Satellite TV CEO Changes for Tough Times

Top management changes in the two major U.S. satellite television companies reflect an industry need for new thinking to match a changing media landscape. DirecTV (DTV) has named former PepsiCo (PEP) exec Michael White as CEO, while Charles Ergen is leaving as EchoStar (SATS) CEO, though remaining as chairman.

There is some degree of recycling going on. White replaces Larry Hunter, who has been interim CEO since the departure in June of Chase Carey. Cary had joined the company after leaving as co-COO of News Corp. (NWS) in 2003. He became DirecTV CEO back when Rupert Murdoch’s company held a controlling interest in the satellite broadcaster but after its failed bid for then DirecTV parent Hughes Electronics. A few years later, News Corp. sold its interest to Liberty Media. In June of this year, Carey left DirecTV to return to News Corp. and become Murdoch’s number two as COO. Some things never change.

Ergen’s departure left EchoStar in need of someone at the helm, and so Michael Dugan, who was the company’s COO five years ago, emerges from retirement to become interim CEO.

However, the real news is business as unusual. White is currently vice-chairman at PepsiCo as well as CEO of Pepsico International, so has top experience with one of the world’s leading brands. He has also been at Avon, Bain & Co., and Arthur Anderson, and so has the additional experience in management consulting with the accompanying emphasis on corporate change. As importantly, he’s an outsider to the television and telecom industries.

The entire video entertainment and telecommunications world is turning in circles and no one knows where it will turn out. Here are just a few of the factors currently at work:

• Traditional broadcast is being subsumed by cable and satellite television because of wider programming selections, better image quality, and additional services not available over the air.
• Cable and traditional telephone carriers are slugging it out, each trying to become the provider of entertainment and Internet connectivity to consumers, which is driving down prices while increasing the need to invest in infrastructure to at least win the consumer bragging wars of my pipes being bigger than yours.
• Video deliver over the Internet is playing an enormous role in disrupting all the old assumptions about where people look to for entertainment. As such services as YouTube and Hulu advance, the studios begin to directly reach consumers without having to strike bargains with the television carriers.

For any traditional television carrier to make it in the new world will require savvy and ideas outside of historic industry assumptions and answers. Perhaps White is the person that can do what DirecTV needs; perhaps not. But the critical point is that the industry has to stop assuming that success will stem from more of what has worked in the past, but that is starting to crack at the edges today.

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