PHILADELPHIA — Most cities would be thrilled to see the arrival of a new cable company that promised to invest millions in the community and bring sorely needed competition to the local monopoly. In Philadelphia, city leaders ran such a would-be rival out of town.
When RCN Corp., a New Jersey-based cable and telephone venture backed partly by Microsoft Corp. co-founder Paul Allen, applied to break into Philadelphia in 1998, the then-mayor openly scoffed at the notion of helping an outsider challenge the home-grown Comcast Corp. Then the city council dragged out the approval process for months.
RCN, which also offers cable service in New York and Boston, gave up earlier this year and left town, complaining bitterly that Comcast had a lock on the city the likes of which it had never seen.
As the locals like to say, Philadelphia is Comcast country, and most seem to want it to stay that way.
Understanding how Comcast and the Roberts family, one of America's wealthiest, came to prosper and eventually dominate this historic East Coast city goes a long way in explaining how a low-key, father-son-led company--largely unknown in the media centers of Hollywood and New York--could burst on the scene with a bold bid to become the nation's No. 1 cable operator.
The audaciousness of the $39.7-billion stock offer for AT&T Corp.'s cable assets impressed not only Wall Street and the cable industry, but also many in Philadelphia, where residents and some civic leaders were surprised that a company in their own backyard was rich and powerful enough to pull off such a headline-grabbing move.
It may not rival the civic excitement generated earlier this year when the city's 76ers basketball team (which Comcast also owns) reached the NBA finals, but corporate pride in Comcast is hitting new highs in Philadelphia. Leaders hope the deal will restore some of the city's fading luster.
"It's the boldest business move that's come out of Philadelphia in more than 20 years," said City Councilman Michael Nutter. The Philadelphia Inquirer gushed in an editorial that "it's hard to resist a parochial cheer at seeing a home-grown corporation for once be the predator, not the prey."
As RCN learned, though Comcast and the Robertses, the company's controlling shareholders, are known in the cable industry for their hardball business tactics, the company inspires uncommon loyalty and support in its hometown, largely because it pours millions of dollars into local campaigns and civic causes. It's easy to find customers who will gripe about Comcast's rising prices, but among the city's inner circle, the company is at the top of virtually everyone's fund-raising list.
Power of Company, Family Sparks Concern
Comcast gave $1 million to help bring the 2000 Republican National Convention to Philadelphia, and Comcast President Brian L. Roberts co-chaired the organizing committee. An additional $2 million went toward a new performing-arts center downtown. And the company is reportedly paying $10 million for the naming rights to an entertainment development along the Delaware River.
"You will have to search long and hard in this city to find anyone who will say anything bad about Comcast or the Robertses," said Edward C. Rendell, the city's colorful former mayor and former chairman of the Democratic National Committee. Considered a leading contender in next year's gubernatorial race, Rendell remembers how the Roberts family took a chance on him during his first mayoral campaign a decade ago, providing funds and support that helped him win the race.
Not everyone in Philadelphia is a fan of the company or the family.
Lance Haver, a local activist and president of the board of Consumer Education and Protective Assn., said Comcast's shrewd, behind-the-scenes lobbying campaign against RCN shows that the company has too much influence.
"This is a family so powerful and well-connected, they could stop another multimillion-dollar business from creating new jobs in the city," Haver said.
City officials deny Comcast pressured them on the RCN deal. But Sen. Arlen Specter (R-Pa.) was so disturbed by the episode and rising cable rates that he's considering holding hearings into whether tougher cable regulations are needed.
Philadelphia City Councilman David Cohen said Comcast's prices are too high, and he laments that Philadelphia is still one of the only large cities without a public-access cable channel.
"Some feel Comcast got the $44 billion [the original stock value of the AT&T bid] from overcharging customers," said Cohen, glancing out his City Hall office window toward Comcast headquarters across the street.
In old-money, upper-crust Philadelphia, where some fortunes date back more than a century, the Robertses--whose fortune has ballooned to nearly $1 billion, according to Forbes magazine--would qualify as nouveau riche, but the family is widely accepted and admired for its lack of ostentation.