Exclusive Interview: Peter Chernin

February 22, 2012 World Screen Top Stories

PREMIUM: Former president and COO of News Corp. and now head of his own production and media companies, Peter Chernin talks to World Screen about what makes a good TV show, the importance of Hulu and other digital platforms, and business opportunities in Asia.

 

WS: What do you look for in a script or in a pitch?
CHERNIN: I look for originality. I look for emotion. I look for something that feels emotionally satisfying. I care deeply about characters. I think that more than anything, if you look at the big hits, they tend to be generally quite original. They tend to feel unique and I think audiences look at them as something they haven’t seen before.
 
WS: Is that getting more and more difficult to do nowadays as there is more and more content out there?
CHERNIN: It’s always difficult to do! [Laughs] So many things have been done, so in that sense it’s more difficult. The other issue is talent, as they’re consistently spread more thinly. Someone was telling me that there are somewhere in the neighborhood of 130 scripted series on basic cable in the U.S. Ten years ago when we put The Shield on FX, I think there were ten scripted series. There’s been an increase of 100 series on basic cable in ten years.
 
WS: Good shows have a certain alchemy that is hard to describe. When do you usually see if a show has it? Is it usually seen in the pilot, does it come through a few episodes later?
CHERNIN: I guess I’d say in some ways these things are ongoing opportunities to get things wrong! [Laughs] It’s pretty easy to go wrong in a pilot and 80 percent of the pilots that are made never get on the air and clearly don’t achieve that alchemy. If you have a good pilot you are way ahead of the game and if you have a great pilot, it’s a pretty good start. That being said, there is a huge difference between a lot of these pilots, which are really designed to introduce the characters and the setting, and your ability to then go and tell 30, 50, 75, 100, 150, 200 stories around those characters. These series are in many regards ongoing opportunities to get things wrong. You start off early in the process with what you think is a great idea. You hopefully turn that into a great script, but you can get a script wrong and then it goes away. You can get a great script and cast it well and you cast one person wrong and it goes away. You hopefully hire the right director and shoot a great pilot. But if you can hire the right director and the music is off, or there is bad chemistry between two actors, you end up with a bad pilot and so on and so forth. So at each step you are trying to both overcome and avoid problems because, in general, at the point at which people go and pitch an idea to networks and studios, they are all great. Everybody is excited; there is nothing wrong with them yet. And the process begins to either expose the flaws or create its own flaws.
 
WS: Tell us about Terra Nova. What originally attracted you to the project?
CHERNIN: It appealed to me because I liked the concept a lot. I found the concept of people going back into the past to start over, particularly to a past where there are dinosaurs, to be unique and interesting. I believe that in a world in which it is really, really hard to launch network dramas, something of that size and scale becomes even more meaningful.
 
WS: Are we getting to the point where pay television is a better home for projects of this scale and this budget?
CHERNIN: I’m not sure I would say that. On television right now, only Game of Thrones is of this scale and this budget. The rest of the shows on HBO aren’t particularly distinguished by their scale and budget; they may or may not be distinguished by other things. Certainly that is true of Showtime. Showtime is not trying to distinguish itself by scale and budget. Kevin Reilly [FOX’s president of entertainment] has said that from his perspective, Terra Nova is profitable. Had it got higher ratings obviously it would have been more profitable, but it was still the number two drama on TV and a viable economic proposition. In some ways what is more relevant to this is international. The potential international appeal of a show like this, or lack thereof, is frankly much more meaningful in terms of being able to afford the budget than being on pay cable versus broadcast television.
 
WS: How do you make sure that your shows get exposed to the widest audience possible?
CHERNIN: Marketing is extraordinarily important. I do think one of the roles that a number of producers don’t pay enough attention to is the marketing of their shows and movies. It’s something I spend a lot of attention and time on because if I go through the trouble of making one of these shows or movies, I want to be sure it gets seen and it’s as successful as possible.
 
