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Roberts in the Crosshairs

Comcast Corp. (Nasdaq: CMCSA, CMCSK) chairman and CEO Brian Roberts was on center stage at last week's Consumer Electronics Show (CES), but this week he found himself in the crosshairs of one of the MSO's larger institutional shareholders. (See CES: Roberts Declares Open Season.)

On Thursday, Barron's reported that Chieftain Capital, which holds 2 percent of Comcast, is pushing the MSO to oust the exec and do away with the company's "dual-class" voting structure, which gives the Roberts family control of Comcast despite owning about 1 percent of the company's stock.

Barron's, citing a letter dated January 14, notes that Chieftain called Roberts's leadership of the company a "Comcastrophe," which is a swipe aimed at the MSO's "Comcastic" marketing tagline. More seriously, Chieftain argued "that it is time for change."

The letter emerged as most cable stocks, for operators and vendors alike, have been in the toilet. (See Cable's Fall Season .)

Comcast's stock has dipped 40 percent over the past 12 months. The situation has been compounded by a recent class action lawsuit and revised 2007 guidance calling for the additions of 6 million revenue generating units (down from 6.5 million), and a 5 percent increase in capex. (See Comcast Slapped With Lawsuit and Comcast Lowers RGU Guidance.)

Comcast SVP of corporate communications D'Arcy Rudnay defended Roberts in a statement:
Comcast continues to perform well, consistently delivering superior revenue and cash flow growth and significant free cash flow, despite a challenging economy and an increasingly competitive environment. Our management team is intensely focused on executing our strategic plan, investing for profitable growth, and creating long-term shareholder value.

We welcome input from our shareholders and take their views seriously. We have met with Chieftain and have discussed their perspective on numerous occasions. While we have expressed our disagreement with Chieftain’s perspective in the past, we will review Chieftain’s most recent correspondence and will respond in due course.


Chieftain acknowledged that Comcast has increased operating cash flow by tenfold over the last decade, but countered that the company "has created zero return for shareholders."

In a report issued last week, Sanford C. Bernstein & Co. Inc. analyst Craig Moffett wrote that Comcast is entering the new year "at all time low valuations and with low expectations. It is likely to remain in the penalty box for awhile, as it rebuilds its broken credibility."

Despite those sentiments, "we believe Comcast is too cheap by an extraordinary margin," Moffett noted, adding that the firm has cut its target price on the stock to $30 from $34.

Comcast shares were down 27 cents (1.55 percent) to $17.14 each in mid-day trading Friday.

— Jeff Baumgartner, Site Editor, Cable Digital News



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