NEW YORK, Jan 17 (Reuters) - Comcast Corp (CMCSA.O) Chief Executive Brian Roberts has come under fire from a shareholder who has written to the board demanding that he be replaced and the board re-initiates a stock dividend.
Chieftain Capital, an investment advisory firm that owns around 60 million Comcast shares, or about 2 percent of shares outstanding, called on the board to install a “highly qualified CEO” who will focus on maximizing value for shareholders.
The firm has been disappointed with the No. 1 U.S. cable operator’s 40 percent drop in share price over the past 12 months.
“We want and deserve the best CEO Comcast’s board of directors can find -- and, based on his record, Brian Roberts is not it,” Chieftain said in a letter dated Jan. 14 and addressed to J Michael Cook, presiding director on Comcast’s board.
New York-based Chieftain slammed Comcast management for a series of missteps which have resulted in “zero return” for shareholders, describing it as a “Comcastrophe.”
When asked for comment, Comcast said its management team is focused on executing its strategic plan and investing for profitable growth, and creating long-term shareholder value. It also pointed out a survey by Institutional Investor magazine named Roberts the top cable and satellite CEO of the year.
“We have met with Chieftain and have discussed their perspective on numerous occasions,” Comcast said in an e-mailed statement.
“While we have expressed our disagreement with Chieftain’s perspective in the past, we will review Chieftain’s most recent correspondence and will respond in due course.”
Chieftain, which manages around $5 billion in funds, said Comcast should impose strict financial discipline on its management team and stringently manage capital expenditure, eliminate wasteful spending on non-core acquisitions and low-return investments.
The letter also asked Comcast to commit to a policy of returning cash to shareholders, including a “meaningful dividend.” Chieftain said Comcast should increase its debt to an appropriate level.
One Wall Street analyst disagreed with Chieftain’s call for higher debt at a time when competition from phone and satellite companies is mounting.
“The last thing we believe Comcast should do is drastically lever up and buy back stock as Chieftain is asking for,” said Richard Greenfield, analyst at Pali Research.
“Like it or not, Comcast is in a ‘war’ with competition escalating on existing fronts and all-new fronts,” said Greenfield in a blog note for clients.
Chieftain said it wants to meet with the independent members of the board as soon as possible to discuss how best to achieve the changes it wants. The letter was signed by the firm’s three managing directors. (Reporting by Yinka Adegoke, editing by Richard Chang)