio Corp. as a producing company, manufacturing the Radiolas now made for it by the electric companies. General Electric and Westinghouse were also to turn over to Radio Corp. their holdings in Radio Corp. subsidiaries. In addition to stirring up anti-trust agitation, the Radio deal revived rumors of an approaching absorption of Columbia Graphophone.

Details of the additional stock issue (subject to stockholders' ratification), were: Radio Corp. is to increase its present 6,580,375 shares of common by an additional 6,580,375 shares, of which General Electric is to receive 60% and Westinghouse 40%. Holdings of General Electric in Radio common and in Class A (voting) preferred already total 14.1 of Radio's voting strength, and similar Westinghouse holdings total 6.1% of voting strength. The additional new common will bring General Electric's voting strength up to 32.1% and Westinghouse's to 19.2%, giving the two companies a 51.3% control. (The actual number of common shares held [60%] is misleading as the Class A preferred has ten votes to the common's one.) Radio Corp. is also to issue additional Class B (nonvoting) preferred, which will go to the electric companies to pay for loans made to Radio Corp.

Although there were rumors that the centralization of control would result in the formation of a new super-holding company, there was nothing on the face of the transaction to alter the positions of Radio's Executive Committee Chairman Owen D. Young, or Chairman James G. Harbord or President David Sarnoff. Mr. Sarnoff said that the new arrangement would result in operating economies resulting in cheaper radio sets and tubes and that the stock transfer represented compensation for the patent and manufacturing facilities acquired. Meanwhile Oswald Schuette, executive secretary of the Radio Protective Association (anti-Radio Corp. radiomen) said that "this $6,000,000.000 monopoly was a challenge to the Department of Justice, the Federal Radio Commission and the Congress of the U. S.

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