Entertainment Industry

Category: Peter Chernin

CBS outlines post-CEO production deal with Leslie Moonves

MoonvesNAB2011

CBS Chief Executive Leslie Moonves has nearly three years remaining on his employment contract, and after that, he will be entitled to a lucrative CBS-financed television and movie production deal.

CBS and Moonves this week signed an agreement that sketches out Moonves' tentative producer agreement, according to a filing Friday with the Securities and Exchange Commission. 

The proposed arrangement borrows from a particularly rich production deal that former News Corp. President Peter Chernin exercised when he left the executive suite of Fox in 2009. Last week, private equity firm Providence Equity Partners invested $200 million in Chernin's company -- demonstrating the potential value of a company headed by one of the biggest names in the entertainment business.

But, unlike Chernin, Moonves may choose not to trade in his executive stripes to run a production company. The filing did not rule out the possibility that Moonves, 62, could extend his employment agreement with CBS, keeping him at the CEO controls beyond the current February 2015 expiration of his contract.

Last year, Moonves received compensation of $69.9 million for his CEO role, making him the highest-compensated executive in Hollywood.

Under the proposed contract, Moonves could trigger the production deal once he steps down. CBS would be required to finance the enterprise for at least four years and invest as much as $3 million a year to cover the operation's overhead for staffing and a development fund to buy projects.

CBS would be obligated to buy at least three TV series projects over the life of the deal. CBS would have to pay Moonves license fees for TV shows equal to the highest amount paid to other producers who do business with the network or with CBS Studios.

CBS also would be required to pay Moonves a guaranteed fee of $1.5 million a year.

"This fixed fee is offset and reduced dollar for dollar by all executive producing fees earned for shows ordered from Mr. Moonves," the agreement states. "Mr. Moonves will earn fees for each hour and half hour scripted series and for each alternative series that are accepted by CBS, subject to pre-defined terms and at rates generally consistent with those paid to other top producers with Mr. Moonves’ skill, experience and record of success."

CBS would also be required to pay Moonves a "penalty fee" if the network failed to order the agreed-upon number of TV shows.  Chernin's agreement with Fox contains a similar provision. 

Under the terms of the deal, CBS has a first look at all of his movie projects. If CBS gave its blessing to a movie, Moonves would receive a producer fee, plus "certain contingent compensation if, and only if, the film achieves profitability." He would be entitled to the same profit-sharing agreements that the company's current CBS Films extends to other producers.

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-- Meg James

Photo: Leslie Moonves, right, president and chief executive of CBS Corp. at the National Assn. of Broadcasters convention in 2011. Credit: Julie Jacobson / Associated Press

Peter Chernin unveils movies, TV shows -- but continues to stalk Silicon Valley

Silicon Valley holds a certain allure for Peter Chernin.

The former News Corp. president, who started his own entertainment company two years ago, has been investing in promising technology ventures that could upset the media status quo.

PeterChernin2011 Chernin has experience in this realm. An architect of the online video service Hulu -- whose popularity has created conflicts for traditional broadcast networks -- he advocated making TV shows available for free.

That has become an increasingly unpopular stand in companies like News Corp., which owns Hulu with media giants Walt Disney Co. and NBCUniversal.

More recently, Chernin has made a handful of investments in technology firms. His Santa Monica company, the Chernin Group, has taken stakes in Pandora Media Inc., the Internet radio provider; Fullscreen Inc., a digital media start-up; and Flipboard Inc., which makes software that displays photos and text posted on social networks as a digital magazine on the iPad.

Chernin also has been approached by investors weighing a possible acquisition of Yahoo Inc.

The investor group continues to be interested in buying the portal, which has been the No. 1 website in the U.S. for more than six months and operates the top sites in 12 publishing categories, including finance, news, sports and entertainment lifestyle.

Yahoo's current chief executive, Carol Bartz, has been criticized by investors for her overall business strategy.

As part of their plan, Chernin would play a leading role in Yahoo's management, according to two people familiar with the ongoing discussions. He could be chairman of the board or chief executive.

The former position would make it possible for him to continue running his film and television production operation, which is funded by News Corp.

That venture, Chernin Entertainment, is poised to premiere its first high-profile film and television projects.  "Rise of the Planet of the Apes," which hits theaters Aug. 5, will reprise the 1960s-era science fiction franchise that has been in development at News Corp.'s Fox movie studio for years. "Terra Nova," which is shaping up to be one of the most expensive TV shows ever, will land on the Fox network Sept. 26.

Hollywood is watching to see whether Chernin, 60, will deliver an equally powerful encore to his 12-year tenure overseeing the film, television and digital businesses of Rupert Murdoch’s sprawling media conglomerate News Corp. Chernin spent two decades working for Murdoch.

-- Dawn C. Chmielewski, Ben Fritz and Meg James

Photo of Peter Chernin; Credit: Paul Buck / EPA

Latest in MGM drama: Len Blavatnik is out and Peter Chernin isn't interested

In the seemingly never-ending drama that is MGM, one of the near-bankrupt studio's would-be white knights, billionaire Len Blavatnik, has withdrawn his bid to salvage the company, a person close to the situation confirmed Friday.

