ITTs New Network

The plot of the behind-the-scenes TV drama outclassed anything on the tube. Aggressive but cash-short American Broadcasting Co. had been casting about for a merger partner for more than three years, and had huddled, at one time or another, with a number of prospects, including General Electric. West Coast Financier Norton Simon had bought control of 9.9% of ABC's stock, was regarded as a persistent -- and unwanted -- suitor. Finally, late in 1965, months of on-and-off talks with another acquisition-minded and seemingly more suitable partner, International Telephone & Telegraph Corp., blossomed into an agreement to merge.

The final act came last week when, in something of a cliffhanger of its own, a bitterly divided Federal Communications Commission approved the merger by a bare 4-3 majority. "Why the rush?" complained dissenting Commissioner Nicholas Johnson, who felt that the study of the largest merger ever to come under FCC consideration had been too brief.* Why not? answered the commission's majority, which concluded that the merger will "enhance rather than lessen" competition in the communications industry.

Bigger Than RCA. Whatever the deal accomplishes, there is no question about size. Together, ABC (1965 sales: $475 million) and ITT ($1.8 billion) will form a vast broadcasting-electronics complex that will surpass the Radio Corp. of America (1965 sales: $2 billion) and its National Broadcasting Co. subsidiary, leave the Columbia Broadcasting System ($700 million) the only major network without a big corporate shelter.

The prospective partners seem wonderfully synergistic. For ITT Chairman and President Harold S. Geneen, 56, the merger, which will be completed next month in a stock swap worth about $430 million, is the main event so far in a phenomenal growth-through-acquisition campaign that has more than doubled ITT's sales and profits (to $76 million) since he took over in 1959.

A Name on the Street. Though many of Geneen's 42 acquisitions (among them: Avis rent-a-car) have been far removed from the company's communications origins, the bulk of ITT's earnings come from its worldwide sales of telephone and communications equipment and, in Europe, production of TV sets and appliances. Besides increasing ITT's size, ABC will boost to 50% the company's U.S. contribution to its overall income. Besides, the ABC name will make ITT better known--which is essential for a company that plans to grow through stock-swap acquisitions. Geneen has complained that "you can stop 15 people in the street and not one will know what ITT is. That bothers me."

What has been bothering ABC President Leonard H. Goldenson, 61, who will continue to run the company as an "autonomous" subsidiary, is the fact that ABC has for so long been in the shadow of its richer rivals, NBC and CBS. Now, from ITT the network will get an initial $50 million, which it will use to improve its production facilities and complete a conversion to full color broadcasting. Beyond that, the merger could give the two companies new push in two areas in which both have been earnestly trying to expand: VHF-TV stations on the ground and communication with the help of satellites in the sky.

* The only formal corporate objection came from St. Paul-based Hubbard Broadcasting, Inc., which wants the merger to be held up until the FCC decides on Hubbard's previous application for one of the ABC stations involved, WABC radio in New York.

This file is automatically generated by a robot program, so reader's discretion is required.