Executive Changes Likely at DirecTV

Rupert Murdoch wants one of his key lieutenants to run DirecTV, the satellite TV provider that News Corp. hopes to control by the end of the year, according to sources close to the situation.

Murdoch’s top choice for the job is Mitchell Stern, the chairman and chief executive of News Corp.’s highly profitable Fox Television Stations group, the sources say. These sources caution that a contract hasn’t been signed by Stern, a temperamental executive whose current employment agreement expires next month.

Under this scenario, Murdoch’s oldest son, Lachlan, whom Stern has been grooming for the last several years, would take a more active roll in day- to-day operations at Fox, according to News Corp. sources. That would elevate the profile of 32-year-old Lachlan, who has largely concentrated on the company’s newspaper operations, including the New York Post.

Fox generates more profit than any other News Corp. operation.

At DirecTV, Stern would replace Roxanne Austin, who is credited with dramatically improving DirecTV’s performance since taking over as president in mid-2001. During the third quarter, DirecTV beat rival EchoStar Communications Corp. in subscriber growth for the first time in more than a year. Austin is under contract until the News Corp. purchase is completed.

Murdoch, News Corp.’s chairman, and other executives had insisted they had no plans to change DirecTV’s top management team. Yet speculation about Austin’s replacement has been rampant.

Neither News Corp. nor DirecTV would comment.

News Corp. is expected to receive federal approval within the next month to purchase a 34% stake in Hughes Electronics Corp., the El Segundo-based parent of DirecTV that is owned by General Motors Corp. The stake would give News Corp. virtual control of the nation’s satellite TV leader, fulfilling Murdoch’s dream of reaching every corner of the world with satellite television services. The United States has been a gaping hole in his strategy.

Stern would be News Corp.’s first appointment at DirecTV.

He would report to Chase Carey, a former News Corp. chief operating officer. Carey, a longtime troubleshooter and deal maker for Murdoch, was designated chief executive of Hughes after the deal was struck this year. DirecTV Chairman Eddy Hartenstein has been slated to become vice chairman.

Rupert Murdoch’s younger son, James, was a rumored candidate before becoming chief executive this month of News Corp.’s BSkyB, Britain’s dominant pay TV provider. Tony Ball, the 30-year-old Murdoch’s predecessor at BSkyB, also was seen as a contender.

Stern is among Murdoch’s most trusted executives and reported to Carey when he was News Corp.’s chief operating officer. Stern took the station group from one of the worst performers in the industry to one of the best. He joined Fox as chief financial officer of the station group in 1986, after spending eight years at CBS. From 1990 to 1992, he ran Fox’s KTTV-TV Channel 11 in Los Angeles and then became COO of the entire Fox station group.

He was instrumental in two of News Corp.’s biggest acquisitions. One was the purchase of New World stations from financier Ron Perelman. The other was the purchase of Chris-Craft Industries, the owner of UPN’s largest station affiliates. That deal was crucial because it gave Fox cost-efficient duopolies -- two stations -- in several large markets, including New York and Los Angeles.

As head of the most profitable News Corp. group, Stern had wide-ranging influence at the company. But his abrasive and cantankerous style made him a controversial figure within the television industry as well as News Corp.

Many company sources say that temperament could serve DirecTV well in its battles with programmers and cable rivals. And they predict that his financial savvy could help turn DirecTV around: Despite recent successes, it remains an unprofitable operation that will require big investments over the next several years.

“If I were going to start a new business, the person I’d turn to first is Mitch -- he’s a tremendous logical thinker, understands the numbers, and if you throw ideas at him he’s good at picking out the best ones,” said Greg Nathanson, a retired television executive who promoted Stern into an operating role when the two worked at Fox. “He is so funny and sarcastic, he should be a talk radio host.”