Comcast Strives to Stay Just Folks

Ralph Roberts, the 83-year-old chairman and co-founder of Comcast Corp., has his own bobblehead doll.

In the cable company’s workaday world of engineers, technicians and customer service representatives, the soft-spoken pay-TV pioneer is the equivalent of a rock star. He routinely gets standing ovations at company events. Employees want his autograph and compete for his bobblehead.

When Roberts visited the Denver office last week, employees surprised him with a cake shaped like his trademark bow tie to commemorate Comcast’s 40th anniversary.

“The feeling that it’s a family company is a feeling we should try to keep,” says the white-haired Roberts, one of the only cable pioneers still in the industry after a decade-long consolidation.

Today, Roberts and his 44-year-old son, Brian, who runs the company from its headquarters here, are on a mission to preserve Comcast’s folksy culture in the face of speeding growth.

One year ago today, Comcast became the nation’s largest pay-TV provider through the audacious $51-billion merger it executed with its much bigger rival AT&T; Broadband.

Overnight, the company tripled in size to 21 million subscribers, or 1 in every 4 U.S. pay-TV households, including 500,000 in Los Angeles. Comcast also absorbed 35,000 AT&T; employees, a workforce that dwarfed its own 20,000 people.

The merger stands out amid the wreckage of media mega-deals gone awry -- most notably America Online’s union with Time Warner and Vivendi’s marriage with Universal Studios.

Comcast is a year ahead of the turnaround schedule it promised investors after buying AT&T;’s troubled cable properties. It has so quickly paid down the $30 billion in debt it assumed in the merger that Comcast’s balance sheet is stronger today than at any time in its history, analysts say.

Comcast’s stock price has nearly doubled in the last year, making the company more valuable on Wall Street than media giants twice its size, such as Viacom Inc. and Walt Disney Co. Its shares closed Friday at $31.72, down 10 cents, on Nasdaq. At the same time, Comcast has averted a potential culture clash between AT&T;’s top-heavy and hidebound traditions and its own lean, decentralized and entrepreneurial approach. The key was communication.

In February, senior Comcast executives -- including father and son -- departed on a 90-day whistle-stop tour of the 16 largest former AT&T; cable markets to roll out the Comcast name. They held massive rallies for employees tailored to each city.

In Chicago, 4,150 employees piled into the Aria Crowne Auditorium to hear the top executives followed by R&B; singer Chaka Khan. In Seattle, 2,750 employees went to a fashion show at the Tacoma Dome Expo, where Comcast uniforms were modeled and repainted trucks driven on stage.

The 1,400 Los Angeles employees and their spouses spent an evening at the California Science Center, previewing the Titanic exhibit and hobnobbing with Hollywood celebrities lined up by Comcast’s E! Entertainment Television cable channel.

“Keeping the intimacy and the small-family feeling -- it’s a major priority,” said Chief Executive Brian Roberts, who is widely viewed as a mogul in the making. “If you get it right with employees, then you’re going to win those new customers, invent those new products, meet your financial goals.”

At the rallies, the former AT&T; employees got a sneak peek at Comcast’s new advertising campaign before it was rolled out to the public. The ads, introducing Comcast into the former AT&T; markets, featured five-time Tour de France winner and cancer survivor Lance Armstrong, hard at work, pedaling his bicycle. He intones: “No one will give you respect. You have to earn it.”

Comcast officials say they didn’t want AT&T; customers to think their new cable provider was cocky.

“We didn’t want some James Earl Jones voice of God saying, ‘Aren’t we great?’ ” said Comcast Cable President Stephen Burke, who cycles in his spare time. “We wanted someone who had overcome obstacles, who was not a flash in the pan, to signal customers we would be there day in and day out.”

Comcast is plotting its next move, with Roberts eyeing ownership of more of the entertainment carried on Comcast’s cable systems. The company already owns the Philadelphia 76ers, several regional sports channels, E!, Outdoor Life and Golf.

Wall Street and industry speculation has focused on a possible acquisition of ESPN’s owner, Walt Disney Co., although Comcast executives say privately that the Burbank entertainment giant is too troubled and would take a hostile takeover to land.

Not that Comcast is averse to hardball tactics, despite the friendly image it attempts to convey. Its first run at AT&T; was hostile, and the company has used its new clout to shave $270 million in fees it pays programmers.

Comcast was born in 1963, when Ralph Roberts, at age 43, used the proceeds from the sale of his belt-and-suspender business to buy a cable system in Tupelo, Miss. At the time, subscribers paid $3 a month for improved reception of three networks -- ABC, NBC and CBS.

As cable grew, so did Comcast. Ralph was a born entrepreneur, and his co-founder, Julian Brodsky, Comcast’s vice chairman, a financial wizard. In 1972, the company became one of the first in the cable industry to go public, growing through acquisitions and junk bond financings.

