Comcast’s Surprisingly Viral Future

Why is Philly’s most important company pouring a fortune into buzzy media newcomers like BuzzFeed and Vox?

Illustration by Kyle Hilton

Illustration by Kyle Hilton

I first wrote about Comcast for this magazine in 1991, when a few hundred million dollars and endless spools of coaxial cable were all you needed. I traced how the Philadelphia company had exploded across America, gulping one dorky regional cable TV company after another. I whined jealously about newly minted president Brian Roberts, who at age 31 was handed control of a $657 million corporation by his father, who’d built it, while I was living on a block at 3rd and Arch that Comcast hadn’t even bothered to wire for cable yet.

Twenty-six years later, Comcast is an $80.4 billion company that has become the country’s second biggest provider of TV shows and largest provider of Internet service by following a simple rule: If someone is eating your lunch, eat them.

In October, one of the company’s monstrous acquisitions, the TV and movie empire NBCUniversal, revealed that it had peeled off $200 million to buy another taste of BuzzFeed, the trendy shareable-content producer. BuzzFeed has been best known — until recently — for its many irreverent lists and quizzes and “listicles.” And I guess “quizzicles.” These include the recent viral sensation “How Millennial Are You?” and a 2015 debate, involving millions of agitated people, over whether a striped dress was white and gold or black and blue.

The new investment brought Comcast/NBCU’s total stake in BuzzFeed to $400 million, or around a quarter of the company. Comcast also has put more than $200 million into Vox Media, another digital darling working diligently to reinvent media for people who weren’t around to complain about cable in 1991. Just for comparison, the Philadelphia Inquirer, Daily News and Philly.com sold as a complete package in 2014 for a paltry $88 million.

The editors at this magazine clearly felt something was up, because they put me back on the case. What is Comcast thinking with these new-media flirtations? Is it trying to buy some hipness — to earn credibility among young people who like to take selfies while they watch ironic six-second videos? Is that even possible? BuzzFeed is playful and sassy. Vox, its news operation co-founded by earnest young pundit Ezra Klein, is smart and nimble. Being seen with them might help if, for some reason, your image could use a makeover. Or does the voracious and venerable cable giant think it can learn something from these young punks?

Sugar Daddies and Exploding Watermelons

My first thought about what the company was up to with these deals is what I will call the Sugar Daddy Theory. That is, Comcast’s support of these nubile upstarts calls to mind the well-off middle-aged man who befriends a bright 24-year-old woman, offering her the benefit of his wisdom and resources in exchange for companionship and perhaps the opportunity to think young thoughts again.

When I proposed this brilliant metaphor to my wife of many years, she really didn’t approve and wondered where an idea like that even comes from. She suggested it’s like the nerdy rich kid who tries to be more popular by having his parents take all the cool kids to the NBA game. I countered by saying, no, it’s like a goofy talking moose who chums around with a spunky flying squirrel — because it seems unlikely, but they really do get along. We compromised on it being like your parents wearing skinny jeans.

There is something to this way of thinking, to a degree. Companies have a mandate to improve their financial performance, not to look hip. They don’t spend their shareholders’ money for a seat at the cool kids’ table. Or do they?

Comcast has seemed like the opposite of cool for a long time. When it acquired NBC, the network’s own sitcom 30 Rock set up a parallel story line about the network being taken over by a bunch of backwater clowns from a Philly company named Kabletown.

Over the decades, the company has had a bit of a blind spot to things like buzzy brand building. It has been rigorously unsentimental as it acquired content that regular humans might connect with emotionally. I remember covering Comcast’s unsuccessful 2004 bid to take over Disney back when I was a reporter for the Inquirer. I asked Steve Burke, then president of Comcast’s cable division, how amazing it would feel to become caretaker of Snow White and Pinocchio and the Magic Kingdom’s other cherished stories that have been the bedrock of childhood in the Western world since the 1930s. He basically replied that those were indeed valuable properties with timeless revenue potential, so it would be nice.

Then just this past June, Burke, now CEO of NBCUniversal, spoke about what digital investments like BuzzFeed in particular might bring. His talk came shortly before the Olympics, which NBC is paying $7.75 billion to broadcast through 2032.

“My nightmare is, we wake up someday and the ratings are down 20 percent,” Burke told investors at a conference. “If that happens, my prediction would be it’s that millennials have … been in a Facebook bubble or a Snapchat bubble. The Olympics have come, and they didn’t know it was coming.”