The person said Blavatnik had given MGM a deadline to accept his offer to restructure its huge debt load and infuse new capital to keep the struggling studio alive, but that the deadline had passed without a response from MGM, so he took it off the table. News of Blavatnik backing away from the auction was first reported by Reuters news service.

Blavatnik's holding company, Access Industries, was one of several parties, including News Corp. and Qualia Capital, offering to help restructure MGM's $3.7-billion debt and provide an infusion of cash to enable the studio to continue operating and producing new movies.

Meanwhile, MGM is expected to get a fifth extension next week on its interest payments due May 14 as its lenders and bond holders continue to weigh proposed stand-alone plans as well as a $1.5-billion bid by Time Warner Inc. to buy the studio. A person close to Time Warner said MGM had not approached the media company, parent of Warner Bros., about sweetening its offer, which some stakeholders view as too low.

Some news outlets, including Bloomberg.com, are reporting that MGM's steering committee has met with various industry executives including former News Corp. president Peter Chernin for advice and about potentially running MGM. People close to Chernin, who has a lucrative movie and television production deal at News Corp.'s Fox studio, say he has zero interest in running MGM.

-- Claudia Eller

Chernin Entertainment: Not your daddy's media company

Team Chernin does not want you to think that the executive who spent three decades in television and film is just another "old media" dude.

Peter Chernin is also eager to spend money in digital entertainment as he bulks up his new company, Chernin Entertainment, according to people close to the former Fox executive. On Tuesday, Company Town reported that Chernin recently hired three young business development executives with MBAs to help line up acquisitions, possibly including a cable television channel. That post triggered a flurry of phone calls and e-mails saying that the former News Corp. president and co-architect of popular video website Hulu was no less interested in digital media.

Chernin's mini media empire would include digital media, TV channels and a movie studio, people familiar with his plans have said. Chernin kicked the tires of  Metro-Goldwyn-Mayer and he once expressed interest in acquiring Universal Pictures from its soon-to-be owner Comcast, but Comcast wasn't interested in selling.

Chernin's newly hired business executives -- former Goldman Sachs banker Jesse Jacobs, Jason Bergsman and Scott Bromley -- seem most interested in digital media. Bergsman, who has an MBA from Harvard, also worked at Goldman Sachs before joining the Walt Disney Company. Before joining Chernin in January, he was a director for digital media at NBC Universal. Bromley, who last year received his MBA from the Stanford Graduate School of Business, also worked at Disney before spending two years at venture capital firms.

There is "lots of talk about 'digital,' gaming, 'next generation' TV [and] international," said one person familiar with the conversations who asked not be identified because he was not authorized to discuss the group's plans.

-- Meg James

Chernin hires group of MBAs to scout out acquisitions

Peter Chernin is on the hunt.

Eight months after leaving the News Corp. executive suite, Chernin has been putting together an A-list team to help him run his new company -- Chernin Entertainment.  Last year he hired two former NBC Universal executives, Katherine Pope and Dylan Clark, to manage his TV production and movie units. They since have been busy preparing development slates.

Chernin In the last few weeks, Chernin has hired three business development executives, including former Goldman Sachs banker Jesse Jacobs, to scout out possible acquisitions. 

Chernin "is in the process of figuring out how best to take advantage of the many interesting opportunities that he is faced with," said one person close to him who did not want to be identified discussing his plans. "The people he has hired are very smart and well-equipped to help him do that."

Chernin already is working on a deal to buy a cable channel, according to one well-placed person, who would not disclose which channel was in the sights of the longtime Fox executive. 

But there are not a lot of cable channels on the block. There is the Gospel Music Channel, but that one doesn't exactly have Chernin written all over it.  What about Ovation TV, the independent channel dedicated to the arts, or the Tennis Channel? Both would be for sale at the right price, according to people in the know. News Corp. for months has been in discussions about a sale of Fuel channel to Viacom. But Chernin seems a little late to that party.

He could be interested in G-4, the Comcast-owned network, available in 66 million homes, geared toward geeks and video gamers -- basically men ages 34 and younger. But, according to sources, Comcast has zero interest in selling the channel -- even to Chernin, who served as an advisor to Comcast last year when the Philadelphia company was preparing its bid for NBC Universal. Comcast is betting it will be able to grow the channel after acquiring NBC Universal and its marketing firepower.

That leaves Fuse, the music network owned by MSG Media, a division of Madison Square Garden.  Fuse, which bills itself as the place "where music lives," is already available in 60 million homes -- about half the homes in the country with TVs.  And that's a respectable number for an ambitious mogul who is looking to build a company. Chernin could revamp the channel into a general-interest network.

Chernin has millions of dollars at the ready when he goes shopping.  He is planning to work with Providence Equity Partners or some other private equity firm to scoop up a valuable asset, according to these people. His plan is to put together a mini-media company complete with a film production studio and several cable networks.

If he is looking for a film library, some are on the block.  Disney is trying to unload Miramax, and Metro-Goldwyn-Mayer is in need of a new owner. Chernin already has sniffed around MGM, according to one source, but he didn't immediately whip out a checkbook.

"Any time an interesting asset comes on the market, of course, if you are an entrepreneur like Peter, you are going to take a look," one person said. "But I don't know if he's targeting anything in particular right now."

Or maybe he's just not talking about it.

-- Meg James

Photo of Peter Chernin by Scott Eells; Bloomberg News


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