In 1990, the younger Roberts became president and heir apparent. Brian had learned the business at the knee of cable’s pioneers, including John Malone, who had built Tele-Communications Inc. into a giant before selling out to AT&T; in 1999. Malone had cut many deals with Ralph Roberts in an industry known for its clubbiness.

Brian Roberts’ stature in the industry swelled after he convinced Microsoft Corp. in 1997 to invest $1 billion in Comcast for a 10% stake. Microsoft founder Bill Gates’ endorsement of cable, under siege by the emergence of satellite TV, set off a record run-up in cable stocks.

In spite of the high share prices, the deregulation of the telecommunications industry soon spurred mergers and acquisitions among the cable companies, as they looked to consolidate to better take on their phone-company rivals. Roberts -- whose passions are deal making and technology -- envisioned doubling Comcast’s size.

In 1998, the introverted Roberts hired Burke, an outgoing and charismatic leader. The young hotshot from Disney had launched its chain of retail stores, led a turnaround of Euro Disney and was running the TV and radio stations group at the ABC division.

At Comcast, one of the first orders of business was developing a unifying mission. In 1999 Burke dispatched 90 top executives to create what is referred to today as the “Comcast credo”: “We will be the company to look to first for the communications products and services that connect people to what’s important in their lives.”

To reinforce such principles, Burke that year created Comcast University and a two-day course called “Spirit of Comcast.” Every other week, about 50 senior managers from across the country attend “Spirit of Comcast,” where they exchange war stories, preview new products and services, talk about the credo, get face time with the top brass and meet the founders.

In one video, managers learn about how the founders built the business. In another, Comcast workers talk about what the company means to them. One dispatcher breaks into a song he made up for a Comcast holiday party that sets the credo to music.

It’s not unusual for large companies to have programs that try to foster esprit de corps -- or for the workforce to dismiss these efforts as mere schmaltz. But at Comcast, many employees seem to genuinely embrace the credo and other such messages from the top ranks.

“It may sound hokey, but I believe in it,” said Brian Gregory, a government affairs manager for Comcast in Chicago.

For Burke and Roberts, growth would come faster than either expected. After losing a bidding war for the Media One cable group to AT&T; Corp., Comcast in the summer of 2001 turned the tables on the phone giant by launching a hostile bid for its floundering cable unit.

AT&T; managed to deflect the offer at first but gave in to a friendly merger just before Christmas. The transaction took nearly a year to complete.

The AT&T; cable systems were a mess. Their parent had jumped into cable as a potential way to deliver local phone service, hoping to offset declines in its long-distance business.

But the gambit financially strangled the company and delayed the digital conversion of the cable systems needed to fend off satellite-TV rivals. AT&T; lost nearly 500,000 subscribers to satellite TV in 2002 -- more than any other cable provider.

Its systems -- in large and lucrative markets such as Boston, Chicago, San Francisco, Seattle and Denver -- suffered from some of the industry’s lowest profit margins.

Morale was at rock bottom. Local service-call centers had been closed by AT&T; in favor of cheaper subcontractors, creating long waits on toll-free help lines and a rise in customer complaints.

Field technicians, who make house calls to install cable service, were so wary of management that they unionized, giving organized labor its largest cable foothold.

Comcast shook things up quickly. It discontinued investments in the local-phone business to concentrate on the core cable TV business. It sank $2 billion into rebuilding AT&T;’s cable systems so that they could deliver high-speed Internet access, which is more profitable than phone service.

Comcast soon reversed the subscriber defections, and by the end of this year it’s set to have more high-speed Internet customers than any of its rivals. Profit margins at the AT&T; systems jumped from the low-20% range into the low-30% range, although they still are below the 43% average at the Comcast systems.

“If we did this 100 times, we’d never get off to a better start,” Burke said.

One of the most satisfying victories for management: Of the 3,000 workers that were unionized at the time of the merger, half of them, including those in Los Angeles, have voted out the union.

Officials at the Communications Workers of America contend that strong-arm tactics were at play. Comcast rewarded anti-union supporters while depriving union members of the same benefits as their nonunion counterparts, said Candice Johnson, a spokeswoman for the CWA.

“It’s the big-stick approach,” she said, adding that in at least two cases, Comcast fired union supporters who since have been reinstated to their jobs after concluding the grievance process. Comcast, however, says employees voted out the union for one simple reason: They’re very comfortable with the new owner. Two weeks after the deal was signed, 25 leading former AT&T; field managers, including Los Angeles’ Debi Picciolo, went through the “Spirit of Comcast” boot camp.

At first she was incredulous. “I thought, ‘Will it be sappy?’ ” recalled Picciolo. “But it works.”

She said her skepticism about the company’s vaunted family values in view of its new size dissolved when she and 24 counterparts were invited to Burke’s house for dinner. “I was shocked. I never had dinner at Michael Armstrong’s or Dan Somers’ house,” she said, referring to the heads of AT&T; Broadband.

The scene at Burke’s house also was an eye-opener. “Steve’s kids were climbing all over Brian, calling him Uncle Brian. You could see these people meant what they said about family.”