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Remembering Thomas S. Murphy, Media Legend

by News Desk

Thomas Murphy, one of the giants of the media industry from the ’70s into the 2000s whose career was a literal business school study, died Wednesday at age 96 at his home in Rye, New York.

Murphy, along with his friend Daniel Burke, grew what was then Capital Cities from a string of regional radio stations into local television, newspapers and magazines and, in 1986, surprised the business and media worlds with the $3.5 billion acquisition of the much-larger American Broadcasting Corp. It was an audacious move by Murphy, whose business ethos was to hire managers — often young executives with only a few years of experience — and empower them to run their individual businesses and budgets.

The Cap Cities mantra, even once it became Cap Cities/ABC, was “lean.” Murphy was a friend and role model to legendary Berkshire Hathaway head Warren Buffett, who said Murphy’s method of running a company was an inspiration to him and that he wished that he had applied it to his own businesses earlier than he did.

Lawrence Cunningham wrote in his book “Berkshire Beyond Buffet,” that, “in 40 years at the head of CapCities, Murphy and Burke developed a set of principles — decentralization, hiring the best possible people and giving them autonomy and imposing rigorous cost controls.”

For example, when Cap Cities acquired ABC, its total headquarters head count was 12 people — with no public relations department. A BusinessWeek reporter who called the switchboard once the deal was announced asked to speak with the company’s PR. The person who picked up the phone when the call was out through was Murphy.

But even as the corporation grew, Murphy remained low-key, ego free and approachable. He would visit Cap Cities/ABC offices throughout the world and chat with staff — not being above taking a cup of instant coffee and asking, “What can I do for you?”

After buying ABC, Murphy was bemused — and perhaps shocked — at the spending at the TV network compared with that of Cap Cities, grumbling about all the Town Cars used by ABC staffers as opposed to the subway or taxis. Indeed, once visiting Tokyo, Murphy called the office of a Cap Cities division there and asked the staffer how to get there. The employee, not realizing who was calling, explained which subway to take — and 15 minutes later, in walked Murphy. The embarrassed employee said if only he’d known, he would have sent a car for Murphy, who replied, “No, the subway’s fine. I’m not one of those ABC people who need a car.”

In October 2011, when Burke died, WWD wrote of their partnership: “Burke and Thomas Murphy, chairman of CapCities, formed a duo many management theorists and analysts believe was one of the best executive teams in business history. Their style was low-key and low ego, with no frills and no fuss. Burke and Murphy gave the managers of CapCities’ various business units immense autonomy to run their divisions. The ABC deal was backed by Warren Buffett, a longtime supporter of Murphy’s and Burke’s, who in 1996 pressed for an outright sale of CapCities to The Walt Disney Co. for $19 billion instead of merging with the entertainment conglomerate.

“In 1986, the two men stunned the media and corporate worlds by acquiring ABC for $3.5 billion in the largest non-petroleum merger in corporate history.”  At that time, WWD went on to note, “Burke became president and CEO of the combined firm CapitalCities/ABC, retiring from that position in 1994.“

Murphy said of Burke in 2011, “He was wonderful, smart, creative and perceptive, with great integrity. Among other things, he was the architect of fixing ABC from the inside. I was outside. He was terrific. We wouldn’t have done as well as we did without him. He kept costs under control.

“He was a fun guy. We [knew each other] for 33 years. His older brother was a classmate of mine at Harvard Business School. I met him when he got back from Korea. He was a great partner.”

Many of the same things could have been said of Murphy.

Before ABC, however, Capital Cities made another big purchase when in 1968 it acquired the-then Fairchild Publications, which doubled the size of the company. The parent of Women’s Wear Daily as well as the menswear paper Daily News Record, Home Furnishings Title and Footwear News was owned by the Fairchild family. Cap Cities immediately cut costs — closing Fairchild’s printing plant in the basement of its headquarters at 7 East 12th Street in Manhattan, for example.

But even as it trimmed some costs, it also expanded Fairchild, adding titles such as Electronics News, Sportstyle, Multichannel News and, most importantly, W, which moved Fairchild into consumer magazine territory. The brainchild of the legendary publisher John B. Fairchild, the title would become an instant success and create an entirely new genre of magazines. (WWD is now part of Fairchild Media Group, which is owned by Penske Media Corp.)

Murphy was born on May 31, 1925, in Brooklyn, New York. He matriculated at Princeton, then went into the U.S. Navy, graduating from Cornell University with a B.S. in engineering in 1945, and then from Harvard Business School as part of the fabled class of 1949 there, which was known for its high percentage of unusually successful chief executive officers.

