New Kid on Broadcast Row

By Janice Castro.

The media company that is buying ABC is remarkable for its low profile. Unlike the three networks, whose highrise towers constitute a kind of Broadcast Row along midtown Manhattan's Sixth Avenue, Capital Cities Communications occupies a small building a few blocks away. Its corporate headquarters is home base < for only 33 employees, from the mail clerk to Chairman Thomas Murphy. In an industry where pizazz often seems as important as performance, Capital Cities does not even have a public relations department, let alone an organizational chart. Says Murphy: "I've never believed in a lot of reports and memos."

But he does believe in profits: Capital Cities, named for the state capitals (Albany, N.Y., and Raleigh, N.C.) where its first two television stations were located, has reaped record earnings in each of its 30 years. True to form, 1984 revenues rose 23%, to $940 million, while profits of $143 million were up 24% over 1983. The company's stock has risen along with its fortunes, from $18 per share in 1974 to a peak of $174.50 last year, earning Capital Cities a reputation among investors as "the Cadillac of the industry."

Much of the credit for the stunning record belongs to Murphy, 59, the Brooklyn-born Harvard M.B.A. who was Capital Cities' first employee. In 1954 he was put in charge of a near bankrupt Albany television station bought by the broadcaster Lowell Thomas and a partner. Murphy took a "waste not, want not" approach from the start. Noticing that his ramshackle headquarters building was badly in need of paint, he immediately spruced up the two sides that were visible from the road.

Over the years, Murphy developed a knack for spotting golden opportunities. After three decades of acquisition and diversification, Capital Cities now consists of seven television stations (four of them ABC affiliates), 54 cable- TV systems, 12 radio stations, 27 weekly newspapers, 10 dailies and 45 other publications, including those of the Fairchild group (Women's Wear Daily, W and M) and Institutional Investor.

The hallmark of Capital Cities' management style is de-centralization. Says James Burke, 60, chairman of Johnson & Johnson and a director on Capital Cities' board: "Murph's friends say he delegates to the point of abdication." Notes Cary Reich, executive editor of Institutional Investor: "Except for once, nobody from Cap Cities has ever set foot in our offices."

Murphy does demand efficiency from the company's units, however, and that has sometimes sparked laborrelations conflicts. When Capital Cities bought the Wilkes-Barre (Pa.) Times Leader in 1978, the new management tried to eliminate some employee benefits. That led to a strike by most of the staff, who started their own daily called Citizens' Voice. The walkout is still going on 6 1/2 years later. Other newspaper acquisitions have turned out more successfully. After Capital Cities bought the Kansas City Star and Times in 1977, dozens of employees were fired or resigned. Since then, though, the company has won the grudging admiration of its Kansas City workers, and the papers have won two Pulitzer prizes since 1982.

Murphy hardly fits the image of a tough boss. Friends describe him as generous and very shy. He is a devout Catholic and an eternal optimist whose most striking executive quality is said to be his ability to instill self- confidence in his managers. But even Murphy admits to having some trepidation when he considered the prospect of taking over a major network. On the day before he signed the agreement to buy ABC, he stopped for inspiration at another famous institution across the street from his office: St. Patrick's Cathedral.

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With reporting by Barry Kalb/New York