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November 28 2007: 10:15 AM EST
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Comcast CEO: Investors are wrong about us

The CEO of the largest U.S. cable company talks about his company's ailing stock, competition from satellite and phone rivals, and ongoing tussles with the NFL.


Comcast CEO Brian Roberts
Comcast CEO Brian Roberts
AT A GLANCE
Random facts
Roberts's father started Comcast. His mother hosts a talk show for seniors that airs on Comcast's CN8 network.
Greatest feat
Acquired AT&T's cable assets in 2002 for $25.5 billion in stock, turning Comcast into the No. 1 cable operator in the U.S.
Biggest setback
Disney's board rejected Comcast's unsolicited $54 billion takeover bid in 2004.
Brian Roberts with his father - and office mate - Comcast founder Ralph Roberts
Brian Roberts with his father - and office mate - Comcast founder Ralph Roberts
Questions for... Martha Stewart
Martha Stewart
Author, TV host, and the founder of Martha Stewart Omnimedia answers your questions in the Dec. 8 issue of Fortune.

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Previous Q&As

(Fortune Magazine) -- Don't call him the cable guy.

Brian Roberts, CEO of Comcast, is moving the company well beyond TV. Already the No. 1 provider of traditional cable, with 24.2 million subscribers, Comcast (Charts) is on track to become the fourth-largest residential phone company in the U.S. by year-end. But phone operators like AT&T (Charts, Fortune 500) and Verizon (Charts) are fighting back, and Wall Street is fearing a bloodbath.

Fortune's Stephanie N. Mehta asked Roberts, 48, your questions about Comcast's ailing stock, its NFL coverage, and a hot-button topic: customer service.

Q: Why is Comcast out of favor with Wall Street, and what can you do to boost your company's stock price? -- Kevin M. O'Neill, Hoffman Estates, ILL.

A: We plan to keep growing our customers and to continue to invest in future growth that proves to investors we are, in the long run, in an enviable, secure position. There's increased uncertainty over the future, and unfortunately it may take time for people to get comfortable with the idea that more competition doesn't necessarily slow down growth.

Fortune: But are investors nervous that competition is hurting Comcast?

A: I think it's a combination of factors: heightened competition, the potential softness in the economy, the maturation of broadband. A majority of homes now have broadband. There's growth, but it will be slower growth. What I hope we will prove with subsequent performance is that we have new products -- telephone, [services for] small and medium-sized business, more digital subscriptions, and broadband. When you add those together, we'll continue to grow at a very exciting rate.

Q: What worries you more, competition from local phone companies or the threat of content providers offering programming directly through the Internet? -- Pamela Shimer, Portland, Mich.

A: We face competition from satellite companies, phone companies, and other cable overbuilders, and that's forced us to become a better company. Content on the Internet appears more like an opportunity than a threat. It will cause many people to switch from DSL to the faster cable broadband because video-rich content works better on cable modem. Some 60% of our broadband sales this quarter came from people [leaving] DSL. I think that's a result of customers wanting to watch more video.

Q: When will the cable industry be able to provide its customers with faster Internet connections? -- Paul Wojo, Altamonte Springs, Fla.

A: At the national cable convention this year I demonstrated a technology called DOCSIS 3.0. We'll start rolling this out in 2008. It provides up to 160 megabits or more of speed per second -- that should give more than enough bandwidth to do multiplayer online gaming.

Q: Will you ever offer la carte channels instead of bundling channels into tiered packages? -- Dave Findley, Atlanta

Providing tiers is a great way to give customers more choice. Tiers we offer today are sports, family, Spanish language, a digital tier. la carte questions the viability of niche programming. Channels such as A&E or Discovery may never have been created if they weren't packaged in a popular tier. We also don't think it should be a governmental mandate how we sell in a competitive marketplace.

Q: What will be the future hub of the digital home over the next five and ten years? -- Clay Cowan, San Francisco

Great question, and I'm not sure there is an answer. One of Comcast's goals is to make sure we satisfy each consumer segment. For my kids it may well be the mobile phone. For many it may well be the PC. And many people are building home theaters. I don't know that there will be one winner even if there is a lot of convergence over the next five to ten years.

Q: As a CEO you must be aware of your company's horrific reputation regarding customer service. How do you plan on improving it? -- Eric Sodee, Arlington, VA.

A: I hope that reputation is not universal, and we are working very hard to improve where we have made past mistakes. We do 250 million phone calls a year between orders and services, and, inevitably, with that many calls, you are going to have failures. We have added 11,000 technical and customer-care employees just in the past 18 months. And we are beginning to call customers before and after service appointments to make sure we did the work properly. It is a major goal to continue to improve.

Q: How do you plan to combat DirecTV's stranglehold on the NFL? -- Ryan Long, Pittsville, MD.

A: We have been living with that situation ever since [DirecTV's football package] Sunday Ticket was launched. It's unfortunate the National Football League chooses to not make that package available universally. I think it's a real disservice to the large numbers of their fans who are cable customers. We have plenty of sports: We have high-definition programming of regional sports, and we carry the NFL Network [as part of a sports package]. With 95 games a season on broadcast and cable television and 75 NFL games in high-def, you get a lot of NFL if you're a fan.

Fortune senior writer Stephanie N. Mehta asks:

Q: Comcast's stock took a hit after you missed some analysts' estimates for phone and Internet subscriber growth in the third quarter. How important are these metrics?

A: We're having the second-best year in our history in terms of growth in new products. We grew 100% last year, and we're on pace to grow another 30% this year in new products. We're disappointed that growth wasn't even faster, but we're pleased that for every customer we lost in cable, we gained ten telephone customers.

Q: You and your father, who started Comcast, share an office suite. What's the best business advice he's given you?

A: Listen to others, but in the end, do what you think is right for the long term. And treat people with respect: He's the same person with one of our customer-care folks as he is with the president of the company.

Q: Are there any business leaders outside Comcast you admire?

I think we all can learn from Steve Jobs and Apple (Charts, Fortune 500). When I walked into my first Apple store, I was struck by how he has, by quantum leaps, distinguished his brand with incredible technology and fun for the customer. From a completely different vantage point, I'd say Bill Gates. He continues to build Microsoft (Charts, Fortune 500). It isn't easy to have been on top for so long. And he and Melinda are changing the world.

Q: You played competitive squash in college. Are there similarities between squash and business?

A: Absolutely. You learn tactics. Short-term and long-term successes aren't the same. You can't win alone. In business you try to create an entity that's like a sports team, with higher purpose than self, integrity, and competitive zeal. To top of page

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