This has become a legit modern fear: that a generation might be looking the other way during a major global event. Burke described how NBC intended to alert young people to the existence of the Olympics in part by paying BuzzFeed to handle the network’s Snapchat channel: “At first the guys at NBC Sports were beside themselves, because the BuzzFeed guys, their first story idea was how many people hook up in the Olympic Village? Their second story was how much would you weigh if you ate like Michael Phelps but didn’t swim? And they had 15 of those, which I thought were fantastic, but the traditionalists at NBC Sports didn’t want to have anything to do with it.”

So now things start to make sense. Things like Comcast hiring Chris Hardwick, the smarmy comedian in the tight suit jacket, as spokesman for the company’s X1 cable TV interface. Like NBC making a mini-version of the singing contest The Voice this past summer on Snapchat, a platform that no one over 25 really knows how to use.

It seems that just like everyone else, Comcast and NBCU are afraid of children. Because, honestly, we have no idea what these people want. With close to $20 billion in revenue each quarter, Comcast can front a couple hundred million to find out.

Conquering the next phase of how people want to consume video is vital. Comcast grew huge by avoiding competition as a monopoly provider of cable TV. That protection is gone. Everybody is trying to snatch away the next generation of eyeballs, subscription fees and ad dollars.

Viewers have been “cutting the cord” to quit cable and just watch the Internet (access to which Comcast also sells, but so do mobile phone networks). The most technically savvy viewers are those with the most options. There’s Netflix and Hulu and Apple TV. You can watch NFL games on Twitter and the NBA on a PlayStation. Premium channels like HBO and Showtime offer their goods without cable. So-called “skinny bundles” — cheaper bunches of channels via the Internet, like Sling TV and DirecTV Now — are luring people.

It’s a scary new world. It’s a world in which a year ago, BuzzFeed attracted a massive live audience and 10 million views over five days for its “exploding watermelon” video. Just what was this viral masterpiece? Two BuzzFeed staffers wearing safety goggles stretched rubber bands around a melon, one band at a time, until it went kablooey just short of the 45-minute mark. It was all shot on an iPhone.

What Would Tolstoy Say?

I contacted Comcast to ask about this brave new territory and how the BuzzFeed and Vox investments fit in. They said: Well, you might get some ideas by seeing what we’re doing to appeal to modern viewers with our Xfinity X1 television platform. So I make a pilgrimage to the tower.

“There’s this perception that cable is not very cutting-edge,” Matt Strauss, Comcast’s executive vice president and G.M. of video services, tells me. Up on a high floor of the Comcast Center, he demos the X1 software, which does give the impression that the old dog has learned some new tricks.

Choosing what to watch on cable traditionally has meant down-buttoning through an endless grid of program listings. There was no sense that you were using “software.” Around 2010, Comcast got the genius idea of separating the program-choosing interface from the box. The company started thinking of itself more as a software company and built up its in-house development.

“Understanding how to build products is not something that was always in Comcast’s DNA,” Sam Schwartz, chief business development officer for Comcast Cable, tells me. “We’d buy [a cable box] from Motorola, plug it in, and go sell cable subscriptions.”

The X1 software, which Comcast developed internally, runs not just on a cable TV box but also on your phone or tablet or computer. It takes advantage of the fact that cable channels and Internet streams come through the same wire. You can peruse a familiar listings grid, but you also can see programming arranged in other ways, like TV shows trending on Twitter. It shows video available not just from cable channels but also from the Internet. A voice-activated remote for X1 lets you search by simply saying “Benedict Cumberbatch” or “You can’t handle the truth!”

It’s kind of fun. More importantly, as software, it lets Comcast’s service integrate apps and data and some of these streaming competitors that have been offering themselves as cable alternatives. Recently that includes Netflix and Sling TV, whose programming can be melded seamlessly into the X1 menu system. Co-opting rivals is a cheaper way to neutralize them than buying them. It’s another new look for Comcast, which has had a tendency to purchase things (like DreamWorks Animation for $3.8 billion) to gain complete control.

“We’re not your father’s cable company,” Strauss says (a nice choice of words, given Comcast’s history). Even product design has become a consideration at squaresville Kabletown. Their newest cable “box” is a black parallelogram the size of a drink coaster. And after a history of trying to avoid price wars, Comcast has been developing its own “skinny bundle,” an Internet-based video service called Stream that could compete against its own core cable service.

