Metromedia
Metromedia was an American media conglomerate founded by John W. Kluge in 1959 through the acquisition of the Metropolitan Broadcasting Corporation for $4 million, which he renamed Metromedia in 1961.[1] Originally starting with two television stations (WNEW in New York and WTTG in Washington, D.C.) and two radio stations, the company rapidly expanded into one of the largest independent broadcasters in the United States, owning seven television stations in major markets including Los Angeles (KTTV), Chicago (WFLD), and Dallas (KTVT) by the 1980s.[2][3] Under Kluge's leadership, Metromedia diversified beyond broadcasting, acquiring interests in outdoor advertising (including 45,000 displays nationwide), radio paging and cellular services, and entertainment properties such as the Harlem Globetrotters and Ice Capades.[1][2] In the 1980s, it further expanded into telecommunications and the restaurant industry, owning chains like Ponderosa, Bonanza Sirloin Steak House, Steak & Ale, and Bennigan's, which by 1993 accounted for about 60% of the company's earnings.[2] The company's growth culminated in a $1.1 billion leveraged buyout in 1984, making it one of the largest privately held firms in the U.S. with over $2 billion in annual sales and 19,000 full-time employees by the early 1990s.[1][2] A pivotal moment came in 1985 when Kluge sold Metromedia's seven television stations and production arm to Rupert Murdoch's News Corporation for approximately $2 billion, with the Boston station (WCVB-TV) redirected to Hearst Corporation for $450 million as part of the deal.[3][4] These stations formed the nucleus of the Fox Television Stations group and helped launch the Fox Broadcasting Company network in 1986.[5] Following the divestitures, which included sales of radio stations for $290 million and outdoor advertising for $710 million, Metromedia shifted focus to telecommunications, high-tech ventures, and its restaurant holdings, though it later faced challenges including the 1991 bankruptcy of its majority-owned Orion Pictures subsidiary.[1][2] Kluge, who became one of America's richest individuals with an estimated net worth of $6.5 billion at the time of his death, passed away in 2010, leaving a legacy as a pioneer in independent media ownership.[6]Overview
Founding and Early Structure
The predecessor to Metromedia originated in 1956 as a standalone entity through the spin-off of the DuMont Television Network's owned-and-operated television stations following the network's financial collapse in 1955. This separation allowed the broadcasting assets—initially under the name DuMont Broadcasting Corporation, later renamed Metropolitan Broadcasting Corporation in 1958—to operate independently from DuMont Laboratories.[7] John W. Kluge became the key figure in the company's transformation, acquiring a controlling interest in 1959 and serving as chairman and CEO. Born in Germany in 1914 and immigrating to the United States as a child, Kluge had built early success in radio, acquiring his first station, WGAY in Silver Spring, Maryland, in 1946 for $15,000 after recognizing the sector's growth potential through market analysis. By the mid-1950s, his experience as a stockbroker and investor positioned him to capitalize on undervalued media properties, including the DuMont remnants, which he viewed as opportunities in major metropolitan markets. Kluge and a group of investors purchased a 24% interest from Paramount Pictures for $4 million, giving him control of the company comprising two television stations and two radio stations. Under Kluge's direction, the company—renamed Metromedia in 1961—transitioned into a focused independent broadcaster. The stock was listed on the New York Stock Exchange shortly after the acquisition, gaining favor among investors for its promising returns in the expanding broadcast sector and generating approximately $12.4 million in annual revenues as of 1959.[7][8][9]Core Business Model
Metromedia's core business model centered on acquiring independent television stations in major urban markets to circumvent dependencies on national networks and capitalize on local advertising opportunities. By focusing on unaffiliated stations, the company could control its programming and scheduling, often employing counter-programming strategies such as airing syndicated sitcom reruns and low-budget films during prime time to attract viewers in competitive environments. This approach allowed Metromedia to generate substantial revenue from spot advertising sales tailored to local demographics, particularly in high-value metropolitan areas.