You gotta hand it to those geniuses over at the Googleplex, thinking up adorkable names for all their various plots and schemes.

And for its latest look-see of the Yahoo situation, it has revived an old one: “Project Porcupine,” presumably from the old joke about how you hug a porcupine.

Very carefully.

Or maybe you don’t hug it at all, which is why all the rumors about the search giant hooking up with some unnamed private equity firms have been so unclear and, well, hard to grab ahold of.

According to sources, there are three clear aspects of what is actually going on:

1. Interest in using Google’s vast cash hoard as part of an investment it would make in a deal — meaning the company was approached, which it is, often.

2. Desire of Google’s crafty Chief Business Officer Nikesh Arora to perhaps find a clever way to get ahold of Yahoo’s display inventory to add to Google’s own fast-growing DoubleClick display advertising subsidiary — meaning Arora has been making the rounds at Yahoo to gauge interest.

3. Pure enjoyment in messing with Microsoft execs — who are now allied with Yahoo via its Bing search technology — as well as getting up any price the software giant would have to fork over to be part of any consortium that will be cobbled together in what is sure to be a hopelessly complex deal.

Whether incoming or outgoing or just an early version of Mischief Night, any one of these options — while interesting to contemplate — is certainly fraught for Google.

Remember the trouble three years ago when Google tried to do a simple search-advertising partnership with Yahoo, in order to pull it out of the clutches of Microsoft?

That effort ended with a resounding oh-no-you-don’t by the Justice Department, which promised an antitrust lawsuit was awaiting such a move to bring together the No. 1 and No. 2 search services.

And if it was a no-no then, any formal relationship or even arm’s-length investment in Yahoo by Google would inevitably be more closely scrutinized this time around.

In fact, what I wrote in 2008 applies a dozen times more emphatically today:

“It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.”

Fast forward to today, after Google has already played a worrisome game of chicken with regulators over a number of acquisition deals — which makes trying to bring back Yahoogle akin to reaching for the third rail.

But that’s not what it’s going to do, in truth, because — even though Yahoo is still a tempting target — there is usually only one outcome to hugging a porcupine.

Ouch.

Later today, Google Executive Chairman Eric Schmidt will appear at the Senate Judiciary Committee’s antitrust subcommittee for hearings on whether Google is a search bully or not.

Schmidt, according to written testimony obtained by the Politico blog, will be trotting out the company’s longtime argument that its competitors are “only one click away” from taking Google down.

And, in what can only be described as a you’ve-got-to-be-kidding furthering of that meme, Schmidt will apparently claim that Microsoft’s much tinier Bing search service could catch and pass Google by next year.

Reads the testimony, according to Politico: “Microsoft’s Bing launched in June 2009 and has grown so rapidly that some commentators have speculated that it could overtake Google as early as 2012.”

Say what? Say ridonkulous! The Facebook worry, I get, but costing-Microsoft-a-billion-a-quarter Bing?

That’s because in the most recent market-share report from comScore, Google had 64.8 percent of the total, with Yahoo at 16.3 percent and Bing at 14.7 percent. Even combining the pair — who are currently in a search partnership — they still have less than half the share that Google has.

In any case, although the Google-as-imminently-threatened concept displays a lot of gumption, it’ll be interesting watching Schmidt try to sell it.

And also to see Google’s critics call foul.

After Schmidt appears, there will be a second panel, featuring Yelp CEO Jeremy Stoppelman; Jeffrey Katz, CEO of Nextag; and Tom Barnett, spokesman for FairSearch.org and counsel to Expedia.

Stoppelman, who almost sold his online reviews company to Google in late 2009, has since become a vocal detractor of the search giant’s methods.

In his testimony as well as exhibits, all posted below, Stoppelman paints a more dire picture of Google:

“When one company controls the market, it ultimately controls consumer choice. If competition really were just ‘one click away’ as Google suggests, why have they invested so heavily to be the default choice on web browsers and mobile phones? Clearly they are not taking any chances.”

Stay tuned for my liveblog at 11 am PT, as well as other AllThingsD coverage of the hearings.

9.21.11 Verbal Testimony _10am final_

9.21.11 Written Testimony _clean_

9.21.11 Exhibits

Earlier today, well-known digerati dude Robert Scoble posted on his social feed on Google+ that the search giant was working on a social and news reader.

“I heard from someone working with Google that Google is working on a Flipboard competitor for both Android and iPad,” posted Scoble. “My source says that the versions he’s seen so far are mind-blowing good.”

If blowing the minds of hot Silicon Valley start-up Flipboard and Facebook is the goal, then Scooby-Don’t's rumor is pretty spot-on.

