Comcast 2007 Annual Report Download - page 16

from time to time. Local franchising authorities often demand
concessions or other commitments as a condition of renewal or
transfer, and these concessions or other commitments could be
costly to us. In addition, we could be materially disadvantaged if
we remain subject to legal constraints that do not apply equally to
our competitors, such as if telephone companies that provide
video programming services are not subject to the local franchising
requirements and other requirements that apply to us. For exam-
ple, the FCC has adopted rules and several states have enacted
legislation to ease the franchising process and reduce franchising
burdens for new entrants. Congress and the FCC are also
considering various forms of “net neutrality” regulation. See
“Legislation and Regulation” in Item 1 and refer to the
“Franchising” and “High-Speed Internet Services” discussion
within that section.
Weakening economic conditions may reduce subscriber
spending on video, Internet and phone services and may re-
duce our rate of growth of subscriber additions.
A substantial portion of our revenues comes from residential cus-
tomers whose spending patterns may be affected by prevailing
economic conditions. The weakening economy affected our net
subscriber additions during the second half of 2007 and, if these
economic conditions continue to deteriorate, the growth of our
business and results of operations may be affected.
We face risks arising from the outcome of various litigation
matters.
We are involved in various litigation matters, including those arising
in the ordinary course of business and those described under the
caption “Legal Proceedings” in Item 3. While we do not believe
that any of these litigation matters alone or in the aggregate will
have a material effect on our consolidated financial position, an
adverse outcome in one or more of these matters could be
material to our consolidated results of operations and cash flows
for any one period. Further, no assurance can be given that any
adverse outcome would not be material to our consolidated finan-
cial position.
Acquisitions and other strategic transactions present many
risks, and we may not realize the financial and strategic goals
that were contemplated at the time of any transaction.
From time to time we have made acquisitions and have entered into
other strategic transactions. In connection with acquisitions and
other strategic transactions, we may incur unanticipated expenses;
fail to realize anticipated benefits; have difficulty incorporating the
acquired businesses; disrupt relationships with current and new
employees, subscribers and vendors; incur significant indebtedness;
or have to delay or not proceed with announced transactions. These
factors could have a material adverse effect on our business, finan-
cial position, results of operations and cash flows.
Our Class B common stock has substantial voting rights
and separate approval rights over several potentially mate-
rial transactions and our Chairman and CEO has
considerable influence over our operations through his
beneficial ownership of our Class B common stock.
Our Class B common stock has a nondilutable 33
1
⁄ 3 %ofthecom-
bined voting power of our common stock. This nondilutable voting
power is subject to proportional decrease to the extent the number
of shares of Class B common stock is reduced below 9,444,375,
which was the number of shares of Class B common stock out-
standing on the date of our 2002 acquisition of AT&T Corp.’s cable
business, subject to adjustment in specified situations. Stock divi-
dends payable on the Class B common stock in the form of Class B
or Class A Special common stock do not decrease the nondilutable
voting power of the Class B common stock. The Class B common
stock also has separate approval rights over several potentially
material transactions, even if they are approved by our Board of
Directors or by our other stockholders and even if they might be in
the best interests of our other stockholders. These potentially
material transactions include: mergers or consolidations involving
Comcast Corporation, transactions (such as a sale of all or sub-
stantially all of our assets) or issuances of securities that re-
quire shareholder approval, transactions that result in any person or
group owning shares representing more than 10% of the combined
voting power of the resulting or surviving corporation, issuances of
Class B common stock or securities exercisable or convertible into
Class B common stock, and amendments to our articles of
incorporation or by-laws that would limit the rights of holders of our
Class B common stock.
Brian L. Roberts beneficially owns all of the outstanding shares of
our Class B common stock and accordingly has considerable in-
fluence over our operations and has the ability (subject to certain
restrictions through November 17, 2012) to transfer potential
effective control by selling the Class B common stock. In addition,
under our articles of incorporation, Mr. Roberts is entitled to re-
main as our Chairman, Chief Executive Officer and President until
May 26, 2010, unless he is removed by the affirmative vote of at
least 75% of the entire Board of Directors or he is no longer willing
or able to serve.
Item 1B: Unresolved Staff Comments
None.
Comcast 2007 Annual Report on Form 10-K 14