If you hadn’t already sussed out the gravity of the News of the World hacking story, take a moment to consider who joined Rupert Murdoch this weekend as the News Corp. chairman attempted to deal with the blowback.
Shoring up Murdoch in his London foray was second-in-command Chase Carey, the deputy chairman, president and COO of Rupert’s global media conglomerate and the most powerful executive on the company org chart who doesn’t also happen to bear the surname.
Carey’s reputation is that of a “cleaner”—think Harvey Keitel as Mr. Wolf in Tarantino’s Pulp Fiction, but with a Rollie Fingers mustache. He's also largely viewed as the man who could take over should the 80-year-old media baron step down, assuming a family member doesn't—or can't—take the job. (Given the magnitude of the crisis, that could be sooner than Murdoch partisans might have hoped.)
It was Carey who, by all reports, advised Murdoch to cut the tabloid loose in order to preserve News Corp.’s bid to takeover BSkyB, although the drastic measure may prove to be insufficient for an outraged Britain.
Unfortunately for Carey, some disgruntled investors aren’t letting him off the hook for the current crisis. On Monday, the executive was named as a co-defendant in a lawsuit brought by a group of institutional investors, who charged that “Carey’s long friendship with Murdoch, his tenure with the company and his exorbitant executive compensation prevent him from asserting independent judgment.”
For the fiscal year ended June 30, Carey received $26 million in compensation from News Corp.
An addendum to an earlier suit filed after News Corp. purchased Elisabeth Murdoch’s production company, Shine, for $673 million, the new motion also named James and Lachlan Murdoch as co-defendants, among other board members.
Putting this particular complaint aside, Carey remains the smart choice for a non-family successor, because he’s usually the smartest guy in the room at any News Corp. meeting.
He’s also a tough guy—some might even say a bully. Consider Carey’s reaction last October, when he grew weary of Cablevision’s intractable stance on its carriage negotiations with Fox’s broadcasting unit. In the midst of the 2010 World Series, Carey ordered Fox to yank its programming from Cablevision’s New York-Long Island-New Jersey footprint.
While both sides clamed victory, analysts said Fox walked away with a decisive win. At the time, Sanford C. Bernstein analyst Craig Moffett said that “there was never any ambiguity about who had all the financial leverage in the negotiation. Fox is too large, Cablevision is too small, and Fox’s sports programming is too indispensable.” Moffet added that once the prospect of regulatory intervention was dashed, “Cablevision was out of options.”
The Fox signal was restored in time for the opening pitch of Game 3.
When Carey speaks of his crusade to get operators to pay the right price for the company’s broadcast and cable programming, he typically uses the “fair value” trope. And as much as the big Fox broadcast deals have been wrapped up for the near term, Carey is now turning his attention to Fox News Channel, which commands just a fraction of the carriage fee that ESPN pulls in.
According to SNL Kagan estimates, ESPN takes in $4.40 per subscriber per month, for an annual total of $5.27 billion. FNC charges 70 cents a head for its feed; with a sub base of around 98.8 million households, the network’s overall affiliate haul adds up to around $829.9 million per year.
If Carey weren’t already revered for his role in launching Fox News and Fox Sports, or for his indomitable will at the negotiation table, it’s worth recalling how he managed to escape blame for what is arguably the worst deal Rupert Murdoch ever made, when News Corp. forked over $580 million to acquire MySpace. That deal closed when Carey was not in the News Corp. executive suite, having left to serve as the CEO of DirecTV.