For Personal Reasons

Billionaire Howard Hughes and the American Broadcasting Companies, Inc. last week ended where they had started 15 suspenseful days before. Hughes still had the kitty of cash he was willing to spend to take over ABC, while ABC felt itself free again to listen to other suitors for merger.

Hughes's tender offer to buy 2,000,000 shares in the TV-radio network and theater chain at $74.25 per share was made July 1 when they traded for $58.88. The bundle would have amounted to 39% of outstanding stock and would have presumably led to a shake-up of management and operations of the company, whose TV network lost $17 million last year. ABC management fought the takeover bid, asking for a court injunction and a hearing by the Federal Communications Commission.

Short of the Bid. The tender offer expired on July 15 at 3 p.m. Not until shortly after 1 p.m., when a federal appellate court denied ABC's request for an injunction, did shares start pouring in. As much as 90% of those offered to Hughes were rushed to his Wall Street dealer, Loeb, Rhoades & Co., within 1 1/2hours of the deadline. Altogether, 1,650,000 shares were counted, some 350,000 short of what Hughes bid for. Still, they represented 28% of ABC common, and would have made Howard Hughes ABC's largest stockholder.

Had he extended the offer to buy, as he had the option to do, he surely would have wound up with the full 2,000,000 shares. Instead, Hughes chose to withdraw his offer. His Hughes Tool Co. cited ABC management's "inordinate opposition" as the cause for giving up. More likely, the main reason was a very personal one--reclusive Howard Hughes's reluctance to show himself in public. Back in 1963, he gave up his right to manage TWA rather than make a court appearance. Now, at ABC's request, the Federal Communications Commission scheduled hearings on the takeover and let it be known that Hughes's personal appearance was a must.

Top management at ABC was elated by the turn of events. Concluded ABC President Leonard Goldenson: "Because of their confidence and faith in the future of our company, a substantial majority of our stockholders elected to reject the Hughes tender offer." Shares of the company closed down by only 380 by the end of the week from a high of $67.75 on Tuesday, before the news.

Out from Under. Underpinning ABC's optimism was the success of an attempt to raise $50 million cash by offering 25-year convertible debentures to stockholders. By the time the offer expired July 15, it was nearly 100% subscribed. Whether this showing reflected confidence in the company or the hope that Hughes would take over may never be known. "In addition to this infusion of cash," says ABC Vice President James C. Hagerty, "we will have a saving of $53 million on network operations this year. This is the first time we've been out from under in two years."

Merger still seems virtually certain; the question is when and with whom. President Goldenson, who prefers a stock swap that would be tax free, had already started preliminary talks with C.I.T. Finance Corp. over the July 4 weekend. Such talks could now resume.

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