President, chief executive officer and chairman, Comcast
Born: June 28, 1959, in Philadelphia, Pennsylvania.
Education: Wharton School, University of Pennsylvania, BS, 1981.
Family: Son of Ralph Roberts (founder of Comcast); married Aileen Kennedy; children: three.
Career: Comcast, 1981–1989, comptroller, Trenton office; 1990–, president; 2002–, chief executive officer and president; 2004–, chairman of the board.
Address: Comcast, 1500 Market Street, Philadelphia, Pennsylvania 19102; www.comcast.com.
■ Brian L. Roberts took the helm of Comcast, the business his father had started in the late 1960s, and oversaw its growth into the largest U.S. cable-television operator. The company finished 2002 with at least $12.5 billion in sales. To build a collection of programming content, Roberts purchased stakes in several cable channels, including QVC, which supplies more than half of the company's revenues, E! Entertainment Television, and two Philadelphia sports teams. But Comcast's 2001 acquisition of AT&T Broadband, which boosted its subscriber count to 21.3 million, is the deal that placed Brian Roberts on the corporate map. Roberts believed that the future of the cable industry was in the broadband platform, and he aggressively pursued the implementation and delivery of high-profit services such as digital video, high-speed data, and voice. Roberts's leadership style, not to mention every major business decision he made, was inextricably linked to his hero and mentor—his father.
The Roberts family was shaped by the Depression. Ralph Roberts, the founder of Comcast, was born into affluence—the family even had a chauffeur for a while—but the wealth
quickly disappeared. Said Ralph Roberts: "My father died, and we lost all our money. People who never had a financial problem in their lives can never understand what terror there is in that" ( New York Times , June 22, 1997). Driven by his family's past, Ralph Roberts acquired an entrepreneurial streak, starting a company that sold belts, suspenders, and other men's accessories. He traded in fashion for cable after hearing in a poker game about a company looking for investors. Along with two colleagues, he bought American Cable Systems, renamed Comcast, in 1969.
In its formative years, cable was a mom-and-pop business. As the industry grew, however, it quickly acquired a cutthroat streak, with smaller operators cashing out and handing over their subscribers to bigger businesses. Comcast was the exception. Since its modest beginnings in 1963 as a single system in Tupelo, Mississippi, Comcast went public in 1972 and grew eightfold from 1987 to 1992, but still managed to remain a tightly knit family business. Comcast's CFO, Julian Brodsky, once told Ralph Roberts that he would make millions if he took the company private, to which Roberts replied: "I don't want to be rich. I want to build a great company that I can turn over to Brian" ( Fortune , October 29, 2001).
For Brian Roberts, the decision of what to do with his life was determined from childhood: He would proudly follow in his father's footsteps. As a child he helped assemble the coupon books that were mailed to Comcast's customers. As a teen he was fascinated by facts and figures. The road to a finance degree at the University of Pennsylvania's Wharton School began in high school, where Roberts read the Wall Street Journal between classes to check on his stock investments. He also had his own financial advisor, with whom he would meet frequently. Another high-school activity was accompanying his father to meetings with bankers to negotiate loans. Said Brodsky: "I think we have known that Brian would take over the company since he was about eight years old" ( Fortune , October 29, 2001).
After college, Ralph Roberts encouraged his son to assert his independence by finding work outside the family business. But Brian Roberts doggedly pursued employment at Comcast, and his father relented on the condition that he would join the company at the bottom and work his way up on his own merit. His first jobs involved selling cable service door-to-door and climbing utility poles to string cable.
But while Ralph Roberts insisted on the merit system, after his son proved himself, Brian Roberts was given opportunities to shine. In 1986 Comcast joined an industry bailout of debt-ridden Turner Broadcasting System. Most assumed that Ralph would be the company representative to join the Turner board, but he sent his son instead. Said Terry McGuirk, a Turner executive and friend of Ralph Roberts: "It was an important experience for Brian. The people who sat around that table were the most powerful in the industry, and Brian was recognized as a peer" ( Fortune , October 29, 2001).
Not long after the Turner deal, Comcast aligned with TCI president John Malone to purchase half of Storer Communications, a move that made Comcast the nation's fifth-largest cable company, with more than two million subscribers. As the company grew, so did Brian's clout. In 1990 Ralph Roberts named himself Comcast's chairman and his 30-year-old son president.
Families that work together have been known to implode under the pressure, but Ralph and Brian Roberts appeared to have escaped that kind of tension and bruised egos. Leo Hindery, former president of AT&T Broadband, said, "Ralph and Brian have the most remarkable father-son relationship I've seen in any context. Rather than battling each other, as fathers and sons often do in a family business, they have this supportive, loving relationship" ( Fortune , October 29, 2001).
