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Chernin frank on formats and Fox

Exec warns H'wood to keep eye on hi-def industry

NEW YORK — News Corp.’s Peter Chernin didn’t mince words in warning Hollywood to monitor carefully the battle of high-definition DVD formats. “We’re idiots to have built a business that we can’t protect, and shame on us if we do it a second time,” he said, calling the current DVD format “one of the leakiest” possible.

He told investors at a media conference that copyright protection is the factor to consider as Sony’s Blu-ray format dukes it out with Toshiba’s HD DVD.

In a wide-ranging Q&A, Chernin defended News Corp.’s all-stock buyback of Fox Entertainment, said the conglom has had “one or two informal, fairly pleasant conversations” with shareholder Liberty Media, and declared it wants to launch one or two new cable networks each year.

A reality channel rolls out this summer and a business channel in the second half. Each is launching with about 20 million subscribers and is likely to break even in two or three years. Fox hasn’t formally announced a sports web, which Chernin said is still mostly in conversations. But it’s been standard operating procedure, he said, for News Corp. and Fox to seek “opportunities to disrupt entrenched businesses” — in this case, Walt Disney’s hugely successful ESPN.

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“We think in a world where you have one entrenched competitor, there are usually chances to shake things up. It’s certainly an area we’re studying,” he said.

Poison pill

On the Liberty front, Chernin assured investors that News Corp. feels under “no immediate pressure” from John Malone’s company — mostly because News Corp. set up a so-called poison pill to thwart any takeover.

“That said, we have a good relationship with Liberty, and we are happy to sit down and enter discussions that would be mutually beneficial — especially if they’re beneficial to us.”

Malone recently acquired a large chunk of News Corp. voting stock. Wall Street seems to see that situation as untenable, and figures News Corp. chairman Rupert Murdoch will seek to extricate himself by buying the shares or inking some other pact with Liberty.

In any case, Chernin said cash-rich News Corp. has the financial flexibility for almost anything: a Liberty deal, expanding its minority interests, buying back stock or making acquisitions. “There are plenty of things we would buy — additional distribution, cable channels, content or maybe a videogame company. But we’re not feeling any particular pressure.”