Comcast Will Simplify Stock Offerings By Blending Voting And Non-Voting Shares

If you’ve ever tried to buy Comcast stock then you might have been surprised to discover that you had a choice: You could buy Class A shares that would give you a vote on company matters, or so-called Class A Special shares without a vote.

But that will end if shareholders approve a change that the board endorsed yesterday, according to an SEC filing this morning. Directors want to merge the two into a single, voting stock.

That is designed to end “investor confusion caused by having two classes of publicly traded stock” and improve “the trading liquidity of Comcast’s publicly traded stock,” the company says.

CEO Brian Roberts will continue to own another form of untraded stock with 15 votes per share that gives him a third of all the votes, even though he only owns 0.4% of the company’s economic value. He has promised to support the change.

As you might imagine, the complications with the stock flow from an effort to avoid taxes — mostly from Comcast’s $72 billion deal in 2002 to buy AT&T Broadband. To make the arrangement tax-free, AT&T shareholders had to control more than half of the shares after the merger. Comcast accomplished that by issuing lots of voting Class A Common stock.

Those shares now account for 85.4% of Comcast’s economic value, while the non-voting ones account for 14.2%.

Why change now? The complicated structure began to affect a lot more investors in August when Standard & Poors decided to add non-voting shares of companies including Comcast, Fox, and News Corp to the S&P 500. (The group now includes 505 stocks representing 500 companies.)

When that happened, many funds that index themselves to the performance of the S&P 500 began to buy Comcast’s non-voting shares.

Following the change, owners of the Class A shares will see their voting stake reduced from 66.7% to 57.2%, while owners of the Special shares will gain 14.2%.


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