WS: Why should the studios support Hulu? What benefits does it offer?
CHERNIN: It involves a whole range of benefits. First and foremost, everything that has ever been made is available to be pirated. I am a huge believer that the really effective way to stop piracy is less about legal action than it is about making your goods available to consumers at an appropriate price in a convenient manner.
 
The ability to monetize content on Hulu is enormous. Anybody in their right mind who wants to watch an old episode will watch it on Hulu rather than pirate it. It’s free and it’s a better experience.
 
So first and foremost, you have to make things digitally available just to combat piracy.
 
Secondly, one of the things we looked at very closely when we started Hulu was we moved as a hedge against DVRs. So many viewers were recording shows on DVRs and in those days we weren’t getting any benefits in the ratings. So we felt we’d much rather have people watching things on Hulu than recording them on DVRs and getting no credit for it.
 
Third, the Hulu subscription service, Hulu Plus, has actually been quite successful and if I am a studio, which I am not right now, but if I were, I would feel very strongly that I want there to be multiple players in the digital distribution world. I wouldn’t want to live in a world where there is just Netflix. I happen to have a lot of respect for Netflix, but where the content community does very well is where there are multiple players distributing content.
 
WS: Is my perception correct that the studios are still uncomfortable with digital platforms?
CHERNIN: To be fair to them, it’s an extraordinarily complicated and challenging issue. If you are running one of those companies, you clearly want to protect your established business model and there is a balancing act you have to do: you want to protect your established business model but you don’t want to put your head in the sand and not pay attention to where things are going. At the same time, you also want to build new sources of revenue and you want to build new platforms, which you can own.
 
One of the things I always used to say when I was running News Corp. was that our job isn’t to protect things, because ultimately you can’t protect them. Our job is to do the best possible job we can in maximizing the amount of revenue we get out of the existing businesses. But at that same time we need to build new business models faster as the old ones may or may not decay.
 
It’s a very complex equation because we all have a pretty good poster boy for how not to do it, and that’s the music business. They did everything they could to avoid new business models and it’s taken away 50 to 60 percent of their business, probably on a permanent basis. That’s a pretty good cautionary tale—don’t ignore the new models. On the other hand, don’t commit suicide. These are very lucrative existing businesses and you certainly don’t want to encourage their demise. You have to be very close to consumers, you have to experiment and you have to look for ways that you think are likely to build new businesses.
 
WS: Tell me about some of the businesses you are building. What are you looking for?
CHERNIN: We have done two separate things. When I left News Corp. and I was thinking about what I wanted to do, I wanted to build a company that focuses on where growth is going to occur in the media business. I think that growth is going to occur in three areas: in premium content, in the developing world, particularly Asia, and in digital transition delivery platforms.
 
I had production deals [with Twentieth Century Fox] and started building out the production side of the company through premium content. I then established a company called CA Media to buy, build and create media assets in India, China and Indonesia.
 
I also started making a series of digital investments and they were all platforms that I feel have huge upside opportunities. We’ve made investments in four companies so far: Pandora, Flipboard, Tumblr and Full Screen.
 
Pandora is essentially the largest radio business in the country right now. It controls about 5 percent of the radio listening and is arguably the number one or number two mobile app. It was a really interesting way of looking at streaming distribution of product and also next-generation mobile content, which I think is a very, very important issue.
 
Flipboard is a next-generation content-delivery platform and you’re going to see a lot of people trying to copy it. It’s a way to deliver essentially print content in a much more elegant and much more user-friendly way. The notion that it is tied into your social graph and begins to push you content that your friends like is an innovation. And its elegance and beauty as a platform for advertising is really interesting.
 
Tumblr more than anything is a pure growth platform. It is personalized content, a sharing service and it’s a way for people to share blogs and re-blog them and re-send them to different friends, but it’s a different kind of content consumption.
 
We’ve also made an investment in a company called Full Screen, which was started by [George Strompolos], who had been head of all the content partnerships at YouTube. Full Screen is a way of aggregating the top content players on YouTube, a lot of whom are young people with millions and millions of hits on fairly cheep low-budget content, but interesting stuff that they are producing. So it’s a way of trying to play in this YouTube distribution platform.
 
