During this same early period, another television company, Dumont, was able to mount a TV network largely because it had been acquired by Hollywood’s Paramount Pictures, and even the NBC and Columbia Broadcasting System (CBS) television networks, usually thought of as secure corporate entities, relied on mergers to increase their stable of owned-and-operated television stations. As the three-network oligopoly of ABC, CBS, and NBC solidified its position in the American news and entertainment contexts and in the wake of specific Federal Communications Commission (FCC) rulings on the allocation of spectrum space, the television industry appeared to be established and unchanging. Through the 1960s and 1970s, the “Big Three” TV networks acquired few TV properties, and the only big news in the late 1960s was an “almost merger” as ITT tried and failed to take control of ABC. The FCC carefully investigated that proposed deal, and the delay caused the parties to abandon the merger. CBS and NBC were satisfied to acquire ancillary entertainment units, from baseball teams to book publishers.

The stability of the three major TV network empires was shattered in the mid-1980s, a time when the television business was changing rapidly. Cable and home video made major inroads into the landscape dominated by terrestrially based broadcasters. Longtime owners, such as William Paley of CBS, began to ponder retirement, and perhaps most significantly, the FCC lowered the level of its threatened opposition to proposed deals.

In 1986 General Electric (GE) purchased the Radio Corporation of America (RCA) at a price in excess of $6 billion and thus acquired NBC. GE, one of the biggest corporations in the world, immediately sold off the NBC Radio network and stations as well as RCA manufacturing. GE’s stripped-down NBC then began to expand into cable television, a move most strongly exemplified by its acquisition of shares of the CNBC, Bravo, American Movie Classics (AMC), and A&E cable television networks.

Also in 1986, Laurence Tisch and his Loews investment company took over CBS. Earlier, as Ted Turner attempted a hostile bid for CBS, longtime CBS chief Paley looked for a “white knight” to save his beloved company and in October 1985 asked Tisch to join the CBS board of directors to thwart the Atlanta-based broadcaster. The following year, Tisch took full control and, to no one’s surprise, systematically began to sell everything CBS owned in order to concentrate on television. First to go was CBS Educational and Professional Publishing, which included Holt, Rinehart and Winston, one of the country’s leading publishers of textbooks, and W.B. Saunders, a major publisher of medical books. Next Tisch picked up $2 billion from the Sony Corporation of Japan for CBS’s Music Group, one of the world’s dominant sellers of popular music.

ABC was the third of the Big Three to be merged into another company. By the early 1980s, Leonard Goldenson had transformed ABC into the top TV network, but he had passed his 80th birthday and wanted out of the day-to-day grind of running a billion-dollar corporation. In 1986 Capital Cities, backed by Warren Buffett’s Berkshire Hathaway investment group, bought ABC for $3.5 billion. Capital Cities had long ranked as a top group-owner of television stations, and through the late 1980s and into the 1990s, the new “CapCities,” led by chief executive officer Thomas Murphy, moved ABC into cable television, most notably by taking control of the cable sports network ESPN (Entertainment and Sports Network).

At this same time, the cable television industry was also in the process of consolidating. Giant companies were created through acquisitions and mergers based on the core of the cable television operation: the local franchise. To take advantage of economies of operation, corporations merged cable franchises under single corporate umbrellas, creating “multiple system operators.” No two corporations did this better than Time Warner and TeleCommunications, Inc. (TCI).

Time Warner was formed by the merger of two communications giants in 1989; its assets approached $20 billion, and yearly revenues topped $10 billion. While the colossus covered all phases of the mass media, its heart was a vast nationwide collection of cable franchises. However, this merger to end all mergers also included Warner Brothers (one of Hollywood’s major studios, a leading home video distributor, and one of the world’s top six major music labels) and Time’s vast array of publishing interests, from magazines as well known as Time, Fortune, and Sports Illustrated to Time-Life Books. In 1995 Time Warner acquired Turner Broadcasting (which had itself acquired other film libraries, production companies, and cable entities), making an already vast empire ever larger.

From the outside, to challenge the Big Three networks and these vast cable corporations, came Rupert Murdoch and his News Corporation Ltd. From a confederation of independent stations around the United States, Murdoch fashioned the FOX television network. He began by taking over the Hollywood studio 20th Century-Fox and thus obtaining a steady source of programming. Next he acquired the most powerful nonnetwork collection of television stations, Metromedia, for well in excess of $1 billion. These six over-the-air television stations, plus a score more in smaller markets that Murdoch would later acquire as legal ownership maximums increased, could reach nearly one-third of homes in the United States. As a capstone, Murdoch spent well in excess of $1 billion for TV Guide, the magazine that was best able to promote his new television empire.

