PHILADELPHIA – C. Michael Armstrong stepped down Wednesday as chairman of Comcast Corp., a post the former AT&T chairman assumed when Comcast bought AT&T’s cable division in 2002.
Brian L. Roberts, Comcast’s 44-year-old chief executive officer, became chairman as well. He had been scheduled to become chairman in 2005 under terms of the AT&T Broadband acquisition.
Armstrong, 65, said he had accomplished the goal of getting the new board of the merged company running smoothly and seeing the systems successfully combined into a network capable of offering voice, video and data service to nearly 40 million homes.
At its annual shareholders meeting Wednesday, the company talked up add-on services.
Comcast, the country’s largest cable company with 21.5 million subscribers, previously de-emphasized the phone service offered in former AT&T systems. But Roberts singled out Internet phone service, using voice over Internet protocol, or VOIP, technology, as a new growth area.
It will be tested in systems in the Philadelphia suburbs, Indianapolis, and Springfield, Mass., this year, offered in half its systems by the end of the year and in 95 percent by the end of 2005, Roberts said.
“That’s a key differentiator that this company takes forward,” said Armstrong, who had retired as AT&T’s chairman and chief executive officer with the merger. His attempts to build AT&T’s cable business, including acquiring MediaOne Group and TCI, had left more than $60 billion in debt with which AT&T continues to struggle.
Roberts said other growth areas include high-speed Internet and video-on-demand services satellite television can’t match. For example, Comcast offers digital video recording capability in 17 percent of its systems and will have it in all systems by the end of the year, he said.
Comcast reduced its debt of $34.8 billion in November 2002 to $22.7 billion by the end of 2003, and expects free cash flow, after paying interest, taxes and capital expenses, of $2 billion this year, Roberts said.
Analysts have suggested Comcast now is looking for potential growth areas after dropping its unsolicited bid for The Walt Disney Co. on April 28.
“If they needed Disney, the need doesn’t go away,” said Jeff Kagan, an independent telecommunications analyst based in Atlanta. “It’s a great company, run by great leadership, but it has a soft underbelly: Where is growth going to come from?”
“Nothing could be further from the truth,” said Roberts, scolded about the Disney bid by shareholder activist Evelyn Y. Davis, of Washington, D.C.
“On Disney, we’ve moved on,” Roberts said. “We think our company’s in great shape.”
In answer to another Davis question about whether Comcast offered to buy only Disney’s ESPN sports network, Roberts said he hadn’t spoken with Disney Chief Executive Officer Michael Eisner, who had rebuffed his calls for a meeting about the bid for all of Disney.
“Why don’t you call him?” Roberts said.
Comcast’s stock was at $29.49 a share, down 8 cents, in early afternoon trading on the Nasdaq stock market.