General Electric Co.'s plans to acquire RCA Corp. and its NBC television network subsidiary caps a year that has seen the greatest economic upheaval and restructuring of the broadcast industry since the emergence of the three networks in the 1950s.
Deregulation of the industry by the Federal Communications Commission, a growing realization that broadcast properties were more valuable than the stock market recognized, and the emerging specter of hostile bids from corporate suitors, all converged to turn 1985 into a time of takeovers.
*In February, Taft Broadcasting Co. purchased six TV stations and eight radio stations from Gulf Broadcast Co. for $755 million.
*In March, Capital Cities Communications bought American Broadcasting Cos. for $3.5 billion -- at the time, the largest U.S. merger outside the oil industry and the first time in more than 30 years a television network had been sold.
*In April, cable television entrepreneur Ted Turner filed a plan with the Securities and Exchange Commission to purchase two-thirds of CBS Inc. using "junk bonds" -- high interest, high risk debt -- as well as stock in his Turner Broadcasting System Co.
*In May, Australian media mogul Rupert Murdoch, along with oilman partner Marvin Davis, bought Metromedia Inc.'s seven television stations -- including Washington's WTTG, Channel 5 -- making him the nation's largest independent television broadcaster. The Boston station was quickly sold to Hearst Corp. for over $450 million.
Meanwhile, the Tribune Co. -- owners of television stations in New York and Chicago -- paid a record $510 million for KTLA in Los Angeles -- making it the most potent rival to Metromedia.
In August, Turner abandoned his bid to acquire CBS in the wake of reports that the company would proceed with a $1 billion antitakeover stock buyback.
Gannett Co., the Rosslyn-based media giant, paid $717 million to acquire the Evening News Association of Detroit's nine newspapers, two radio stations and five television stations -- including Washington's WDVM, Channel 9.
In October, CBS further consolidated its antitakeover defenses by permitting Laurence A. Tisch, owner of the Loews Corp. conglomerate, to increase his stake in CBS to 25 percent. For the first time in its history, CBS agreed to sell one of its owned and operated stations -- KMOX in St. Louis.
These television takeovers and mergers are a part of an overall growing appreciation by investors for the entire spectrum of communications and media companies.
Earnings by communications companies increased by more than 16 percent per year from 1979 through 1984, according to Morgan Stanley investment banker Steven Rattner.
Consequently, not only have broadcast companies been a part of a merger and acquisitions frenzy, but newspaper and magazine properties also have sold for record prices. For example, Gannett purchased the Des Moines Register for more than $200 million. CBS purchased 12 consumer magazines from Ziff-Davis Publishing for more than $362 million.
Not only has this historic flow of earnings greatly enhanced the value of media companies, but also it has put them in a strong position to acquire other media companies. The situation is unique in the television broadcasting industry because the regulatory shackles that once made new ownership difficult have been loosened. Earlier this year, the FCC raised the number of television stations a single company could own from seven to 12. The clear result of that was to encourage acquisitions activity.
Moreover, the FCC stated that it would not interfere with friendly or unfriendly takeover attempts. Thus, aggressive media moguls such as Murdoch and Turner were in a position to bid for companies without the fear of regulatory rebuff.
In addition, the emergence of new financing techiques such as junk bonds, created greater opportunities to make media purchases. Both Murdoch and Turner, for example, relied on junk bonds for their bids.
These economic and regulatory forces have fused this year as investors and entrepreneurs have sought to make media companies realize their true market value. This quest for value has put the once impregnable media companies "in play" for corporate takeover.
General Electric, which once owned several small television stations but virtually left the business several years ago saying that it didn't fit into its strategic long-term plans, has obviously reconsidered its priorities in the midst of this phenomenal growth in media values. Earlier this year, General Electric had been rumored to be a "white knight" candidate to rescue CBS if it had been seriously threatened by a hostile takeover.