Deal or No Deal

Comcast's Brian Roberts is a tough negotiator but hasn't made a big acquisition in years. Is he trigger-shy?

Ever since Brian L. Roberts abandoned a hostile bid for Walt Disney (DIS) four years ago, Wall Street has wondered when the Comcast (CMCSA) chief executive and serial acquirer might make a play for another big media prize. The chatter picked up last fall, just before America's largest cable company confessed that it would add fewer subscribers than expected in the fourth quarter. Some investors worried that, with growth slowing, Roberts might try to pick off Yahoo! (YHOO) or NBC Universal (GE)—diversifying away from cable by wading into the murky waters of "content."

In January, dissident shareholder Glenn H. Greenberg warned Roberts to stick to what he knows best: distributing TV, Internet, and phone service over Comcast's 125,000 miles of pipe. As far as Greenberg was concerned, buying a Web site, cable network, wireless outfit, or other "noncore" business would "fritter away" the more than $2 billion in cash that Comcast generates annually. Greenberg, the boss of Chieftain Capital Management, a $5 billion investment fund that owns 2% of Comcast's stock, brazenly questioned whether Roberts should be running the company. The broadside jolted the normally unflappable Roberts into action. In a mid-February conference call with investors, he vowed to reinstate Comcast's dividend after a nine-year hiatus and repurchase $7 billion in stock by 2009, two moves designed to put more of Comcast's money into shareholders' hands. His 88-year-old father and Comcast founder, Ralph, even gave up his hefty compensation package. And Roberts promised that Comcast "was not spending any time on any of the large, transformative acquisitions" that Wall Street had been buzzing about.

Roberts went further, embarking on a charm offensive to soothe investors even more. He met with Greenberg at New York's St. Regis hotel on Feb. 28 to talk about the company's future. Greenberg, for one, has softened his stance only slightly since. "We'd still like to discuss with the board the need for adult supervision," says Greenberg. "He's done some bad things to the shareholders."

JUDGMENT CALL

Brian Roberts, at 48, faces a choice that could define the rest of his career. Should he bow to Greenberg and other like-minded investors and run Comcast more or less like a slow-growth utility company, parceling out excess cash to shareholders at regular intervals? Or should he risk Wall Street's wrath, acquire a big entertainment company, and take one more shot at media moguldom? Comcast still derives a much smaller percentage of its revenues from content—defined as any nugget of media people can watch, read, or listen to—than rivals Cablevision and Time Warner, which own such lucrative properties as CNN, TNT, and TBS. Roberts has let similar opportunities slip through his fingers in the past, turning down programming deals that, in hindsight, would have paid off handsomely. And on a personal level, one Roberts confidant says, Roberts has long admired Rupert Murdoch, whose media and entertainment colossus News Corp. (NWS) pulls in revenues from advertising, DVD sales, subscriptions, and more.

Roberts is reluctant to admit he's at a fork in the road. "I'm happy with the hand we have," he says. For now Comcast is growing briskly by selling cable customers on phone service and pricey upgrades such as digital video recorders, and plans to sell phones and data service to businesses. But there's little doubt that growth will slow as customers max out on services as telephone companies eat into market share. John C. Malone, a cable pioneer who now controls rival satellite broadcaster DirecTV ( 2 3 Next Page

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