AT&T's acquisition of DirecTV unites a pair of CEOs with different levels of tech sector experience with a common goal: survival and expansion in a shifting communications market.
Both AT&T CEO Randall Stephenson and DirecTV CEO Michael White are channelling the same message: that the merger, announced Sunday, results in a more resilient multi-dimensional company that can thrive during a time of industry change and consolidation.
The combined company will be "well positioned to meet the evolving video and broadband needs of the 21st century marketplace," White said in a statement.
AT&T with DirecTV can "redefine the video entertainment industry," Stephenson said, also in a statement.
The two took different paths to the altar. Stephenson, who is 54, has spent his entire career in telecommunications, joining Southwestern Bell in 1982 in his home state of Oklahoma. White, on the other hand, 62, had his longest career stint at PepsiCo before becoming CEO in 2010.
They have known each other for years. Both are members of the Business Roundtable; AT&T and DirecTV have had a joint distribution agreement, too.
In fact, their working relationship may have helped consummate the deal. Stephenson had talked with DirecTV's satellite TV competitor Dish chairman and CEO Charlie Ergen as well for a deal. But some analysts believe Ergen's reputation as a demanding negotiator, and the prospect of working with Ergen after a deal is forged, may have turned Stephenson off.
In contrast, Stephenson and White have "really complementary styles," says Richard Doherty, director of The Envisioneering Group.
White did appear on the CBS reality show, Undercover Boss, in 2010 but he did his own unpublicized undercover stint in his company, too. After becoming CEO, White worked various departments in the company. "He really tried to learn the different aspects of it. I respect that," Doherty says.
In contrast, Doherty says, Stephenson is "the ultimate corporate man."
AT&T CEO's career in telecom
Stephenson, who earned a master's degree in accounting from the University of Oklahoma, worked his way up through Southwestern Bell to become the baby bell's chief operating officer in 2004. He was appointed to the board of directors of AT&T in 2005, the year that Southwestern Bell acquired the company and changed the name of the subsequent company to AT&T.
After the breakup of AT&T in 1982, Southwestern Bell was considered "the runt of the litter," but Stephenson, along with then CEO Ed Whitacre, had "a great vision of how this market would play out," says Roger Entner, an analyst at Recon Analytics. "They realized they had to grow through acquisition."
Eventually, SBC acquired other baby bells including Ameritech, Pacific Telesis and, ultimately, AT&T. The company eventually folded its Cingular wireless company and BellSouth into AT&T's wireless business.
Stephenson learned that operational improvements were not enough to drive growth, Entner says. "They had to buy adjacent businesses and also made the tight decision to also go into wireless, but to do it through deals," he says. "Randall runs a very good ship in operational excellence but they also have a much more forward-looking organization to see what makes sense, what is possible and how can we push the envelope."
AT&T's initially-exclusive deal with Apple in 2007 to market the industry-transforming iPhone helped the company's ascendance. Last month, the company reported its strongest growth in long-term wireless subscribers in five years -- adding 1 million -- with wireless revenue up 7% from a year earlier to $18 billion, also the strongest growth in years.
Not as successful was the company's attempt to acquire competitor T-Mobile, which it abandoned in 2011 because of regulatory pushback. "When we look back we regret much more the risks that we didn't take than the ones we took. He saw an opportunity for a transformational deal that would consolidate the industry," Entner says. "You can't blame the man for trying. He did the right thing it. ... Even Sprint, which argued so hardly against (AT&T's purchase of T-Mobile), now wants to buy T-Mobile."
In 2013, Stephenson earned nearly $20.6 million in salary, bonuses and other income at AT&T.
Satellite chief has international prowess
Compared to Stephenson, DirecTV chief White , who earned nearly $12.4 million, is "an international man of mystery," Doherty says.
He earned a master's degree in international relations from Johns Hopkins University and, has helmed the satellite TV company during a fiercely competitive, rapidly evolving period in the communications industry.
The former PepsiCo. executive took the CEO slot in January 2010. Since then, he's had to court subscribers and grow sales during a time of ever-expanding media choices for consumers.
His early success, such as growing the Latin American business and improving customer service, earned him the Executive of the Year honor from Multichannel News in 2012.
DirecTV has a strong presence in Latin America -- it's the leading pay TV provider with 18 million subscribers. White's expertise in a region that has the upcoming World Cup and the 2016 Summer Olympics is valuable -- as is DirecTV's video holdings. "But he has been less visible than any other DirecTV CEO," Doherty says.
Speaking of sports, White is a former goalie who played intramural ice hockey in the 1970s while a student at Boston College. "White has taken his fair share of shots to the body," said Multichannel News in a profile from that year. "But has managed to keep DirecTV at the top of its game."
Under White's leadership, DirecTV's stock has surged. It's up just over 30% this year to close at $86.18 on Friday.
Yet the company has also gotten tangled up in some high-profile media battles during White's tenure.
In 2012, it stopped carrying channels owned by Viacom because of a contract dispute. Recently, it wrangled with the Weather Channel over fees and programming, with each party issuing dueling public statements on the situation.
After months of fighting, DirecTV and the Weather Channel announced a new deal in April, with the Weather Channel focusing more on weather than on its reality programming.
Earlier in his career, White held executive positions at Avon Products, Bain & Company and Arthur Andersen & Co. But his longest stay was at PepsiCo. He joined the company in 1990 and held positions such as CFO of Frito-Lay North America, CFO of PepsiCo and CEO of PepsiCo International.
Upon his departure from PepsiCo., CEO Indra Nooyi put out a statement that credited White for leading "a dramatic transformation of our international business, helping to grow total sales outside North America to close to $20 billion, from less than $8 billion in 2003."
It is assumed that White will stay on for a while during the transition and then perhaps "ride off into the sunset ... to other opportunities," Doherty says.
Contributing: Associated Press
Source : http://www.usatoday.com/story/money/business/2014/05/19/directv-ceo-michael-white/9225009/
