Murphy Back as Chief at Capital Cities/ABC : Media: The company also plans to buy back up to 12% of its stock after unsuccessfully seeking a merger partner.

Capital Cities/ABC Inc. said Chairman Thomas S. Murphy will return as chief executive, succeeding Daniel B. Burke, who will retire in February.

Murphy, 68, stepped down as chief executive three years ago, when Burke took over. The two men are among the most widely admired media executives, but Cap Cities evidently was unable to produce an heir to the top spot in time for Burke’s departure. Burke has been adamant about retiring when he turns 65 next year.

Cap Cities also announced that it will repurchase up to 12% of its stock, signaling that the media company, despite a range of potential merger talks with Turner Broadcasting System and Paramount, has been unable to find a marriage partner.

Cap Cities shares rose $6.375 to close at $616 in New York Stock Exchange trading.

Murphy’s return as chief executive will also give him voting control of the largest single block of stock in the company. When Cap Cities merged with ABC seven years ago, Omaha investor Warren Buffett agreed to invest $500 million in the newly merged company in exchange for an 18% stake, but Murphy and Burke got the right to vote Buffett’s stake as long as either is chief executive. The right expires in 1997.

Murphy and Burke are credited with steering a small broadcaster, Capital Cities Communications, into a 1986 merger with ABC and then successfully directing one of the largest U.S. media companies.

Over the past year, Burke and Murphy have shuffled their senior management team and promoted some executives to key positions in preparation for appointing a new chief executive. The five divisions of Cap Cities are headed by company veterans who have considerable operating experience. But Jay Nelson, an analyst with Alex. Brown in New York, said the available candidates were either “too young or unseasoned across the breadth of skills� needed to be chief executive at Cap Cities.

Neither Murphy nor Burke was available for comment, but insiders expect Murphy to stay on for a year or two and then choose a successor.

The name most often mentioned is Robert A. Iger, who earlier this year was named executive vice president of Cap Cities in addition to his role as president of the ABC Network Group, overseeing entertainment, news and sports programming. But Iger, 42, who has rocketed through a series of high-level jobs in recent years, is considered too young, and his appointment would leapfrog many senior executives.

Murphy and Burke have considered going outside Cap Cities to find their next CEO, according to a knowledgeable executive. Feelers were reportedly put out to Frank Biondi, the chief executive of Viacom, among other candidates.

But choosing an outsider is still deemed unlikely: Cap Cities almost always picks its top managers from its own ranks, and going outside the company would confirm that for all their success, Murphy and Burke were unable to groom a successor.

The announcement that Cap Cities would spend about $1.3 billion to buy back 2 million of its own shares also signals that the company is in no rush to acquire or merge with another media company, as some analysts have been speculating.

In justifying its stock repurchase plan, Cap Cities said it had considered acquisitions but could not find one at prices that “would result in attractive returns for its shareholders.�

Cap Cities will buy the stock back in a “Dutch auction,� whereby the company sets a range of prices it is willing to pay--in this case, $590 to $630 per share. Shareholders can offer their stock at any price in the range, and the company picks the lowest price in that range that will yield the number of shares desired.

Buffet will tender 1 million of his 3 million shares. If Cap Cities repurchases all of Buffet’s tendered shares, his stake will fall to 14%. If not, or if Buffet withdraws his tender, his stake would rise to 21%.

The immediate effect will be to boost Capital Cities/ABC’s reported earnings per share by about 10%, analysts estimated.