According to numerous sources close to the situation, Google is indeed working on rolling out the new product, which is currently called Propeller.

Sources said Propeller is apparently one of a number of new socially focused announcements Google is prepping, including new apps. But the timing for their launch is unclear.

Here’s what is: Propeller is a souped-up version of similar reader apps such as Flipboard, AOL’s Editions, Yahoo’s Livestand, Zite (which was just bought by Time Warner’s CNN) and Pulse.

Facebook is also making social versions of publications available within its site. So, instead of just seeing a sidebar on a news site of what stories your friends liked, you’ll get a personalized and reformatted version of the latest news when you visit that publication’s page within Facebook.

All these apps are part of the drastically changing habits of media consumers, helping them better navigate numerous social and media feeds — such as Facebook and Twitter, as well as news sites and more — using handsome interfaces and touch technologies.

Flipboard is the most prominent and elegant of these offerings, available only on the Apple iPad. The company is working on an iPhone version, too.

Flipboard’s traction among elite users, along with its high-level design ethos and strong reviews, is why Google tried to buy the well-funded company last year, sources said.

But Flipboard — which is backed by some of tech’s biggest venture players, who have invested more than $60 million at a $200 million valuation — declined the kind offer.

At the time, sources said, Google told Flipboard execs that if it did not buy the start-up, it planned to do a version of its own.

Hence, after I heard about the product earlier this year, I dubbed it the Flipinator.

Propeller is probably a better name, I will admit.

It’s not clear what Google’s Propeller will include in the product, such as Facebook integration, since the pair of Silicon Valley behemoths have not been able to partner over data exchange.

Which is an understatement, I know.

But sources said it would be available on both Apple’s iPad and Google’s Android tablets.

In any case, stay tuned and thanks to Scoobs for the tip!

[Photo credit: This Noogler Propeller Hat -- which is given to all new Googlers -- is in the collection at the Computer History Museum, the gift of Marcin Wichary; the image is by Mark Richards.]

With the continuing negotiations between AOL and high-profile TechCrunch founder Michael Arrington likely to come to some conclusion soon, the big question remaining is whether he will appear at its flagship conference, TechCrunch Disrupt, which officially begins tomorrow.

Sources said that seems more likely than not, although the talks between AOL and Arrington are not resolved as yet and his appearance at the highly lucrative conference is part of a whole package.

But it seems unlikely that neither Arrington nor AOL CEO Tim Armstrong and content chief Arianna Huffington wants to damage TechCrunch Disrupt, which makes piles of moolah from sponsors and fees, attracts thousands of attendees, and where a plethora of promising start-ups compete with each other.

And, in fact, some of the slated speakers I have contacted have said that they have not been told of any changes in the program.

A hackathon of those entrepreneurs is now taking place before the main event, where well-known Silicon Valley players will be interviewed on stage by the staff of TechCrunch.

The conference is mostly run by TechCrunch exec Heather Harde, as well as the site’s leading editor Erick Schonfeld.

But, of course, TechCrunch Disrupt has starred Arrington, the larger-than-life blogger now turned venture capitalist.

That shift and how badly it was done is at the center of complex severance negotiations.

As I previously wrote, sources said the company has so far refused Arrington’s bold demand, posted on TechCrunch itself, to either give the popular tech news site “editorial independence” or sell it back to him.

As I wrote last week:

The situation between the popular tech blogger and top execs at the Internet company — which bought his site earlier this year — comes after a week of increasingly testy back and forth between them, after it was revealed that Arrington was starting his own $20 million venture fund called CrunchFund.

The move caused a media firestorm over the ethics and propriety of the move, which was followed by an ugly internal war at the company, with Arrington and TechCrunch staffers on one side and Armstrong and Huffington on the other.

(Full disclosure: Although no one cares what I think, I consider the deal appalling and wrote that it was a “giant, greedy Silicon Valley pig pile.” Now, it seems to be 56 percent piggier!)

After many confusing messages from AOL, Arrington was removed from his longtime job at TechCrunch and placed in its venture arm, after editorial objections from Huffington.

That had supposedly been the the plan until it all blew up, with reveleations about what the CrunchFund deal — which includes $10 million from AOL — meant to TechCrunch and its news gathering.

That seemed clear from a widely cited quote from CrunchFund investor and well-know Silicon Valley entrepreneur Reid Hoffman to me last week:

“TechCrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, CrunchFund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you had it: No one can afford to be out of the deal flow in these competitive times, even if it means cutting corners and using a tech news site as fodder.

