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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  March 25, 2018 3:00am-3:30am EDT

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david: did anybody say is he ready to be president? brian: everybody, including myself. david: do have you ever had problems with your cable? brian: sure. david: is it intimidating for the cable repairman to come to your house? >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a journalist, and nobody else would consider myself a journalist.
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i began to take on the life of being an interviewer, even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? ♪ david: when you graduated from college in 1981, you went to the university of pennsylvania. you then joined the company your father had started, comcast. at that time, it was a relatively small company. did you ever, in your wildest imagination, think it would become the leading company in the telecommunications area? brian: we had about $20 million in revenues that year, and my father, when asked that question for many years later would say, "of course." and the reality is of course no way did either of us dream we would be lucky enough to be comcast nbc universal, sitting here with the kind of wonderful products and company we have. i pinch myself every day. david: did you ever say to your father, i don't want to join the
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company? i might do something else. what propelled you to want to join this company? brian: i thought about that. i just always wanted to work for my dad. he used to be in the men's belt and suspenders business way back before he started comcast, men's cologne. we used to play with the cologne growing up as kids, and he had a passion about it. he just made it seem fun for me. he never pushed to me, even a little bit, to want to work for the company. david: what was your father's background? brian: well, he got out of the navy. he was living in philadelphia. met my mom. they got married. they were married 72 years until he passed away a couple years ago. he was very interested in business, also went to the wharton school, and he was an entrepreneur, made golf club putters. he went into muzak, marketing, worked for senator benton in advertising, so he liked the marketing and advertising products side. and one day, he got into men's cologne, and he just loved the smell and the marketing aspect.
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and then the same with a product, like a belt or a suspender. technology came along, and he got himself convinced that slacks, that is polyester pants without belts, would be the technology that could put him out of business, so he sold his business. he was walking around philadelphia, apparently, 1963, and a guy came up to him and said, ralph, i have a got a venture for you. you ought to buy a community television system in tupelo, mississippi. and as he told the story, he said, where is tupelo, and what is community antenna television? and the answer was the birthplace of elvis presley, and in tupelo, they could not get cbs from memphis. it was a valley town, so they put up a big antenna on the top of a mountain and ran a community antenna, catv, and those were the early roots of cable television. david: television was for free in those days. now, you have to pay for it in
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tupelo, mississippi. so was that hard to convince people to pay for television? brian: what he liked about the business was the subscription nature. so in belts or cologne and many other businesses he had been in, you have a product, you sell it, if you get sick next month, you're out of business. in our business, and what he liked about recurring revenue, is you have to borrow a lot of money, build it, and hope they will come, then you have a recurring business that you have a base to work from. david: where did the name "comcast" come from? brian: great question. it does not get asked very often. it is amazing that in 1963, being a community television company, he dreamed up the name comcast. "com" was "communications," "cast" was "broadcasting," and we were going to merge and be in the future of communications and broadcasting, so he was very visionary in that respect. david: you buy the cable franchise in tupelo, mississippi. how much did he pay for that? brian: i think a few hundred thousand dollars. david: a few hundred thousand
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dollars, ok. and what did he do after that? he started buying other franchises like that? brian: yes. so, the next-door town was meridian. and he would go down to tupelo -- he never moved there. he had a philosophy of decentralized management, in that you would have a local manager, and they should feel like they own the business, so there was a general manager of tupelo. then they went and bought meridian, then he got into michigan, new jersey, and pennsylvania. we started buying other operators. and as the business evolved through the 1980's, one day, it was not just a valley town business and a rural business. espn, hbo, and cnn came along. it was suburban and urban, and so there were 30,000 cable franchises awarded, and eventually, they needed to consolidate to be more like a tv business or phone business, where you had larger service areas, and that is when comcast really stepped on the pedal. david: so in 1972, if i had bought your stock, what would i be -- brian: if you had bought 1000
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shares, it came public at $7, went down to $.25 at the all-time low -- that is another story -- you would have over $11 million today, an 18% plus compounded return for 45 years. if you put the same $7,000 in the s&p 500, you would have just over $500,000, with a 10% return. david: that's not bad. brian: not bad. david: okay, so when you joined the company, did he say start at the bottom and work your way up, or did he say you could start at number two? brian: well, that is maybe what i wanted to happen. no, he definitely put me through a wonderful kind of de facto training without either of us really ever talking about it that way. so one summer, i climbed poles and learned to be an installer. had real trouble holding the ladder because i was pretty weak and 15 years old. another summer, i sold door-to-door hbo and cable subscriptions -- it was brand-new -- in west moreland, pennsylvania. another summer, i went and sold
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muzak, which was a business comcast was in at the time, installing and selling. david: right. brian: so when i got out of wharton school, undergrad, i was like a finance major, and i was like, let's go do deals. he said, no, move to trenton, new jersey. i never worked in cable. that was one of my later businesses in life. my dad was in his 40's when he started comcast, which is a great lesson for people. if you have not found your thing yet, and you are 40 years old, it is not too late. and many people think it is way too late. and he said, "but i will never know this business, why don't you learn it well from the bottom up." so i moved to trenton and learned the billing system, worked the counters when customers paid their bill, and when the truck delivered the new cable boxes, a brand-new system, everybody got out, unrolled their sleeves, and unloaded the warehouse. so i had the pleasure of doing all the jobs, and something for me just clicked. i loved the business. i love being around people. i loved being in management at a young age.
