Comcast Holders Want to Chat About Control

Imperial CEO Brian Roberts touts advanced services like VoIP, but governance issues carry the day.
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Comcast

(CMCSA) - Get Report

planned to use its annual meeting Wednesday to highlight the growing promise of advanced services like cable telephony. But some shareholders had other ideas.

Shaking off this spring's failed bid for media powerhouse

Disney

(DIS) - Get Report

, CEO Brian Roberts sketched out a bright future for Comcast's cable business. The executive once again said a host of digital services, ranging from broadband Internet access and voice over the Net to video on demand, could provide sparkling growth opportunities for the company.

But grumpy investors, let by microphone-hogging shareholder gadfly Evelyn Y. Davis, focused discussion on Comcast's governance setup. That arrangement gives Roberts and his family control over the Philadelphia cable giant far in excess of their equity stake.

Thus, with Roberts holding in the neighborhood of 1% of Comcast's stock -- but 33% of the voting power -- the outcome of the meeting was never in doubt. All company nominees to the board of directors were re-elected by margins of more than 92%, all company-sponsored proposals received more than 96% of votes and all shareholder proposals were defeated, though Comcast didn't specify the margins.

Little wonder. The company's class B stock, of which Roberts holds 100%, was entitled to 15 votes per share; holders of the company's class A common stock were entitled to 0.2 votes per share. On Wednesday, Comcast shares fell 9 cents to $29.48.

Roberts, who is succeeding former

AT&T

(T) - Get Report

executive Michael Armstrong as chairman of Comcast -- at a time when other CEOs, like Disney's Michael Eisner, are ceding their chairman posts -- was unapologetic about his family's imperial control over the company.

Shareholders are free to sell their stock if they don't like the setup, he suggested. But he also defended the setup, aided by dual classes of stock, as best for shareholders, pointing to the company's average annual return to shareholders of 20.4% over the past 32 years, compared to the

S&P 500's

10.2%.

"One of the secret sauces is the stability," said Roberts, whose father, Ralph, co-founded the company and remains on the board.

After one attendee mentioned cable operator Adelphia Communications -- members of whose founding family, the Rigases, are on trial for fraud -- Brian Roberts dismissed comparisons to companies at which dual classes of stock had been problematic. "You can always find bad exceptions to every rule," he said, citing unspecified research about the outperformance of companies with dual-class stocks.

In his presentation to shareholders, Roberts kept the focus on the company's financial performance, and various advanced services in Comcast's non-Disney future.

"On Disney, we've moved one," he said. "Frankly, we're very excited about the business we've got."

Roberts proudly noted that Comcast is the largest provider of broadband Internet connections in the U.S.

He also mentioned Comcast's tests of voice over Internet protocol (or VoIP) telephony, in terms that were little different from the company's previous discussions of the service. Comcast hopes to have 50% of the company's plant ready for VoIP by the end of the year, and 95% by the end of 2005, Roberts said. But, in line with what the chief has said before, he indicated the company isn't running headlong into the business. "We're optimistic, but we'll take it one step at a time," he said.

Comcast, which acquired AT&T's cable systems at the end of 2002, has previously been critical of AT&T's rush to roll out telephone service over cable without paying enough attention to its profitability.

Roberts spoke also of putting digital video recorders in set-top boxes, and of rolling out video on demand as well. Referring to the heavy usage of VOD by customers who have the service in Comcast's home town of Philadelphia, Roberts said, "That's going to change the way people use television."