Rupert Murdoch's News Corp., which spans three continents and delivers much of the entertainment and news that people consume around the world, is facing a sudden flush of bad news.
This month the company, owner of such prized media properties as the Fox movie studio, the Fox TV network and the Wall Street Journal, reported an unusual quarterly loss amid a worsening recession. News Corp.'s stock is now trading for under $7 a share, nearly 75% off its peak, a sign that investors have lost confidence. To top it off, a new setback hit News Corp. on Monday when the company confirmed that Peter Chernin, its respected president and chief operating officer, would leave when his contract expires in June. The announcement pushed News Corp.'s shares down a further 4.3%.
For now, Murdoch doesn't plan to replace Chernin. Instead, the mogul, who will turn 78 in two weeks, plans to take over day-to-day operations.
Chernin is the latest News Corp. executive to leave after Murdoch made clear that he's the boss. In the early 1990s, for example, Barry Diller, who launched the Fox network, left in frustration over Murdoch's unwillingness to share power.
This time, however, things are different. Murdoch's high-wire act to assume a more direct role comes at a choppy time for News Corp. Investors are unhappy with the media baron's decision to double down on newspapers. Chernin opposed the purchase last year of Dow Jones & Co., publisher of the Wall Street Journal, which came just before the industry went into a tailspin.
Moreover, Chernin's decision to step down leaves News Corp. without its ambassador to Wall Street and Hollywood, a role that was crucial for the company's stability, assuring investors that the $33-billion-a-year empire was more than a one-man band.
Murdoch acknowledged the difficult environment, in which a dramatic pullback in advertising and consumer spending has undercut the company's film, television and publishing businesses. This month News Corp. posted a $6.4-billion quarterly loss, largely because of a write-down reflecting the diminishing value of assets.
"The downturn we are operating in is more severe and global than anything we have seen before," Murdoch wrote in an e-mail Monday to employees announcing Chernin's departure. He said he would take the opportunity to create "a streamlined management structure between our Los Angeles-based business units and the rest of the company."