[9][10][6] The "Metromedia" name, adopted in 1961, underscored this metropolitan-oriented strategy, evoking a focus on top-10 U.S. cities like New York, Los Angeles, and Washington, D.C., where population density and economic activity supported premium ad rates. By the early 1980s, Metromedia owned stations in seven of the top ten markets, reaching approximately 23% of U.S. television households without network affiliation constraints. This selective expansion emphasized quality over quantity, prioritizing markets with strong local demand to maximize profitability.[9][11][12] To complement its television operations, Metromedia diversified into radio broadcasting, building a portfolio of up to 14 stations by the early 1980s that provided steady, complementary revenue streams through similar local advertising models. This portfolio approach treated media assets as interconnected investments, leveraging synergies in content distribution and market coverage while maintaining a high cash flow, low-capital structure that facilitated debt-financed growth. Overall, these strategies drove significant financial expansion, with revenues growing from approximately $12 million in 1959 to over $100 million by 1970, reflecting the model's effectiveness in urban media dominance.[9][11][7]Historical Development
Origins from DuMont
The DuMont Television Network, one of the pioneering broadcast entities in the United States, faced mounting financial pressures throughout the early 1950s, culminating in its operational collapse in 1955. Intense competition from the established networks—ABC, CBS, and NBC—limited DuMont's ability to attract affiliates and advertisers, as these rivals dominated prime-time scheduling and talent acquisition. Compounding these issues were internal factors, including declining sales of DuMont-manufactured television sets, which had been a key revenue stream for the company, and restrictive Federal Communications Commission (FCC) policies that prevented expansion by prohibiting the acquisition of additional stations.[13] By April 1955, DuMont ceased most entertainment programming, and the network fully wound down operations by August 1956, prompting the sale and reorganization of its assets to avoid total liquidation. In response to the network's dissolution, the FCC approved the spin-off of DuMont's owned-and-operated (O&O) stations into a new entity, the DuMont Broadcasting Corporation, established in 1956 to manage these assets independently. This included key stations such as WABD (later WNEW-TV) in New York and WTTG in Washington, D.C. The approval process, detailed in FCC proceedings, allowed the corporation to operate these outlets as standalone properties, separating them from DuMont Laboratories' manufacturing arm. Paramount Pictures played a crucial role in facilitating this arrangement, leveraging its minority stake and veto power in DuMont—stemming from a 1939 investment—to negotiate the asset transfer and resolve ongoing antitrust concerns arising from the 1948 Paramount Decree, which scrutinized studio control over media outlets.[14] By 1957, Paramount further aided the transition by selling its holdings in DuMont, enabling FCC-sanctioned divestitures that cleared antitrust hurdles.[14][15] The rebranding of these former DuMont stations as independent broadcasters under the new corporation presented significant initial challenges, as they lost access to network-supplied programming and had to compete in major markets without affiliated support. Stations like WABD and WTTG shifted to a mix of local productions, syndicated content, and acquired shows, but faced audience retention issues amid the dominance of network affiliates and limited advertising revenue in the immediate post-DuMont era. Early operations generated modest revenues—around $12.4 million annually in 1955—with negligible profits, requiring strategic adjustments to build viability as standalone entities before further corporate evolution into Metropolitan Broadcasting and eventually Metromedia. In 1958, DuMont Broadcasting acquired WHK radio in Cleveland.[11][15]Expansion into Broadcasting
