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Comcast to Change Stock Structure

Comcast plans to hold a special meeting of shareholders to vote to reclassify its non-voting Class A Special Common shares of stock, also known as 'K' shares, into Class A voting shares.

Comcast said in a proxy statement filed Monday that it is making the moves to avoid confusion concerning its share structure. Comcast has three classes of stock currently -- Class A shares which hold one vote each (traded on the NASDAQ Exchange under the symbol CMCSA) , Class A Special Common Shares (traded on the NASDAQ under the symbol CMCSK) which have no vote and Class B super voting shares that hold 15 votes each and are not publicly traded.

Class A shares typically were priced higher than the 'K' shares because of their voting rights. According to the proxy statement, that discount -- about 2.6% -- has reversed since the 'K' shares were included in the S&P 500 Index in August. In early trading Monday, the ‘K’ shares were priced at $62.16 each (down 19 cents) while the Class A shares were priced at $62, up 2 cents each.

Comcast has about 2 billion Class A Common Shares outstanding, 347 million 'K' shares outstanding and 9.4 million Class B shares. The largest holders of the 'K' shares are Clearbridge Investments with 47.2 million shares (11.3%), Massachusetts Financial Services Co. with 27.4 million shares (6.6%) and BlackRock Inc. with 26.8 million shares (6.4%). The largest individual 'K' share owner is Comcast chairman and CEO Brian Roberts, with 8.2 million shares (2.3%). Roberts owns through individual and family trusts all of the Class B shares, giving him 33.3% of Comcast's total vote.

Historically, the 'K' shares were the more liquid class of Comcast stock, but that changed after its 2002 merger with AT&T Broadband.

Tax and non-tax considerations associated with that deal necessitated that the shareholders of AT&T receive more than 50% of the outstanding voting power of the combined company. As a result, Comcast issued a large amount of Class A Common Stock in connection with the AT&T Broadband Transaction, which substantially changed its capital structure and resulted in having two large, liquid classes of publicly traded stock. Since that time, the Class A Common Stock replaced the Class A Special Common Stock as a component of the S&P indices and Comcast has since used shares of Class A Common Stock for equity issuances and grants of equity-based compensation for employees.