New Colossus

ABC has long played third fiddle to NBC and CBS. Although it has sales of $421 million and operates 401 movie theaters, it has not had the plentiful cash with which its rivals dominate the TV screen. But last week the word at ABC was money--lots of it. After a year of dickering, the International Telephone & Telegraph Co. (1964 sales: $1.5 billion) agreed to acquire ABC in a move that, if it goes through as expected, will produce a new electronics-entertainment colossus. The combination would outrank Radio Corp. of America (1964 sales: $1.8 billion) and its NBC subsidiary, leave CBS as the only major network without a big corporate shelter.*

Chopped Down. The proposed merger by stock swap, which must be approved by the stockholders and will probably receive more than the normal amount of scrutiny in Washington, is the work of Harold S. Geneen, I. T. & T.'s hard-driving president since 1959. When he took over I. T. & T., Geneen boasted to a group of Wall Street analysts that the then ailing giant would become "one of the most important companies of the next decade."

To turn his fancy into fact, Geneen chopped down a somnolent executive hierarchy and tightened Manhattan-headquarters control over I. T. & T.'s global spread (195,000 employees, 27s factories and offices in 52 countries). He also became one of the corporate world's most expansion-minded executives. He has made 35 acquisitions, including an auto-rental company (Avis) and a mutual-fund management company (Hamilton), has moved into heating and ventilating equipment, consumer finance and life insurance. One result: the doubling of both I. T. & T.'s sales and its profits ($63 million).

The I. T. & T.-ABC merger should bring big benefits to both companies. I. T. & T. gets the bulk of its income from its activities as a major world supplier of telephone and electronic equipment and services and as a big producer in Europe of TV sets, refrigerators and record players. The new combine would end that heavy dependence on overseas income. ABC would become an "autonomous" subsidiary headed by President Leonard H. Goldenson, 60, would get from the merger the needed financial resources with which to build stronger programs.

Delighted Simon. The merger would also end any chance of a takeover by ABC's largest stockholder, Norton Simon, the West Coast industrialist. Simon, in fact, seems delighted. One reason: he already has a $17 million paper profit on the 9.9% of ABC common stock held by his Hunt Foods and Mc-Call Corp.

The tie-up could also speed satellite communications for ABC radio and television. A major stockholder in Comsat, I. T. & T. last month asked approval from the Federal Communications Commission to build and operate a satellite earth station in Puerto Rico, where it runs the telephone system. The station would connect the U.S., Europe and Latin America with live TV, telephone and other services.

* NBC's news of the week was the departure of President Robert Kintner, 56, who was scheduled to move up to board chairman on Jan. 1. There was no official announcement, no unofficial leak. The reasons, presumably, were personal.

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