The Philadelphia Inquirer logo.

Philadelphia Inquirer: A cable kingdom 40 years in the making

By Don Steinberg

Ralph Roberts, the 82-year-old chairman of Comcast Corp., mingled among the black-tie crowd in his trademark spotted bow tie. He had flown to Denver into a fierce, unexpected snowstorm, from what was probably his last board meeting as an executive of the company he founded four decades ago.

The gala event Tuesday night was the grand opening of the Cable Center, a glass palace housing the cable television Hall of Fame. Denver has been the cable capital ever since John Malone built Tele-Communications Inc. in suburban Englewood into the biggest operator in the 1980s and 1990s.

But things change: Malone sold TCI to AT&T Corp. in 1999, and now AT&T is selling it to Comcast.

By all indications, Comcast's deal to acquire AT&T's cable business will be completed in the next week or two. It will create AT&T Comcast Corp., the world's largest cable company and one of the top 100 corporations in the United States. It will shift the center of the cable universe to Philadelphia and cap an unbelievable 40-year ride for Roberts.

As Roberts roamed, a parade of industry luminaries approached him, shaking his hand, embracing him.

"Don't forget about your secret adopted son, me!" said Henry Schleiff, chairman of Court TV, leaning his head on Roberts' shoulder.

And then suddenly there was John Malone, putting a hand on Roberts' shoulder.

"How does it feel to be king of the world?" Malone said, grinning through a clenched jaw.

The soft-spoken Roberts smiled a little but did not say anything.

Forty years earlier, Roberts had stopped selling belts and suspenders to buy a small cable system, back when AT&T was as big as the federal government.

Now, king of the world.

"I was just lucky," Roberts said, back at his office last week. "I could still be in the suspender business."

Forbes ranks Roberts as the 12th-highest-paid chief executive in America, with compensation last year of $69 million, almost all in stock. Yet the king often can be found at his favorite restaurant, Little Pete's, a greasy-spoon diner on 17th Street. That is where he took his wife of 60 years, Suzanne, the night she won a regional Emmy award for the public-service show for seniors she hosts on Comcast cable.

During the week, they live in an apartment near Rittenhouse Square. On weekends they go to the Chester County farmhouse Roberts had custom-built from 18th-century materials. He rides horses, a hobby he began at age 70. "I'm not jumping as much as I used to," he acknowledged.

Roberts is a die-hard Philadelphian. After the One Meridian Plaza building burned halfway down in 1991, forcing Comcast to find new headquarters, Roberts made an appointment to see then-mayor Ed Rendell.

"Ed was all nervous Ralph would use it as an excuse to leave the city," recalled Comcast executive vice president David Cohen, Rendell's chief of staff at the time. But Roberts went to tell Rendell he was staying. "It was typical, classy Ralph."

And so here is the riddle of Ralph Roberts: It is almost impossible to meet him and not think he is one of the nicest men you have ever met. Yet in the field of battle, he and Comcast are tenacious. They have a reputation for using every tool in the shed - gentle persuasion, financial leverage, intimidation - to beat you or win you over.

"Ralph is certainly a kindly gentleman. He is also the toughest person I have ever done business with," said Barry Diller, who in 1994 was to be boss of CBS - until Roberts decided to make that impossible.

Comcast has no shortage of foes. Consumers Union says cable prices have jumped 45 percent since 1996, and insists the AT&T merger will make it worse. Satellite-TV companies complain that Comcast, which owns the Flyers and 76ers, plays unfairly because it does not let satellite channels air those teams' or many Phillies' games locally - you need cable to do so.

And unspoken in Malone's hearty cowboy back-slap in Denver was what happened in 1997, when Comcast betrayed him by joining with Microsoft Corp.'s Bill Gates in a secret attempt to get control of TCI before AT&T did.

Harold F. "Gerry" Lenfest, whose Suburban Cable was, until 1999, larger than Comcast in greater Philadelphia, tells how Roberts cajoled him for more than two decades to let Comcast buy his company, then pulled a maneuver that forced Lenfest to sell.

"One time he told me it was his destiny to own us," Lenfest recalled. "I didn't want to be purchased. We were doing quite well on our own."

Comcast finally gained control of Suburban by dealing with AT&T, to which Lenfest had agreed to sell half his company with the condition that it never be sold to Comcast.

"The night that we closed with AT&T, I got a call from a reporter saying, 'Did you know AT&T has agreed to sell you to Comcast?' " Lenfest said. He was crestfallen. "We were the pawn in that chess game."

But it worked out all right - Lenfest made a billion dollars or so - and who can hold a grudge against Ralph Roberts?

"We can't be together two minutes without laughing and having a great time together," Lenfest said last week.

