ABC Earnings Decline 19%; Merger Expenses Blamed

American Broadcasting Cos. said its first-quarter profit fell 19%, largely because of expenses resulting from its planned merger with Capital Cities Communications.

The company, which operates the ABC Television network, reported net income of $19.4 million for the first three months of 1985, compared to earnings of $23.9 million a year ago. Revenue fell 5% to $797.8 million from $836.7 million.

ABC and Capital Cities, another New York-based media concern, announced a month ago that they had agreed on a friendly, $3.5-billion merger. The proposal requires approval by the shareholders of each company and the Federal Communications Commission.

ABC said that, “excluding certain corporate charges which increased because of the ABC-Capital Cities merger announcement, ABC’s first-quarter earnings would have increased modestly over last year.”

The 1984 results also benefited from revenue and profits from its coverage of the 1984 Winter Olympics in Sarajevo, the company said.

The ABC results fell between those reported earlier this month by the companies that operate the other two major television networks.

ABC’s chairman, Leonard H. Goldenson, and its president, Frederick S. Pierce, said in a joint statement that their company’s results included “operating improvements of ABC Publishing, ABC News and ABC Radio, a capital gain in the sale of a television studio and incremental profits from the company’s first-time-ever coverage of the Super Bowl.”

But they said increased expense for a stock bonus plan had a big impact on corporate costs and partially offset the gains.