Chernin To Exit News Corp.
COO, Whose Contract Expires In June, Could Leave With $40 Million-Plus Package
Mike Farrell -- Multichannel News, 2/23/2009 6:34:55 PM
Peter Chernin, News Corp. COO and chairman Rupert Murdoch's right-hand man, is getting ready to leave the media giant, electing not to renew his employment contract which expires in June.
"Peter's contributions to the company over the past two decades have been immeasurable. He has led important businesses and nurtured talented managers," Murdoch said in a statement. "We are fortunate to have such a strong and seasoned group of leaders at our Fox companies and we are confident that our success will continue. To that end, Peter and I will work closely over the next four months to ensure an effective transition."
"Peter is a valued colleague and a trusted friend," Murdoch continued. "There are few executives, at any company, that combine his maturity, his experience, and his skills as a communicator and leader - I will miss him. It is understandable that at this stage in his life he would want to do something new after serving News Corporation and our shareholders so well for so long."
Speculation has swirled for months that Chernin would leave the company. As head of the film and entertainment divisions, Chernin has largely been christened by Wall Street as the chief architect of News Corp.'s success. The long-time News Corp. executive also was expected to be Murdoch's immediate successor as CEO, once the media mogul either retired or died.
Chernin, who has been with News Corp. since 1989, has been president and COO of the media giant since 1996. Chernin's departure would seem to open the door for one of Murdoch's children -- most likely News Corp.'s Europe and Asia chairman and CEO James Murdoch -- to step into a greater role.
In a statement, Chernin said that the decision to leave the company was a tough one.
"This was a difficult decision for me," Chernin said in a statement. "Next week, marks my 20th anniversary with News Corporation and the company has been a huge part of my life. During my years here I have had the great privilege to work for one of the true visionary leaders of our time, Rupert Murdoch. As a leader, Rupert is unparalleled. He is bold, entrepreneurial, innovative, creative and incredibly supportive. As a partner and friend he has been inspiring, fascinating, and most of all, tremendous fun.
"The other great privilege of these years has been to work with all of my colleagues around the world at News Corp," Chernin continued. "I owe more to them than I can possibly express. Collectively, they represent the best in this industry. They have built great businesses, created new models and redefined existing franchises. Above all, they are individuals of unmatched character and collegiality. I will miss Rupert and my colleagues deeply. But I have no doubt they will continue to thrive without me."
Rumors about Chernin's imminent departure have swirled through the media landscape in the past only to be beaten back at the last minute when the executive signed a late-inning deal. But this time, with the recession in full-bloom and valuations of media properties like News Corp., dwindling rapidly, the former literature major may have determined that the time was ripe to look at other opportunities.
News Corp. stock was one of the poorest performers in the media landscape in 2008, dropping 55% or $11.67 per share to $9.58. The stock has dipped further this year - it closed at $6.39 per share on Feb. 23 - as investors worried about the company's newspaper holdings and the whims of its largest shareholder, Murdoch.
Chernin is expected to get a lucrative severance package valued at more than $40 million. According to BusinessWeek, the executive who received $28.8 million in compensation in fiscal 2008 is entitled to about $27 million in deferred compensation and $11 million in pension awards. In addition, Chernin can require News Corp. to enter into a six-year consulting agreement, pledging to buy at least two films a year from him at a fee that is at least as favorable as the most favorable deal the studio struck in 2004, the year the employment agreement was reached. That could be another huge payday for the executive, since in 2004 Fox Studios launched such blockbusters as X2: X-Men United.
Ina statement, News Corp. said that Chernin will launch a Fox-based production company later this year, among other ventures. In addition, he will continue his efforts as Chairman of Malaria No More.
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