The Roberts team set up adjoining offices and confided with one another about important business decisions. Said Brian Roberts: "We do months of work with advisers, bankers, financial analysts, corporate strategists, lawyers, and then you get to the moment of truth: Should we do it? That's when I walk into Ralph's office and say, 'OK, what's the call?'" ( San Francisco Chronicle , February 15, 2004). This family relationship helped drive impressive financial results, as Comcast stock split 12 times between 1971 and 2004. Together, the Robertses decided against several merger offers that would have increased the company's shareholder value in the short term because they would have ultimately weakened the family's control of the company.
In 1994 the revered Hollywood mogul Barry Diller attempted to sell QVC, the home-shopping network he ran, to CBS. Comcast already owned 15 percent of QVC and, unbeknownst to Diller, was anxious to secure the rest. Just hours before Diller was to sign off on the deal, the father and son surprised him with their intentions at a New Jersey airport, where he had arrived in his private jet. The CBS-QVC merger died and Comcast bought the network for $2.5 billion. The decision was prescient. In December 2001 the network set a record by securing $80 million in orders, including 30,000 Dell computers.
During the 1990s Roberts gradually assumed a leading role in his family's business during a time when the future of the industry was dubious. Congress had re-regulated the industry and opened the doors for the Baby Bells, the seven telecom companies formed after the breakup of AT&T in the mid-1980s, to compete. Meanwhile, satellite competitors like DirectTV aggressively pursued cable's customers. Recalled Brian: "We did some soul-searching. Was the cable industry obsolete? Was it an opportune time to get out? Our conclusion was that if you rebuilt your system with this new fiber-optic coaxial hybrid—which we now call broadband—the glass was half full, not half empty. We could compete" ( San Francisco Chronicle , February 15, 2004).
It would not be cheap. Comcast invested $5 billion to create a digital-cable company that offered all of the trappings of modern U.S. television service: two hundred channels, high-speed Internet access, and video on demand. An important vote of confidence came from Bill Gates in 1997. During a dinner in Seattle with several cable moguls, the Microsoft CEO asked what could be done to accelerate broadband's growth. Brian Roberts replied: "Why don't you buy 10 percent of the industry? Most of us are here tonight" ( Fortune , October 29, 2001). Instead, Gates decided to buy 10 percent of Comcast in a deal that cemented Comcast's industry standing. Recalled Brian: "We had 650 analysts on the conference call to discuss the deal. Usually we have about 200" ( New York Times , June 22, 1997).
In 2000 AT&T announced that it would split into three separate entities, including its giant cable unit, AT&T Broad-band, which claimed 13 million subscribers and dismal finances; AT&T Wireless, at one time the nation's largest wireless company; AT&T Business—the network, the labs, the AT&T brand—and $28.4 billion in revenues from wholesale and corporate customers; the AT&T Consumer unit that became a tracking stock for consumer long distance; and whatever the company could put together in D.S.L., as well as its Internet access business.
But AT&T Broadband continued to struggle in 2001, with profit margins hovering around 18 percent in some cities versus industry averages of about 35 percent or better. Roberts viewed an acquisition of AT&T Broadband as a great opportunity.
Brian Roberts wanted the deal badly, and few in the industry questioned his competitive streak. In college, he had joined Penn's squash team as a freshman and was one of the worst players on the team; by the time he graduated he was all-American player, known for his intense drive and sharp sense of strategy. He also claimed three silver medals from his contribution to the U.S. squash team at the Maccabiah Games (the Jewish Olympics) in Israel in 1981, 1985, and 1997.
In 2002, Comcast acquired AT&T Broadband for $29.2 billion in stock and the assumption of more than $24 billion in AT&T debt. The transaction made Comcast the nation's largest cable operator with 22 million subscribers, nearly twice as many as second-place AOL Time Warner Inc.
The Comcast-AT&T deal was the biggest in the industry since the AOL-Time Warner merger in 2001. With cable subscribers, broadband users, and a modest programming business, the new Comcast contained the key components of a media empire. Still, Roberts, an understated business executive who prefered mass transportation to limousines and for years held the company's annual meeting in the cafeteria, avoided grand pronouncements. When asked about the impact the deal would have, he replied: "We will go from a regional cable company to being a premiere provider of entertainment and communications services into people's homes." His father's own past played a role in this tempered enthusiasm. "My father watched his parents lose it all," he said. "You talk to anybody in the company and they'll say, 'Brian's a fatalist. He's constantly wary.' It could all go away in an instant" ( BusinessWeek , November 18, 2002).
The AT&T Broadband acquisition left Comcast in a financially vulnerable position at a time when the industry was suffering. Media and cable companies were going out of business and those that remained were affected by accounting improprieties at several cable companies that created a general distrust of the entire industry. Competition from satellite services threatened to cripple the industry even more. In 2001 cable shares lost 57 percent of their value and Comcast's shares fell nearly 34 percent to about $25. Said industry analyst Alan Bezoza of CIBS World Markets: "Investors want to see the proof in the pudding. Where's the cash? It's that simple" ( BusinessWeek , November 18, 2002).
