Don't Buy Vague Buyback News

It is not often that The Wall Street Journal's Breakingviews column puts scorpions in The Business Press Maven's mind, but since this quality corner of the business media did just that this week, let's take a look-see.

The mistake was a bit subtle, but it was made in a report on an important company (ComcastCMCSA) and on an essential issue (stock buybacks) that can be applied to other companies. So it's worth throwing a haymaker or two at Breakingviews, as unaccustomed as I am.

For those unaware, big investors have been holding Comcast's feet to the proverbial fire. The muscular institutional holders have done everything from forcing the company to pay a dividend to reducing the pay of company founder and dad of the president and chairman to $1. They also -- and I love this -- took away from Big Daddy Ralph J. Roberts a large salary that was going to be given to him for five years after his death. (Note to my editors: I am a fairminded man and believe that paying me for writing this column a mere three years after I slip my earthy bonds is more than reasonable.) (Editor's Note: Thanks for the laugh.)

But here's the key. Comcast has been buying back billions of dollars worth of stock for years, and these shareholders, who did yeoman's work in taking salary from the clutches of a future dead man's hands, forced the company to say it would buy back the remaining $7 billion in the existing plan by 2009.

This subtle point was lost on Breakingviews, which usually excels at making subtle points in a simple and direct way. Instead, we got this: "By agreeing to pay annual dividends of $750 million, a third of annual free cash flow, and to buy back $6.9 billion of stock, Comcast dispelled worries it would squander capital." Without mentioning the "by 2009," it makes it seem as if the buyback decision itself were new. It's not. Mind you, Comcast's concessions are all decent news (especially the grabbing back of salary from the dead guy.) But Breakingviews, perhaps giving Comcast undue credit for announcing a buyback in the first place and not just the time frame, really plays it up. Comcast Gunfight Avoided says the headline, followed by the redundant lead: "It wouldn't make for good television, but Comcast has smartly headed off a gunfight." For that combination of overplay, Breakingviews receives the dreaded "Back of the Hand."

Contrast this to the more measured takeaway in a report on the Philadelphia-based company's concessions by its hometown The Philadelphia Business Journal. Remember: Hometown publications often offer the best (familiar with company, close to sources) or worst (familiar with company, close to sources) coverage. In this case, it's the best and Peter Key at The Philadelphia Business Journal gets the week's coveted Business Press Maven "Nod of Approval" award. Unlike Breakingviews, the PBJ (nice, huh?) avoids a headline that talks about permanent avoidance of more conflict. Instead, they say "Comcast 4Q income up 54%, founder gives up pay after death deal." Their lead was also more measured: "Comcast Corp. on Thursday reported net income growth of 54 percent in the fourth quarter and said it will start paying dividends, a move that may quiet some of the grumbling..."

WSJ: avoided, headed off a gunfight.
PBJ: may quiet grumbling.

Did this differing interpretation have to do with the fact that the WSJ seemed to take the multibillion-dollar stock buyback as a whole new deal, while PBJ realized they were just slapping a time frame on what was already in place and going on?

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