In 1985 Capital Cities Communications stunned Wall Street by acquiring the American Broadcasting Company for $3.5 billion, and 10 years later sold the company to Disney for $19 billion, but Thomas S. Murphy died on Wednesday at his home in Westchester.
His death was announced by a spokeswoman for Mr. Murphy.
Capital Cities stock increased in value 2,000 times between 1957 and 1995 when Disney bought it, a testament to Mr. Murphy's business success.
The same story is highlighted by other measures. In the three decades before Capital Cities acquired ABC, it had swallowed three dozen broadcasting and publishing companies, almost always at bargain-basement prices. Television stations made $55 for every $100 they made. From 1974 to 1985 its earnings per share increased by 22 percent, as investors responded with almost reverential confidence in the management.
Mr. Murphy was described as shrewd and personable by Warren E. Buffett, the celebrated Omaha investor.
Mr. Buffett told The New York Times in 1987 that he doesn't have the complexity of character that makes for irrational behavior.
The acquisition of NBC by General Electric in 1986 was seen to have gone more smoothly than those before it.
The network's ratings went up after the Capital Cities acquisition. ABC made inroads with the younger audience.
I wouldn't say I was a creative force, Mr. Murphy said.
Mr. Murphy did not shrink from the momentous despite being praised for his cheerful demeanor. He walked into the office of Leonard H. Goldenson, who had run the company for more than three decades. He hoped Mr. Goldenson wouldn't throw him out of the window when he heard it. Capital Cities should acquire ABC.
He said that it made sense for both sides. A change in federal policy made it possible for a company to own more stations, which Mr. Murphy coveted. Mr. Goldenson wanted management expertise that he didn't think his company needed to guide it into the future. Capital Cities was called the most well-managed company in the world.
Capital Cities acquired ABC for $3.5 billion. The biggest merger ever outside of the oil industry was at the time of the deal.
The sale of Capital Cities/ABC to Disney was the second largest corporate takeover of all time. Disney's vast media and entertainment kingdom was brought together with Capital Cities/ABC's own assets. Capital Cities shareholders were paid $19 billion by Disney.
Mr. Murphy had a humble beginning in business. After graduating from Harvard Business School in 1949, he worked for an advertising agency and as a brand manager. Frank Smith was asked to manage an AM radio station and a UHF television station by an investment group headed by Lowell Thomas. He was paid $18,000 a year for the job.
Mr. Murphy became chief operating officer of Hudson Valley Broadcasting, which owned the stations. The stations were so small that they broadcasted from a home for retired nuns. The company almost went out of business.
Hudson merged with a television station in Durham, N.C., to become Capital Cities in 1957. The capital regions of their states were served by the stations. The new company's shares were sold to the public for 72 cents each.
Mr. Smith and Mr. Murphy both died in 1966. Lower-level executives were forced to make their own decisions. His passion for cost-cutting became well known, as he painted only the two sides of the company headquarters that faced the road, and the building had no air-conditioning.
The business grew quickly. Continuous increases in sales or decreases in costs widened profit margins. At the time of the ABC acquisition, Capital Cities had seven television stations, 12 radio stations, 54 cable television stations, 10 daily newspapers and 36 specialty newspapers.
The deals were put together by Mr. Murphy. Mr. Burke ran complex operations away from the public eye.
Mr. Murphy got the job back in 1994 after Mr. Burke retired. Mr. Murphy retired in 1996. Mr. Burke passed away in the year 2061.
On May 31, 1925, Thomas Sawyer Murphy was born. Charles was a judge in the New York State courts for the last 15 years of his life. In his 1995 book,Buffett: The Making of an American Capitalist, Roger Lowenstein wrote that Mr. Murphy's mother often touched his chest.
Mr. Murphy joined the Navy after graduating from college. He received an undergraduate degree in mechanical engineering from Cornell. He applied to Harvard Business School but was turned down. He applied to Harvard again and was accepted. He graduated in 1949.
He met Mr.Buffett in the 70s. After the price went up, Mr. Buffett sold the stock and missed the huge increases in share prices to come.
Mr.Buffett said of his decision to sell.
Mr. Lowenstein wrote that Mr. Murphy was checking with Mr.Buffett before making big business decisions. The two once proposed buying Walter Annenberg's publishing empire for $1 billion on a 50% basis. Mr. Annenberg did not want to sell.
When ABC was bought by Mr. Murphy, Mr.Buffett offered to buy 18 percent of Capital Cities stock in order to help Mr. Murphy fight any takeover attempts. Mr. Murphy was given the authority to vote on his shares. Mr. Buffett hoped to make money on the investment.
Mr. Murphy's wife, Suzanne, died in 2009. He is survived by his family, which includes three daughters, Kathleen Murphy and Mary Conlin, and a son, Thomas S. Murphy Jr. Charlie and Betty Murphy Orteig were his siblings.
Mr. Murphy bragged that he never went to work. He told Harvard Business School that he loved fixing things and figuring out how to make deals. I didn't go to work. Not many people can say that. It's an unbelievable privilege to be able to say that.
Maia Coleman was involved in reporting.
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