Chernin might leave News Corp.

New Corp.’s Peter Chernin is wrestling over whether to surrender one of the biggest jobs in entertainment.

For the last 12 years, Chernin has been president and chief operating officer of News Corp. and helped his boss, Chief Executive Rupert Murdoch, reshape the global media empire. But at 57, he’s not sure whether to extend his contract for an additional two or three years, or embark on another, less certain, chapter in his career.

Executives within News Corp. say they aren’t sure whether Chernin will stay.

Last week, when asked during an earnings conference call with investors and analysts to characterize the status of his contract talks, Chernin initially demurred, then allowed that they were “constructive.” Murdoch quickly jumped in.

“I would characterize them as constructive and friendly,” Murdoch said.

Keeping Chernin is a priority for News Corp. as it tries to weather the economic storm roiling every media company. People within News Corp. say Murdoch values Chernin because he has been key to the company’s smooth operations and has brought stability at a crucial time. But Chernin is not interested in signing another five-year contract, which expires in June, according to people close to him.

Instead, Chernin has told friends that if he’s going to start something new, now is the time -- before he turns 60. Others, however, interpret his Hamlet-like equivocation as a cagey bargaining ploy.

Chernin declined to comment on the negotiations. But people close to him believe that he will eventually sign a two- to three-year deal.

His decision may be tempered by new realities. The business climate has dramatically changed since he signed his last deal four years ago. There are few if any high-level openings at comparable companies. Investment money, which could back him in a new venture, has dried up. And by all accounts he relishes his job.

Once thought of as a narrowly focused Hollywood executive, Chernin has broadly expanded his expertise. In recent years he’s focused on emerging technologies and the international marketplace. He championed News Corp.’s acquisition of social networking site MySpace and joined with rival NBC Universal to launch Hulu, an online video service where users can watch network shows and movies. He played a pivotal role in contract talks with the directors and writers unions. And outside News Corp., Chernin has been active in combating malaria and involved in fundraising for Democrats.

“He is very skilled and knowledgeable of the affairs of the company, and it appears that he has been instrumental to their success,” said Harold Vogel, a media analyst. “But it’s difficult to bargain strongly in this environment.”

Given the state of the economy, it may be an awkward time for News Corp. to lose Chernin. The company’s stock is trading near record lows, closing Thursday at $7.61 a share and down 63% this year. In a recent report, Merrill Lynch media analyst Jessica Reif Cohen cited Chernin’s possible exit as a risk factor for the company’s shares.

Murdoch and Chernin have had at least two dinners together in the last month, one in New York and the other in Los Angeles, to discuss his future. The details haven’t left the table, but the succession question has become like a parlor game for many inside News Corp.

Murdoch views the global media giant -- whose interests span television, movies, newspapers and Internet holdings -- as a family business. He has said that he would like his children eventually to take over, with this caveat from an interview with Newsweek: “They all have to prove themselves first.”

Initially, the focus fell on his eldest son, Lachlan, as the leading family member to succeed him. But in recent years, speculation has centered on Murdoch’s second son, James, who is running the British satellite-television operation, British Sky Broadcasting Group, as the heir apparent to succeed his 77-year-old father.

People who know James Murdoch describe him as steely and smart, much in the mold of his father. But just last week, News Corp. took a $420-million write-down on its investment in German pay-TV company Premiere, which James Murdoch had championed earlier this year. Subsequently, the German service has been exposed for inflating its subscriber numbers, which caused the stock to plummet and triggered the write-down. However, News Corp. has hardly soured on its investment and may be waiting to gain control of the company for less money.

Meanwhile, his second daughter, Elisabeth Murdoch, has proved herself to be a savvy entrepreneur. She has spent the last eight years assembling the largest independent TV production firm in Britain, and this year expanded into the U.S. by acquiring the TV program production firm Reveille from NBC Entertainment co-Chairman Ben Silverman.

Nearly a decade ago, Murdoch brought in Lachlan to work closely with Chernin. But Lachlan left the company’s management ranks after losing a power struggle and moved his family to Australia, where he launched his own company, Illyria, a private investment firm.

If Chernin does reach a new contract, however, the recession might make it hard for him to receive a richer deal than his current one. Under terms of that pact, Chernin receives a base salary of not less than $3.8 million a year and is eligible for bonus payments of as much as $25 million, based on the performance of the company, according to News Corp.’s proxy statement released last month.

For the fiscal year ended in June, Chernin’s total compensation package was $28.8 million, making him better compensated than even Murdoch, who controls roughly 40% of News Corp.’s stock.

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meg.james@latimes.com

dawn.chmielewski@latimes.com