Company Town : Fox TV’s Chairman Takes Some Hits in His First Year

One thing clearly sets Fox Television Chairman Chase Carey apart from other Hollywood executives: He’s spent a lot of time scrumming.

As a former college rugby player at Colgate (a scrum is similar to a football huddle), the burly Carey picked up plenty of bruises along the way.

“He looks as if he’s taken a couple of hard hits and not noticed it,” says former Twentieth Century Fox studio chief Leonard Goldberg.

Lately, Carey and other Fox executives have been scrumming with federal regulators in Washington, taking some lumps--and giving some--on the regulatory playing field.

Fox was the target of a sweeping review of its ownership structure by the Federal Communications Commission, fueled in part by a bitter feud with NBC last fall over Fox’s aggressive snatching of affiliates from other networks.

NBC complained--and later withdrew--a complaint that Fox’s TV station ownership structure violated federal rules because Rupert Murdoch’s News Corp., the parent of Fox, is based in Australia.

Still, the FCC pressed its review, at a cost to Fox of $2 million in legal and other fees to argue an issue Fox executives thought was decided when the agency first looked at the Murdoch ownership issue back in the 1980s.

Although Fox appears to have dodged the bullet, Carey’s first year as head of the nation’s fourth broadcast network has been anything but smooth.

“It made me bitter and frustrated and angered by the process in general. It also annoyed me as a citizen. I don’t understand it,” says Carey in an uncharacteristically emotional tone.

Last week, Fox told the FCC it will revise the capital structure of its TV stations in a tax-free move. It also issued a list of arguments declaring that Fox operates in the public interest. The agency will review the plan.

For Carey, 40, the regulatory battle couldn’t have come at a worse time. He was barely getting used to running a network when the fight with NBC escalated, and he believes the episode has slowed Fox’s momentum.

In the last 18 months, Fox has snatched 12 affiliates away from the major networks by investing $500 million in New World Communications, took National Football League broadcasts from CBS and is scoring ratings hits with shows aimed at younger viewers such as “Melrose Place” and the cutting-edge “X-Files.”

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Carey, who joined Fox in 1988, took over the network last July when former chief Lucie Salhany left after clashing with Murdoch. Carey had been chief operating officer of Fox Inc., serving as Murdoch’s right-hand man in negotiating major deals. Because his experience has been largely at the corporate level, he lacked hands-on management of a division.

“I thought he could do it, and he wanted it. I wanted to see that he could run a company too,” Murdoch says.

Today, Carey is better known in Hollywood than he’s ever been, but he has yet to adopt the stereotypical lifestyle. He doesn’t even have a car phone, something fellow Fox executives say probably endears him to the frugal Murdoch. (Carey says he doesn’t have one because his half-hour commute is the only quiet time he has to himself.)

He spends little time on the party circuit. When most top entertainment executives head for homes in Malibu, Bel-Air and Brentwood, Carey heads home to a quiet suburban beach life with his family in the South Bay.

Some say his biggest accomplishment is surviving in one of Hollywood’s most Darwinian management systems. Murdoch is known as a demanding, hands-on boss, and a fair number of Fox TV alumni now work at competing ventures. Two of Murdoch’s former television executives, Salhany and Jamie Kellner, are leading start-up United Paramount Network and WB network, respectively.

Former Fox programmer Sandy Grushow is president of Tele-TV, a new interactive entertainment and information venture of Pacific Telesis, Nynex and Bell Atlantic. And Barry Diller, who helped Murdoch launch the network, is said to be in the hunt for a competing network.

Carey’s survival, friends say, is testimony to the degree Murdoch trusts him.

“He and Rupert obviously understand each other,” says film producer John Davis, who has known Carey since they attended Harvard Business School together.

A whiz with numbers, Carey is a serious executive who is the first to admit he’s not the operation’s creative force. That’s for programming chief John Matoian.

Carey’s one nod to quirkiness is his 1890s-style handlebar mustache, giving him a look that suggests he might break into “Sweet Adeline” any minute. And he occasionally shows flashes of self-deprecating humor. During one meeting with TV journalists, Carey referred to himself as “the other Chase,” a not-so-subtle reference to Fox’s late-night debacle with a talk show hosted by Chevy Chase.

Carey’s goals include broadening the network’s appeal from its core youth audience. Critics worry about the risk: that a broadening strategy might lose the audience that made Fox successful. Carey says the network won’t do anything to alienate younger viewers.

He also hopes to continue to lure affiliates into the Fox fold, using as a calling card Fox’s NFL broadcasts, which, despite a $350-million charge against earnings, are credited with boosting Fox’s status as a network.

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Holes remain for Fox, such as a major news operation and a late-night show. Some executives who know Carey suggest he might eventually succeed the 64-year-old Murdoch. One notes that he occupies an office on the Fox lot once used by Murdoch. And maybe it doesn’t hurt that Murdoch is involved in the rugby business.

But it’s a question no one really ponders, because few envision a day when Murdoch isn’t around calling the shots. Murdoch has said publicly that he hopes to remain News Corp. chief executive until well into the next century and expects one of his children to eventually take the helm.

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Back in the game: He didn’t get credit in any of the press releases, but Hollywood sources say former Drexel Burnham Lambert financier Michael Milken played an advisory role in MCI’s decision to invest up to $2 billion in Rupert Murdoch’s News Corp.

Milken, who has been battling prostate cancer since his release from prison for securities violations, knows both Murdoch and MCI Chief Executive Bert Roberts. He was especially instrumental in helping MCI get capital when it was starting out.

In a statement, a spokeswoman for News Corp. would say only that “Mr. Murdoch and Mr. Roberts know Mr. Milken and have been advised by him in the past. This transaction was negotiated between Mr. Murdoch and Mr. Roberts directly.”

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No longer on board: The annual meeting of shareholders in television producer Kushner-Locke will take place Wednesday in Santa Monica.

Unable to attend is O.J. Simpson, a director, who starred in Kushner-Locke’s series “1st and Ten.”

In a filing two weeks ago with the Securities and Exchange Commission, Kushner-Locke said, “In light of current circumstances, Mr. Simpson does not intend to stand for reelection as a director at the company’s next annual meeting of shareholders.”