Arrington obviously has another view of the deal he struck with Armstrong and, sources said, wants his powerful tech news platform back. He has been talking to many Silicon Valley power players about the situation, said sources.

More to come soon from this Silicon Valley soap opera. And, hopefully, it will be a happy — well, happy-ish — ending.

(Full disclosure: AllThingsD also runs conferences that could be construed as competitive to TechCrunch Disrupt, although we both we seem to do just fine. In addition, Walt Mossberg and I are getting along like peas and carrots, although we vigorously disagree over the humongous talent of Barry Manilow.)

Of course I have something to say about the news yesterday that AOL would be a key investor in a new early-stage venture fund being started by TechCrunch’s perpetually petulant editor Michael Arrington — with a big, fat and decidedly greasy assist from a panoply of Silicon Valley’s most powerful VC firms and angel investors.

Arrington has previously called me “chief whiner” — oooh, buuuurn, although fair enough, since I have compared him to an egomaniac turtle named Yertle in the past — about my nagging him over the importance of upholding standards of fairness and ethics in journalism.

So as not to let him down, let me begin the whining.

First, my initial reaction when I first heard about the deal: Ugh. Sigh. Hopelessly corrupt. Now 100 percent more icky! A giant, greedy, Silicon Valley pig pile.

I was upset.

By early evening, after my kids told me to chillax, my dark mood had changed to accept that the transaction — however profoundly distasteful to me — was part and parcel of the insidious log-rolling, back-scratching ecosystem that has happened in every other center of power in the universe since the beginning of time.

And so it goes in Silicon Valley.

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from start-ups and VCs in need of press, both exclusive access and information.

And now, inevitably, money.

This could have been a lot cleaner, of course, by Arrington simply resigning from TechCrunch, becoming a VC and perhaps starting a new blog where his agenda is much clearer, from which he could huff and puff away as he does with much entertaining gusto at real and (mostly) imagined slights.

There is certainly precedent for VCs blogging, including Fred Wilson, Brad Feld and Ben Horowitz. And, despite my criticisms about ethics, it is clear that Arrington is a talented writer whose unique voice would be even stronger if it was truly seen as separate from what has become a news organization.

But because of his obvious need to be the center of attention — requiring the ermine kingmaker mantle and foisting his patented I’m-here-to-tell-it-like-it-is attitude on us all — that appears to be impossible.

(By the way, I await Arrington’s usual inane rant about the fictional conflicts of interest related to my gay Google marriage anytime now in 3 … 2 … 1, always and purposefully leaving out the pertinent facts that I can only wed one person, get no financial benefit and am also a prominent critic of the scary search behemoth, while he can make a badillion questionable and grossly tangled investments.)

Personal annoyances aside, what’s most interesting here is the group of Silicon Valley power players who lined up to bow and scrape and then hand over a small pile of dough to the blogger who would be king.

They include: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures and Accel Partners, as well as individual investments from partners at Benchmark Capital and Andreessen Horowitz, entrepreneur Kevin Rose and DST Global’s Yuri Milner. And, of course, the inevitable Arrington BFF Ron Conway.

Holy googa mooga, that would be, well, everyone, except Ashton Kutcher and Justin Timberlake (who will surely appear soon enough).

As one person also pointed out to me, I don’t recall this many competing VCs investing in one company, let alone another venture fund.

It goes without saying that the reasons they all decided to jump in this fetid pool with abandon are quite varied, if all entirely compromised.

One investor told me — off the record, naturally — that he thought it would be an interesting experiment to see what happened and so he wanted in, especially since everyone else was doing it.

Another well-known VC said that there is no downside to being financially affiliated, especially in attracting talent to its start-ups, with Arrington and, by extension, TechCrunch.

The well-respected Reid Hoffman of Greylock was the only one brave enough to talk on the record, explaining the reasoning pretty clearly:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you have it: No one can afford to be out of the deal flow in these times, even if it means cutting corners.

While TechCrunch’s owner, AOL, said Arrington will no longer be managing editor, with only writing duties at the site he dominates and with no editorial control, Hoffman’s use of TechCrunch for CrunchFund was accurate, because in the eyes of many they are interchangeable.

That’s due to the fact that Arrington still breaks or is clearly the source for important stories on the site and, more importantly, is the big swinging dude who attracts all the eager entrepreneurs to the party. He is the fulcrum of that site, even as it has grown.

And so it will remain, I am guessing, no matter how much AOL insists it will not be so, because the easy questions pile up quickly:

Will Arrington keep doing what are clearly news stories, for example, even though he protesteth too much — as he did in the New York Times yesterday — that he is not a journalist?

