Rupert Murdoch's Latest Deal with John Malone

It was one of those calls that only a couple of media moguls could make. Rupert Murdoch needed approval from his longtime partner and occasional nemesis John Malone before hiring a new second-in-command at News Corp. (NWS).

He got that go-ahead on June 2, when Malone, whose Liberty Media (LMDIA) holdings include a 48% stake in satellite operator DirecTV (DTV), said Murdoch could tap DirecTV CEO Chase Carey as News Corp.'s deputy chairman, president, and chief operating officer.

As Murdoch's No. 2, the 55-year-old Carey takes over from Peter Chernin, who is leaving on June 30 after many years under Murdoch to make movies and TV shows under a six-year deal with News Corp. Chernin also plans to help raise money for the fight against malaria and other causes. Carey will oversee News Corp.'s sprawling operations, including its Los Angeles-based Fox studio and TV operations that only two months ago Murdoch had said he would supervise following Chernin's departure.

Carey Figured in a Prior Deal

Presumably, Carey's elevation lets Murdoch return to what he does best: seeing the big picture and cutting deals. Carey already has lengthy experience with Murdoch, having started with News Corp. in 1988, then moving up through the ranks at Murdoch's Fox TV stations to become News Corp.'s co-chief operating officer with Chernin in 1996. His tenure at News Corp. included helping Murdoch launch new ventures, including the company's Fox Sports network, expanding its Fox TV station group, and ultimately helping Murdoch launch satellite TV operations. Carey became CEO of DirecTV, then-controlled by News Corp., in 2003.

This isn't the first time Malone and Murdoch have struck a deal that involved Carey's future. In December 2006, Murdoch defused a potential takeover bid by Malone and swapped News Corp.'s 38.5% stake in DirecTV and other assets in return for Liberty's 16.3% stake in News Corp. Carey stayed on as DirecTV's CEO, with Malone replacing Murdoch as chairman.

Although neither side will say, it is almost certain that Malone got something in return this time around, too, for letting Carey leave DirecTV a year and a half before his contract would have expired on Dec. 31, 2010. Carey last year was paid $12.3 million in salary, bonuses, and restricted stock grants. Representatives of Liberty, News Corp., and DirecTV declined to comment.

More than likely, Malone and Murdoch discussed a potential deal that might include DirecTV getting content from one of Murdoch's various entities, or possible partnerships for other assets that the two companies own. Dealmaking is, after all, what moguls do.

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