The Man Behind Rupert's Roll

Peter Chernin's TV production executives were already in his Twentieth Century Fox office when he arrived for a June 8 meeting. In his affable style, the CEO of Fox Group quickly got down to business. Chernin sought cuts in the $1 billion budget for "Ally McBeal," "Dharma & Greg" and the rest of the record 30 prime-time series the Fox Group produces. "We can't live with these numbers," said the man who wanted the "Titanic" set quickly dismantled after filming, partly so the movie's overspending director couldn't reshoot any more scenes. Just then Rupert Murdoch, whose News Corp. controls Fox, appeared at the office door. "Peter, may I see you outside?" Murdoch asked softly. So close are the two men that the aside could have been about anything. Maybe Murdoch briefed Chernin on how he had spent that day divorcing Anna, his wife of 32 years. Maybe it was to invite Chernin to his wedding 17 days later to Wendi Deng, 32, aboard his yacht in New York Harbor (Chernin came). Or perhaps it was only a routine chat on Chernin's pending trip to Germany, where he's replicating the Murdoch strategy that helped make the Fox network a huge success in the United States. "They confer on a minute-to-minute basis," says a top Murdoch executive.

At the age of 68, Rupert Murdoch has become a lion in winter, and Peter Chernin is his lord-in-waiting. Chernin is also the man Murdoch now expects to run his company--at least until the media titan's children are ready. Murdoch, the controversial visionary who transformed the media business worldwide, insists he's not slowing down. Piece by piece, he continues to build his global empire even as his personal life has come to resemble one of his own prime-time dramas. There's romance, marital discord and ambitious kids--Lachlan, 27; James, 26; Elisabeth, 31--who are constantly depicted as sibling rivals for corporate power. Murdoch's relationship with Deng, who resigned last fall as an executive in Murdoch's Asian satellite-TV business, has also drawn the kind of tangy headlines his tabloid papers have long inflicted on others. Recently, his British and Australian publishing rivals have been serving up mischievous accounts about a "Viagra-chomping Murdoch" and his "smoochy cruise" with Deng around the Mediterranean.

Yet through all the tumult, Murdoch's company has only prospered. Its stock has surged 34 percent this year, and throughout the industry News Corp. is admired for being a self-sufficient global media conglomerate. Its Fox Entertainment unit produces a stream of hit TV shows and movies--including six of the top 10 grossing films of all time--to distribute over News Corp.-owned satellite-TV operations, cable channels and broadcast outlets spread across five continents. "We reach people around the world, around the clock," says Chernin. Almost overnight, News Corp. has also turned into a powerhouse in sports and kids' programming. "They are 10 steps ahead of everyone," says Jessica Reif-Cohen, Merrill Lynch media analyst. And analysts agree that a pivotal factor in News Corp.'s success is Chernin, the company president who seems to possess a rare mastery of both the creative and the corporate sides of the business. "I guess it's from being a lit major from a long line of accountants," jokes the Berkeley-educated Chernin, who resembles a bespectacled Wayne Newton and is surely one of Hollywood's most unassuming top execs. Chernin's emerging star power also represents what many investors say is the missing piece in News Corp.'s Wall Street profile: a solid succession plan.

Murdoch's utter domination of his company, and his buccaneering ways, have long made investors nervous. His autocratic, rollicking management style worked while News Corp. was small; Murdoch used to think nothing of carrying multimillion-dollar certified checks in his pocket to pay for deals (once, while he was buying New York Magazine, he left one on the airport ticket counter). "He was always too busy moving on," says one of his executives, Anthea Disney. Starting with a single Australian newspaper in 1952, Murdoch for years was the irritating outsider who acted on his own, often using racy content--like the daily dose of bare-breasted women in Britain's Sun newspaper--to break into markets. He frequently succeeded by being swift and outmaneuvering entrenched media giants around the world--in 1994, for example, Murdoch stunned CBS by buying up eight of its affiliates for Fox in a single deal. But as News Corp. grew and itself became part of the media establishment--it is now a $13 billion company, while remaining about 30 percent owned by the family--Murdoch's go-it-alone style looked more and more to investors like a liability. The question of what might happen to News Corp. post-Rupert loomed larger. In 1994 the Australian-born tycoon brought in Lachlan, ultimately giving him control of the Australia operations and virtually designating him as his successor. Early this year Murdoch also added the U.S. publishing operations to Lachlan's portfolio. Currently, Lachlan is also in charge of a companywide cost-cutting effort. But the patriarch's broken marriage reignited reports of sibling rivalries. And concerns that his wife at the time, Anna, would seize half the family's wealth made some investors jittery, briefly depressing News Corp.'s stock.

Now Murdoch himself is sending clear signals that Chernin will be in charge for quite some time. In an interview with NEWSWEEK in his New York office, Murdoch acknowledged what many in the industry are whispering: Lachlan won't be ready any time soon. Nor will Elisabeth or James. "They all have to prove themselves first," Murdoch said. "Peter is very much senior to them." Asked about the management lineup if he were suddenly unable to lead News Corp., Murdoch paused. "I don't like contemplating my death. It would certainly be a matter for the board. I would think Peter would probably be the CEO. Maybe my older son [Lachlan] would become chairman. I don't know." Murdoch's mere engagement to Deng invited a frenzy of speculation about a future corporate role for her. But Murdoch hasn't disclosed any such plans to his inner circle. Murdoch insists he is "re-energized" by his new relationship, and says his heirs will have to "carry me out or push me out."

Lachlan himself, in an interview over lunch in News Corp.'s private dining room, plays down the idea of being heir apparent. Calling his parents' divorce "a real shock," he attributes the reports of family discord to his father's rivals. He and his siblings have plenty to do at News Corp., Lachlan says, and "don't have a lot of time to plot how to stab each other in the back." His brother James agrees. "If something terrible happened to my father," he says, "no one would have a problem if Peter were the successor. In my mind, Lachlan, Liz and I are on board with that. We have a structure in place that is really firing... What happens 10 and 15 years from now, who knows?" He and Elisabeth also have major jobs at News, though neither has joined Lachlan on the board. In Britain, Elisabeth helps run News Corp.'s 40 percent-owned BSkyB satellite-TV operation. From New York, James oversees News America Digital Publishing, the unit putting News Corp. onto the Internet and into e-commerce.