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david: when you are in business with your father, do you call him in front of other people dad, or do you say ralph, or what you do? brian: i called him ralph. when he had all his grandkids, he had all the grandkids call him ralph. one of the great things that he did for my daughter, who has now just had her own child a few weeks ago, he said, every kid learns the word "no." that is one of the first words they learn. so he got on the ground with all the little grandbabies and would go like this and said, "yes, yes." and one of the amazing things my wife and i enjoyed with my dad, and i think my siblings did, and my mom, was his positive attitude about life, and it came out for all the employees. he had a yes attitude. david: you became an employee in 1981 when you joined, but you became the ceo in 19 -- brian: we did not use that title between my dad and myself. 1990, i became the president. i was about 30 years old.
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david: and did anybody say, is he ready to be president yet? brian: everybody, including myself, but i was very eager to -- having worked for many years, half a dozen years in different jobs in trenton, in flint, michigan, in dallas, in pittsburgh, and then trenton again, back in philadelphia, then in the corporate side in finance -- my dad was still active, but he was 40 years older than i was. so i was 30, he was 70, and he wanted to begin continuity without an abrupt change, so we worked as partners really from then on until he died. david: there is a concept called "net neutrality." brian: to me, it can also be called regulation. often times people say, oh, you are against net neutrality. that is not the case at all. we really have a great interface called xfinity x1. and you can come over and you can see our guide.
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you can come over and go back, and you can do on-demand. and this is all coming from the cloud. it was really a game changer. every click is going out and back faster than you can click, just looking at it. if you say, "tom brady versus russell wilson," you are a sports fan, and we have now added data right there. you can pull up their stats. david: wow. ♪ ♪
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david: people like products, let's say amazon, or they like the products of apple, or they like the products of starbucks, and they therefore tend to like the companies. why do you think comcast and other cable companies are not that well-liked, unlike other companies whose products are popular and the companies are liked? brian: well, it is a great question.
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television used to be free, and now most americans are paying a lot of money for it. and every year, it can get more expensive, and that is the sum total of sports and the cost of actors and the cost of many, many more channels, high definition, technical capabilities, and if we are passing all of those increases along that we have experienced, no one remembers that. so that is partly why it is an industry issue, but that is not a good answer. so what we set about at comcast was to not accept that and to try to find a way to emulate some of the companies you just referenced, who have a lot of goodwill, and so we've thought that by making our products better, we changed the name of the company to "xfinity." we came up with a product called x1, and it took about 10 years in development. we are building a technology center here in philadelphia, and we are trying to pivot the whole company to have a rapid deployment of new products that
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delight and surprise you all the time. back that up with advertising and messaging and understanding by the consumer of what it is that you get, and then, maybe the link that was missing, after we achieved that with some of our products, was service. showing up on time, getting it right the first time, having the network be reliable. david: do you ever have problems with your cable? brian: sure. once in a while. david: what do you do? you call somebody, call your office, what do you do? brian: well, you know, i use it as a learning experience, first of all. we are constantly trying to improve and have a virtuous cycle of repair and improvement. if my cable is out, i use my app. i then will go back and see how many customers are affected, and there is a culture i believe we have improved massively, but we have ways to go. david: but is it intimidating for the cable repairman to come to your house? they know they better get it right, or they know it is you? brian: hopefully a little bit of
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both, but ultimately i try not to get so much different treatment that it is out-of-touch with what our customers are experiencing, but i am sure there is some of that happening. david: cable tv blossomed in the 1980's and 1990's, and you grew to 20-some million customers, and then at some point, broadband came along. you had built cables in everybody's homes, then you realized you could use as cables -- those cables for internet access as well. when did it dawn on you that you can actually sell more than cable tv to those same customers? brian: there was an "aha" moment on that. and that was a meeting in seattle of a group that we formed with other cable companies called cablelabs. we went to see intel, oracle, and microsoft. and while we were at microsoft, bill gates was talking about someday the data business for you guys will be bigger than your television business. i said to bill, would you consider investing in our industry? because we are putting all of these fiber optics, this new thing that no one had ever heard of. wall street hated it.
