Linking Tentacles
Once the world's largest talent agency and more recently Hollywood's leading TV film producer, the Music Corp. of America has long been known in show-business circles as "The Octopus." The sobriquet still stands, even though the company (now called MCA Inc.) stopped handling talent in 1962 under threat of a Justice Department antitrust suit. Besides TV production, MCA has major interests in moviemaking (Universal Pictures), recording (Decca Records) and real estate (Universal City). Last week it agreed to link tentacles with Pittsburgh-based Westinghouse Electric Corp., itself no small fish when it comes to diversification.
Under terms of the merger, which must be approved by its stockholders, MCA will become a wholly owned subsidiary of Westinghouse. For MCA, one of the principal attractions of the $385 million stock-swap deal is Westinghouse's higher dividend. And nobody stands to benefit more than MCA's founder and chief stockholder, Chairman Jules Caesar Stein, 72, whose 27% stake in the company has a current market value of almost $90 million. By converting his MCA holdings to Westinghouse stock, Stein's annual dividend return would rise from $1,200,000 a year to $4,000,000.
Stein's success as a businessman is all the more remarkable for the fact that his original calling was ophthalmology. A graduate of both the University of Chicago and Rush Medical College, Stein helped finance his education first by organizing a band in which he played "schmaltz" violin and saxophone, later by arranging dance-hall bookings for other bands. In 1924, Dr. Stein founded the Music Corporation of America as a band-booking agency, found the sideline so profitable that he decided to abandon medicine. Over the years he moved into management of talent in radio and films, succeeded in signing up most of Hollywood's top stars, including Bette Davis, Marilyn Monroe and Marlon Brando. Biggest Plums. MCA's chairman remains active in the company, still owns the seat on the New York Stock Exchange he acquired in 1936, also finds time for antique collecting and philanthropy. The man who actually runs MCA is President Lew Wasserman, 55, who was elevated to that job by Stein in 1946. A onetime theater usher, Wasserman moved MCA into TV production when the new medium began threatening the movie industry in the early 1950s, six years ago acquired Decca Records and its controlling interest in Universal Pictures. Under Wasserman, MCA has grown into a $224 million-a-year company, with earnings last year of $15,680,140.
If its acquisition of MCA goes through, Westinghouse will be getting a studio that accounts for 151 hours a week of network TV's prime-time output (The Virginian, It Takes a Thief and Ironside) and has turned out some of Hollywood's most profitable full-length features (Thoroughly Modern Millie, The Secret War of Harry Frigg). The biggest plums are the potential TV receipts from MCA's library of 1,954 feature films, including 700 Paramount features that Wasserman shrewdly bought up ten years ago, and the company's real estate properties, notably its $1 billion Universal City office-and-hotel development overlooking the bustling Hollywood Freeway.
After years of sluggish profits, Westinghouse has brightened considerably under President Donald C. Burnham, 53. Since taking command in 1963, Burnham has shaken up the company's management and sharply pared costs while increasing earnings by 156%, to last year's record $122.5 million. His company is not a complete stranger to show business. Besides turning out 8,000 different products--light bulbs and can openers as well as nuclear reactors and desalination plants--Westinghouse owns and operates five TV and seven radio stations, one of which, Pittsburgh's 48-year-old KDKA, was the first licensed radio station in the U.S.
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