It was some time before Brian Roberts could answer that question. The acquisition meant that Comcast would have to take on enormous debt in a weak economy. In addition to reducing that debt he would also have to get revenues flowing again. This required that he spend about $2 billion to upgrade AT&T's rundown cable systems while working hand-in-hand with a vocal critic of the merger, former AT&T chief executive C. Michael Armstrong, who became nonexecutive chairman of the new company, replacing Ralph Roberts. Yet Roberts felt that the potential rewards of purchasing AT&T's cable business surpassed the risks. "You only get one chance to redefine your company, and this was ours" ( BusinessWeek , November 18, 2002).
Much of Roberts's plans hinged on the growth of broad-band services. Some analysts predicted that about 30 percent of Comcast's subscribers—about 6.7 million homes—would be buying high-speed data by the end of 2006. Others warned that such projections were too optimistic. Said Leo Hindery, a former president of AT&T Broadband who had become CEO of the Yankees Entertainment & Sports Network: "I'd be shocked if you get 20 percent of homes on high-speed data" ( BusinessWeek , November 18, 2002).
By the end of 2003 Comcast had boosted profit margins at AT&T Broadband's old cable networks, helping earn Roberts the distinction from Institutional Investor magazine as one of "America's best CEOs." Hungry for an even bigger deal, Comcast announced that it would sell its 17.9 percent stake in Time Warner Cable, the second-largest cable company in the United States, thus setting the stage for a surprise February 11, 2004, Comcast announcement of a $66 billion hostile takeover bid for the Walt Disney Company.
Under the deal, Comcast would pay $54 billion in stock for Disney. The deal would add Disney's $12 billion debt to Comcast's already debt-laden books. In return, Comcast would get what every cable-delivery company wanted: original programming content such as feature films and network television shows. Disney owned Miramax, ESPN, ABC, the Mighty Ducks of Anaheim hockey team, and some of the most recognizable films and animated movies in the world. The acquisition would make Comcast the world's largest media conglomerate, surpassing even Time Warner.
The board of Walt Disney, however, unanimously rejected the offer from Comcast as being too low. The board noted that the offer was worth $3.60 less per share than the market price of Disney's stock. The board also reaffirmed its confidence in embattled CEO Michael Eisner, saying that it expected Disney's current structure and strategy to enhance shareholder value. Eisner had been under siege from several factions, including disgruntled former board members, corporate partners, restless shareholders, and, now, Comcast.
In April 2004 Comcast dropped its offer. Roberts had misread his own shareholders, who drove the company's stock price down, making it easy for the Disney board to ignore the bid and difficult for Comcast to sweeten the pot. Foreseeing Wall Street's disapproval, Comcast timed the news with the announcement of its first-quarter earnings: revenue of its cable systems rose 9.8 percent from the first quarter of 2003 to $4.65 billion. The company earned a profit of $65 million compared with a loss of $297 million a year earlier. Still, the company's shares remained 11 percent lower than they had been before Comcast's offer for Disney. Said Craig Moffett, a cable analyst at Sanford C. Bernstein & Company: "Some damage has still been done. It's not that easy to put all this behind you. The after effects of the bid are going to linger" ( Wall Street Journal , April 29, 2004).
The failed takeover threatened Roberts's reputation as a highly skilled dealmaker. A chance to restore some of his luster came in the form of a potential acquisition of Adelphia Communications, the country's fifth-largest cable company, which had been operating under bankruptcy protection. In April 2004 Adelphia's board voted to explore the possibility of selling the company, and Roberts said that Comcast would consider an offer.
Comcast also had strong prospects in its broadband business. In early 2004 it announced plans to begin offering telephone service using Internet technology, which could lead to the introduction of other services, such as videophones. As for the Disney debacle, Roberts refused to dwell. "Being disciplined means knowing when it's time to walk away. That time is now" ( Wall Street Journal , April 29, 2004).
See also entry on Comcast Corporation in International Directory of Company Histories .
Fabrikant, Geraldine, "The Heir Clearly Apparent at Comcast," New York Times , June 22, 1997.
Grant, Peter, "Comcast Drops Offer to Buy Disney," Wall Street Journal , April 29, 2004.
Helyar, John, "The First Family of Cable," Fortune , October 29, 2001, p. 137.
Jones, Del, "Comcast CEO Keeps a Pretty Low Profile," USA Today , February 12, 2004.
Lieberman, David, "Father-Son Odd Couple Make Bid to Rule Cable," USA Today , July 23, 2001.
Lowry, Tom, "A New Cable Giant," BusinessWeek , November 18, 2002, p. 108.
Wallack, Todd, "A Father-Son Team that Usually Wins," San Francisco Chronicle , February 15, 2004.