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Certain that Comcast will thrive despite turmoil

Stephen B. Burke, the No. 2 executive at Comcast Corp., is a trim and athletic man who has pounded out 13 marathons. Now 50, he bicycles and kayaks on the Schuylkill to save his sore knees.

Steve Burke, Chief Operating Officer of Comcast, in the lobby of Comcast Center (April Saul/Inquirer)
Steve Burke, Chief Operating Officer of Comcast, in the lobby of Comcast Center (April Saul/Inquirer)Read more

Stephen B. Burke, the No. 2 executive at Comcast Corp., is a trim and athletic man who has pounded out 13 marathons. Now 50, he bicycles and kayaks on the Schuylkill to save his sore knees.

Sports are a big part of Burke's life, and he sprinkles his speech with the terminology. Earlier this year, facing criticism on Wall Street that Verizon Communications Inc. and AT&T Inc. were beating Comcast to the punch in the pay-TV market, he vowed: "We are budgeting to come out swinging."

These days, sports euphemisms serve Burke particularly well. "We have to suck it up," he said in reference to criticism of the company by regulators and customers.

"A lot of attention we get is because we are the biggest cable company and one of the biggest companies in America," Burke said. "We made a lot of progress in explaining the actions we are taking. You have to take the time to tell people what you are doing."

Burke, a former executive at the Walt Disney Co., serves formally as chief operating officer. But observers consider him chief executive officer Brian L. Roberts' right-hand man. And in a wide-ranging interview in the company's towering new headquarters, Burke evinced a command of Comcast's enormous challenges and spoke with the confidence of a well-trusted lieutenant.

Burke, addressing perhaps the biggest issue, said the cable giant would likely avert the pain endured by many other businesses in an economic recession. The company could lose business, for example, in pay-per-view movies. Customers, instead of running up a monthly $125 bill to Comcast, might run up just $100.

But "the idea that people will say, 'I don't want to have my cable, I don't want to have my Internet service,' that's not happening."

Comcast's stock price held up reasonably well until the last couple of weeks, when Wall Street became convinced that the nation was heading into a hard recession. The company's stock fell 13 cents Friday, to close at $15.23. It had traded between $21 and $22 in August.

Even in this time of economic turmoil, Burke remains focused on Comcast's future. Comcast has to "lean forward" - another sports reference - to keep pace with advances in technology and media.

"The real challenge is that our video business is maturing. And do we want to be a company that grows 2 percent a year, or do we want to grow at a much higher percentage?

"If you want to create a consistently growing entertainment business," he said, "you have to constantly get into new businesses."

Comcast projects sales growth of 8 percent to 10 percent this year, and Burke said he believed the company had laid a solid foundation with projects such as the Canoe interactive-advertising venture and the online-media division, anchored by Comcast. net and Fancast.

There are no plans to split Comcast's entertainment properties - such as E!, the Golf Channel or Versus - from the cable-TV-distribution business, as Time Warner Inc. has done and Cablevision Systems Corp. has talked of doing.

Burke would like to go in the opposite direction and buy an entertainment company. "We look at everything that comes along."

This is Burke's 10th year at Comcast. He was hired from Disney after launching the Disney retail chain and restructuring its ailing European theme park.

He is considered part of a second-generation management team that took over from the Comcast founders, led by Ralph Roberts. Brian Roberts is the son of Ralph. Burke is president of the giant cable division, in addition to chief operating officer.

Comcast is a completely different company from the mid-tier cable firm Burke joined in 1998. That year, Comcast earned about $5.1 billion in revenue, all of it from analog pay-TV services, and it employed 17,000.

This year, Comcast will earn about $35 billion in revenue and has 100,000 workers. The company operates the nation's fifth-largest corporate fleet, with 40,000 vehicles, and maintains 590,000 miles of cable data lines.

Early on, Burke repositioned Comcast as a more modern corporation. He now focuses on diversification of its revenue. It's a point that is important, stock analysts say, as Comcast battles for the attention of investors who think cable is a dinosaur.

Burke "has got a lot of initiatives on his plate, and if he can accomplish those things, it will show he's a real leader," said April Horace, a cable and telecom analyst with Janco Partners Inc., of Denver.

She gives Burke high marks as an executive and notes that, in terms of new products and reaching out to investors, "cable has done more in the last five years than they probably did in the last 25 years."

David C. Joyce, media analyst with Miller Tabak & Co. L.L.C., of New York, said Burke was a "hands-on manager." His only fear with Comcast, he said, is a price war with Verizon or AT&T.

Within two years, Burke said, about half of Comcast's revenue will come from businesses other than pay TV. The company's second-biggest revenue source is high-speed Internet, which had $6.4 billion in sales last year.

One repeated criticism is that Comcast is not prepared for the booming popularity of wireless services.

Burke does not agree.

"I don't think we have an Achilles' heel, and I don't think people are going to watch a high-definition television the size of their living room wall using a wireless connection," he said. "Technically, it doesn't work. That being said, shame on us if we don't have a wireless-service offering, and shame on us if we don't invest in Clearwire."

Comcast has put more than $1 billion into Clearwire Corp., based in Washington, to help commercialize the next-generation wireless service WiMAX. Partners in Clearwire include Time Warner Cable Inc., Intel Corp., Google Inc. and Sprint Nextel Corp. The service was launched last month in Baltimore and could be available in Philadelphia next year.

A second perceived threat to Comcast and other pay-TV companies is online video.

"I don't think that ESPN and the USA Network will put their content on the Internet for free, if putting it on the Internet for free means someone does not want to be a cable subscriber. We pay ESPN more than $1 billion a year," he said, "and they will want us to keep paying them."

Burke, ever the sportsman, says competition is good. Satellite broadcasters, in the 1990s, were supposed to devastate Comcast and other cable companies. But between 1996 and 2004, Comcast invested $39.1 billion into fiber lines to transmit high-quality digital-video signals into millions of homes. The fiber lines improved the TV picture with the Comcast service and planted the seeds for future business in video on demand, high-speed Internet, phone and interactive advertising.

"The entertainment and media companies that have thrived have invested in new technology," Burke said. "Where you get into trouble is, if you stop and you say this is my business."

And for a man who has run marathons, stopping isn't an option.