Posted by: Jon Fine on February 23, 2009
This has already been a bad week for Murdoch, thanks to the uproar over New York Post cartoonist Sean Delonas, and one of his typical bits of measured and understated commentaries. (Which Murdoch biographer Michael Wolff is betting will result in Post editor Col Allan exiting as well.) But things just got much worse. As I wrote last October in a column, concerning trendlines that have only worsened, News Corp’s stock price has fallen much further than its peers lately, thanks almost entirely to Rupert Murdoch’s atavistic attachment to newspapers.
Those, of course, weren’t Chernin’s operations. Based in Los Angeles, he had done well with his units—check out Grover’s smart take on 20th Century Fox—and had the patina of Professional Management that helps Wall Street swallow the notion of a family-run company more easily. Would the Dolan Discount for Cablevision be so pronounced if they had a savvy-sounding outsider—or even savvy-seeming outsider—running and explaining things?
I had been hearing for some time, as other reporters undoubtedly had, that Chernin might go, was weighing options, was about to leave for another really-crazily-moneymaking gig. (The phrase "hedge fund" was uttered at least once--obviously, this was some time ago.) But these tips never fully checked out. And it makes some sense that the Angeleno Chernin’s exit, which was reportedly decided last weekend, didn’t leak until today. Just search Rupert’s Department of It Wasn’t All Bad for Slumdog Millionaire, Fox Searchlight property and the Academy’s favorite new(ish) Cinderella story. No sense in overshadowing those stories in Monday's papers!
Grover lays out a convincing case that Chernin may just sign on as a very-well-compensated producer for Fox:
Under Chernin's existing contract, the News Corp. No. 2 can require the company to give him a six-year contract to produce movies and TV shows for the Fox studio, and must buy "at least" two movies a year from him and pay him a fee "at least as favorable as the most favorable agreement" the studio has with other producers. That could easily mean $1 million or more per film and a large percentage of a film's revenue. Moreover, under his contract, Chernin has the right to use the News Corp. private airplane for 50 hours a year during the six-year contract (which the company has pegged with a value of $1.65 million) and the use of a company car (valued at another $210,000).
…but my colleague Tom Lowry comes up with an even more delightful potential next move:
Peter Chernin, Democratic candidate for Governor of California.