03.13.09

Hollywood Stunned as Murdoch Shakes Up His Fox Network

The Daily Beast's Kim Masters on the surprise removal of Peter Liguori as chairman of Fox Broadcast—and his replacement with Peter Rice, the man behind Slumdog and Little Miss Sunshine.

It was a rare pleasure on Thursday to call some of Hollywood’s most plugged-in players and hear them express undisguised drop-dead shock at all the high-level changes that Rupert Murdoch has wrought in his News Corp. entertainment empire.

“Holy shit,” exclaimed the head of one of the biggest talent agencies upon learning of all the recent upheaval at the company. That pretty much summed up the sentiment all around town.

Sources say the long knives may also be out for entertainment president and ex-NBCer Kevin Reilly, who has apparently clashed with prickly Preston Beckman.

The recent departure of Murdoch’s number two, Peter Chernin, seems to have tipped the dominoes at the media giant. As predicted here last week, the two co-chairmen of Fox’s film studio, Jim Gianopulos and Tom Rothman, have been promoted to run all “Los Angeles based creative production units.” That means they add the company’s television-production operation to their portfolio.

But that’s not the stunner. On Thursday, Peter Liguori, the chairman of Fox Broadcasting, was unceremoniously axed after three years at the network. His surprise replacement is Peter Rice—the smooth and very successful head of the Fox Searchlight art-house label. The unexpected—and impressively unleaked—announcement took Hollywood by storm since Rice entirely lacks television experience (but not ambition).

Rice, 42, is a smart and well-regarded Brit who managed to turn out a string of massive hits— Napoleon Dynamite, Little Miss Sunshine, Slumdog Millionaire—at a unit that was founded to make smaller movies for a specialized audience.

The fact that he was awarded the network job has led many of the industry’s best tea leaf readers to conclude that Rice is in line to ascend to even greater heights. He will have a chance to learn television before making the next upward move, which would follow the script written by Chernin during his long tenure at the company.

“Peter Rice is going to hunker down and learn a new business,” says a prominent producer. And then this observer, not normally given to hyperbole, adds, “He’s going to become rapidly the most powerful executive in Hollywood.”

That perception is shared by many inside the company. “Around here he’s called ‘The Chosen One,’” says one executive. “I’ve also heard ‘The Anointed.’”

Amazingly, even the most acid Hollywood observers have nothing bad to say about Rice (though if they did, you can be sure they’re not going to say it now). “There’s nobody with his record,” marvels a well-known producer, also not usually prone to hyperbole. His low-key style and impeccable manners hold obvious appeal for Murdoch, who is said to loathe Hollywood self-indulgence.

Former Fox studio chairman Bill Mechanic, who made no secret of his disdain for Chernin, has nothing but praise for Rice, who worked for him during his tenure at the studio. While Rice is now strongly associated with the “art-house” niche, Mechanic says he established himself as a strong executive in the main film division, where he was involved with such hits as X-Men and Moulin Rouge. “There was nothing niche-y” about that,” Mechanic says. He adds that when he put Rice in charge of Fox Searchlight, “I had to talk him into working in a niche.”

For the record, Mechanic believes the Hollywood chatterers are reading too much into Rice’s new job. Moving people around is not unusual for Murdoch. “He doesn’t think there’s anything that idiosyncratic about any business,” he says. But it's probable that the void left by Chernin's departure will make for interesting times at Fox for some time to come. Chernin presided over many executives who were good at their jobs but lacked diverse experience, observes a high-level insider, which “kept him very safe in his job and kept everybody from climbing all over each other.”

His departure leaves a void in the company. Obviously a number of other people have come out ahead in this reorganization, notably Gianopulos and Rothman; and Tony Vinciquerra, who will be Rice’s boss at the network (at least on paper). Vinciquerra is a numbers-cruncher who has been running the cable networks and has now added the broadcast network to his portfolio. He has no background as a creative executive though he might be tempted to try it out now.

Obviously, the biggest loser is Liguori, who was thrown to the curb by Fox. But sources say the long knives may also be out for entertainment president Kevin Reilly, who recently left his job at NBC after a long bout of internecine warfare. Apparently Reilly has clashed with prickly Preston Beckman, who runs the network’s scheduling and who Murdoch literally keeps on speed-dial. Another insider says Mike Darnell, the feisty and successful head of “alternative programming” (like American Idol and Hell’s Kitchen), has battled with Reilly as well.

“Kevin’s done a good job but he still hasn’t pulled out a ratings monster,” says a Fox insider. “Every development executive is only as good as the shows they develop. Dollhouse, (which Reilly had been a big supporter of) hasn’t done very well. Kevin was the one who wanted Joss Whedon.”

Reilly has held his job at Fox for only eighteen months, during which he had to contend with the writer’s strike. Nasty, brutish and short—that is the life of a network president.

While succession issues at News Corp. troubled Wall Street even before Chernin’s abrupt departure, the 78-year old Murdoch seems willing to leave the number two job at News Corp. vacant for the moment. Directly reporting to him now are Gianopulos and Rothman; Vinciquerra; Fox Interactive chief Peter Levinsohn; and Roger Ailes, who oversees the Fox News Channel and local Fox television stations across the country. And what of Murdoch's 36-year-old son James, currently overseeing operations in Europe and Asia? Rumors that he would be called in to take Chernin’s job have proved unfounded—at least for now. “I think Rupert’s going to keep him in Europe for a while,” says a well-placed Fox executive. “And I think James wants to stay there.”

Kim Masters is the host of The Business, public radio's weekly show about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.