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The Financial Metrics & Governance of Comcast
– More a Family Firm than a Public Company
Source: Martyn Roetter, MFRConsulting, Boston, MA 02116, 617 216 1988, mroetter@gmail.com

The information summarized here illustrates that claims of transaction-specific benefits that will be generated by Comcast’s proposed transactions with Time Warner Cable and Charter Communications to enable it to materially improve the quality of its services and customer care which it currently lacks the resources and will not otherwise be able to pursue and implement are unfounded. The company has been allocating substantial discretionary resources in ways that disproportionately benefit a small number of its executives while sustaining and confirming its reputation and position over many years as the, or among the “worst-in-class” providers of services to consumers according to multiple individual complaints and extensive customer surveys. The incentives and priorities driving Comcast’s behavior and actions are skewed towards the financial interests of a handful of executives. It cannot be regarded nor will it in future operate as a worthy steward of the public interest (the franchises it has been awarded by local and state authorities) or as a customer-sensitive company unless there is a significant countervailing force that represents those interests and can effectively influence its behavior. Otherwise why should these executives resist the powerful temptations placed in their path? Most of us would not, if given the chance.

Financial Metrics
Comcast: Some Cumulative Financial Metrics, 2006-2014
NET INCOME $40.6 billion
DIVIDENDS $9.5 billion
STOCK REPURCHASES $21.5 billion
TOTAL DIVIDENDS PLUS STOCK REPURCHASES $31.0 billion
PERCENT OF NET INCOME 76.4%
CONSTRUCTION AND CAPITAL EXPENDITURES1 $47.2 billion
APPROXIMATE RANGE OF ANNUAL CEO PAY2 $21-33 million
APPROXIMATE % STOCK-BASED CEO PAY2 33-36%
1. Investment in cable segment
2.Estimates of the level and structure of compensation of Comcast’s CEO are based on analyses of proxy data filed with the SEC and the estimated value of stock options and awards granted during the year. In addition in 2014 a cash bonus determined predominantly on the basis of short term financial performance targets for the year accounted for about 27% of total CEO pay.
Source of other information in this Table: MFRConsulting calculations from Comcast’s Annual Reports
Comcast has also announced increases in its dividend and share repurchases for 2015. Specifically,(i) Dividends to increase 11% to $1.00 per Share on an Annualized Basis (versus $0.90 per share in 2014) ; (ii) Share Repurchase Authorization to Increase to $10.0 Billion, with $4.25 Billion to be Repurchased in 2015; and (iii) Additional Share Repurchases Above the $4.25 Billion Plan in 2015 will be determined by the closing of the TWC Merger and the subsequent divestiture transactions.
Comcast’s 2015 proxy statement presents the compensation levels and structures of its most highly paid executives as follows :

Governance
The highly concentrated power structure within Comcast based on its dual class of shares is demonstrated in the company’s 2014 10-K . Notably Comcast fits the definition of a “family firm” used by the Economist magazine , that includes two elements, (i) A family must own a significant share of the company concerned and be able to influence important decisions, particularly the choice of chairman or CEO; and (ii) There must have either been a transition from one generation to the next, or, in the case of a founder-owned firm, plans for such a transition.
“Our Class B common stock has substantial voting rights and separate approval rights over several potentially material transactions, and our Chairman and CEO has considerable influence over our company through his beneficial ownership of our Class B common stock.
Our Class B common stock has a nondilutable 33 / % of the combined voting power of our Class A and Class B common stock. This nondilutable voting power is subject to proportional decrease to the extent the number of shares of Class B common stock is reduced below 9,444,375, which was the number of shares of Class B common stock outstanding on the date of our 2002 acquisition of AT&T Corp.’s cable business, subject to adjustment in specified situations. Stock dividends payable on the Class B common stock in the form of Class B or Class A Special common stock do not decrease the nondilutable voting power of the Class B common stock. The Class B common stock also has separate approval rights over several potentially material transactions, even if they are approved by our Board of Directors or by our other shareholders and even if they might be in the best interests of our other shareholders. These potentially material transactions include mergers or consolidations involving Comcast Corporation, transactions (such as a sale of all or substantially all of our assets) or issuances of securities that require shareholder approval, transactions that result in any person or group owning shares representing more than 10% of the combined voting power of the resulting or surviving corporation, issuances of Class B common stock or securities exercisable or convertible into Class B common stock, and amendments to our articles of incorporation or by-laws that would limit the rights of holders of our Class B common stock. Brian L. Roberts, our chairman and CEO, beneficially owns all of the outstanding shares of our Class B common stock and, accordingly, has considerable influence over our company and the potential ability to transfer effective control by selling the Class B common stock, which could be at a premium.”

Additional Information Relevant to the Comcast/TWC Transaction
“Time Warner Cable: TWC Chairman and CEO Robert Marcus is in line for a payout of $79.8 million — including more than $20 million in cash — after the company agreed to be purchased by Comcast, according to a Securities and Exchange Commission filing from Comcast CMCSA on Thursday.
He’s not the only one with a hefty “golden parachute” coming his way: CFO Arthur Minson could haul in $27.1 million, Chief Technology Officer Michael LaJoie may bring in $16 million and Chief Operating Officer Philip Meeks could bring in $11.7 million.”

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