Rich Greenfield at Pali Research has given up on News Corp, changing his “Buy” recommendation to “Sell” within the last 24 hours and dropping his stock target price to $5.50 from $12. The financial analyst was basing his very negative assessment on several issues:  fiscal (June) 2009 operating income expected to decline 30%, with TV profits down 80%, newspapers down over 50%, book publishing down 90%, and filmed entertainment down almost 30%. But I was most interested in what he said under the headline “Chernin Increasingly Likely To Leave”:

“We are increasingly fearful that the downturn in the global media businesses, with a increasing array of secular challenges (DVRs/TV and Maturing DVD market), will lead to Peter Chernin’s departure from News Corp. when his contract expires in the middle of 2009. While Chernin has not signaled his intent, we fear the longer time goes by, the less likely he is to renew his contract, particularly given how much News Corp senior executives would like Chernin to stay. Chernin’s departure would raise significant investor concern and could lead to other management changes at News Corp.”

Well that just upped Chernin’s quote by a few millions…

It’s always such a drama when the 57-year-old prez/COO’s contract is due. Last time, he negotiated an “out” clause in case he was offered something better, like the chairman or CEO job at Disney. This time around it’s been 4 months of uncertainty with the pact up in June. And Chernin wants less than another 5 years in the No. 2 slot – if at all. Plus, for the fiscal year ending in June, Chernin’s total compensation package was $28.8 million, making him better paid than Rupert Murdoch, who just happens to control roughly 40% of News Corps stock. But that’s still chump change considering the vast sums that Bob Iger and Les Moonves pocketed. (See my Bob Iger’s $30.6M Compensation Package and Moonves’ New CBS Contract Pays 200% Above Other CEOs.)

Until now, it’s been Hollywood fun and games speculating whether News Corp’s Hamlet will stay or go. Every week there’s another rumor about where Chernin is supposedly landing. The latest was to Apple, and before that to Yahoo, and before that to Washington DC to work in in the Obama adminstration. All of which have been denied officially or unofficially.

But clearly Chernin’s protracted contract negotiation is now affecting News Corp’s perception on Wall Street. After all, Murdoch’s age of 78 causes succession concern. And Chernin has one of the biggest jobs in infotainment. But his reluctance to step into the SAG-AMPTP mess and solve it, like he did during the writers strike, is being interpreted by the Hollywood community as Peter mentally having moved on. (Not only did writers chant, “Peter Chernin, What You Earnin’?” outside Fox, but at one rally a picketer carried a sign with Chernin’s home address and an invitation to spend Thanksgiving there.)

Understandable since the economic crisis is harrowing for him and every other Big Media boss whose business model depends on advertising. On the other hand, like so many other Teflon CEOs and COOs, chairmen and presidents, Chernin’s not blamed and could find another job. (Hell, even Time Warner’s Dick Parsons did after overseeing that company’s near-destruction. Quick, people, sell your stock in Citibank!)

Chernin can get away with waffling because he knows Murdoch won’t tell him to take a hike until the kids are ready to take over. As Chernin himself likes to tell people, “I’m just warming the seat for a Murdoch.” When and if that ever happens. ”James is not anxious to come back to the United States. And he has little experience with Hollywood. And it’s hard to imagine them pulling in Elisabeth or Lachlan,” one source points out to me. “I don’t even know if they’d replace Chernin. They might just give all the division heads more oversight.”

Editor-in-Chief Nikki Finke - tip her here.

Get Deadline news and alerts sent to your inbox.