Disclosure of Corporate Ownership of the Broadcast Industry
_____ By 1972 A hand full of International Banks Highly Interlocked with theOil and Defense Industries had Illegally Usurped Corporate Control of theBroadcast Industry____________________________________________________________ .
Following are excerpts from:
Document No. 93-62, 93rd Congress, 2nd Session
Document Title: Disclosure of Corporate Ownership
Prepared By: The Subcommittees on Intergovernmental Relations, and Budgeting,Management, And Expenditures
Of The
COMMITTEE ON GOVERNMENT OPERATIONS
UNITED STATES SENATE
Original
Document printed
Copies of original document available from the government printing office.
INTRODUCTION
Background Congressional committees, Federal Agencies and scholars are considering substantive issues created by the dominant role of institutional investors -- bank trust departments, insurance companies, pension funds and others, such as foundations and universities -- in major corporations. At least 32 institutions are known to manage investment portfolios in excess of $5 billion each (listed in previous table)
INSTITUTIONAL INVESTORS ROLE
The role of institutional investors is of course not limited to the acquisition and sale of stock and the right in many cases, to vote it. Some institutional investors make loans to companies in which they invest, or provide insurance coverage. Their representatives often sit on the companies' boards of directors. Sometimes institutional investors help facilitate or block mergers.
FCC Ownership Rules
The FCC has several restrictions on ownership of broadcasting
companies. One is the duopoly rule, which prohibits ownership of 2 FM, AM, or
TV stations which serve the same area. Another rule permits an investor--
institutional or individual-- to own up to 21 stations --
In 1972 the commission raised the ownership limitations for banks from 1% to 5%. It raised the limit because so many banks were in violation of the Commissions 1% regulation that, to comply with it, 19 banks would have had to divest themselves of $976 million in stock in 25 companies.
Voting rights of New York Banks
The data in part III will show the substantial voting rights of a few New York Banks in networks and major broadcasting companies. This FCC data shows for example:
Chase Manhattan Bank has sole or partial voting rights to more than
14 % of the stock in CBS, 6.7% of ABC, as well as 4.5 % of the stock in the RCA
corporation, parent of NBC;
Bankers Trust has the voting rights to more than 10% of the stock in
ABC, and 9.8 % of the stock in Metromedia;
INADEQUATE OWNERSHIP REPORTS
The FCC did not know that the banks were in gross violation of regulations until the banks told the Commission about it. The data submitted by the banks were based on a survey conducted among the 19 largest banks in April, 1969. It took three years to get that material to and considered by the Commission. Then the Commission gave the banks three more years to reach compliance with the new, more lenient rules, which may have been relaxed further before then. The Commission has before it now requests from insurance companies to raise their allowable holdings from 1% to 5%, and requests from the mutual funds to raise their allowable holdings from 3% to 10%.
The problem at the FCC is inadequate and misleading corporate
disclosure(s) to this\a Federal agency.
USE OF MULTIPLE NOMINEES
The example upon which we have elaborated is by no means uncommon.
The holdings of Institutional Investors, especially banks, are often
hidden from view of regulators and the public by use of multiple nominees.
- "Hemfar and Co.", "Lerche and Co", "Kane and Co., "Park and
Co., "Pace and Co., and many more. In response to the federal regulators'
request for these addresses of these "security holders" the companies
report simply
The consequence of this continuing use of nominees in ownership reports to federal regulators is a massive cover-up of the extent to which holdings of stock have become concentrated in the hands of very few institutional investors, especially banks.
Bankers use nominees most
Banks used nominees more frequently than other institutional investors. The only financial institutions not providing complete information routinely about the common stocks that they hold are the trust departments of the commercial banks.
The Top of the Pyramid
Were this report presented in geometric terms and was full data on bank
ownership available the top of the pyramid might well be the final of Table 5,
which shows the holdings of the eight above institutions in banks. As noted
previously, the response from banks to the query regarding 30-top stockholders
were poor; only nine of the 50 queried banks responded fully. The nine
cooperating banks include two which are also among the 8 major institutional
investors mentioned above.First National
City Bank reported that Chase Manhattan 's trust
department held 2.7 % and Morgan Guaranty's trust department held 2% of First
National City Bank's Stock. Banker's Trust reported that Chase Manhattan held
2.4%, and state street of
THE MULTIPLE LEVERS OF CONTROL
Inadequate Disclosure a Recurring Theme
Control of a small block of stock in a widely held company by a single or few like -minded financial institutions provides them with disproportionately large powers within the company. The House Banking and Currency subcommittee on Domestic Finance, in its 1968 study, Commercial Banks and Their Trust Activities: Emerging Influence on the American Economy, considered a 5% or larger holding of one class of stock significant in judging the potential influence of a bank trust department's stockholding in a particular corporation.The subcommittee emphasized that even "1 or 2% of stock in a publicly held corporation can gain tremendous influence over a companies policy and operations."
ALTERNATIVES
FOR READJUSTING CORPORATE POWER
There are various alternatives for readjustment of corporate decision making
power. They include limitations on stockholdings, anti-trust actions and
Federal chartering of corporations providing disclosure and performance
requirements within the charter.
