Chris-Craft Industries, Inc.

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Chris-Craft Industries, Inc.

600 Madison Avenue
New York, New York 10022
U.S.A.
(212) 421-0200
Fax: (212) 935-8462

Public Company
Incorporated: 1928 as National Automotive Fibers, Inc.
Sales: $332 million
Employees: 1,000
Stock Exchanges: New York Pacific
SICs: 4833 Television Broadcasting; 3081 Unsupported Plastics Film & Sheet; 3086 Plastics Foam Products; 2299 Textile Goods, Nec; 3089 Plastics Products Nec

Chris-Craft Industries, Inc., is the owner and operator of eight television stations across the United States, with a significant market share in the greater New York and Los Angeles areas, which are the country’s two largest TV markets. Two of these stations are affiliated with networks, while six are independent. As a result, Chris-Craft is the second largest independent broadcaster in the nation, and the sixth largest TV broadcaster overall. In addition to its television division, which produces over ninety-five percent of the company’s revenues, Chris-Craft also has an Industrial Division which manufactures plastic flexible films and contamination control plastic bag products, fiber carpet underlay, and insulation.

Chris-Craft Industries bears virtually no resemblance to the company from which it originated, National Automotive Fibers, Inc., which was founded in 1928 in Detroit. National Automotive Fibers manufactured upholstery, interior trim and carpeting, plastic products, and foam rubber for major Detroit automakers, especially Chrysler, Ford, and Studebaker-Packard. The company’s present name was adopted two years after it had acquired the famous Chris-Craft boat manufacturer in 1960, and was retained even after the company divested itself of its boat manufacturing interest in 1981. The company still leases the name to the boat manufacturer.

National Automotive Fibers was successful, but remained a relatively minor supplier to the automobile industry. It had acquired the Montrose Chemical Company of San Francisco in the 1940s, but the company nevertheless remained almost wholly dependent on the automobile industry, and its revenues reflected those of the auto industry, often fluctuating wildly.

National Automotive Fibers, Inc., operated during and after World War II with moderate success, but in 1956 its fortunes changed dramatically when the company lost over $1 million on sales of $46 million. However, the company had attracted the attention of Paul V. Shields, senior partner of the Wall Street investment firm Shields & Co., who had determined that the company’s troubles resulted from overdependence on the auto industry. Shields acquired National Automotive Fiber in a bold takeover move, trimmed it of marginally profitable products, and diversified its operations.

While sales revenues of National Automotive dropped to $23 million a year later, profits rose to a record $1 million, and by 1960, the firm (then called NAFI to emphasize its new identity as a diverse manufacturer) had accumulated assets of $10 million. By then NAFI had entered into oil and gas operations, as well as TV and radio broadcasting.

NAFI’s financial health provided the means to acquire the Chris-Craft Company, a boat manufacturer worth $50 million. Chris-Craft was privately owned by the descendants of its founders, Christopher Columbus Smith and his brother Henry. During the 1880s the Smiths were backwoodsmen in St. Clair County, Michigan, who depended on duck hunting for a living. The ancestors of today’s well-known pleasure boats were the Smiths’ simple rowboat, built for cruising the St. Clair River.

The two brothers supplemented their incomes by acting as field guides for wealthy businessmen and professionals from Detroit, who vacationed fifty miles away in the unspoiled, natural environment of St. Clair County. To the brothers’ surprise, these tourists admired the simple, sturdy lines of the Smiths’ homemade vessels. Soon they found themselves selling the boats to eager buyers. In 1884 they built a boat house, and soon boatbuilding supplanted the business of hunting.

Fifteen years later, business was booming in the Smith boat house on the St. Clair River in Algonac. From simple duck boats the brothers had expanded their product line to include canoes, rowboats, and even a few sailboats. So successful were they that the Smith’s business had become the town’s major industry. The first gasoline-powered boat on the Great Lakes was a Smith craft, as were the fastest speed boat and the world’s first hydroplane. By 1930 the boat making firm was called Chris-Craft Corporation, and at the time of its acquisition by NAFI in 1960, was the largest manufacturer of small boats in the world.

