Will News Corp.'s President Jump Ship?

In a town that loves a hot rumor, the latest Hollywood gossip is that Peter Chernin, Rupert Murdoch's second-in-command for the last 12 years at News Corp. (NWS), might be leaving the company sometime this year. His contract expires on June 30, and both Murdoch and Chernin have been tight-lipped about the progress they've been making on extending his 2004 deal.

Odds are News Corp. President Chernin won't be leaving; he waited to sign his most recent contract until the last one had actually expired. But the buzz remains that he's thinking of bolting, and the timing couldn't be worse for News Corp. The parent of Fox Broadcasting and The Wall Street Journal recently reported a massive $7.6 billion second-quarter loss, much of it related to writing down the declining value of its TV stations and newspapers. And at $6.78 a share, News Corp.'s stock is trading near a 10-year low.

A Deluxe Package of Goodies

News Corp. is mum on Chernin's plans, but the 57-year-old executive wouldnt be hurting much if he decides to walk away, judging from the retirement benefits package in his contract. For starters, Chernin, who earned $28.8 million last year in salary, stock, and other awards, sits on top of a pile of money. He's got nearly $27 million in deferred compensation, along with another $11 million in various pension funds, going back to when he ran the Fox film studio and TV network before moving up to the presidency, according to News Corp.s proxy filing with the Securities & Exchange Commission.

Chernin also has the right, according the filing, to "require" the company to enter into a six-year deal to buy films or TV shows from him. This isn't any window-dressing, either. Chernin, a literature major from the University of California, Berkeley who got his show business start making movies of the week, has written into his deal that Fox would be required to buy "at least" two movies a year from him, paying a fee "at least as favorable as the most favorable agreement" the studio had with a producer in 2004, when he signed the agreement. That means big bucks, especially since back then Fox was making hefty pictures like X2: X-Men United that paid its producers a nice chunk of change.

But Chernin's retirement package hardly stops there. Should he decide to leave, he would continue to receive credit during his six-year production deal for the company's pension plan, building up his nest egg as if he had remained an employee. And his stock awards would continue to vest. On top of that, according to the company's filing, he would have the right to use the company jet for up to 50 hours a year (a six-year benefit estimated by the company to be worth $1.65 million), and could make use as well of a company car (another $210,000) while making deals around Hollywood.

All in all, not a bad way to enter retirement. But then again, as Murdoch's No. 2, Chernin makes as much in salary as the boss and last year even took home $1 million more (not that Murdoch's $27.5 million was too shabby.) Then there are the perks, which include not only the use of the corporate jet and a car, but $18,710 in country club dues. Perhaps best of all, he doesn't have to worry about getting his films made. He's one of the guys who can order them up in the first place.

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