Peter Chernin will be stepping down as president and chief operating officer of News Corp. when his contract expires on June 30, News Corp. Chairman Rupert Murdoch announced this afternoon.
The company said that News Corp.’s Los Angeles-based Fox businesses will report directly to Mr. Murdoch when Mr. Chernin leaves. Those businesses include the Fox broadcast network, the television station group, the movie and television studios and the entertainment cable networks.
Unconfirmed reports of Mr. Chernin’s departure had been published earlier in the day. Mr. Murdoch had previously issued only brief statements on the status of the company’s talks with Mr. Chernin.
Concern that Mr. Chernin would leave concerned analysts and investors and weighed on the stock of the company, already sent lower by the troubled economy and depressed advertising market.
Despite the long wait for Mr.Chernin’s decision, little progress appears to be made on any type of succession plan.
“It will be interesting to see how much autonomy managers get” with Mr. Chernin gone, one News Corp. insider said. Mr. Chernin appeared to get along well with his direct reports, having experience running most of the units under his oversight.
Insiders said they expected Mr. Chernin to help streamline the organization to cut back on the number of people reporting to Mr. Murdoch, but it was unclear who executives currently reporting to either Mr. Murdoch or Mr. Chernin might report to in the future.
Until a new executive structure is set, there might be some difficulty in solving internal issues Mr. Chernin played a role in unraveling. Fox has cable networks under two different reporting structures—one run by Fox News Chairman Roger Ailes, who reports directly to Mr. Murdoch and the other run by Fox Networks Group CEO Tony Vinciquerra, who reports to Mr. Chernin.
Insiders said it might be difficult to get Mr. Murdoch to focus on and ultimately decide issues that pit the interests of the network against the TV station group’s or the studio’s.
Insiders said they couldn’t name a unit that might fare better with Mr. Chernin no longer making decisions.
“He was fairly Solomon-like,” one observer said.
One reason some were expecting Mr. Chenin not to re-up with News Corp. is that he believed he was never going to get the top job at the company. Mr. Murdoch, who controls about 40% of the company’s stock, is expected to pass the reins to one of his offspring.
Insiders, however, did not expect any of the Murdoch children to step into Mr. Chernin’s role any time soon.
News Corp. had planned to announce Mr. Chernin’s plan to leave at a board meeting scheduled for Tuesday, but leaks forced company to announce his decision a day early.
“Peter’s contributions to the company over the past two decades have been immeasurable,” Mr. Murdoch said in a statement. “He has led important businesses and nurtured talented managers.”
“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,” Mr. Murdoch said. “To that end, Peter and I will work closely over the next four months to ensure an effective transition.”
Mr. Chernin said in a statement that leaving was a “difficult decision.”
“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,” Mr. Chernin said.
“The other great privilege of these years has been to work with all of my colleagues around the world at News Corp. 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,” he continued.
News Corp. said that Mr. Chernin will be launching a Fox–based production company later this year.
Mr. Chernin earned $28.8 million in salary—topping Mr. Murdoch’s pay–and stock in 2008. He’s also owed $27 million in deferred compensation, plus $11 million in pension money.
According to his employment agreement, after he leaves the company, News Corp. is required give him a six-year film and TV deal on terms as good as the company gives any other producer.
Mr. Chernin, who has held his current position at the company since 1996, joined News Corp. in 1989 as president of entertainment for Fox Broadcasting, a post he held for three years. Following that, he served as CEO of News Corp.’s Fox Filmed Entertainment unit.
[Editor: Gilbert. Updated 10 a.m. 2/24 to rewrite 8th paragraph.]