The acquisition of Chris-Craft involved a great deal of negotiation because the company’s president, Harsen Smith, was opposed to the sale. Harsen’s objections were rooted in his strong loyalty to the company and an urge to maintain its dynastic heritage. Harsen controlled only about 25 percent of the company, however, and the rest of the Smith family was in favor of selling. The company’s valuation at approximately $50 million came as a huge surprise to the family and afforded them the opportunity to be selective in choosing a buyer.

On January 18, 1960, Joseph Flannery, who was the assistant to NAFI’s president, Paul Shields, happened to encounter Owen Smith, Chris-Craft’s majority stockholder, at a boat show in New York. Owen Smith indicated his amenability to Chris-Craft’s sale, and a series of high level negotiations began, with the reluctant Harsen Smith the recipient of competing offers between NAFI and a rival bidder, Brunswick Corporation.

Within one month of the chance meeting between Owen Smith and Joseph Flannery, NAFI had arranged a complicated buyout of Chris-Craft with a sale price of $40 million. The sale was predicated on Shields’s willingness to agree to a “hands-off” management style with Chris-Craft.

The arrangement worked, for the 1960s proved to be the most successful period in the company’s history—so successful, in fact, that in 1962, NAFI’s stockholders agreed to change the company’s name to Chris-Craft Industries, Inc., in order to capitalize on the division’s success.

While the success of Chris-Craft’s marine operations would eventually decline, the stimulus it injected into the parent company was enormous. Virtually all identification with the old National Automotive Fibers company disappeared, except for the manufacture of some carpet fiber, insulation, and chemical products. NAFIs annual revenues had stabilized long ago, thanks to Paul Shields’ diversification strategy.

Throughout the 1960s, the Baldwin-Montrose chemical manufacturing company had invested increasingly in Chris-Craft, until it became Chris-Craft’s biggest stockholder. Herbert J. Siegel was the chairman of Baldwin-Montrose who led a takeover of Chris-Craft, completed in 1968. Siegel remained chairman of Chris-Craft from 1968 into the 1990s.

In 1968 Chris-Craft headquarters moved from Oakland, California, where they had been since 1962, to New York. Siegel set about streamlining and re-organizing the company, which consisted of three main operations: the Boat Division; the fast growing Television Broadcasting Division with TV stations in Los Angeles, Minneapolis-St. Paul, and Portland, Oregon; and the small Industrial Division, consisting of Montrose Chemical of California (the world’s largest producer of DDT until the federal government banned it in 1972) and Chris-Craft Industrial Products, Inc. Their combined sales for 1968 were $89 million.

The 1970s and 1980s saw the divestment of the Boat Division and Chris-Craft Industries’ continued expansion into television broadcasting. During the 1970s Chris-Craft invested in Paramount, which provided Chris-Craft ownership of United Television, Inc.. In 1983 Warner Communications, Inc., later Time-Warner, Inc., in an attempt to avert a hostile takeover by Australian investor Rupert Murdoch, welcomed Chris-Craft’s investment in the company, enabling it to become Warner’s biggest stockholder.

The Chris-Craft-Warner venture led to the formation of BHC Communications, a seventy percent owned public subsidiary of Chris-Craft. BHC owned and operated all eight of Chris-Craft’s TV broadcasting stations, and was the parent company of United Television, Inc. The remaining thirty percent was owned by Time-Warner, the world’s biggest media company.

In the early 1990s Chris-Craft continued to expand into the television broadcasting arena, acquiring Pinelands, Inc., in August 1992 for $313 million. Pinelands owned WWOR-TV, an independent station which broadcasted in a tri-state area that included the second most important television market in the country, New York City.

Chris-Craft’s sales declined during the recession of the early 1990s, but by 1992 they had increased 16 percent over 1991, to $332 million. With its six independent and two network-affiliated TV stations, Chris-Craft had become the nation’s sixth largest television broadcaster and the second largest independent television producer in the country. During the early 1990s Chris-Craft’s stations reached approximately 20 percent of the households in the United States. The far smaller Industrial Products Division of the company manufactured packaging films, contamination control products, carpet fibers, and insulation, and was experiencing vigorous growth and expansion in the United States as well as in Europe with sales of over $1 million.