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News Corp. exit door may widen with Murdoch plan

February 25, 2009|Meg James and Dawn C. Chmielewski

Media Mogul Rupert Murdoch has a knack for corporate chess. Now he's contemplating how to advance his pieces.

Murdoch plans to use the exit of his longtime lieutenant, Peter Chernin, to assume more direct involvement in operations and shuffle management at News Corp., which is expected to trigger the departure of some ranking executives, according to people familiar with the matter who asked not to be identified because of its sensitivity.

News Corp. board members met Tuesday in New York and discussed the transition, said these people. News Corp. declined to comment.

In an e-mail Monday to employees, Murdoch framed Chernin's exit as an opportunity to streamline the company's operations, which he thinks need to be reviewed in light of a rapidly shifting media economy and landscape. Like all media companies, News Corp.'s advertising-dependent businesses have been pummeled by the recession.

"There will be cost savings as a result," Murdoch wrote in an e-mail. "But the more important aim is to be leaner so that we can better leverage our collective talent and expertise."

A restructuring would address the key burden of having as many as 20 executives reporting directly to Murdoch due to not filling Chernin's position of president and chief operating officer. Murdoch is expected to organize the company so that only four to six operating division heads report to him.

Murdoch, who turns 78 in two weeks, has not groomed a successor, beyond Chernin, because he has long wanted to install one of his six children at the top of the global empire that encompasses the Fox film studio and network, online community MySpace and a chain of newspapers including The Times of London, New York Post and Murdoch's jewel, the Wall Street Journal.

Wall Street is closely watching.

News of Chernin's departure "continues to raise investor concerns about management and succession at News Corp.," Spencer Wang, media analyst at Credit Suisse, wrote in a research report.

The front-runner to eventually succeed Murdoch is his 36-year-old son, James, who currently runs News Corp.'s British and Asian operations. But some think he is not ready.

"Over the past couple of years, James has been widely viewed as the heir apparent to Rupert," Merrill Lynch media analyst Jessica Reif Cohen wrote in a research note Tuesday. "While James has had a very successful run operating businesses, he may still be viewed as too young to step into Mr. Chernin's current role as President and COO."

James Murdoch already has considerable sway. Two years ago, on James' recommendation, one of his top executives from Britain moved to New York to run human resources for the entire company.

But Murdoch's daughter, Elisabeth, should not be counted out. Years ago, Murdoch began to groom her for management. She left News Corp. to create her own imprint. She returned to London and has been building her TV production company, Shine Group, into one of Britain's largest independent producers.

Moreover, Elisabeth, 40, displays her father's entrepreneurial instincts. She bought and sold her own TV stations while barely out of college, recommended that Fox develop "American Idol" and last year her TV company bought the U.S. producer behind such hits as "The Office" and "The Biggest Loser."

On Tuesday, Elisabeth, although she is not on News Corp.'s board, attended the meeting, said a person familiar with the matter.

Those expected to report to Murdoch include son James; Roger Ailes, who runs Fox News Channel; Les Hinton, who manages Dow Jones, which publishes the Wall Street Journal; Fox Networks Group Chief Executive Tony Vinciquerra and Fox film studio chiefs Tom Rothman and Jim Gianopulos.

"We regard News Corp.'s management bench as very deep, particularly at the film and TV studio, the Fox Broadcast Network and in cable programming," Wang wrote.

The wild card is Fox Sports Chairman David Hill, a Murdoch loyalist. Murdoch has often parachuted Hill into company hot spots, and he once ran programming for the Fox network.

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meg.james@latimes.com

dawn.chmielewski@latimes.com

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