Can Comcast Be As Mighty As Google?
In pure business terms, Comcast’s roughly $14 billion acquisition of 51 percent of NBCUniversal (GE retains 49 percent) is a narrative about a company on the verge of transformation. By now, particularly here in Philadelphia, we all know the basic outline: Between its 2002 acquisition of AT&T Broadband and its purchase (approved by the FCC just over 10 months ago) of NBCUniversal, Comcast has exploded from a cable company with 8.5 million cable subscribers and roughly 38,000 employees to a telecommunications behemoth with 22.4 million pay-TV subscribers, 137,000 employees across 38 states, and 2011 revenue that’s projected to exceed $50 billion.
But for Comcast, claiming a controlling stake in NBCUni isn’t just about getting bigger. It’s about becoming a fundamentally different kind of company. Selling cable, which Comcast founder Ralph Roberts famously started doing in 1960s Mississippi, required only the necessary equipment and the know-how to connect wires. Technology has changed along the way, but the core dynamics of the business remain the same. Operating television and film properties, on the other hand, requires managing thousands of creative minds and placing bets on which stories people will use that technology to follow. If Comcast’s traditional role as a cable operator only required it to understand that people enjoy television and sell them the means to do so, its new job at NBCUni is to create what people want to watch.
The shift is daunting, on at least a couple of fronts. For starters, there’s the sorry state of the properties Comcast acquired in the NBCUni deal. While the company’s cable networks—which include USA, Bravo, CNBC and SyFy—performed well in recent years, its Universal Pictures movie arm and theme parks struggled. And then there’s NBC. At the time of the merger, the network boasted just one top 30 prime-time hit—Sunday Night Football—and averaged about $500 million in annual losses. Indeed, if there had been a place to finish behind last—a darker, more filthy level than the sub-basement—NBCUni would have owned it, covering itself in mud.
Equally challenging is the fact that it will be Comcast trying to connect with the tastes of the American public. Our collective image of the company is probably not too far from the satire put forward by NBC’s 30 Rock, which lampoons Philly’s highest-ranking Fortune 500 company as “Kabletown,” a bastion of mediocrity where the cable is already laid and innovation is unnecessary; the revenue from on-demand porn just keeps flowing. The send-up is a neat modernization of an old conceit: In the ’60s, broadcasters derided the then-new cable guys stringing wires all over town as an unsophisticated tribe they called “pole climbers.”
Comcast execs shrug off the Kabletown satire, but the pole-climber stigma lingers. “I think they are largely undervalued,” says Merrill Lynch stock analyst Jessica Reif Cohen. “They are still traded like they are ‘one of the cable companies.’ But their reputation on Wall Street will depend a lot on whether or not they turn around NBCUni, which is pretty much last at everything they do. If Comcast succeeds, they’ll be looked at as innovators, one of the iconic companies in American industry.”
Comcast? An iconic company? Google, Apple, Microsoft, Amazon … Comcast?
“It’s going to take a few years to see if they can succeed with this merger,” Reif Cohen adds, “but I think they’re on the verge of being mentioned with those companies.”
Responsibility for making that happen falls largely on Steve Burke, whose new position renders him perhaps the most powerful man in New York or Hollywood. In 10 months as CEO of NBCUni, he has jumped into the fray. He’s dismissed, by weight, roughly a ton of high-level executives, including legendary NBC Sports chief Dick Ebersol. He’s hired Bob Greenblatt, a risk-taking programming chief with a strong record at Showtime and Fox, to change NBC’s fortunes. He’s begun imposing a new, unified company culture.
