Giving Nepotism a Good Name

By JOE NOCERA
Talking Business
The New York Times
July 7, 2007

“The fundamental fact is that people love television,” said Ralph J. Roberts a few weeks ago. “And if you can provide them with more television, they love it even more.”

It was a stifling Wednesday afternoon in Philadelphia, but sitting at his desk in a downtown high-rise, Mr. Roberts was decked out the way businessmen used to dress, back when the executive suite was still a formal place, with a white handkerchief peeking out of the front pocket of an elegant suit. At 87, Mr. Roberts still has a full head of white hair, combed back in a way that reminded me of Paul Drake, the rakish sidekick in the old “Perry Mason” show.

Some 47 years ago, Ralph Roberts founded Comcast. He was a middle-aged man who had recently abandoned the belt and suspender business, and was looking for something new. He found it in a tiny company in Tupelo, Miss., which was erecting a giant antenna to provide the local citizenry with signals from the television stations in Memphis, 90 miles away.

At that moment, Mr. Roberts became a cable pioneer. Along with Ted Turner, John Malone, Charles Dolan of Cablevision, John Rigas of Adelphia and a handful of others, he was one of the men who built the cable industry, pulling off one of the more unheralded achievements in modern business: getting people to pay for something they had always assumed would be free.

Today, most of the cable pioneers have sold out or retired, or, in the sad case of Mr. Rigas, gone to jail. But in his understated Philadelphia way, Mr. Roberts turned out to have more ambition than the lot of them, and lo these many years later, his company is the biggest cable provider in the country. It serves around 25 million subscribers, employs 90,000 people and will generate an estimated $31 billion in 2007 revenue.

Except that it isn’t his company anymore. Not really. While Mr. Roberts remains a Comcast director, Comcast is his son’s company now. And therein lies a story that is pretty unusual in corporate America. And pretty instructive, too.

THINK for a minute about the generational sagas you usually read about in the business pages. Rupert Murdoch’s son Lachlan decides he can no longer work for his father, so he quits his job as the publisher of The New York Post. Charles Dolan and his son James, who control Cablevision, always seem to be fussing and feuding about something. Sumner Redstone’s daughter Shari has long been viewed as his heir apparent. But her octogenarian father can’t bring himself to let go of his companies, and he has a deep need to show the world who’s boss. Just last fall he publicly criticized his daughter — even as he was being sued by his son Brent. Geesh.

It’s never been like that with Ralph Roberts and his son Brian, who became Comcast’s president in 1990 at the age of 31, and has been chairman and chief executive since 2004. “Theirs is a relationship of love and mutual respect,” said David Calhoun, a former Pennsylvania politico who joined the company five years ago as executive vice president. “They are incredibly close.”

Brian Roberts knew he wanted to work for his father practically from the moment he emerged from the womb, and Ralph Roberts knew pretty quickly thereafter that he wanted his son to finish what he’d started.

As far as anyone can tell, they’ve never had so much as an open disagreement at Comcast, despite all the obvious stresses that running a business can put on any relationship.

I had originally gone to Philadelphia thinking I would write about Comcast’s recent success. Although it’s not been a knockout stock, that’s mainly because Wall Street is annoyed that Mr. Roberts won’t use some of the cash flow Comcast is generating these days to take on more debt and buy back shares.

What is unarguable, however, is that the company, having completely recovered from its failed effort to buy Disney three years ago, is clicking on all cylinders. Its revenue is growing at a healthy double-digit clip. The rise of high- definition television has turbocharged earnings. Its Internet service is going gangbusters. It has even started to make inroads against the telcos, selling its own phone service. All the talk that cable would be overrun by the Internet hasn’t remotely come to pass. On the contrary: cable in general, and Comcast in particular, seem stronger than ever.

“This is an extremely good business,” said Stephen Burke, who is Mr. Roberts’s No. 2. “We have 25 million customers who pay us an average of $100 a month.” Yes, indeed, people love their television.

Brian Roberts, who, like his father, also wears suits to the office, but unlike his father takes his jacket off once he gets there, would have been perfectly happy taking a deep dive with me about the state of Comcast’s business. He is a soft-spoken man, who answers questions with an appealing earnestness and lack of pretense. The reason Comcast wasn’t piling on debt, he said, was that the company has always been run conservatively; that was a cultural value his father, a product of the Depression, had instilled from the start.

