Executive getting rich film, TV production pact
HOLLYWOOD — There’s a new power producer on the 20th Century Fox lot.
As Fox execs were still sorting out the restructuring repercussions of Peter Chernin’s pending exit as News Corp. prexy, there are also plenty of questions about Chernin’s lucrative film and TV production pact that will kick in as soon as he formally steps down on June 30.
Chernin’s six-year pact calls for Fox to buy “at least two motion pictures per year,” according to a summary of Chernin’s employment agreement filed in a proxy statement with the Securities and Exchange Commission in September 2005.
That means Chernin will have two put pictures a year on the Fox sked, meaning that if his shingle assembles the key elements the company would be obliged to finance and distribute them through one of its banners. This could make things more competitive for other Fox-based producers vying to get projects on the company’s sked of 16-18 releases a year.
There’s likely to be some budgetary ceiling on Fox’s pickup commitments but that is not spelled out in the proxy filing. It does spell out that Chernin’s banner will have a first-look arrangement with the studio on all of its film and TV projects.
The specifics of the kind of overheads and funding that Fox will give the banner are also unclear, but it’s a safe bet that it will be a substantial amount of coin.
According to the proxy filing, “both the motion picture and television production agreements will contain terms relating to guarantees, fees and compensation at least as favorable as the most favorable agreements entered into by the company” prior to August 2004, when Chernin’s last employment contract was inked. That timing works out well for Chernin, given that Fox’s richest producer deals circa 2004 were generally fatter than its top-of-line producer pacts today.
Chernin has an affinity for the hands-on task of producing, having gotten his start in showbiz working for the famously prolific producer David Gerber. But while his exit package assures that Chernin will segue comfortably into the production arena, those who know him well say that producing will not be his only focus. Chernin declined comment Tuesday.
“Knowing him as I do, I feel confident that there’ll be another chapter in his business life,” said Endeavor partner Rick Rosen, a longtime friend of Chernin’s.
When the financial and venture capital markets try to recover from this economic malaise it would hardly be a surprise to see Chernin put together some entrepreneurial efforts with startup ventures or acquisitions, perhaps in the technology arena. Chernin also has said he intends to devote some of his time to his work as chairman of the nonprofit org Malaria No More and its push to eradicate the deadly disease.
As Chernin looks to the future, changes are afoot for his longtime lieutenants at Fox’s film and TV units, as well as at the Fox Interactive Media division where Chernin has had a strong hand in managing News Corp.’s relatively recent acquisitions such as MySpace.
News Corp. chief Rupert Murdoch said Monday that he would take over Chernin’s direct reports on the Fox lot and other entertainment-centric businesses. Murdoch told employees in a memo sent Monday that there “will be a streamlined management structure between our Los Angeles-based business units and the rest of the company.”
Chernin will not be directly replaced in his role as Murdoch’s No. 2 — speculation is that Murdoch is saving that role for his son James, who heads the company’s Europe and Asian operations — but there will be some reorganization to cut down on the high number of direct reports Murdoch will inherit.
Fox’s film chieftains, Jim Gianopulos and Tom Rothman, are said to be in line to receive expanded responsibilities for overseeing Fox’s TV production operations, 20th Century Fox TV and Fox Television Studios. Peter Rice, prexy of Fox Searchlight, is also expected to see his domain on the film side expand.
Tony Vinciquerra, chairman and CEO of Fox Networks Group, is expected to get expanded oversight of Fox Broadcasting Co. and possibly Fox’s international channels. Vinciquerra’s portfolio at present includes Fox’s domestic cablers other than Fox News Channel. The plan for Fox Interactive Media is still unclear.
Insiders cautioned that Murdoch could very easily change his mind about the specifics of the immediate post-Chernin restructuring. Murdoch was in Gotham on Tuesday for a News Corp. board meeting — the meeting that triggered the announcement of Chernin’s decision to step down when his contract expires in June — and is not expected to be back in L.A. to address the Fox troops for a few weeks, insiders said.
Biz insiders said that Chernin’s absence will probably be felt most in the buffer that he provided for the Hollywood-based businesses with Murdoch and the corporate side of News Corp. in Gotham. And he was also adept at keeping his studio and network division heads motivated and at peace with one another.
“There are a lot of places where friction can happen at this company,” one Fox insider said. “Peter was really good at settling those issues when they came up.”