WS: CA Media is looking at India. Are broadband and mobile two areas of big potential growth there?
CHERNIN: There are already some 600 million-plus mobile customers in India. That is already pretty big, but first 3G broadband and then 4G are about to be rolled out. There are about 125 million pay television customers in India and there is generally one television set per household. They have just announced a $60 tablet that they are going to start selling in India and $40 to students. What is the opportunity if you can deliver 4G signal to a $60 tablet for a country that has, on the one hand, 600 million mobile customers, but only about 125 million cable customers? That is a big opportunity. But I think there are enormous opportunities throughout the region.
 
WS: What feature film projects do you have coming up?
CHERNIN: We just finished a film called Parental Guidance. It’s a family comedy starring Billy Crystal and Bette Midler, which will come out at the end of the year. I have yet to see the cut, but the dailies were quite good. We just started a really exciting Tom Cruise movie for Universal called Oblivion. I have about 30 to 35 projects in various stages of development, and we hope to get another two or three of them greenlit to enter production this year.
 
WS: As many studios have somewhat of a reliance on sequels and franchises, is it more difficult to get an original idea at the movie theater?
CHERNIN: The economic pressures on big-budget movies are astonishing and it’s a lot less scary to do a sequel because you can gauge that there is clearly audience appeal, you know that people will have heard of it, etc. In that sense it’s understandable why studios want to make sequels. Conversely, if you look back over time, the big breakthrough movies are always wildly risky and wildly original. Avatar is the best example of that—an exceedingly risky move. To his credit, Jim Cameron is taking huge risks. He has a better track record than anybody and it becomes easy for a studio to bet on Jim Cameron. But who is the next Jim Cameron and how do you bet on that? These are issues you constantly have to grapple with.
 
WS: How has it been running your own company compared to working for a studio?
CHERNIN: It’s a lot smaller! [Laughs] There were somewhere between 5,000 and 10,000 employees at Fox and 50,000 at News Corp. So on the one hand you have these big systems and huge resources at your disposal and anytime you need something you just press a button and you call the legal department, or the facilities department, or the IT department and things get done for you. You have enormous seeming power, etc. But at the end of the day they are very similar jobs. These jobs are about creativity and strategy—creativity in terms of trying to find and attract the best people, identify good ideas, etc. And from a distribution perspective they are about being thoughtful and smart about the strategic opportunities. What do you want to do with a Hulu? How do you want to handle Netflix? What are the international opportunities? How do you grow an international cable business? How do you grow, in my case, an Asian business? The scale is different and the trappings are different. But I don’t think that the fundamental intellectual challenges are overwhelmingly different.
 
One of the things I always used to say to the people who worked for me was, if you think you are a buyer—because everybody differentiates between buyers and sellers—you are absolutely wrong. You real job is to be a salesman. Your real job is to go out and find the best talent, the best ideas and convince people that you offer the best place for them. Everybody is a seller in some ways. Everyone is hustling to find the best projects, the best materials, the best business ideas and the best business models.
 
WS: The important thing, are you still enjoying yourself?
CHERNIN: Yes, I’m actually enjoying myself a lot. I loved News Corp. I loved that job. I was treated extraordinarily well. I loved Rupert. I have nothing but wonderful thoughts and fondness about News Corp. I had been president of the company for 13 years and I wanted to try something new. I’m having a good time doing a whole set of different things.
 
WS: Anything in particular that you learned from Rupert that you carry through today or any lasting impression of him?
CHERNIN: First of all, I have hundreds of things that I learned from Rupert. I would say in general there is a constellation of things: being willing to take chances, willing to bet on your gut instincts, willing to be very aggressive at what you believe in, but those all revolve around the area of being bold, being determined. I worked hand in hand with Rupert for 20 years and they had an enormous impact on my life and career.