Following the formation of DuMont Broadcasting Corporation in 1956 from the remnants of the DuMont Television Network, which was renamed Metropolitan Broadcasting Corporation in 1957, the company, under the leadership of John Kluge after his 1959 acquisition of a controlling interest, embarked on an aggressive expansion into broadcasting. In 1957, it acquired WNEW-AM and WNEW-FM in New York, marking its entry into the radio market and bolstering its presence in the nation's largest media hub. This move was followed by further radio acquisitions, including KRLA in Los Angeles during the 1960s, which helped diversify revenue streams beyond television while targeting high-value urban audiences. By focusing on independent stations in top markets, Metromedia capitalized on lucrative advertising rates, as these outlets commanded premium ad dollars due to their strong local viewership in competitive environments.[16][2] Television expansion accelerated in the early 1960s, with the 1963 purchase of KTTV in Los Angeles for approximately $10 million, adding a key VHF independent station to its portfolio and extending its reach into another major West Coast market. Through a series of strategic buys and FCC-approved trades, Metromedia grew to own seven VHF television stations by 1970, including outlets in New York, Washington, D.C., and Chicago, adhering to federal ownership limits while prioritizing affiliations that maximized syndication opportunities and local dominance. Complementing this growth, the company amassed multiple radio stations, reaching over a dozen outlets by the mid-1970s, all concentrated in high-ad-rate metropolitan areas to optimize profitability. Kluge's approach emphasized efficient operations, leveraging tax-deferred station swaps to acquire stronger assets without excessive capital outlay.[16][2][7] To enhance station performance and ratings, Metromedia invested heavily in programming during this period, developing robust local news operations that provided community-focused content and differentiated its independents from network affiliates. It also secured rights to popular syndicated shows, such as All in the Family and MAS*H, which drew large audiences and boosted ad revenues across its stations in the late 1960s and 1970s. These investments not only improved viewer engagement but also positioned Metromedia as a leader in the independent broadcasting model, where off-network and first-run syndication played a central role in scheduling.[16][17] Financially, Kluge drove expansion through innovative strategies, including taking the company public in 1961 shortly after renaming it Metromedia, Inc., which raised capital for further acquisitions. This was supplemented by leveraged financing and buyouts, enabling rapid scaling while maintaining high operating margins from broadcasting assets that generated the bulk of profits. By the mid-1970s, these efforts had transformed Metromedia into a multibillion-dollar media powerhouse, with its broadcasting holdings serving as the core of sustained growth.[7][2]Acquisition of Film and Production Assets
In 1964, Metromedia acquired the Wolper Organization, a prominent documentary film production company founded by David L. Wolper, for $3.6 million, marking the company's initial entry into the film and television production sector.[18] This purchase provided Metromedia with an established library of documentaries and the capability to produce original content, expanding beyond its core broadcasting operations.[19] Under this ownership, the Wolper Organization launched the acclaimed National Geographic Specials series in 1965, which featured high-quality documentaries on wildlife, exploration, and science, distributed through Metromedia's television stations and national syndication. Following Wolper's departure in 1968, when he repurchased his company for $750,000 along with select projects, Metromedia restructured its production arm by forming Metromedia Producers Corporation (MPC) from the remaining Wolper assets and in-house capabilities.[19] MPC focused on developing television films, series, and specials, investing in independent production ventures throughout the 1970s to create content for both theatrical release and broadcast.[20] Notable examples include the 1974 TV disaster film Hurricane, directed by Jerry Jameson and starring Larry Hagman, which dramatized hurricane hunters tracking a massive storm in the Gulf of Mexico, as well as other made-for-TV movies like Go Ask Alice (1973) and It's Good to Be Alive (1974). These productions emphasized dramatic storytelling and timely themes, often leveraging real-world events to appeal to broad audiences. MPC's efforts in the 1970s also extended to distributing in syndication popular series such as Starsky and Hutch (1975–1979), a gritty police drama that became a syndication staple, further solidifying Metromedia's content pipeline.[21] The strategic rationale behind these acquisitions and investments was to achieve vertical integration, enabling Metromedia to control content creation and distribution across its owned stations, thereby reducing reliance on external programming and optimizing airtime promotion of in-house material.[7] This approach not only diversified revenue streams during a period of broadcasting growth but also enhanced promotional synergies, as Metromedia's independent TV outlets like WNEW-TV in New York prioritized airing MPC-produced specials and films to boost viewership and advertising income.[18]1980s Divestitures and Sales
