Word: rca
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Dates: during 1980-1989
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Feelings of impending doom, however, are not in evidence inside RCA. A key reason is Bradshaw. Drawing upon a calm management style honed during 17 years as president of the Los Angeles-based Atlantic Richfield oil company, the new boss, 64, has put an end to years of boardroom intrigues at RCA and given the firm a badly needed sense of renewed confidence in its own future. Says he: "What I have been doing is spending a lot of time finding out what kind of a company this is so that we can decide where we are going...
...Many of RCA's current woes stem from some hasty and shortsighted acquisitions that were made during the 1960s and '70s when the firm, like many other big American corporations, tried to boost earnings by diversifying into fields far outside its traditional lines of business. The entertainment and broadcasting company, for example, bought Random House publishing in 1966 and Hertz car rental in 1967. RCA's biggest acquisition of all was in 1979, when it paid $1.3 billion, or 40% over market value, for C.I.T. Financial Corp., a consumer loan and insurance firm. To raise the money...
When interest rates began to shoot up three years ago, so did the carrying costs on RCA's outstanding debt, which now totals $1.5 billion. By last October, interest payments for the first nine months of 1981 had reached $273.8 million, or nearly $78 million more than for all of the previous year. This created a major cash drain for the corporation as a whole. Said an RCA watcher: "Interest problems are the reason that company earnings collapsed...
...made no decision either way about what to do with C.I.T. and Hertz. Says he: "Naturally, we will keep them as long as they pay their own way and provide funds for other corporate ventures. But we have not yet decided if they do fit into the future of RCA." Wall Street experts are doubtful, however, and believe that Bradshaw will soon unload one, or both, of these properties. It already sold Random House...
...Bradshaw, that future is back to the business the company knows best: entertainment and communications. Both are fields in which RCA was an early and proud pioneer in everything from network programming to color television and space satellites. Says he: "The strength is still there. We have enormous strength in marketing; we are a leader in satellite communications; we have strength in entertainment programming. Match all that against the communications explosion that is coming in the 1980s, and we have got some tremendous opportunities...