By Geoff Colvin, senior editor-at-large
FORTUNE -- America's biggest media company isn't what you think. Comcast (CMCSA) takes in more revenue and commands a higher market value than Disney (DIS), News Corp. (NWSA), Time Warner (TWX), or any other competitor. Even CEO Brian Roberts marvels at how the company has risen. Founded by his father as a small cable-TV system in Tupelo, Miss., Comcast is now majority owner of NBCUniversal, as well as the country's largest cable operator (by far), the largest residential Internet service provider, and the third-largest phone company. Roberts, 53, talked recently with Fortune's Geoff Colvin about what he learned from last summer's Olympic coverage, continually changing the business model, and much else. Edited excerpts:
Q: The Peter Drucker question: What business are you in?
A: We're now clearly in the cross-section, maybe uniquely, of media and technology. Comcast NBCUniversal has an incredible array of brands and ways to deliver those brands and experiences for consumers. We're no longer a cable company or a broadcaster. We're right at a cusp of change in media and technology.
An example of media and technology was your coverage of the Olympics, which seemed to be a model of what you envisioned when you bought NBC. These events were streamed live online through every kind of device and also broadcast on traditional TV, sometimes live, sometimes taped. You called it a laboratory. What did you learn?
A bunch of things. The first job was to try not to lose money on the Olympics. Based on the prior couple of Olympics, it looked as if we would lose money, and we were very fortunate to break even, maybe even make a small profit. That bodes well for the multibillion-dollar [$4.4 billion] decision we made to carry the Olympics through 2020.
We had projected we'd be about 10% below Beijing because Michael Phelps won eight gold medals, and how could you top that? And the [Beijing] time zone was so far away that a lot of events were broadcast live in the U.S. Europe is the most difficult for that live factor. So we budgeted it down 10% and in fact came in up 10%. Why? Well, social media was something the NBC team embraced. We also used all our networks [NBC, CNBC, MSNBC, Telemundo, Bravo, USA, and many others], not just one. The number of hours of television was unprecedented. We put every single event live online and had mobile apps. The cable side of the company, Xfinity, had on-demand information on every American athlete on laptops, on mobile phones. We had 40 million to 50 million on-demand sessions in 17 days.
So the public could not get enough ways to experience and touch the Olympics, and that bodes well for the future model. This company is in a position to take an event or a news happening or a movie and expose it as widely as possible in a very fragmented world, different from almost any other media or telecommunications company out there.
Telephony is another thing you're doing in a big way. Voice is becoming essentially a wireless business, but you've sold your wireless spectrum. What's the future?
While that is certainly the trend, we still are adding hundreds of thousands of wireline voice accounts because it's more than wireline voice. It's a great bargain. If the babysitter's cellphone doesn't work, you want to call your house and make sure somebody answers -- how much is that worth to you? One day it was $100. Today maybe it's $25. There's a number at which a lot of people say, "You know what? Just as a backup for my home security system." We've also tried to bundle our wireline technologies to be more than a standalone product. I can get my voicemail transcribed and sent to me as e-mail. I want to be able to have my address book and all my life come up on my TV and video chat. The whole telecommunications experience through a wire is still very relevant.
That being said, as we looked at wireless, which is clearly the growth engine, we wanted to partner rather than build our own. It just did not seem viable at this time to do something like that. So Verizon Wireless has opened up all their products to our customers and to our technologists to innovate, so we can make for consumers a seamless world between our Xfinity home products and your tablets, your TV on the go, your downloading, your preferences, your history, all coming together, and then market it with Verizon Wireless in certain markets where we give great deals to consumers.
You've been losing traditional cable subscribers for several years. Why did that happen, and why does it now seem to be stopping?
We had more competition -- DirecTV (DTV), Dish Network (DISH), Verizon (VZ), AT&T (T). It forced us to innovate, to get more high def, to have more emphasis on broadband and phone. The fastest-growing part of our residential company is broadband. It's a 10-year-old product; you don't usually see your rate of growth increasing. We've also adjusted our strategy by going into businesses with the same product suite. The fastest-growing part of the company is taking the same products, altering them for commercial use, and having them go into small and medium-size businesses. We will have a great operating margin, over 50%, and several billion dollars of revenue less than five years after starting up a new business line.
We've grown cash flow every year while we had increased competition over the past decade, and it's nice to feel like we might be able to win back many of the customers we lost when we didn't have the best suite of products.
Is it a problem that just watching TV is becoming very complicated for the consumer?
Everything we could learn from what Apple (AAPL) has done so well is how to take really complicated things and make them simple, make them fun, make them beautiful and easy. As I think about where I'd like to see us go, it is absolutely to take this overwhelming amount of content choices -- now with the Internet so many more choices -- and make them personalized, make them easy to interact with and have anytime on any device.
Many years ago Bill Gates said that one day we'd be able to click on the shoes of a character in a TV show and buy them online. Whether that happens or not, are you thinking about new ways to combine your assets in programming, customer knowledge, and technology?
I was recently in Silicon Valley, and somebody said to us, "Every idea you've heard about someday is going to happen." None of those ideas are necessarily bad; they just were way ahead of their time, too expensive, maybe a little quirky. But we now have tablets: You touch them, things happen. Software is changing everything. So you have to reinvent your company all the time and reinvent the business model. If commerce and knowledge of your behavior and your desire -- with privacy very much top of mind -- can make it easier to consume content, then that's a winner. We're playing with voice technology that lets me talk into my remote and say, "Find movies, dramas, high definition, that my kids would like," and boom! -- up come answers. You click and you watch. Those are the kinds of things we're working on that I think have great promise.
You've been talking about innovating the business model, which is highly relevant for a lot of companies in every industry. What have you learned about how to do that?
It all comes down to the people you choose. The hardest part in business is to pass somebody over who's been loyal, to go outside, to have someone leave. To make those calls is the name of the game, and I've been very fortunate with great stability. Steve Burke [who now runs NBCUniversal] ran our cable company for many years successfully. But when he moved over to NBCUniversal, we recruited Neil Smit from Charter [a cable operator]. That was hard for Neil and hard for the organization. But a couple years later, I think it's one of the best decisions I've ever been involved with.
So when you're trying to figure out how to change your trajectory, it's who's on the team and how honestly you're talking among yourselves. How focused are you on not accepting status quo? We've got a real entrepreneurial culture, and I think it comes from the roots of the company, being family-oriented, feeling like we're the underdog. As we've gotten larger, how do we use that size to innovate and go faster, not slower, and take more risks, not less risk? Those are counterintuitive as you get bigger. That's my job, to keep the culture feeling feisty -- paranoid, as Andy Grove said.
This comes through time and again. Comcast has a lot of physical capital, but it's the human capital and the culture that are the most valuable.
It's corny, but it's 100% right.
This story is from the December 24, 2012 issue of Fortune.
The Leadership series This is the latest interview with a top executive by Fortune senior editor-at-large Geoff Colvin. See video excerpts of this interview at fortune.com/leadership -- plus find Colvin interviews with Wells Fargo CEO John Stumpf, Medtronic's Omar Ishrak, Jack Koraleski of Union Pacific, GM's Dan Akerson, and many more.
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