Murdoch's lost lieutenant
By Andrew Edgecliffe-Johnson
Published: February 28 2009 02:00 | Last updated: February 28 2009 02:00
Last April, Peter Chernin could be found by the icy shoreline of a Greenland fishing village, part of a huddle of executives in Gore-Tex gear, waiting for a helicopter ride to some adventurous skiing.
The group of fur-clad Inuits looking on was a far cry from the celebrities crowding around News Corp's chief operating officer last Sunday as Fox Searchlight, the studio he founded, swept the Academy Awards with eight Oscars for Slumdog Millionaire . The next day he became the most popular man in Hollywood when he announced that after 12 years as Rupert Murdoch's closest lieutenant and head of the Fox television, film and interactive businesses, he was off to launch his own production company.
Under a contract agreed the last time News Corp's chairman feared he might lose his deputy, the 57-year-old has a guarantee that News Corp will buy at least 12 films over the next six years. The terms, worth ab estimated $25m-$40m a picture, are remarkable. "He is the best producer in Hollywood at the moment, because nobody else in Hollywood has that guarantee," says one rival studio owner. As film financing dries up, directors will beat a path to his door because "he's getting his films made".
By leaving now, after News Corp predicted a 30 per cent profit drop for the year, "at least he avoids the next three years of global recession", another media chief executive says, before adding grimly: "I might ask if he needs a production assistant."
Mr Chernin's departure, while cordial, is a challenging moment for Mr Murdoch. "I had lunch with Tom Rothman [chairman of Fox Filmed Entertainment] on Monday and he said 'it's like Dad leaving home'," says David Hill, chief executive of Fox Sports.
Despite the family analogy, Mr Chernin made his name at News Corp because he was not a Murdoch. No non-family executive has held such a senior role for as long. "The arseholes get bumped very quickly," Mr Hill notes.
Mr Chernin had to navigate not only his mercurial chairman but also his children. He outlasted Lachlan, Mr Murdoch's eldest son, who was his deputy for five sometimes awkward years. Neither James's emergence as heir presumptive nor the growth of Elisabeth's trans-atlantic production company threatened his position.
Michael Garin, the former Lorimar Telepictures executive, says this quality was apparent when he hired Mr Chernin in 1987 to run Lorimar's film division alongside Bernie Brillstein, the larger-than-life producer of The Muppet Show . "He's always had an uncanny ability to manage people who are both senior to him in age and in stature," he says. "Managing Rupert is certainly not an easy task."
In 20 years at News Corp, Mr Chernin forged the reputation as the "operator" to Mr Murdoch's "visionary", but people close to him challenge this. "I don't think Rupert has the patience to be the operator that Peter is," one friend says, but "a lot of the [News Corp] vision is Peter".
The exception is when it comes to newspapers. Mr Chernin disagreed with his boss's decision to offer 17-times earnings for The Wall Street Journal in 2007. Mr Chernin, now married to Megan, afundraiser for inner-city mentoring programmes, in fact had his start in print at St Martin's Press and Warner Books. "There are very few bosses I ever worked for you could have a decent conversation with about William Faulkner," says Mr Hill.
Having grown up in the smart New York suburb of Westchester, Mr Chernin later credited the University of California, at Berkeley with broadening his horizons. "There are colleges that take wayward kids and straighten them out. Berkeley did the opposite to me, and I've been grateful ever since," he told his alma mater years later.
Despite his disagreements over newspapers, a friend argues: "if you compare Rupert to the other media moguls, he got the best one. He ran these businesses unfettered."
The Fox platform put Mr Chernin in charge of Hollywood's most profitable studio and television blockbusters from The Simpsons to American Idol . Mr Murdoch's penchant for
gambles also allowed him to strike defining digital deals. Stealing MySpace , a book on News Corp's swoop on the social networking site, chronicles a ruthlessness in Mr Chernin's tactics that his boss must have admired. At a clubby media conference in July 2005, Mr Chernin learned that Tom Freston, Viacom's co-president, was on his way to a Hawaiian holiday. Knowing that Viacom was the favourite bidder for what was then the hottest media property, he struck when his rival was on the beach. Within months, Mr Chernin had recouped his MySpace investment through a $900m deal with Google. When it comes to deals, "he's a great closer", Mr Hill says.
Jonathan Nelson, the Providence Equity chief executive who organised the Greenland skiing trip, also credits Mr Chernin with the early success of Hulu, News Corp's online video partnership with NBC Universal and Providence. In Hulu, he created one of the "very few examples where paradigm-shifting models have been spawned inside a traditional media company", he says.
In a back-stabbing business, Mr Chernin's style has earned him an unusual number of industry friends, including Bob Iger, Walt Disney's chief executive, with whom he helped end last year's strike by Hollywood writers. Jeff Zucker, NBC Universal's chief executive, lauds Mr Chernin's ability to look at the media business unemotionally. "He is as grounded as any big-time media executive you will find."
"He is a Democrat in a conservative world, a studio boss with the respect of Hollywood for his independence, his integrity and his judgment, and an executive who can fight on principle without sacrificing profit," says Sir Howard Stringer, chairman of Sony. "Peter made it look easy."
Ray Chambers, United Nations special envoy for malaria who handed the chairmanship of Malaria No More to Mr Chernin, says hebrings a unique ability "to cut through the smoke and identify what needs to get done".
Tied to the admiration is concern for the impact of his departure on News Corp. "They don't realise how big a hole he'll leave, but they're about to find out," one media executive warns. Mr Chernin's peers suspect he will want a bigger challenge. One prospect is joining Providence for a tilt at NBC Universal should GE sell its media arm. Mr Nelson will not comment, but says: "I don't think his intellectual curiosity will be satisfied producing a couple of movies a year."
Copyright The Financial Times Limited 2009