The bottom line is that X1 has helped Comcast stanch the bleeding. The company added 161,000 video customers in 2016 — its best results in 10 years. Early adopters of X1 have been, yes, millennials.

There’s another potential benefit to the slick technology, one that has to do with the elephant in the room for any Comcast story. The company’s decades of customer-service issues have been so well documented that it feels like piling on to rehash them. In 2014, the company was named Consumerist’s “worst company in America” for the second time. On the news-posting website Reddit, the so-called “front page of the Internet” for millions of people, the section titled “Comcast” is “dedicated to venting about your shitty experiences with Comcast.”

The enormity of Comcast’s operation makes problems inevitable. There may be no other organization in America that deals with as many unique issues in millions of houses. Every customer’s PC is a personalized tech-support hellscape, every home’s wiring its own Gordian knot. To paraphrase Tolstoy: All happy Comcast households are alike, but each unhappy Comcast household is unhappy in its own way.

The issues have saddled the company with a dreadful reputation. So one benefit of the whizzy technology is that it might help muffle the whine of customer-service gripes. That involves applying better tech directly to the process of troubleshooting problems. Charlie Herrin, the Comcast exec in charge of “customer experience,” tells me they’re putting more diagnostic tools in the hands of consumers, to resolve common issues without the torture of calling for support. The company is developing an app that lets you track your cable guy, like an Uber driver. If you forget your wi-fi password, you can ask the voice remote.

“Every touch point’s got to get better if you want to improve the reputation of the company,” Herrin says.

But perhaps it’s also about making the product attractive enough that potential customers are willing to overlook the negatives. There are plenty of reasons to dislike Apple, for example, but the company keeps giving its devotees more things to love.

Behold the Looming Tower

Coming across as forward-looking — rather than as a roadblock to your happiness — is critical to Comcast in ways that could be good for Philly. The company is erecting a $1.5 billion, 60-story skyscraper that will dominate the skyline along with its current Center City headquarters. The Comcast Technology Center, to open in 2018, is designed by the architecture firm that’s doing the doughnut-shaped Apple campus in Cupertino. Comcast wants to fill it with techies who will drive innovations aimed at keeping generations of media consumers happy. I’m told it has about 1,500 new hires to make. That’s a lot of people who, if they’re any good at inventing the future, have options elsewhere.

Reputation matters when tech workers choose employers, says Brad Kielinski, who runs Philly-based tech staffing company IT Pros. He shows me surveys indicating that a company’s reputation can be a top factor when tech employees decide where to work.

“The challenge with Comcast is, a lot of people on the customer side have been burned,” he says. “Until they fix their reputation — which is the number one challenge of any company, not just Comcast — they’re going to have a huge attraction issue. I can see them attracting more people from outside the region, because of the reputation they have in Philadelphia.”

I have a chance to ask two talent recruiters at Comcast about this, promising to keep their names out of it because they don’t usually talk to reporters. They assure me the commitment to technology will attract talent. And this swanky new building is designed from the ground up to have an entrepreneurial vibe while offering workers the chance to design products used by millions of customers. What’s not to love?

Sam Schwartz says they’re taking design ideas from Silicon Valley companies like Facebook and Airbnb. The new building will contain vast collaborative spaces, with no private offices. Raised floors with cables underneath will allow desks to be moved overnight as teams assemble into 30-day product-development “sprints.”

And so it’s time for me to go up in the building and see how the plan is coming together. Mike Delaney of builder LF Driscoll gives me a hard hat and a neon yellow vest. We walk in where the grand entrance on 18th Street will be. Two massive escalators are on the ground, still wrapped from shipping. I see what will become a 500-seat amphitheater for presentations, its huge windows overlooking the dome of the little Arch Street Presbyterian Church. Many employee spaces will be multiple stories high. And Delaney shows me how the floors indeed are raised six inches by slim, mostly concrete tiles. One feature is a dedicated “incubator” space for select start-ups — young chicks that Comcast wants to nurture, so to speak. (None are announced yet.)

One early rendering showed a multi-story playground slide in a common area. Apparently they’ve rethought that. The HR recruiters I spoke with say they won’t try to compete with the legendary office perks associated with Silicon Valley — the kale bars, llama rides, ovum-freezing services.

