Capital Cities is a major media and broadcasting company in the United States that has made some landmark investments and acquisitions over the past few decades. As an investment holding company, Capital Cities has deployed capital in strategic deals that have shaped the media landscape. Some of the major investments and acquisitions by Capital Cities include the purchase of ABC in 1985, the acquisition of cable television systems in the 1990s, and investments in new media platforms in the internet age. Capital Cities’ investment philosophy focuses on value and long-term growth rather than short-term profits. The company has partnered with visionary entrepreneurs and managers like Warren Buffett to make investments that transform industries. Though Capital Cities itself was acquired by Disney in 1996, its investment principles have continued to guide successors like ABC and ESPN.
The acquisition of ABC in 1985 was a landmark deal for Capital Cities
In 1985, Capital Cities acquired the American Broadcasting Company (ABC) in a $3.5 billion mega-merger deal. This deal was orchestrated by Capital Cities’ CEO Tom Murphy and Warren Buffett, who helped finance the acquisition. Though surprising at the time, the deal proved hugely successful for both companies. ABC benefited from Cap Cities’ superior management style and strategic direction. And Cap Cities gained an entertainment powerhouse and national television network. Buffett called Murphy one of the top managers in the US after the legendary deal. This acquisition transformed Capital Cities into a media conglomerate and was one of the biggest deals of its kind at the time.
Capital Cities invested heavily in cable television systems in the 1990s
In addition to the ABC network, Capital Cities bet big on the growth of cable TV in the 1990s. The company acquired cable assets from NBC and CBS and consolidated them into a cable division called Cablevision Systems Corporation. Though not as high profile as the ABC deal, these investments in cable television helped Capital Cities capitalize on the cable revolution of the 90s. As cable networks like ESPN, CNN and MTV changed television, Capital Cities was well-positioned with cable infrastructure and significant cable network assets. These cable investments became an important part of Capital Cities/ABC’s value proposition.
More recently, Capital Cities has focused on digital media and new platforms
In the internet age, Capital Cities has evolved its investment strategy to focus on digital media and emerging platforms. While Disney took over the core entertainment assets, successors of Capital Cities like ABC and ESPN have made major digital investments. For example, ESPN has launched streaming services like ESPN+ and has rights to stream major sports online. ABC has invested heavily in digital content and online video. And Capital Cities’ investment philosophy of partnering with visionaries continues at these companies. Though no longer a standalone company, the core principles of Capital Cities live on through its former subsidiaries and guide their digital transformation.
Over its operating history, Capital Cities made prescient investments across industries and platforms – from traditional media networks to next-generation digital technologies. Guided by long-term thinking and partnerships with talent like Warren Buffett, the company evolved into a major force in the media landscape before being acquired. And Capital Cities’ strategic mindset continues to shape successors like ABC and ESPN.