They're changing the nameplates in RCA Corp.'s executive suite again. But for the first time in years, it's not a rush job.
This time, the transition is an orderly one: President Robert R. Frederick, who was named chief executive of the $10.1 billion communications and electronics company last week, was hand-picked and groomed for the position by his predecessor, Thornton F. Bradshaw.
That's quite a difference from the last three changes of power at RCA, which had put the executive suite nameplates on a revolving door. Bradshaw's predecessor, Edgar H. Griffiths, was ousted by the company's board in 1981. Griffiths had been preceded six years earlier by Anthony Conrad, who was forced out after 10 months on the job when it was revealed that he had not filed income-tax returns for five years. And Conrad had replaced Robert Sarnoff, son of the company's founder, who was eased out because of philosophical differences with the board of directors.
The smoothness of Frederick's ascent to the CEO spot compared with the tumult of the three previous changes is a metaphor for the strength and stability RCA has regained under Bradshaw. The RCA Bradshaw took over seemed to be tumbling wildly out of control, bloated by seemingly senseless acquisitions and diversified far beyond its core technological strengths.
"The company had lost its way," Bradshaw said in an interview last week. "Somehow or another during the 1960s and '70s, other fields looked greener and it went into some ill-advised diversification efforts. . . . It was an overdiversification, under any standards."
Bradshaw has spent the last four years reshaping and pruning RCA, selling off many of those odd diversifications, such as the CIT financial services division, a greeting card company and a frozen-foods outfit, and putting most of the rest of the offshoots on the block.
He has also strengthened the company's existing businesses, moving RCA back to the fore in consumer electronics and breathing new life into the NBC television and radio operation by stabilizing its topsy-turvy management situation and giving the network the time to regain its health. NBC's prime-time television schedule, the most important part of the network, is now No. 2 in the ratings after a long time as a poor third to rivals CBS and ABC.
"I just have to be very grateful for what has happened," Bradshaw said. "The major objectives were completed."
The company that Frederick takes over is a throwback to the RCA of 10 years ago: a company built around a strong technological base, with extensive interests in broadcasting, military and private communications, and consumer electronics equipment -- all areas that its leaders believe will provide a base for strong future growth.
"Everything is built on electronics, or will be in the future, and everything is dependent on communications," Bradshaw said. "We hope that . . . the company has enough balance so that, when one part of the company is doing less well, another part will be strong."
"What you want is more of the same, but faster," Frederick said. "We've had three years of making progress. We've got a long way to go."
Indeed, some analysts question whether RCA can keep up with the tough competition in many of its chosen fields, especially in light of the beating it took in the 1970s and the scars left from Bradshaw's overhaul of the company the past few years. But RCA's leaders believe the changes have strengthened the company.
When Bradshaw took over RCA, he was no stranger to the company. Then the president of Atlantic Richfield Co., he had been a director of RCA since 1972 -- through the Sarnoff, Conrad and Griffiths regimes. But his time on the board did not prepare him for what he found when he began managing the company.
"The first year," Bradshaw remembers, "I'd go home at night and say, 'My God, look what I found today,' and I'd tell my wife about some problem that would be a terrible problem. And she would say, 'But you were a director. Why would this problem come as a surprise to you?' "
It was, Bradshaw concedes, a good question.
"The answer undoubtedly is that almost all directors are very busy at their own business. They know what the management basically chooses to let them know, frankly. They don't know enough. I didn't know enough. We knew enough, though, during that period of time to get rid of three chief executives, and that, after all, is the primary function of a board. We certainly didn't know enough, any of us, certainly I didn't know enough to pinpoint what the real problems were. I don't think you get at those problems until you get your hands dirty on a hands-on management basis."
Bradshaw had to get his hands really dirty. Arco had been a solid, growing entity when he left it after 17 years as its president. RCA, by contrast, was a disaster area. The company, once one of America's most respected, was suffering from high debt, low morale and a bad reputation on Wall Street. "It was in a very bad way," Bradshaw said.
So Bradshaw began selling off his predecessors' prized diversification attempts. The biggest piece of the company he divested was CIT Financial, a financial services businesses picked up by Griffiths in 1980 for $1.2 billion. The $1.5 billion brought in by the sale of CIT revived RCA's financial flexibility, and once a couple of smaller remaining subsidiaries are sold, RCA will have about $1.5 billion in cash for corporate operating needs as well as any future acquisitions.
Bradshaw's goal was to rebuild the company around its strong technological base. The company's research and development arm had long been one of the best in the nation, in a class with Bell Labs and General Electric Co.'s R&D Center. Because its R&D expertise traditionally had been in communications and electronics, Bradshaw decided to make these the cores of the company, along with broadcasting.
The only division outside the core businesses that RCA is keeping is Hertz, which Bradshaw once wanted to sell but now believes the company should keep because of its strong No. 1 position in the car-rental industry, its handsome cash flow, and its handy -- and large -- investment tax credits. "If you're going to have a company that doesn't fit, it might as well be Hertz," he said.
Frederick hopes to use the company's know-how to carve out major shares in new related businesses. For example, RCA's expertise in television picture tubes -- it is the nation's leading maker of color televisions -- could pave its way into the fast-growing computer-monitor field. Similarly, RCA developments in television cameras could create a new line of products -- high-quality cameras used for security and industrial surveillance.
The company also hopes that its technology will also enable it to expand its already strong satellite communications and defense electronics businesses, and that know-how from its defense work will spill over into commercial applications.
Frederick speaks of improving the "linkage" between RCA's R&D laboratories and its marketing force to get technology to the marketplace faster. And Bradshaw believes the company's marketing ability in consumer electronics is among the best in the business.
But RCA knows the pitfalls of bringing new technology to market too quickly, and of misreading consumer demand. It learned the hard way, through a debacle in videodisc players that finally resulted in a $175 million write-off last year.
Bradshaw calls the videodisc escapade an example of what was wrong with RCA's old management style: The company plunged ahead into the field despite some clear warnings and a misreading of the market, failing to anticipate that the competing videotape-player industry would simply overwhelm RCA's effort. "You can look back and you can write a pretty good case history of a whole series of management errors," Bradshaw said. "The manufacturers did their job, the marketers did their job. There was just a number of tactical mistakes made."
Frederick, 59, a longtime GE executive before Bradshaw recruited him for RCA, is somewhat lower key than the affable Bradshaw. But both men have similar management philosophies. Frederick calls it a "participative" style of management. "When I say participative, I mean that no one person runs RCA. Nor should he or she," he said. "Anybody who thinks they know enough about everything to make a major decision is dangerous." Similarly, Bradshaw says of his subordinates: "I don't tell them how to run their business, but I know how they run it."
Although he will retain the title of chairman, Bradshaw doesn't intend to have to tell Frederick how to run RCA. "My first and foremost job will be to get out from under his feet," he said.