Leading Man
Dorothy Pomerantz 05.19.08, 12:00 AM ET
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As that strike dragged into February, Chernin took action. One morning he and Disney Chief Robert Iger showed up at the negotiations at L.A.’s secluded Luxe Hotel bearing a crucial concession: The studios would give writers a cut of any money they took in streaming movies and television shows on the Internet. It was a line the studios had previously refused to cross. Chernin was willing to tiptoe over it. The writers would get a modest percentage of the studios’ gross in the third year of a three-year deal. By the time he walked out of the hotel that night the strike was over.
The Chernin compromise met his main goal: leaving News Corp. free to try out radically different ways of selling TV shows and movies online without being blocked by Writers Guild rules. He hopes to strike a similar deal with the actors. “I think there’s a potential to impede moving content online, and I will not allow that to happen,” he says flatly.
By many measures Peter Chernin is Hollywood’s most powerful man. He runs the most-watched TV network, the largest movie studio (based on year-to-date box office sales), a clutch of cable channels and an expanding array of Internet sites. Thanks to his reputation as a straight shooter in an industry famous for duplicity, Chernin has also become a leader in keeping the peace with Hollywood’s stars.
Yet, for all his achievements, the 56-year-old Chernin finds himself in a precarious position. Recorded entertainment is a business under siege. The Motion Picture Association of America claims pirates with camcorders and fast Internet connections annually steal movies worth $6 billion at normal prices. Films like Fox’s recent box office smash Horton Hears a Who! and shows like 24 and American Idol are available at the Pirate Bay for free at the click of a mouse. Partly because of the pirates, DVD sales have started shrinking after a decade of wild growth. Last year sales dipped 4% to $15.6 billion. By 2010 DVD sales will shrink to $11 billion, predicts Adams Media Research.
Chernin also faces his own unique set of uncertainties. While he may be the most powerful man in Tinseltown, he is still the second banana at his own company, the $55 billion (market cap) News Corp.
Rupert Murdoch, the company’s controlling shareholder and chief executive, gives Chernin enormous latitude to run the video business as he pleases. Murdoch spends his time buying and overhauling properties like the Wall Street Journal (and, he hopes, Newsday) or doing battle with moguls like John Malone and Charlie Ergen. But while Murdoch makes a point of treating Chernin as an equal—the men draw identical $8.1 million salaries—that equality extends only so far. The 76-year-old Murdoch makes no secret of his desire to one day elevate one of his children to the top of News Corp. When that happens, there is no assurance that Chernin will continue to run his own show.
Yet rather than play it safe, Chernin is rushing to remake News Corp. into an Internet powerhouse. He is moving Fox’s content onto the Internet more aggressively than any other studio or network. He has partnered with NBC on a new Web site, Hulu, that he hopes will revolutionize the way people watch TV. News Corp. has spent $1.2 billion buying up Internet sites, most notably MySpace.
Chernin has also ordered his TV and film executives to develop cell phone- and laptop-friendly content that will have as much life on the littlest screens as it does on the biggest ones. It is for the moment acceptable that the little screens currently produce correspondingly little profit.
Now is the time to evolve or die. Says Chernin, “People want to consume our content digitally. Either we’re going to figure out a way to do it or they’re going to steal it, and if they do, shame on us.”
Peter Chernin is nothing like the stereotypical Hollywood suit. Most studio chiefs have an M.B.A. or law degree; Chernin, an English major, has neither. In a town known for its egomaniacal dealmakers—personified by Ari Gold in HBO’s Entourage—Chernin is known for being a good listener who will happily greet a visitor in the lobby instead of having him brought to the office by lackeys.
Chernin also has a knack for making more friends than enemies. In response to clips of movies and TV shows appearing on YouTube, Viacom Chief Sumner Redstone sued Google, the site’s owner, demanding damages of at least $1 billion. Chernin invited Google Chief Eric Schmidt to dinner in Beverly Hills to talk about how the two companies could work together. It’s hard not to be charmed by Chernin, says Schmidt: “He’s known for his persuasiveness.”
Raised in the swank Westchester suburbs of New York, Chernin grew up in a white-bread world where, he says, “ethnic diversity meant your family liked Chinese food and pizza.” That changed the day he showed up at the University of California, Berkeley in 1969 for freshman orientation. While he never ran with the school’s gun-toting protesters, he quickly shed the remnants of his suburban upbringing.
In a commencement address he gave to the school in 2001 he summed up his college years this way: “I suppose there are colleges that take wayward kids and straighten them out. Berkeley did the opposite to me, and I’ve been grateful ever since.”
With his English literature degree, Chernin found a publicity job at St. Martin’s Press. He moved up through the ranks in publishing to become an editor at Warner Books. In 1978 he edited Cruel Shoes, a collection of short stories by Steve Martin.
In 1979 Chernin jumped from publishing to TV, eventually landing at Showtime, a cable channel that was experimenting with creating its own television shows. When NBC rejected comedian Garry Shandling’s idea for a sitcom about his life as a stand-up comic where he would break the “fourth wall” and speak directly to the audience, Chernin got Shandling on Showtime. It’s Garry Shandling’s Show went on to be nominated for an Emmy for writing and cemented Chernin’s reputation as an executive with an eye for offbeat talent. “He had the courage to say yes to something completely different that had never been done previously on television,” recalls Shandling.
In 1989 Barry Diller hired Chernin to run Fox’s fledgling television division. At the time, the fourth network had been limping along with dogs like Women in Prison and The New Adventures of Beans Baxter. Instead of green-lighting the sort of family sitcoms and detective shows running elsewhere, he picked shows that viewers could fall in love with. “We didn’t need bland shows,” he says. “We needed to get noticed.”
So he gave the go-ahead to The Simpsons. The show broke two important rules for network prime time: The characters were wildly dysfunctional and they were cartoons—crudely drawn cartoons at that.
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