Inside Move: Family ties that bind

AFL-CIO challenges Roberts' rule at cabler

Beware of ties that bind.

With all the ruckus over the alleged insularity and blind loyalty of Disney’s board of directors and Michael Eisner‘s supposed stranglehold on company decisionmaking, it might behoove investors to take a closer look at the corporate governance of the company that hopes to move into the Mouse House: Comcast.

Like many family-founded and operated firms, the Roberts’ control of Comcast is airtight.

The Philadelphia scions own less than 1% of the company’s total equity (around $900 million of a total $68 billion), but vote 33% of the shares. That privileged position comes thanks to an exclusive class of stock that awards the Roberts five votes per share, compared to the 1/5 of a vote plebian common stock owners get — the same class A stock that Comcast wants to issue Disney in its merger proposal.

The catch is, the Roberts’ voting share doesn’t budge if they buy Disney, giving the family barely 0.5% of the combined $100 billion+ entity.

The incongruence of that kind of lopsided power was blasted home last week by the AFL-CIO’s demand that Comcast get its own governance house in order before it goes spending other peoples’ stock on big acquisitions.

The fact that Eisner is under siege at all is at least a testament to the proxy voting power of its shareholders. Over at Comcast, Brian Roberts‘ job is virtually guaranteed until 2010 thanks to a charter that requries a 75% vote of the board to oust him or even change the charter by which he governs. Bylaws also enshrine his right to choose members of the very corporate governance committee that could change the charter.

Responding to the AFL-CIO attack last week, Comcast defended its ethics, noting that the company’s stock has outperformed the S&P 500 by a more than 2 to 1 since the company went public in 1972. (Calpers, by contrast, notes that Disney has lost 23% of its value in the last five years).

But Comcast stock has dipped nearly 12% since it first announced its hostile intentions toward Disney, a clear sign investors aren’t thrilled with such a massive acquisition — which would dilute their stock even more.