News Corp president and COO Peter Chernin will leave after 12 years on the job, depriving the media conglomerate of its second-highest ranking executive as it deals with a severe decline in advertising revenue.

Chernin, 57, is a well-regarded Hollywood executive who has been a critical force in News Corp's success in movies and TV. But though he has been with the company for nearly 20 years, it was unlikely that Chernin would ever get more than a secondary role because Murdoch is expected to eventually hand the reins to his son James, 36.

News Corp Chief Executive Rupert Murdoch and Chernin had failed to reach an agreement on a new contract, so he will leave when his existing contract expires on June 30, the company said.

Chernin will start a Fox-based production company as well as other ventures, News Corp said.

Chernin will be under a six-year deal that calls for him to produce movies and TV shows for Fox, which must buy at least two movies a year from him, News Corp spokeswoman Julie Henderson said.

He would get a fee "at least as favorable as the most favorable agreement" that the studio has with other producers, she said.

It did not name a successor but said Murdoch, 77, would take over Chernin's supervision of the company's Fox movie and television operations.

"Peter is a valued colleague and a trusted friend," Murdoch said in a statement. "I will miss him. It is understandable that at this stage in his life he would want to do something new after serving News Corp and our shareholders so well for so long."

Chernin called the decision difficult, and said News Corp employees and Murdoch "would continue to thrive without me."

Speculation has been rife among media circles on where Chernin would go next. For a short time, some industry observers said he could be in the running for the next chief executive of Internet search company Yahoo Inc.

The resignation comes at a difficult time for News Corp, which has had a decline in advertising revenue at its papers and local TV stations, as well as falling DVD sales.

The markets are souring on Murdoch's persistence in holding on to his newspapers, including the New York Post.

At the company, Chernin was more focused on TV and Internet growth, such as the MySpace online social network.

Earlier this month, News Corp wrote down half the value of Wall Street Journal parent Dow Jones & Co, which it bought for $5.6 billion in 2007. It wrote down a total of $8.4 billion when it reported fiscal second-quarter results on Feb. 5.

News Corp also cut its fiscal 2009 operating income forecast to a decline of 30% versus its previous forecast for a fall in the mid-teen percentage range.