In the mid-1980s, Metromedia, under the leadership of founder and CEO John W. Kluge, undertook a series of major divestitures driven by mounting debt from a 1984 leveraged buyout valued at approximately $1.6 billion and evolving Federal Communications Commission (FCC) regulations on media ownership limits.[16] These pressures, including the FCC's gradual relaxation of station ownership caps from seven to twelve VHF outlets in 1984, prompted Kluge to liquidate core broadcasting assets to stabilize the company's finances and capitalize on high market valuations for independent stations.[7] The pivotal transaction occurred on May 4, 1985, when Kluge announced the sale of Metromedia's seven major-market independent television stations to a partnership led by Rupert Murdoch's News Corporation and Marvin Davis for a total of $2.05 billion.[22] This included six stations—WNEW-TV in New York, WTTG in Washington, D.C., KTTV in Los Angeles, WFLD in Chicago, KDAF in Dallas, and KRIV in Houston—acquired by the Murdoch-Davis group for $1.6 billion, while the seventh, WCVB-TV in Boston, was simultaneously sold to the Hearst Corporation for $450 million to comply with FCC affiliation rules prohibiting common ownership of ABC affiliates.[23] The deal, completed in early 1986 after FCC approval and Murdoch's U.S. citizenship acquisition to meet foreign ownership restrictions, provided Metromedia with substantial cash reserves and laid the foundation for News Corporation's launch of the Fox Broadcasting Company in 1986, utilizing the acquired stations as its initial owned-and-operated outlets.[5] Concurrently with the television divestiture, Metromedia began offloading its radio holdings, culminating in a March 1986 agreement to sell nine of its eleven stations— including flagship WNEW-AM/FM in New York, KMBC-AM/FM in Kansas City, and KRLA in Los Angeles—along with its Texas State Network to an investor group led by Sidney Shlenker's Metropolitan Broadcasting Corporation for $285 million.[24] These sales, approved by the FCC in November 1986, marked the end of Metromedia's radio operations and distributed the assets to multiple buyers, reflecting the fragmented market for urban radio properties amid rising competition from emerging formats.[25] Further dismantling Metromedia's production capabilities, Kluge orchestrated the March 1986 sale of Metromedia Producers Corporation (MPC), the company's syndication and programming arm, to 20th Century Fox Television as part of the broader News Corporation transaction.[26] Valued at an undisclosed amount but integrated into Fox's expanding television division, this divestiture absorbed MPC's library of over 100 syndicated programs and ended Metromedia's independent content production efforts, allowing Kluge to refocus the remnants of the company on non-broadcast ventures like cellular telephony.[22] These sales, while generating over $2.3 billion in proceeds, sparked subsequent legal challenges over contract terms and asset valuations, though the transactions themselves proceeded without major regulatory hurdles.Legal Disputes and Resolutions
In the early 1980s, Metromedia faced shareholder lawsuits challenging the fairness of John Kluge's leveraged buyout attempts to take the company private. Filed in 1983, the suits alleged that the proposed terms undervalued shares and benefited insiders at the expense of public shareholders, prompting demands for better consideration in the $1.6 billion transaction. The disputes were resolved through a settlement in March 1984, which enhanced the offer by adding quarterly cash dividends and adjusting debenture terms, allowing the buyout to proceed without further litigation.[27] The 1985 sale of Metromedia's seven television stations and Metromedia Producers Corporation to News Corporation for approximately $2 billion encountered significant regulatory scrutiny from the Federal Communications Commission (FCC), primarily over ownership concentration and cross-media holdings rather than formal antitrust actions by the Department of Justice. Challenges included Rupert Murdoch's pending U.S. citizenship status, which raised foreign ownership concerns under FCC rules limiting non-citizen control of broadcast licenses to 20-25%, and requirements for divesting Murdoch's New York Post and Chicago Sun-Times to comply with cross-ownership prohibitions. The FCC delayed approval multiple times amid public comments and internal debates on media concentration, but ultimately granted conditional approval on November 15, 1985, permitting the transfer after Murdoch's naturalization and mandating newspaper sales within two years.