Another alternative is modification of the "one share, one vote" rule in corporate voting. This rule has no basis in common law. Weighted voting, which reduces the voting power of large stockholders, was used in early American corporations and is still used in some foreign capitalistic countries today. Appendix G includes a discussion and bibliography on modification of "one share, one vote" by Julius Allen of the Congressional Research Service of the Library of Congress and the Cornell Law Review article on the subject by Prof. David L. Ratner, a consultant to the subcommittee on Budgeting, Management, and expenditures. They note Alexander Hamilton's prophetic warning to the Congress in his report on the National Bank.
A vote for each share renders a combination between a few principal stockholders, to monopolize the power and benefits of the bank....too easy.
James Madison espoused Federal chartering of corporations and
(* figures in billions)
1. Morgan Guaranty Trust Company $27.4
2. Bankers Trust Company 19.9
3. Prudential Insurance Company of
4. First
5. U.S. Trust Company of
6. Metropolitan Life Insurance Company 16.5
7. Equitable Life Assurance Society 16.4
8. Chase Manhattan Bank 16.2
9. Travelers Corporation 13.1
10. New York Life Insurance Company 11.5
11. Manufacturers Hanover Trust Company 10.9
12. Mellon National Bank and Trust Company 10.5
13. Investors Diversified Services 9.7
14. First National Bank of
15. Continental Illinois National Bank and Trust Company 8.2
16.
17. Scudder, Stevens and Clark 7.2
18. Bank of
19. Harris Trust and Savings Bank 7.0
20. Wilmington Trust Company 7.0
21. First National Bank Of
22. Northern Trust Company,
23. Chemical Bank,
24. National Bank of
25. Loomis, Sayles and Company 6.3
26. Northwestern Mutual Life Insurance Company 6.1
27. Lionel D. Edie and Company 6.1
28. Wells Fargo Bank 5.5
29.
30. Girard Bank, Philadelphia‑ 5.2
31. Crocker Citizens National Bank 5.0
32. Security Pacific National Bank 5.0
Sources:
BusinessWeek,
Fortune, July, 1973
1973 Money Market
PART III
Holdings of 25 Largest Bank Trust Departments in BroadcastIndustry
and
Analysis of Bank Stock Holdings in Broadcast Companies
----------------------------------------------------------------------------
COLUMBIAN BROADCASTING SYSTEM, INC.
(Radio & Television Network-192 affiliated stations)
27,654,823 common shares
---------------------------------------------------------------------------- Broadcast Stations Owned by
______________company____________
_____________________________________TV___________AM______________FM__
Location:
___________________________________
Number % of
of shares held total shares
__________________________________________________________________________
BANQUES HOLDING STOCK (11)
Morgan Guaranty Trust 494,115 ** 1.8
Chase Manhattan 3,897,908 ** 14.1
Bankers Trust 1,587,824 5.7
United States Trust 315,324 1.1
First
Mellon Bank and Trust 264,895 1.0
First National Bank of
Continental
Bank of
Old Colony Trust-Boston 171,800 .6
Fidelity Bank-Philidelphia
467,037 1.7
___________________________________________________________________________
Total 10,530,0003 38.1
_________________________________________________________________________
----------------------------------------------------------------------------
AMERICAN
BROADCASTING COMPANIES, INC.
(Radio & Television Network-168 Primary
affiliates, 82 secondary affiliates
7,088,903
common shares
-----
-----------------------------------------------------------------------
Broadcast Stations Owned by
______________company____________
_____________________________________TV___________AM______________FM__
Location:
Number % of of
shares held total shares
__________________________________________________________________________
BANQUES HOLDING STOCK (8)
Chase Manhattan 475,294 ** 6.7
Bankers Trust 761,992 **10.7
First
Mellon Bank and Trust 98,542 1.4
Manufacturers
Chemical Bank 206,876 2.9
Bank of
Security Pacific National Bank 225,150 3.2
___________________________________________________________________________
Total 2,465,731 34.8[1]
_________________________________________________________________________
----------------------------------------------------------------------------
RCA
Corporation
(National Broadcasting Company(NBC)-219
affiliates,
74,352,168
common shares
---------------------------------------------------------------------------
Broadcast Stations Owned by
______________company____________
_____________________________________TV___________AM______________FM__
Location:
___________________________________ Number %
of of shares held total shares
__________________________________________________________________________
BANQUES HOLDING STOCK (3)
Chase Manhattan 3,309,683 ** 4.5
Bankers Trust 761,992 1.0
Continental
__________________________________________________________________________
Total 4,938,795
38.4
____________________________________________________________________________
Time,INC.
(Radio & Television Network-192 affiliated
stations)
27,654,823
common shares
----------------------------
------------------------------------------------ Broadcast Stations Owned by
______________company____________
_____________________________________TV___________AM______________FM__
Location:
___________________________________number % of
shares held total shares
__________________________________________________________________________
----------------------------------------------------------------------------
__________________________________________________________________________
BANQUES HOLDING STOCK (8)
Morgan Guaranty 537,632 ** 7.4
Chase Manhattan 475,294 ** 5.5
First
Mellon Bank and Trust 208,000 2.9
Manufacturers
Harris Trust and Savings 83,000 2.9
Bank of
___________________________________________________________________________
Total 1,703,232
23.5
_______________________________________________________________________
(Subsequent to this report, RCA, the parent company of NBC, was purchased by
GENERAL ELECTRIC, the nation's largest defence
contactor and ABC was purchased by CAPITOL CITIES, a company whose founder and
largest stockholder was William Casey, the former Director of the CIA. Don't
expect Dan Rather or Ted Koppel to ever do a story on this.)
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