And, if so, is it right for him to do so given his insider status, creating a nonparity of sourcing and crystal clear conflicts of interest?

Most of all, can he resist his palpable love of news-breaking and scoops, even if he gets them in ever more unseemly ways?

As if to make it all pretty, Arrington told reporters yesterday that he has put a clause in his limited partnership agreement so he can report on anything he likes, and in any way, about his investors and their companies, however confidential, except those he invests in.

O joyous day! Freedom of the press is preserved and our sacred First Amendment can breathe a sigh of relief, now that it is enshrined in an unholy blogger-VC LP agreement.

After pausing for a moment so that Thomas Jefferson and Edward R. Murrow can stop spinning in their graves, you can go down this road for many increasingly bumpy miles, which only becomes more twisted and confusing as it continues.

I finally talked to one investor in CrunchFund, who said simply and honestly: “It’s not that much money, so who cares?”

Indeed, who does care anymore about crossing what had long been very bright lines in journalism and, if you want to get all cosmic, in life?

Obviously, most of all, not AOL, or its CEO Tim Armstrong, or its head of content, Arianna Huffington. The pair, for whatever reason, decided to make a startling exception for Arrington from a rule that explicitly bars reporters at its media units from investing in the companies they cover.

That happened after he recently did a complete 180 from a previous decision to stop investing and jumped right back in, leaving Armstrong and Huffington to clean up the ethical mess.

They only made it worse, with their decision to throw journalism under the bus by letting Arrington do as he pleased, while touting how important it was for other content sites at AOL to remain more pure.

In the spirit of full disclosure, these kinds of ethical lapses are endemic these days in journalism. Case in point: The appalling phone-hacking controversy taking place at News Corp.’s News International unit in Britain.

While I cannot speak for Dow Jones, I can say that the behavior in another News Corp. property certainly takes its toll on those who adhere to higher standards at the company, especially when it comes to morale.

Thus, I can imagine how others feel at AOL — including those you-know-who-you-are silent ones at TechCrunch — who can’t and, more to the point, wouldn’t make the deals Arrington has been allowed to get away with.

It is not a good feeling, I can assure you.

And, while I have not spoken to her about it, I’d imagine that Huffington cannot be thrilled to be pushing for better journalism at AOL and trying to burnish her cred by hiring some top reporters, while also having to deal with this.

That’s okay, because Armstrong was perfectly willing to do the awkward pretzel-twist needed to explain away the controversial situation, also in an interview with the Times:

“TechCrunch is a different property and they have different standards. We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it.”

In this case, Tim, I am sorry to inform you that transparency is a complete canard and is more likely to end up covering up a lot more transgressions than it ever will reveal.

And, essentially and lazily sloughing it off by saying, “That’s just Mike being Mike,” is not going to cut it, at least not with me.

Not that any amount of tsk-tsking about it matters, I suppose, as Arrington finally gets his fervent Pinocchio-on-a-star wish to be a real-boy VC, can add yet another tainted buck to the pile of billions his venture pals already have, and just call it another typical day in Silicon Valley.

Still, when you are the designated whiner-in-chief, it is pretty much all one can do.

Vanity Fair magazine put out its high-profile “New Establishment” list of the top 50 people, who are “an innovative new breed of buccaneering visionaries, engineering prodigies, and entrepreneurs, who quite often sport hoodies, floppy hair, and backpacks.”

The hoodie part would be referring to Facebook CEO and co-founder Mark Zuckerberg, who topped the list — which is in the just-released October issue — for the second year in a row.

The Vanity Fair list was packed with Silicon Valley luminaries.

The No. 2 spot went to the hopelessly conjoined twins at Google, CEO Larry Page and his co-founder Sergey Brin. Amazon’s Jeff Bezos was No. 3, followed by newly born CEO Tim Cook and top product guy Jonathan Ive of Apple at No. 4, with Twitter creator and Square founder Jack Dorsey at No. 5.

Interestingly, super-VCs Mark Andreessen and Ben Horowitz clocked in this year at No. 6.

The digitally fast-forward Lady Gaga was the top woman on the list at No. 9, in front of “Harry Potter” author J. K. Rowling at No. 16.

And, clocking in at No. 40? Why, me and my partner-in-crime at AllThingsD, Walt Mossberg. He is apparently a “kingmaker” of tech and I do “juicy exclusives.”

That actually is pretty accurate. More importantly, we were ranked higher than Justin Timberlake and Ashton Kutcher. In other words: Mission accomplished!

