Peter Chernin: The secret formula for media domination
Watching News Corp.'s Peter Chernin hold forth on "Charlie Rose" last night was like watching Jim Brooks talk about comedy or David Mamet talk about drama--it was a master class tutorial on the art of being a consummate media executive. For years, while most studios, networks and record companies have fought a series of pitched battles against the digital revolution, News Corp., with Chernin at the lead, has been quietly embracing the new world, encouraging entrepreneurial businesses and always figuring out a way to make more money. (To get a sense of where Chernin's head is at, read this account of his "Innovate or Die" speech from last fall at the Royal Television Society in Cambridge.)
Rose doesn't always ask the toughest questions, but this was one of those rare opportunities to hear a brilliant media mind dissecting big decisions and anticipating future events. As always, Chernin came loaded with mind-boggling facts and figures, most of them serving as supporting evidence in his belief in the astounding mass appeal of the Internet. One example: The home page of MySpace has a bigger audience than "American Idol," the biggest hit show on network TV.
Chernin also relived past traumas, including his greenlighting "Titanic," which, before it became a blockbuster for the ages, was viewed as a debacle. Or as he explained, it was a film that "cost $110 million and then went $105 million over budget. Most people thought I was not only the stupidest person in Hollywood; I think most people thought I was the stupidest person in the history of Hollywood."
PBS doesn't have any video up yet, but here are a few highlights of the discussion:
On the Internet: Chernin says that News Corp, like most companies, initially missed the boat. "We messed it up," he admits. But after seeing broadband penetration rates reach 50%, the company sensed that the Web would become a platform for video distribution. So when Fox's Web experts came to Chernin in 2005 and said they had identified three properties worth acquiring, saying he should buy one of them, Chernin responded: "Let's not buy one of them. Let's buy all of them." Hence the purchase of MySpace and IGN Entertainment. (He didn't say whether they got the third one, nor did Rose ask.)
On making money from the Internet: MySpace, Chernin says, now represents, in any given month, 10% to 12% of all page views on the Internet. It will do just under $1 billion in revenues this year. But its real value lies in its ability to facilitate targeted advertising. As Chernin put it: "By having scrubbed people's profile pages, we can hyper-target thousands of different advertising categories."
On movies: Film, he says, is a "remarkably resilient form of content. It's not going away. If anything, it's getting bigger and bigger." The Fox strategy is to "either be doing big events--and will be willing to pay appropriately. Or do niche specialized films." The point being to make movies that "are a No. 1 choice to somebody, whether kids or moms or anyone."
On the digital revolution's impact on quality: "In a world of infinite choice, mediocrity is death. Why would you want to go see something mediocre? What we should avoid is anything that feels bland or mediocre. The fact that the marketplace has rejected mediocrity is the best news that's ever happened to anyone working on creative projects."
On the actors strike: "It's a source of enormous frustration to us right now." Chernin said the studios have made their "last and final offer," complaining that SAG expects to get a better deal than either the DGA or the WGA. He argues: "We can't repudiate the deals we made with other [guilds], nor do the difficult economic times justify a better deal for anyone else. It's hard for me to understand why a deal that's good enough for key, key creative partners--the writers, the directors and the 40% of the actors represented by AFTRA--isn't good enough for SAG."
On News Corp.'s recipe for success: "If you look at our company, most of the senior executives came up through the creative side of their businesses. That's the hardest part to run. Ultimately, if the creative product is great, you're going to be doing just fine. If the creative product is lousy, you can have all the greatest business people in the world and you're still going to be toast."
Photo of Peter Chernin by Chris Carlson / Associated Press