“My father used to have two years’ worth of cash on hand,” Mr. Roberts said. “Cash! If we owed $5 billion, we might have $500 million in cash, earning just 2 percent. We were superconservative in a business that was wildly leveraged.” That the son had adopted the father’s fiscal conservatism was something Mr. Roberts wasn’t about to apologize for.

Indeed, to hear Mr. Roberts tell it, his father was the greatest entrepreneur in the history of the cable industry. He kept peppering his answers with references to his dad, and every time he did his eyes would light up. Eventually, I took the hint, and began steering the interview in that direction.

“My father has a wonderful mentoring style,” Mr. Roberts said. “He would never say, ‘This is a terrible idea.’ Instead he says, ‘Have you thought about this?’ ” When he was as young as 12 and 13, he would ask his father if he could sit in on meetings while Ralph was negotiating loan agreements with the banks. Afterward, Brian would ask questions about why Ralph had taken this tack or that one. Other fathers and sons went to ballgames, but this is how the Robertses bonded.

When Brian Roberts graduated from Wharton, his father resisted bringing him into Comcast immediately; he felt his son would be better served gaining some experience elsewhere. But the younger Mr. Roberts didn’t want to work anyplace else.

“My father is 40 years older than I am,” he said. “His father had died when he was 15. His mother died when he was 19. His brother had passed away in his 50s. How many good years were we going to have together?”

So Ralph Roberts relented, and Brian joined the company. It was obvious from Day 1 that he was the heir apparent, but the elder Mr. Roberts insisted that he work his way up.

Brian began his Comcast career as a line installer. Then he put in several years in branch offices before becoming head of operations at age 26. And at 31, his father made him president. At the time, Comcast didn’t use the title chief executive, so Brian Roberts was running the company. Ralph Roberts remained chairman of the board, but stepped aside from the day-to-day operations

Wasn’t that an awfully young age? I asked the elder Mr. Roberts. “It seemed to me that he was ready to be president of the company,” he replied, “and there was no reason not to let him have the job.” Besides, he added, “we seemed to think a lot alike.” What happened next is the real key. As often as not, when a son or daughter takes over a parent’s company, tension is the inevitable result. The heir wants to upend some of the practices the parent holds dear. He wishes the parent would stop coming to the office or meddling. The parent, meanwhile, finds it hard to let go, and second-guesses the child.

But that never happened with the Robertses. “It is hard to find a company that has done this transition better,” said Mr. Calhoun. It is not as if Ralph Roberts had set out a grand plan for the transfer of power. But he instinctively knew that it was important to step aside, to not second-guess, to offer advice when it was asked for, and to keep quiet when it wasn’t.

He also understood that he needed to make it clear to everyone at Comcast that Brian was the boss now, not him. That all requires a kind of supreme selflessness — a quality not often found in ambitious entrepreneurs.

“It’s not that I have no ego,” Ralph Roberts says now. “But I’ve learned that if you give people confidence and let them take some risks, most of the time they are winners.”

“Ralph doesn’t support Brian or give him advice because he has to but because he wants to,” Mr. Calhoun said. “And Brian doesn’t have a connecting door between their offices because he feels he owes his father anything. There is simply no one whose judgment he respects more.”

Because he is every bit as ambitious as his dad, Brian will probably spend the next 20 years or so trying to make Comcast bigger still. He believes the same thing his father does: people love television. And Comcast can make a lot of money servicing that desire.

“Here are two great facts,” Mr. Roberts told me as we moved the conversation back to the business. “Last year, more people bought more TV sets per household than any year in history. And half of those sets were 50 inches or bigger.”

Ralph Roberts, meanwhile, doesn’t have a title at the company anymore, but he does still have an important role as the keeper of the Comcast flame. After Hurricane Katrina, it was Ralph Roberts who went to Mississippi to visit Comcast employees working to get television service restored, even though their own lives had been disrupted. And whenever Comcast buys another company, it is the elder Mr. Roberts who makes the new employees feel good about their new workplace.

“I just got back from Boston, where I spoke to 1,200 new Comcast employees,” he told me as our interview wound down. “I encourage the idea that it is a family company. I tell them if they have relatives who want to come work here, don’t worry about nepotism. I have it right here with my son.” He smiled.

“And look how that worked out,” he said.