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our stocks were low. we were spending capital. this is one of the cycles where you can not always know the answer, but you feel like you should invest and hope that it will work. and he said, i think fiber will change the game for you. how can i help? i said why don't you buy a percentage of the room, and then everybody laughed. and i said ok, just buy comcast. he put $1 billion from microsoft into comcast, non-voting stock, no board seat, no microsoft products. david: what kind of return did he get on that $1 billion? brian: 400%. and it started the broadband wars that have been the beneficiary by consumers the last 20 years. david: are you worried that maybe people will say, i don't want to buy my cable tv and will get everything through the internet? is that a problem you have? brian: first of all, that reality is happening. we have seen it coming. the other "aha" moment for me was another great leader, steve jobs, who we were visiting, trying to see if we could
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collaborate with apple a decade ago. he said, why don't you put wi-fi in all your cable boxes? david: and you said what is wi-fi? brian: i went, what is wi-fi? because it was before anybody else. and now we have more wi-fi than any company in america, and we have the fastest wi-fi. david: you bought from ge nbc universal. was that something natural for you? were you worried that maybe you shouldn't be in the content business? brian: well, there were people who had that worry. we had a dream that the perfect company, if you could create it from scratch, would be in the distribution, but also in content. both were good businesses. they were kind of symbiotic. and so we had gotten to a certain scale, and scale matters. we had dabbled in content. we owned the golf channel. we owned e entertainment. we had some regional sports networks. and along came the recession of 2008, 2009, and the financial crisis, and ge needed, or wanted, to sell nbc universal. we had been knocking on the door for a decade, and one day, they said, ok, and we jumped at it.
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david: and things like hollywood studios, sometimes people who own hollywood studios like to go out and hang out with the stars. that is not you? brian: that is not really me. i care about movies, but i have never been on a movie set. david: now there is a concept called "net neutrality," which 99% of americans probably do not fully understand. can you explain what net neutrality is and why it is such a big deal? brian: to me, it can also be called "regulation." and so, what do i think we stand for? what we have tried to say, from the day bill gates helped us with the idea of the internet, was that you could go anywhere you wanted and that you could do so without being slowed down or delayed, or, in the case of privacy, someone knowing your behavior in a way you don't want. and how do you have a set of rules that gives you, the consumer, that confidence and the certainty, and, at the same time, allows for investment in innovations as new applications come along?
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and we have always said we stand for certain principles. those principles were codified by the fcc, and then the court said the fcc did not have authority to codify those principles. so another fcc came along and said, here is another way to do it. let's put it under something called "title ii," which is a regulatory regime designed for the phone system back in the 1930's. and we did not agree with that. and that can get bundled in a phrase, "net neutrality." and often times people say, oh, you are against net neutrality. that is not the case at all. david: you must go to washington from time to time to talk to legislators or other people, and is that a painful part of your job? brian: i like advocating for comcast. i am passionate about our company and our beliefs. i think we represent what the american dream is all about. you start from literally tupelo, mississippi, and no business, and you take risk capital. we have never had a guaranteed rate of return, like a phone company.
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we have borrowed $60 billion to build the company. no one says we will be here in 50 more years. we are 50-plus years old. and we have created 150,000 jobs, and they are all, mostly, 90%, 95% here in america. so from time to time, depending on where the pendulum is going, there are proposed things that are going to have real implications, and you try to articulate and navigate for that. david: you have cable. you also have broadcast channels. you have movies. how do you have time to watch all the things that your company is producing? brian: well, i don't see everything we do. i try to see some of, a lot of what we do. david: if you see something you don't like, do you call them up? brian: no. i have a point of view, but i also know what i can do and what i shouldn't do. ♪ ♪
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david: you have cable. you also have broadcast channels. you have movies. i mean, how do you have time to watch all the things that your company is producing? brian: well, we grew up in this business. when i started back in 1981, they were just coming out with cable channels, and i was very lucky when ted turner called me up and asked would i come on his board? i think i was in my late 20's or early 30's, the youngest person on the board, and i saw him literally change the world with cnn and literally change the world by putting nfl games on a new network, tnt, and taking the mgm library and bringing it to cable television and building new channels -- cartoon network.