[28][29][30] Post-1986, following the completion of major divestitures, Metromedia Producers Corporation's operations triggered copyright and talent disputes, notably involving the destruction of programming assets. In a prominent case, ventriloquist and performer Paul Winchell sued Metromedia in 1976 over the erasure of master tapes for his children's show Winchell-Mahoney Time (produced 1968-1972 and syndicated via Metromedia stations), claiming the company destroyed the materials in 1970 during stalled syndication negotiations to pressure him into unfavorable terms, thereby infringing his rights to the intellectual property and irreplaceable performances. The decade-long litigation culminated in a 1986 jury verdict awarding Winchell $3.8 million in compensatory damages for the tapes' value and $14 million in punitive damages, though appeals reduced the punitive portion and the case was ultimately settled out of court in 1990. Similar talent-related claims arose from other productions, but most were resolved through settlements without broad industry impact.[31] Overall, these legal matters resulted in minimal long-term penalties for Metromedia, with settlements and approvals enabling Kluge to realize substantial proceeds from the asset sales—estimated at over $3 billion personally—while avoiding dissolution or significant operational restrictions.[32]Broadcasting Operations
Owned Television Stations
Metromedia owned a portfolio of independent television stations in major U.S. markets, operating as unaffiliated outlets that competed with network broadcasters through a mix of syndicated programming, feature films, sports events, and local news productions.[9] These stations were acquired progressively from the late 1950s onward, reaching the FCC's limit of seven VHF or UHF outlets by the early 1980s, with a focus on high-potential urban areas to maximize audience reach and advertising revenue.[11] By 1983, the group covered approximately 23 percent of U.S. television households, leveraging strong local ratings in competitive environments to establish market leadership among independents.[12] The core holdings included flagship stations in key metropolitan areas, emphasizing counterprogramming strategies such as off-network sitcoms, talk shows, and evening movie blocks to attract urban viewers underserved by the major networks.[33] For instance, WNEW-TV in New York City (channel 5), originally a DuMont affiliate, became a syndication powerhouse under Metromedia, airing popular series like The Merv Griffin Show and local news tailored to the city's diverse demographics.[34] Similarly, WTTG in Washington, D.C. (channel 5) focused on regional sports and public affairs, achieving top independent ratings through community-oriented content.[12] In Los Angeles, KTTV (channel 11) emphasized Hollywood-adjacent programming, including movie premieres and variety shows produced at nearby Metromedia facilities, contributing to its status as a ratings leader in the Southland market.[3] Other notable acquisitions expanded the footprint into additional top markets. Metromedia purchased KMBC-TV (channel 9) in Kansas City in 1961, where it operated as an ABC affiliate with strong local news and community programming until its sale in 1982.[35] By the early 1980s, the full lineup encompassed seven stations across seven of the top ten markets, including WFLD (channel 32) in Chicago, KRIV (channel 26) in Houston, and KRLD-TV (channel 33) in Dallas-Fort Worth, all prioritizing syndicated fare and local insertions to drive high viewership during prime access hours.[11] WCVB-TV (channel 5) in Boston rounded out the group, known for award-winning investigative journalism and public service initiatives that bolstered its dominance in New England.[23]| Station | Market | Channel | Key Operational Highlights |
|---|---|---|---|
| WNEW-TV | New York City | 5 | Syndicated powerhouse with local news; high urban ratings.[34] |
| WTTG | Washington, D.C. | 5 | Regional sports and public affairs focus; top independent performer.[12] |
| KTTV | Los Angeles | 11 | Movie blocks and variety; tied to local production facilities.[3] |
| KMBC-TV | Kansas City | 9 | ABC affiliate with community programming (1961–1982).[35] |
| WFLD | Chicago | 32 | Emerging UHF independent with syndication emphasis.[22] |
| KRIV | Houston | 26 | Local news and sports in growing market.[22] |
| KRLD-TV | Dallas-Fort Worth | 33 | Syndicated series and regional content.[22] |
| WCVB-TV | Boston | 5 | Investigative journalism leader.[23] |