2nd UPDATE: DirecTV Taps PepsiCo Executive White As CEO

DirecTV Group Inc. (DTV) said Wednesday it will tap PepsiCo Inc. (PEP) executive Michael D. White as its new president and chief executive, bringing in an outsider to lead the company as it looks to sustain its momentum in the pay-TV business.

The El Segundo, Calif., company will draw upon White's consumer retailing background, as well as his experience in striking multi-billion-dollar deals, to lead the company through increasingly competitive waters. White, 57, previously announced his retirement, but will take the reins of DirecTV on Jan. 1.

"I look forward to working with the talented management team and employees as we continue to grow the business, delight the customer and further distance DirecTV's leadership position," White said in a statement.

White, who was once considered a potential successor to lead Pepsi, led negotiations for the beverage giant's $7.8 billion acquisition of its two biggest independent bottlers. That experience will come in handy as DirecTV prepares to merge with its majority shareholder, Liberty Entertainment, once the unit is spun off from parent Liberty Media Corp. (LCAPA, LINTA, LMDIA). The merger, expected to close by the end of the year, is designed to free up DirecTV to strike partnerships or pursue other deals.

"After a very thorough search, we have found an exceptional leader with a sustained track record of success, profitably growing businesses and a reputation for making the impossible possible," DirecTV Chairman John Malone said in a statement.

Ideally, DirecTV would have preferred an executive with media and entertainment-industry experience, according to a person familiar with the situation. But, White knows about media from buying advertising and knows consumer marketing, the person said.

The company had looked at a number of outside candidates, including Liberty Media Chief Executive Gregory Maffei, as well as former DirecTV CEO and Los Angeles Times Publisher Eddy Hartenstein. Bruce Churchill, who runs the Latin American unit, and interim-CEO Larry Hunter were also in consideration, according to people familiar with the situation.

White likely will try to retain Churchill, the internal frontrunner for the CEO spot, according to the person. The incoming leader wants Churchill to continue doing "the good job he's doing" while keeping the rest of the management team "aligned and in place," this person said.

White began flirting with DirecTV over the CEO spot late this summer – and before he announced his retirement plans, a White acquaintance recalled. "He got excited" over the prospect of changing industries, the acquaintance said. "He's very comfortable in figuring out how to navigate new situations."

White, who also once was PepsiCo's chief financial officer, was credited with combining Pepsi's two biggest international units and making the merged operation "the growth engine of PepsiCo," the acquaintance added.

DirecTV hasn't skipped a beat since Chase Carey left the CEO position to become top lieutenant to News Corp. (NWSA) Chairman and Chief Executive Rupert Murdoch in June. The appointment comes two weeks after the company reported a third-quarter profit of $366 million amid continued subscriber growth.

Still, White, 57, will face challenges in maintaining the company's course. DirecTV has remained relatively protected from the economic downturn because it was ahead of its competitors in offering high-definition programming and the digital video recorder, features that have proven to be attractive to consumers even as they tighten their belts. It has primarily picked off customers from the cable providers, as well as rival satellite player Dish Network Corp. (DISH).

But the company faces a growing threat from the telecommunications companies. On one hand, DirecTV partners with many of them to sell its television service along with the phone company's Internet, voice and wireless services. On the other, Verizon Communications Inc. (VZ) and AT&T Inc. (T) - both DirecTV partners - are focused on pushing their own television services.

Dish, meanwhile, has shored up much of its customer service issues and has picked up steam in the last two quarters. The company added 241,000 net subscribers in the third quarter as more customers stuck to its service.

DirecTV, in comparison, added 136,000 U.S. subscribers in the same period as the company sought to weed out customers looking for more discounts or who tended to call up with service problems. As a result, the company's profit margins and average revenue per user rose from a year ago.

Recruiters Heidrick & Struggles International Inc. handled the CEO assignment for DirecTV.

DirecTV shares rose 11 cents to $31.04 on Wednesday.

- By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

(Joann Lublin contributed to this article.)

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