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so i always thought, someday, it would be nice if comcast could help do that as we continue to evolve more and more niches in television. so how do i have the time? well, i don't see everything we do. i try to see some of, a lot of what we do. david: if you see something you don't like, do you call them up? brian: no. i have a point of view, but i also know what i can do and what i shouldn't do. and i try to have some discipline on that. but i sometimes just share opinions, but i think they -- we have some of the best professionals. david: on technology, right now, you have to be at the forefront of all kinds of technologies. do you personally review all the new technology inventions? brian: we are building a new technology center, which i am very involved in and excited about, but i can't do every invention. but since it comes down to one remote control and one guide, i do get fairly involved and see things before they come out, try to help the team. david: what gives you the greatest pleasure in the job you have?
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brian: the fun is that that answer changes over time. it has not been the same old thing my whole life. today, sadly, my dad is not here, so there was a wonderful moment that went for a long, long time, and we were so lucky. today, we are, as a leader, trying to figure out where this industry is going, and that dynamic change of technology and innovation in things like artificial intelligence and the cloud and the competition, which has never been greater, stimulates you. and over and trying to think through how to build value for shareholders. david: in college, you were a squash player, and you were an all-american squash player. brian: i love the sport. and the best players in the world, which i never was close, are super and superb athletes, and as good as any athletes, i think, in any sport. and when i got to penn, i had a squash coach who was the opposite of my dad. i have always said maybe the second or third most influential person in my life -- one of the top --
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david: is coach malloy. brian: coach malloy. and he was a marine -- or an ex-marine. and he really drilled into me hard work, winning, strategy, tactics, and i went on and played a great run in squash and had a chance to compete internationally after college. david: so now you compete still. at the maccabiah games, you have won the gold medal and silver medal, and you are now going to play again there? brian: my children have both done it, my two daughters. and my son said, let's you and i do it, dad. so we are going to go to israel and compete one more time. it will be my sixth time. i proposed to my wife on one of the trips. it has had a real significant meaning in my life to be able to compete, represent my country, be a jewish athlete, and at the same time, share my family experiences as we have all played the sport and had a lot of fun with it. david: you are now in your 50's. is it hard to get into shape to play in the games when you are in your 50's. brian: i was retired for about 10 years, and it is very hard. that is the short answer.
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every body part of mine hurts right now from training, but it gives you a purpose. i guess i like goals. it is very similar to comcast. you don't always win, but it is fun to try. david: are your children interested in coming to the company? brian: to me, it is a really clear answer. um, you should do what you want to do with your life, not what your parent wants you to do with your life. for me and my family, that is how you end up having a happier life, and if it is something you want to try out, great. it comes with the presumption that you're not that good. you only got there, because, so it is a higher burden. and as i have talked to my own kids as they figure out their lives, there are different answers to that question. david: what are your great philanthropic interests? brian: well, we've just made a really cool involvement with the children's hospital of philadelphia here. we are going to do a genetics center at philadelphia's children's hospital. it is arguably the number one children's hospital in the world.
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so as genetics technology comes along and research, can they continue that leadership? so we created a genetics center. we have been involved in some of the arts. my wife chaired the building of the new barnes in philadelphia, something really special for this city. it is dr. barnes' collection, maybe the best impressionist collection outside the louvre in paris. and for philadelphia, it really gave it some additional world-class stature. david: your father was in the company for a long time. you could do this another 20, 30 years. is this what you intend to do for the rest of your professional career? brian: i love what i do. and it is hard to imagine something else, but i also recognize that you have got to keep the company fresh, so we will take it one day at a time. ♪ ♪
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francine: they are household names, some dating back centuries. the company that owns them has not reached the legal drinking age. 2018, diageo turns 21. it is the biggest single producer of spirits in the world, driving the business forward is a man who has been with the company since inception. today on "leaders" we meet ivan menezes. thank you so much for joining us.


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