In 1990, with the Time Warner merger settled, Rupert Murdoch on scene as a new player, and the new owners for each of the Big Three TV networks, it seemed it would be well into the next century before the television industry in the United States would experience another important wave of mergers. Instead, a frenzy of acquisition came in 1995, far sooner than anyone expected. That summer, Disney acquired Capital Cities/ABC, adding not only a famous TV network but also a score of FM and AM radio stations and two dozen newspapers to the entertainment and theme park company. Within a month, Tisch sold CBS to Westinghouse. At the time, Westinghouse stood as a major manufacturer of industrial equipment in the United States with but a single division owning and operating television and radio stations. (Later in 1995 came the previously mentioned acquisition of Turner Broadcasting by Time Warner.)

A cornerstone event in the history of mergers and acquisitions in the television business had taken place. Critics stood up and asserted that this takeover wave had created a very real threat: a few corporations controlling television, the most important communications medium of the late 20th century. Before 1995, analysts had associated TV networks with one part of the business (distribution run from New York) and Hollywood with another (production of prime-time entertainment). The 1995 merger movement changed all that, consolidating all economic functions into single corporations. Indeed, critics argued that the television industry seemed on the verge of domination by one unit: “The ABC-CBS-NBC-FOX-Disney-Westinghouse-News Corp Entertainment and Appliance Group.”

A primary concern for critics of such alliances is the reduction in forms of social and cultural expression. They cite various form of vertical integration—including the unification of production, distribution, and presentation of mediated material—as serious threats to experimentation, variation, and diversity among social and cultural groups. Profit margins, rather than the needs and aspirations of groups and individuals, determine what is produced and exhibited. Moreover, because most of the major participants in the giant, newly merged media corporations also have international interests, critics point to the possibility of a reduction in cultural diversity, forms of expression, and dissemination of information on a global scale. Indeed, the model of consolidation and merger outlined here in the context of the United States is equally significant among a shrinking handful of European and Asian media conglomerates. Control of communication- and media-based corporations throughout the world, then, is scrutinized as a form of extraordinary political, economic, social, and cultural power.

The wave of mergers continued through the end of the 20th century and the early 2000s. The biggest came in January 2000, when America Online (AOL) merged with Time Warner. This deal lasted only three years, as AOL could never provide a synergistic thrust to the benefit of Time Warner. In August 2003, “AOL” was dropped from the company name.

The second-largest deal came in September 2003, when NBC took control of Hollywood’s Universal studios. Therefore, at that point in time, all four major networks (NBC, CBS, ABC, and FOX) were vertically integrated with movie and television studios in a merger worth an estimated $42 billion.

Mergers and acquisitions will continue in the future as corporate players try to anticipate what it means to operate in the new world of 500 channels and the Internet. Future media mergers will most likely take one of three forms.

First, corporations and companies not directly involved in the television industry will wish to enter into mergers with television companies or acquire them. This was exemplified by the Westinghouse takeover of CBS, continuing a trend that started in the mid-1980s with GE taking over NBC. More often than not (and surely in the case with Westinghouse), the outside corporate entity acquires the television company because it is struggling and seeking to reinvent itself.

Second, there will be an increase in vertical integration. Disney, a “software producer,” acquired ABC, a top distributor of video, in part to enable Disney to gain a guaranteed market for its future products.

The third merger strategy will be corporate diversification. Corporate chief executive officers will seek to spread risk over as many media enterprises as possible in order to hedge bets in an ever-changing media marketplace. With divisions devoted to all forms of the mass media, the diversified corporation can survive through future recessions and ride the technological wave of the future, whatever direction it may take.

It is likely that mergers and acquisitions will always be a central activity in the television business as companies maneuver to become the dominant player in one media segment. Television, whether defined by networks (distributors) or Hollywood studios (producers), has long been comprised of small, exclusive clubs. As long as television remains a major industry, outsiders will attempt to buy in, current players will struggle to protect what they have, and all will strive to minimize risk. Simply put, it is cheaper to merge with and acquire other companies than to start new companies from scratch, a fact as true in the days of Sarnoff, Paley, and Goldenson as it is today.