July 6, 2007

New York Times: A Succession Any Founder Would Envy

By Joe Nocera

The fundamental fact is that people love television," said Ralph Roberts a few weeks ago. "And if you can provide them with more television, they love it even more."

It was a stifling Wednesday afternoon in Philadelphia, but sitting at his desk in a downtown high-rise, Roberts was decked out the way businessmen used to dress, once upon a time, with a white handkerchief peeking out of the front pocket of an elegant suit. At 87, Roberts still has a full head of white hair, combed straight back.

Some 47 years ago, Ralph Roberts founded the company now known as Comcast. He was a middle-aged man who had recently gotten out of the belt and suspender business and was looking for something new. He found it in a tiny company in Tupelo, Mississippi, which was erecting a giant antenna to provide the local citizenry with signals from the television stations in Memphis, Tennessee, 90 miles, or 145 kilometers, away.

At that moment, Roberts became a cable pioneer. Along with Ted Turner, John Malone, Charles Dolan of Cablevision, John Rigas of Adelphia and a handful of others, he was one of the men who built the cable industry, pulling off one of the more unheralded achievements in modern business: persuading people to pay for something they had always gotten for free.

Today, most of the cable pioneers have sold out or retired, or, in the case of Rigas, gone to jail. But in his understated, Philadelphia way, Roberts turned out to have more ambition than the lot of them, and lo these many years later, his company is the biggest cable company in the country. It serves around 25 million subscribers in 21 of the 25 largest U.S. markets, employs 90,000 people and will generate an estimated $31 billion in 2007 revenue.

Except, of course, it isn't his company anymore. While Roberts remains a Comcast director and a significant shareholder, Comcast is his son's company now. And therein lies a story that is pretty unusual in corporate America. Pretty heartwarming, too.

Think for a minute about the generational sagas you usually read about in the business pages. Rupert Murdoch's son, Lachlan, decides he can longer work for his father, so he quits his job as the publisher of The New York Post. Charles Dolan and his son, James, who control Cablevision, always seem to be fussing and feuding about something. Sumner Redstone's daughter, Shari, has long been viewed as his heir apparent, but her octogenarian father can't bring himself to let go of his companies.

It's never been like that with Ralph Roberts and his son Brian, who became Comcast's president in 1990 at the age of 31, and has been chairman and chief executive since 2004. "Theirs is a relationship of love and mutual respect," said David Calhoun, a former Pennsylvania politico who joined the company five years ago as executive vice president. "They are incredibly close."

I had originally gone to Philadelphia thinking I would write a column about Comcast's recent success. Although it's not been a knockout stock, that's mainly because Wall Street is annoyed that Roberts won't use Comcast's cash flow to take on more debt and buy back stock.

What is unarguable, however, is that the company is running on all cylinders. It's growing at a double-digit clip. Its Internet service is going gangbusters. It has started to make inroads against the telephone companies, selling its own phone service. All the talk that cable would be overrun by the Internet hasn't remotely come to pass. On the contrary: cable in general, and Comcast in particular, seem stronger than ever.

"This is an extremely good business," said Stephen Burke, who is Brian Roberts's No. 2. "We have 25 million customers who pay us an average of $100 a month." Yes, indeed, people love their television.

Brian Roberts, who, like his father, also wears suits to the office, but unlike his father takes his jacket off once he's there, would have been perfectly happy taking a deep dive with me about the state of Comcast's business. He is a soft-spoken man who answers questions with an appealing earnestness. The reason Comcast wasn't piling on debt, he said, was that the company had always been run conservatively; that was part of its DNA.

"My father used to have two years' worth of cash on hand," he said. "Cash. If we owed $5 billion, we might have $500 million in cash, earning just 2 percent. We were superconservative in a business that was wildly leveraged." That conservatism had been passed from father to son - for which Roberts made no apologies.

But even as we talked business, every time Roberts brought up his father, his eyes would light up. So I began to steer the interview in that direction. "My father has a wonderful mentoring style," Roberts said. "He would never say, 'This is a terrible idea.' Instead he says, 'Have you thought about this?' "

Indeed, Brian Roberts had seen this as a child. His father used to let him sit in on meetings while he was negotiating with banks or cable networks - and then answer his questions afterwards. "He learned a lot that way," said the elder Roberts.

When Brian Roberts graduated from the Wharton School, one of the top business schools in the United States, his father resisted bringing him into Comcast immediately; he felt his son would be better served gaining some experience elsewhere. But the younger Roberts wouldn't hear of it. "My father is 40 years older than I am," he said. "His father had died when he was 15. His mother died when he was 19. His brother had passed away in his 50s. How many good years were we going to have together?"

So his father relented, and Brian Roberts joined the company. He began as a line installer, then worked out of branch offices until he became head of operations at age 26. He was president at age 31. At the time, Comcast didn't use the title chief executive, meaning Brian Roberts was running the company. Ralph Roberts was chairman of the board.

Wasn't this awfully young? I asked Ralph Roberts. "It seemed to me that he was ready to be president of the company," he replied, "and there was no reason not to let him have the job." Besides, he added, "we seemed to think a lot alike."

What happened next is the real testament to their love and respect. As often as not, when a son or daughter takes over a parent's company, tension is the result. The heir wants to upend some of the practices the parent holds dear. He wishes the parent would stop coming to the office and meddling. The parent, meanwhile, finds it hard to let go, and second-guesses the child.

But that never happened with the Robertses. The elder Roberts never second-guessed his son. And the younger man never stopped consulting with his father. He actually wanted his father to come to work every day.

Brian Roberts told me that his father had always hoped that Comcast would become a big, serious company - "a little blue chip." He's accomplished that for his father. And with the same kind of understated ambition as Ralph Roberts, Brian will likely spend the next 20 years trying to make it bigger still. Internet or not, he believes the same thing his father does - that people love television - and that Comcast can make a lot of money servicing that desire.

Ralph Roberts, meanwhile, doesn't have a title at Comcast, but he does still have a role beyond advising his son. He's the founder, and as such, the keeper of the Comcast flame. After Hurricane Katrina, it was Ralph Roberts who went to Mississippi to visit Comcast workers who were working to get television service restored, even though their own lives had been disrupted.

And whenever Comcast buys a company, it is the elder Roberts who tries to make the newcomers feel good about their new employer.

"I encourage the idea that it is a family company," he said as our interview wound down. "I tell them if they have relatives who want to come work here, don't worry about nepotism. I have it right here with my son." He smiled. "And look how that worked out."

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