So maybe the riddle is not so puzzling after all. As a gentleman, Roberts appreciates what you want. As a businessman, he is not afraid to explore just how much you want it.

Comcast is a second career for Ralph Joel Roberts, who was a man about town before cable TV existed. The Inquirer Sunday magazine ran an interior-design spread featuring Ralph and Suzanne Roberts' Wyncote home in 1949, when he was a 29-year-old advertising executive and she was a radio actress. ("I think we still have that quilt," he said when shown the magazine.)

Roberts was born to Russian emigres in New York in 1920, and lost both parents while a teenager. He graduated from Germantown High School and then the Wharton School in 1941, and was an officer at the Philadelphia Navy Yard.

After the war, he developed a golf putter and buttonholed Bob Hope, performing in Philadelphia, to pose for a picture holding it. Roberts then marketed the "Bob Hope Putter."

Roberts also worked for William Benton, who had amassed a fortune as owner of Encyclopedia Britannica and then Muzak Corp., both of which involved customers' signing up to make recurring payments.

Roberts later became an executive with - and in 1956 bought - the Pioneer Belt & Suspender Co., which he sold in 1961 to make his first $1 million.

He found the next big thing on Chestnut Street in 1962. Venture capitalist Warren "Pete" Musser had acquired an early "community-antenna" TV system in Tupelo, Miss., but was looking to unload it to focus on his new company, Safeguard Scientifics. Musser was talking to newspaper reporter-turned-cable broker Dan Aaron about this when Musser spotted Roberts, whom he knew, and said, "Here comes our fish," according to Aaron's autobiography, Take the Measure of the Man.

Roberts bought Tupelo and hired Aaron, who had been a cable pioneer at Jerrold Corp. Roberts also hired his ace accountant, Julian Brodsky, to be Comcast's financial guru.

Cable began in rural areas where residents could not get TV signals another way, but Comcast trailblazed into areas where reception was just fine.

Roberts became convinced people would pay extra for more TV channels.

Roberts was driven to be big. In his company he had found a way to create financial security for his children, and the only way he saw to keep the nest safe was to get bigger than the predators.

The Robertses have five children. One became an arts board member, one a designer, one a psychology professor, one a lawyer. One is to become the CEO of AT&T Comcast, with an estimated net worth of $600 million.

Brian Roberts, 43, began visiting Comcast when he was 7, and by 15 he was watching contract negotiations. He graduated from Wharton in 1981.

For Brian Roberts, the last 10 years have been about building Comcast. For Ralph Roberts, the decade has been about gracefully turning over control.

Brian Roberts became president in 1990, and in 1998 Ralph Roberts transferred the bulk of voting stock to him.

All along, father taught son as they made deals together. In 1996, Diller was merging his shopping channel, QVC, with CBS in a plan that would have made him head of the CBS network. But Comcast, which had a minority interest in QVC, did not appreciate having its share diluted.

Ralph and Brian Roberts met Diller as his private jet landed at a small New Jersey airport, where they handed him a letter announcing their unsolicited bid for control of QVC - which they won. Diller's plan was destroyed.

"I was surprised, because I had been told otherwise by the Robertses," Diller said. "But it was clearly their right to make an offer."

Today, Ralph Roberts is Brian Roberts' gut check when it is time to make a big deal.

"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?' My father's got nerves of steel. He always knows whether to pull the trigger."

"Ralph," said Stanley Wang, Comcast's general counsel, "is a bigger risk-taker than Brian."

It is all culminating with the AT&T deal, for which Brian Roberts pulled some tricks out of his father's bag. In 2001, Comcast launched its dramatic buyout bid by faxing an unsolicited offer to AT&T chairman C. Michael Armstrong's house over the July 4 weekend.

AT&T shareholders rejected it, and nerve-racking negotiations continued into last winter. At the end, Comcast executives sat in a cramped New York hotel room the Wednesday before Christmas, waiting for AT&T's decision by phone.

"At around 5:30, we finally got the call from AT&T," Brian Roberts said. "Our team had a glass of champagne, and we signed the papers, then I ran off to do a press interview. We all met back in the lobby of the hotel and had a final toast around midnight.

"Then we all piled into the elevator to go up to our rooms, and as fate would have it, Ralph and I were on the same floor. We walked down the hall together. When we got to my room, Ralph just stopped and looked at me. He had a tear in his eye. He said 'This is a miracle. I'm so proud of you,' and he gave me a hug."

At AT&T Comcast, Ralph Roberts will be strictly a board member, his formal reign over. But having pulled Comcast to the top of the mountain, he does not seem ready to slow down.

"I admit I'm a bull when it comes to business," he said. "And I would say that after we get this under our belt, which is what we should do first, other things will come up. I think there are higher mountains out there yet."