Comcast Corp., the nation's third-largest cable operator, announced plans Tuesday to expand into television programming and the new-media business by teaming up with Richard H. Frank, a seasoned broadcast executive credited with building Walt Disney Co.'s TV business.
In yet another sign of the blurring of lines among the cable, broadcast, telephone and Hollywood studio businesses, Brian Roberts, the president of Comcast, and Frank said they were forming C3, a Los Angeles-based subsidiary of Comcast. The firm will make major programming acquisitions and oversee and exploit the global and interactive possibilities of existing Comcast interests in networks such as QVC Inc. and E! Entertainment.
The company also will develop new cable channels and network and syndicated television shows for world markets, making the Philadelphia-based Comcast perhaps the only cable operator outside of Time Warner Inc. with interests in programming for broadcasters as well as cable.
"This would have been unheard of five years ago, that a cable company would spend this kind of money on programming or that a broadcast television executive would cross over to cable," said Marc B. Nathanson, the chairman of Falcon Cable TV, a Los Angeles-based cable operator. "It shows the interlocking alliances of what have been unrelated businesses. We're going to see a lot more of this kind of thing."
The venture, whose handle is short for Comcast Content & Communications, will be funded by Comcast and run by Frank, who will be its chairman and chief executive. Frank, 52, also will have a significant equity interest in it, thereby fulfilling his stated goal upon leaving Disney in March of becoming an entrepreneur in the converging markets of cable, computers and telecommunications.
"Everyone's life is going to change over the next 10 years--the way they are entertained, the way they receive information, the way they shop, and this is a chance to build something from scratch that breaks new ground," Frank said.
At Disney, Frank led the company's joint venture with the regional Bell operating companies and organized the so-called "superhighway summit" with Vice President Al Gore for Hollywood executives.
Though he is not investing directly in C3, Frank said he has bought a chunk of stock in Comcast, whose class A voting shares jumped 88 cents on Tuesday, closing at $22.13 a share.
He said he and the Robertses--chairman Ralph Roberts, who is 75, and his son Brian, who is 36--"shared the same vision of the future as I did" and "similar family values." They have talked on and off since April.
His former colleague at Disney applauded his announcement.
"He has teamed up with a respected, well-financed and innovative company," Disney Chairman Michael Eisner said. "Having solid, decent people behind you is the most important thing."
Frank is credited with making Disney a major network supplier with blockbusters such as "Home Improvement" and experimenting with a prime-time news format after buying the KCAL Channel 9 TV station, although most analysts say that has not been a star performer.
"He's been a pioneer in television for the past 20 years," said Jeffrey Katzenberg, who worked with Frank at Disney before co-founding DreamWorks SKG.
For Comcast, the move is a way to leverage its cable outlets and capitalize on the growing demand for "content" as technology expands distribution options. Besides having a captive audience for television programming in its 3.4 million cable subscribers, Comcast is a leader among cable companies in providing cellular telephone service, mostly in the corridor between Newark, N.J., and Baltimore. It has a joint venture with Sprint and two other cable operators to develop a national phone service and controls the leading home shopping channel, QVC Inc.
Comcast has been trying to expand its content library since luring Barry Diller to take an equity interest in 1992 in QVC.
Comcast backed Diller's effort to use QVC to buy Paramount Communications, which it lost in a bidding war to Viacom Inc. last year.
"We're now ready to go to the next level," Brian Roberts said. "In home shopping, only 9% of the people who get it use it and as computers and TV evolve, there is an opportunity for new business in this area, but we don't want to do it without someone who knows the business. Rich has the track record."