Why You Leavin' (News Corp.), Peter Chernin?

The question now is, What will News Corp. and Fox look like in a post–Peter Chernin world? Predicting whether Chernin would stay or go as Chairman Rupert Murdoch’s No. 2, and who might replace him (if anyone at all right away), had been Hollywood’s favorite guessing game recently.

But now that fun is over. Chernin is stepping down on June 30 with an unprecedented-for-Hollywood golden parachute.

Here’s what happened: On February 23, one of my most reliable sources phoned to tell me that News Corp.’s president/COO was “definitely leaving” when his five-year contract expired. My news was a shocker around the Fox lot, and soon all of News Corp. — not to mention Hollywood. Even agents were the last to know. Murdoch and Chernin had planned to make the announcement at a board of directors’ meeting the next day. But my 10:30 a.m. scoop sped up the timetable. By afternoon, Murdoch himself had issued a long, rambling memo.

Then, around 4 p.m, two Hollywood agencies sent out internal e-mails stating that James Murdoch would replace Chernin. Agency sources even claimed to me that it was a “done deal.” In terms of News Corp., the assumption has always been that the youngest son, who runs all of News Corp.’s international assets, would eventually take over. As Chernin himself liked to tell people, “I’m just warming the seat for a Murdoch.” It would also calm Wall Street concerns about successorship at News Corp., since Rupert Murdoch is 78 years old.

But News Corp. and Fox immediately shut down that speculation. I hear James simply isn’t ready: He’s a know-it-all who parties hearty and isn’t picking up the business or running it as he should.

Other scenarios abound, too: that Chernin won’t be replaced right away. That an insider like Chase Kerry, or an outsider like former Viacom CEO Tom Freston, would take on the caretaker role until James was ready. Or that the more successful division heads will now report directly to Rupert without a No. 2. Certainly among them would be Fox Filmed Entertainment’s chairmen/CEOs Tom Rothman and Jim Gianopulos, whose division has been highly profitable — unlike many other News Corp. units.

But having 16 News Corp. execs report to boss Murdoch sounds unworkable. “Even if Murdoch is able to consolidate/streamline the aforementioned reporting structure,” says media analyst Rich Greenfield of Pali Research, “we believe the company will need a second-in-command over the course of the next year.”

Greenfield noted that Murdoch in his memo acknowledged the inefficiencies at News Corp., “from systems that don’t talk to each other to incentives that struggle to capture the opportunity and aspiration of our total group. These obstacles are obvious to us all. There will be a streamlined management structure between our Los Angeles–based business units and the rest of the company.”

Whatever the heck that means.

Rupert back in 2006 did announce a succession plan in which all four of his children from his first and second marriages — James, Elisabeth, Lachlan and Prudence — would assume control over the family trust that controls News Corp. after he dies. (Under this plan, his two daughters by third wife Wendi Deng would not assume any control of the trust, nor would Deng have a voice in how News Corp. is run. His assets, however, would be divided equally among all six children.)

But Murdoch himself wouldn’t name an heir apparent at that time. Instead, he said: “If I go under a bus tomorrow, it will be the four of them [who] will have to decide which of the ones should lead them.”

Lachlan is an unlikely candidate because an internal family squabble led to a rift, and he left News Corp. in 2005 to return to Australia, where he is a businessman. Prudence, whose husband works for one of Rupert’s newspapers, isn’t considered a candidate. But many put money on second-oldest Elisabeth, who showed her sharpness when she kept telling U.S. executives that Simon Fuller’s 2001 British monster hit, Pop Idol, would do just as well in America. Fox TV honchos Sandy Grushow and Gail Berman shrugged her off. Finally, it took Elisabeth’s nagging Daddy, and a direct order from Rupert himself, to get American Idol launched. Since then, her U.K. indie production company, Shine, recently bought Ben Silverman’s Reveille Productions for around $200 million.

Elisabeth declined Rupert’s recent request that she rejoin News Corp., and turned down a seat on the board. But then she was in New York as an observer at the company’s first board meeting since the announcement that Chernin was stepping down.

Chernin, the 57-year-old mogul, joined News Corp. in 1989 and has served as prez/COO since October 1996, overseeing the diversified global media company, with operations in eight industry segments: filmed entertainment; television; cable-network programming; direct-broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. During his two decades with the company, Chernin headed both 20th Century Fox Filmed Entertainment and, earlier, the Fox Broadcasting Co.