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Comcast deal brings the Roberts family out of the shadows

Brian Roberts completed his first triathlon this year. The event that challenges participants to compete in swimming, running and cycling should be a good preparation for the 50-year-old Comcast chief executive as his cable company takes over the television and movie operations of NBC Universal.

The new joint venture by Comcast and General Electric – in which Comcast owns the majority and controls the management – enters the top ranks of media companies with equity of $28 billion, three times as big as CBS Corp, compared to $33 billion for Rupert Murdoch's News Corp and $57 billion at top-ranked Walt Disney Co.

The family, headed by Roberts and his father Ralph, co-founder of Comcast, controls one-third of the shareholder votes in the company (though actually owning only 4%) and now is poised to emerge from the shadow of Rupert Murdoch, who dominates the media scene with his global operations, and Sumner Redstone, whose Viacom-CBS empire parallels the Comcast holdings.

Comcast, whose cable operations remain outside the joint venture, currently has a market cap of some $50 billion, and Roberts has made the scale of his ambition clear since his unsuccessful 2004 attempt to take over Disney. Eager to combine content with the distribution capacity of the largest US cable operator, Roberts jockeyed for the NBC deal for months before it was announced on 3 December. (Click here to read our coverage of the story)

Some sceptical critics are already comparing the NBC deal to the disastrous merger of America Online and Time Warner a decade ago, which failed to generate any synergies and turned AOL into an albatross around Time Warner's neck.

But Roberts said the acquisition will begin generating new profits for Comcast shareholders immediately and is "strategically compelling." The challenge is to fix NBC, which has lost a quarter of its primetime viewers since 2005, and Universal Studios, which has had a string of box-office flops.

The second-generation CEO has enlisted top management talent from both Murdoch and Disney to spearhead his media expansion.

Peter Chernin, who stepped down last July after 12 years as Rupert Murdoch's number two, consulted with Comcast during the negotiations for NBC. Peter Liguori, the former head of Fox Broadcasting Co who oversaw entertainment at that network until last March, also consulted on the deal.

Murdoch alumni employed at Comcast include the head of programming, Jeff Shell, who joined in 2005 from Fox cable networks, where he oversaw the FX, Fox Sports and National Geographic channels; Jamie Davis, an 11-year veteran of News Corp, who heads Comcast's sports channel, Versus; and Neal Tiles, president of Comcast's G4 video-game channel, who was in marketing at Fox Sports.

Standing at Brian Roberts' side through the expansion has been Comcast chief operating officer Steve Burke, a former top Disney executive who also has media in his genes. It was Burke's father, Daniel, who helped engineer Capital Cities' stunning reverse takeover of ABC in 1985, when the television network was four-times bigger than the agglomeration of broadcast stations and other media properties at Cap Cities.

Typical of the clubby media world, Chernin and Roberts own houses near each other on the exclusive US island of Martha's Vineyard, while Chernin and Steve Burke have homes near each other in Montana ski country. Both Chernin and Burke have solid reputations in the media world.

But it's increasingly clear that no one has a lock on making the right decisions on media as technology continues to revolutionise how content is produced and distributed. Murdoch himself has had to write off half of his $5 billion investment in Dow Jones, with its flagship newspaper, the Wall Street Journal, just two years ago.

Time Warner not only found no synergy with AOL for its media content but also none with Time Warner Cable, the second-largest cable operator after Comcast, which was spun off as an independent company last March.

Unlike the 78-year-old Rupert Murdoch, who still actively manages News Corp, the Roberts family have already managed the transition to the second generation. Brian became president of Comcast in 1990, chief executive in 2002 and chairman in 2004.

It was in 1963 that Ralph bought American Cable Systems, an early independent operator at the dawn of the cable era, for $500,000 after selling his belt-and-suspenders (braces) business. The company was renamed Comcast (combining "communications" and "broadcast") in 1969 and went public in 1972.

At News Corp, two of Murdoch's children who were being groomed for succession, Elisabeth and Lachlan, are no longer involved in the company's management, leaving a third, James, as heir apparent for the time Rupert is willing to give up the reins. However, all children will inherit part of the trust holding the family's shares and Elisabeth and Lachlan are still involved in media ventures of their own.

As for Redstone, 86, the succession to his daughter, Shari Redstone, is in some doubt after reports of recent tension between the two. CBS is managed by the highly regarded Les Moonves and Viacom by trusted associate Philippe Dauman. The Redstones own more than 70% of both companies, with Sumner chairman at both, and Shari, vice chairman.

It's hard to say what the future holds for these prominent media families, or for the media properties they manage. For now, at least, thanks to the splashy deal that combines two iconic US media businesses, the Roberts family have come out of the shadows.

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