Chernin: No payoff in 'dumb money'

Decline of outside financing may help film market, he says

NEW YORK -- News Corp. president and COO Peter Chernin said Tuesday that the drying up of outside financing for movies is a good thing for Hollywood.

In recent years, too much "dumb money" has helped produce too much bad product, leading to a cluttered market, he argued at the Merrill Lynch Media Fall Preview conference in Los Angeles. Wall Street -- including private-equity groups and other investors -- has bankrolled films produced by News Corp. and many other entertainment industry players in recent years.

Chernin and CBS Corp. CEO Leslie Moonves on Tuesday also underlined the importance of owning TV stations despite current weakness in the local TV advertising market. Both said that while they could sell single TV stations they like owning the local assets, especially where they have duopolies, and expect the local ad market to rebound.

"Critical mass is important" to News Corp.'s broad approach to the TV business, which not only includes running stations but also creating and monetizing shows and launching cable franchises, Chernin said.

"Local business has remained very important," said Moonves, predicting "a lot of growth" over the next five years despite this year's sluggishness. "This year is as bad as it's going to get," he suggested.

Moonves also was bullish on network TV's new season, citing the networks being back at "full strength" with the WGA strike behind them.

"A lot of people watched the Olympics, a lot of people watched the Super Bowl," Moonves said. "There's no place to get 24 million people a week watching 'CSI.' ... Network is still the only game in town where you can aggregate a big audience."

It's certainly proving to be a strong season financially, with most of the $9 billion-plus committed for network primetime advertising converted to orders for the fourth quarter. Moonves said that despite the worsening economy, the national ad business has yet to be affected.

Paul J. Gough in New York contributed to this report.