DirecTV Taps New CEO, Fueling Sale Rumors


Five months after former CEO Chase Carey resigned to become the No. 2 executive at News Corp., DirecTV has named his successor, PepsiCo International CEO Michael White.

The selection came as a bit of a surprise — White has no experience in the multichannel-video industry — and set some analysts buzzing that the new executive is a mere placeholder for an outright sale of the company. But DirecTV and Liberty Media chairman John Malone tried to squash rumors of a deal just yet — he told CNBC last week that DirecTV was not for sale — and earlier tried to offer a more-detailed explanation of his choice for the head of the largest satellite TV service provider in the country.

Fueling sale speculation was the completion of the spinoff of Liberty Entertainment, which contributed Liberty Media's 57% interest in DirecTV to an entity that was merged with the satellite giant, and created a new stock of the remaining assets, called Liberty Starz. With Liberty's interest fully consolidated into DirecTV, some analysts have speculated that a deal to sell the company would be easier.

In typical fashion, Malone would not rule out a possible sale of DirecTV sometime down the road, but he told CNBC's David Faber Nov. 23 that is not the intention at this moment. And at an investor meeting on Nov. 19 to approve the Liberty Entertainment spin, Malone characterized White as a long-term executive for the satellite company.

“Frankly, I would never have thought that I would personally [select] from outside of the industry for this job, but the first time I interviewed [White] I said, this is it, this guy is too good,” Malone said. “I think shareholders, when they get to meet him, they will know what I mean. The guy is terrific; he's got a very broad set of skills.”

White was instrumental in developing Pepsi's international business and turned the unit into one of the largest growth engines for the company — revenue was up 13% and operating profit up 31% at the division in the third quarter. White joined PepsiCo in 1990 as vice president of planning for Frito-Lay North America and had several senior positions at the company, including chief financial officer of Frito-Lay North America and CFO of PepsiCo.

White had announced in September that he planned to resign from Pepsi by the end of the year. He will start his new position at DirecTV on Jan. 1.

Malone added he was impressed that White learned to speak Russian in order to drive Pepsi's interest in the former Soviet Union. Aside from that kind of dedication, Malone also thinks White's management style fits with DirecTV.

“I think he's got the skills to continue to harmonize a very high-quality, aggressive management team over there,” Malone said. “I think that was the most important ingredient. It [DirecTV] is not broken. We didn't want to break it.”

In a research note, Wells Fargo media analyst Marci Ryvicker wrote that while White's appointment was a surprise, she also believed it was a solid move.

“His international experience should help strengthen DirecTV Latin America, which could be spun off (via a tracking stock) at some point in 2010,” Ryvicker wrote.

Carey left DirecTV in June to become chief operating officer at News Corp., his former employer. In the third quarter, DirecTV added about 136,000 new subscribers and reported cash flow growth of 8% on revenue growth of 10%.