In reminiscing about his early life, Murphy once recalled that one of the greatest gifts he had been given was to be born into a family with parents who were very happily married and who had high standards for their children’s achievements.

Murphy’s own father came from a large Irish-American family and was the sole member of it to attend college. He served in World War I, then went to Fordham Law School at night and became a very successful attorney.

Thomas Murphy’s father’s friendships with noted broadcaster Lowell Thomas and his business partner Frank Smith, in fact, brought Tom to the attention of that duo when they formed a New York-based investment group to take control of the Hudson Valley Broadcasting Company. Despite a lack of broadcasting experience, Murphy, who had previously worked at Kenyon & Eckhardt and Lever Brothers, was hired to run the WROW stations (television and radio) as their general manager. Within three years, he made it profitable.

In 1957, Hudson Valley merged with Durham Television Enterprises to form Capital Cities Television Corporation, which became Capital Cities Broadcasting Corp. in 1960 and Capital Cities Communications in 1973. In 1966, Smith died unexpectedly and Murphy became chairman and CEO of the company, a position he held for the next 30 years.

There are many headlines in WWD over the years which attest to his success. “Capital Cities Net Up 53% in Period,” reads one headline on April 28, 1972. “Capital Cities Quarter Net Up 48.8%,” read another on July 22, 1982. “Capital Cities Posts Record Results for First Quarter,” appeared on April 24, 1984. “Cap Cities Operating Net Up 62% in 2nd Quarter,” read another on July 29, 1986.

Murphy, who was credited with making ABC Television more profitable through his cost-cutting measures, is in the Television Hall of Fame and, in May 1995, received an award at the Literacy Volunteers of New York City gala at Lincoln Center. Murphy and his wife Suzanne were saluted for their “commitment to education and literacy.”

In fact, adding a service component to corporate work was a hallmark of Murphy’s term as an executive at Capital Cities and later as CEO at Capital Cities/ABC. In 1961, the company received national attention for its exclusive TV coverage of Adolf Eichmann’s trial for war crimes in Israel.

The firm was involved in public service campaigns to Stop Sexual Harassment, PLUS Literacy, the Partnership for a Drug-Free America and many others.

At the same time, Murphy made sure that his employees benefited from the company’s success. Cap Cities was among the early companies to introduce an employee stock ownership plan, contributing 50 cents for every $1 contributed by an employee. When it was first introduced, shares were about $15 each. They would skyrocket over the next 15 or so years to almost $600 each, at which time they were split 10-to-1 so more employees could benefit.

But while Buffett may have been an admirer of Murphy’s, he also forced a deal that the media titan reportedly was not 100 percent pleased with. In 1995, Murphy helped devise what was then the second-largest corporate takeover ever when Walt Disney acquired Capital Cities/ABC for $19 billion. While Murphy was not against the deal per se, sources at the time said he fought strongly for the new company to be called Walt Disney/Capital Cities to retain some of what he had built. Michael Eisner, then CEO of Disney, insisted on swallowing all of the group, including its name – and Buffett, who at that time owned about a quarter of Cap Cities/ABC’s shares, insisted Murphy do the deal.

“Tom Murphy was unrivaled in our industry, not just for his business achievements, but for his impeccable ethics, his unwavering kindness and his boundless generosity,” said Robert A. Iger, former CEO of Disney who oversaw ABC as well as Fairchild at Cap Cities. “He was a deeply principled man, setting and demanding high standards, always living up to them, and never compromising ethics in the service of business… To me, he was more than a mentor. He was a father figure, placing trust in me, instilling confidence, exhorting innovation, being accessible, and just as capable at commiserating failures as he was at cheering on successes. I will never cease to appreciate his friendship and his goodness.”

Murphy was a member of the board of the Walt Disney Company from 1996 to 2004, and a member of the Disney Executive Committee from 1997 to 2004. He was also a member of the boards of Berkshire Hathaway, General Housewares Corp., Texaco, Johnson & Johnson and the IBM Corporation. He was also a trustee and honorary vice-chair of N.Y.U.

Murphy is survived by his three daughters Emilie Murphy, Kathleen Murphy and Mary Conlin; a son, Thomas S. Murphy Jr., and nine grandchildren.

In Cap Cities’ internal newsletter for employees, Murphy once described to an interviewer his attitude to his job. He said that he never took a briefcase of work home with him because, when his son was 10 years old, he realized that he had missed that first decade of the child’s life because Murphy was always working. “There is nothing so important that it can’t wait until the next morning,” he told the interviewer. Family was what mattered.

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