There will be amenities. “We do it in a framework that works for Comcast,” one tells me. Which means sensible things. Like ping-pong.

It’s Always the Oakland A’s

At this point, I ought to disclose that as part of my decades-long Comcast preoccupation, I worked there, circa 2007, for under a year. The company was in the Centre Square building, the one with the clothespin sculpture out front and thousands of soul-draining cubicles inside (and we didn’t have ping-pong).

I didn’t go undercover — it was a legit job working on the Web portal that displayed by default when broadband Internet customers fired up a browser. With a semi-captive audience of millions, our job was to entice people to click on racy headlines linked to syndicated news. That generated page views that could be sold to advertisers. I didn’t hate the job, I didn’t love it, and I learned a lot about the kinds of Web metrics driving panicked business decisions everywhere.

My time on the inside reinforced an idea I’d formed about Comcast as a reporter. When it came to content, the company was sort of “quality-agnostic.” Which means if something on TV was really terrific and life-affirming and paying customers were looking at it, great! If something was lurid and dumb and paying customers were looking at it, great also! Comcast had spent billions building giant pipes that could carry a lot of water, and they just wanted a lot of thirsty people buying the all-you-can-drink plan. I think this is why my former Inquirer colleague Joe DiStefano, in his 2005 book about Comcast (Comcasted), called the company “the nation’s top merchant of TV news, sports, movies and pornography.”

Digital content companies like Vox Media and BuzzFeed have an entirely different mind-set. They don’t own bandwidth that needs to be crammed with whatever most profitably fills it. Vox Media CEO Jim Bankoff has said “Substance is viral,” which is one of the more radical notions I’ve heard. He thinks you can do “quality at scale.” You can get big and stay good. Who knew?

Comcast’s first investment in Vox Media was just $5 million in 2009, through the company’s venture capital unit. Comcast Ventures has a portfolio of modest initial investments ($2 million to $15 million) in the usual bunch of tech start-ups with nonsense-syllable names — Benu, Grokker, Houzz — plus familiar names like FanDuel, Slack, TiVo, even Dollar Shave Club.

“It’s a relatively inexpensive way for us to get under the covers of companies,” says Sam Schwartz, who used to run the Ventures unit. “The value exchange goes both ways. We try and help these companies succeed, and help them with financial outcomes. But we’re being exposed to new ideas — frankly, to the processes that entrepreneurs use to develop products.” (It’s the Sugar Daddy Theory!)

Vox Media began as an Oakland Athletics baseball blog in 2003 and expanded into a network called SB Nation, with blogs devoted to hundreds of sports teams, all sharing a content-management system that standardized page layout and advertising. Since then, the company has extended into food (Eater), real estate (Curbed), tech and gaming (the Verge, Recode, Polygon), fashion (Racked), and the hard-news site Vox.com. Vox Media sites generate insane numbers — around 800 million monthly content views. In 2015, through NBCUniversal, Comcast upped its stake in Vox Media by $200 million.

NBCU is doing just fine. Saturday Night Live has been as sharp as ever. One of NBC’s game-show hosts even became president of the United States. But traditional media powers are scrambling to adapt to digital. Tonight Show host Jimmy Fallon hasn’t met a social media platform he won’t mug for. He’s a hashtag-joke pioneer. On Tumblr, he posted a video tour of his office that he made wearing Snapchat Spectacles, which have a camera in them. If only everyone was so visionary.

Vox Media’s Bankoff says he got a thrill out of the partnership when he addressed NBCU execs from the Saturday Night Live stage. Schwartz’s goal is to “have more of our executives get more exposure to the digital world.” There are specific programs, including selling ads across NBC and Vox Media properties. Content collaborations are popping up. SB Nation created a blog around NBC’s American Ninja Warrior.

Then there’s BuzzFeed. It’s easy to make jokes about BuzzFeed, whose video revealing how to make three-ingredient Nutella brownies has been viewed 81 million times in five languages. A snarky online dictionary defined Vox as “media for millennials with jobs” and BuzzFeed as “media for millennials living at home.” But BuzzFeed has a legit news operation — its release of that questionable Trump-in-Russia intelligence dossier was co-bylined by a Pulitzer Prize winner. And there’s plenty an outfit like NBC, and by extension Comcast, can learn from it.

