With Chernin Out At News Corp, What Happens To FIM?

Peter Chernin, the long-time president and COO of News Corp, is leaving the company after protracted negotiations over his contract could not be resolved. Chernin’s salary was $28.8 million in the last fiscal year, which was $1.3 million more than even Rupert Murdoch’s take-home pay. Chernin helped Murdoch build and oversee his vast media empire over the past 20 years, and his departure no doubt will raise all sorts of questions about the future of the company. He will be leaving when his current contract expires on June 30.

For instance, what will happen to Fox Interactive Media (FIM)? This particular corner of the Murdoch empire is where News Corp keeps all of its Web businesses: MySpace, Photobucket, IGN, Scout, Chernin was its biggest supporter and internal sponsor. Peter Levinshon, the leader of FIM, was considered to be within Chernin’s camp. Although Chernin and Murdoch worked hand-in-hand, they are also very much opposites and a competitive rivalry always existed between the two. News Corp executives often identify with one boss or the other. MySpace CEO Chris DeWolfe, for instance, is considered a Murdoch guy.

With Chernin gone, perhaps this is as good a time as any to take another look at FIM and what purpose it serves. Its original purpose was almost as an internal M&A fund for Internet startups. But now those businesses have grown up. Other than MySpace, which contributes the vast majority of FIM’s revenues and profits, it is not really clear what the point of FIM is. Photobucket could just as easily be part of MySpace. And some of the other businesses could be integrated into other operating units, or sold off. The overhead of running FIM with all of those expensive lieutenants could be reduced as well. Investors would certainly like to see MySpace broken out as a separate business, instead of having to back out estimates of its performance based on FIM numbers as a whole.

Complicating matters is that the employment contracts for MySpace founders DeWolfe and Tom Anderson are up for renewal later this year (each one reportedly makes $15 million a year). Would DeWolfe want to broaden his control to new fiefdoms within News Corp, or would he try to avoid taking on what appear to be deadweight businesses? Or maybe FIM just remains as it is: an anachronism within News Corp.

(Photo by What Counts).