Sad Cats and Pork Tenderloin

Ten-year-old BuzzFeed has become a lab for what’s going to happen next in media. Founder Jonah Peretti has described it as being like a retail outlet for content — the shopkeeper who talks to customers and watches and adjusts as they browse. Old media companies are more like wholesalers, mass-producing material a step removed from the customer.

When Facebook initiated soundless automatic play of videos, BuzzFeed noticed users were sharing BuzzFeed videos most when they were 40 seconds long. So they made recipe videos under their Tasty brand that were 40 seconds long. Tasty cooking videos — annotated overhead camera shots of sped-up hands preparing dishes — now reach 500 million people a month.

BuzzFeed says its content gets seven billion views per month on 30 different platforms: YouTube, Facebook, Snapchat, Instagram, Pinterest, Flipboard. The company figured out that trying to lure people to visit Buzzfeed.com or load BuzzFeed’s phone app was an old-timer’s game. The future is sending your content everywhere else and figuring out how to make money in those places.

“We realized with video, you have to put it anywhere that people are willing to consume it,” says Matthew Henick, head of development for BuzzFeed Motion Pictures. Leveraging diverse media platforms to multiply your influence, rather than trying to own everything, is a totally different mind-set from what has made Comcast big.

It means creating content differently for dozens of apps and websites. BuzzFeed’s vignettes on Snapchat Discover are vertical, for a phone screen. On Instagram, it’s mostly square images with ironic captions. YouTube plays video ads before content and shares revenues with the creators. Facebook lets video creators like BuzzFeed embed sponsorships in their video.

It’s not brain surgery, but there’s a difference between what works and what doesn’t. You get the feeling that if kids started buying rolls of aluminum foil for entertainment, BuzzFeed would figure out how to create trendy content for aluminum-foil packages: What do you put on the sides of the box? What do you print on the foil? How do you leverage the metallic cutter? “They’re always the first one on the new platform, the first one willing to experiment,” an NBCUniversal executive told me.

A few years ago, Ze Frank, now president of BuzzFeed Entertainment Group, was doing the voice of an old cat for a video series called “A Sad Cat’s Diary.” It morphed into videos featuring the cat giving advice about humans to a cute kitty in a series called “Dear Kitten.” In February 2015 it became a BuzzFeed-produced Super Bowl commercial, sponsored by Purina Friskies.

When Universal Pictures was releasing the movie The Secret Life of Pets last July, it wasn’t hard for BuzzFeed to summon its expertise in shareable pet content. It created a swarm of content to push the movie, including the somewhat predictable “Which Secret Life of Pets Character Are You?” It was Universal’s top-grossing movie of 2016.

Those Tasty videos now play on NBC’s Today Show. On TV in September, Al Roker introduced a pork tenderloin video “from our friends at BuzzFeed.” BuzzFeed posted a version online. It may have been the first time many young people learned that there’s something called Al Roker.

And in mid-February, Comcast/NBCU revealed that it’s creating three actual TV series based on BuzzFeed content. All these experiments with partners who were born digital are a gulp from the fountain of youth for Comcast. Call it skinny jeans if you want — or maybe the old cat trying to get advice about humans from the dear kitten.

For perspective, I call a guy who’s been stalking Comcast for as long as I have: media analyst Josh Bernoff. Cable and broadcast TV aren’t poised for long-term growth, he tells me. What is on the rise? “Anything that can be shared and excerpted,” he says. “And that’s why you see these investments in companies like BuzzFeed and Vox. The companies they’re investing in are among the leaders in packaging content for sharing.”

It’s easier said than done. “It’s really not so easy to take what BuzzFeed knows and just sprinkle it over top of the things Comcast controls and make it successful,” Bernoff says. He cites mixed-media marriages that haven’t worked out so well: News Corp. buying MySpace, CBS buying CNET, AOL-Time Warner. Comcast’s investments in Buzzfeed and Vox aren’t pricey marriages, though. They symbolize more than they’ll produce. They’re an admission that consumers want convenience and choice instead of bullying, and occasionally something that isn’t $100 a month. Could this push to become more flexible with technology spill into how Comcast thinks about its customers? Can it rebuild its reputation as millennials take over the planet? That does look like a strategy.

“Comcast is a company with enormous resources and enormous inertia,” Bernoff says. “And that’s really the question: whether the resources will allow them to succeed, or the inertia will stop them.”

Published as “Can Comcast Buy Some Cool?” in the March 2017 issue of Philadelphia magazine.

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