We also beat the Angry Birds dudes at No. 49, whom my two kids would nonetheless have voted tops over their mom any day of the week and twice on Sunday.

In addition, Vanity Fair broke off a list of 25 “Powers That Be,” which is made up of a lot of longtime “New Establishment” folks, as well as another list called the “Hall of Fame.”

“These are the people who have shaped the world we live in today — and continue to wield enormous influence,” said Vanity Fair, which translates into dustier moguls.

Topping the powers-that-be, of course, is Apple’s co-founder and Chairman Steve Jobs. And outgone Google CEO and now Executive Chairman Eric Schmidt is now enshrined in the hall of fame.

As Walt and I head to a good table at the Minetta Tavern to meet the cool peeps for a celebratory drink, here is the official press releases from Vanity Fair:

FACEBOOK FOUNDER MARK ZUCKERBERG TOPS VANITY FAIR’S NEW ESTABLISHMENT LIST FOR THE SECOND YEAR IN A ROW

Sergey Brin and Larry Page Take No. 2 Spot, Lady Gaga Jumps to the Top 10 of Tech-Dominant List

NEW YORK, N.Y. — “The Age of Information gives way to a burgeoning Age of Technology,” announces Graydon Carter, remarking on the “seismic shift in interest and influence” that has occurred in the 17 years that Vanity Fair has been ranking America’s power players. The magazine’s 2011 New Establishment list identifies the top 50 of an innovative new breed of buccaneering visionaries, engineering prodigies, and entrepreneurs, who quite often sport hoodies, floppy hair, and backpacks.

Mark Zuckerberg, founder of the inescapable social-networking site Facebook, maintains his perch at the top of Vanity Fair’s 17th annual New Establishment List ranking for the second year in a row. With a possible I.P.O. on the horizon by 2012, which could value the company anywhere between $50 and $100 billion, Facebook has enough clout to worry even the unshakable Google. Zuckerberg is still the youngest person ever to top the list.

Sergey Brin and Larry Page, co-founders of Google, are in the No. 2 spot this year, closing in on Zuckerberg as they jump up one spot, from No. 3 in 2010. Eric Schmidt, who appeared on the list last year with the duo, has since been pushed out of the C.E.O’s office, replaced by Page. Despite reports of an anti-trust investigation, Google has been setting its sites on Facebook by concentrating on strategic initiatives, such as engineering social-networking features.

Rounding out the top five are Jeff Bezos, of Amazon, at No. 3, Tim Cook and Jonathan Ive, of Apple, at No. 4, and Twitter and Square founder Jack Dorsey, at No. 5.

Lady Gaga makes an appearance for the second year in a row. Coming in at No. 9, she is the highest-ranking woman on the list, in front of J. K. Rowling at No. 16, Sheryl Sandberg, of Facebook, at No. 26, Angela Ahrendts with Christopher Bailey, of Burberry, at No. 30, Natalie Massenet at No. 32, and Kara Swisher with Walt Mossberg at No. 40. At 25 years old, Gaga is also the youngest person on the list — not a surprise for someone whose fans managed to crash Amazon’s servers in their desperation to download her third album.

Youthful energy is spread throughout this year’s list with 15 members under the age of 40, including Zuckerberg, Brin and Page, Dorsey, Lady Gaga, Andrew Mason, Sean Parker, Ryan Kavanaugh, Jeremy Stoppelman, Ashton Kutcher, Dennis Crowley, Daniel Ek, Mikael Hed and Niklas Hed, and Justin Timberlake.

There are 14 billionaires on the list: Zuckerberg, Brin and Page, Bezos, Mark Pincus, Michael Moritz, J. K. Rowling, Jim Breyer, Reid Hoffman, Herbert Allen III, Yuri Milner, Robin Li, Parker, and Peter Thiel.

Five member of the New Establishment are actively involved in space exploration, including Brin, Elon Musk, Bezos, Thiel, and Dennis Crowley. Eight of the New Establishment nominees can count themselves members of the ever growing Stanford Mafia; they include Brin, Page, Reed Hastings, Jim Breyer, Hoffman, Musk, Thiel, and John Hennessy.

The New Establishment, Vanity Fair’s annual ranking of the top leaders of our time, is made up of owners, creators, buyers, thinkers, and innovators — the movers and shakers in the worlds of technology, media, business, politics, entertainment, and fashion. These men and women are the taste-makers and trendsetters, opinion formers and agenda creators, not to mention empire builders. Entry into the ranks of Vanity Fair’s list is based on a number of factors: wealth, influence, and philanthropy, as well as such intangibles as vision and the x factor.

The October issue of Vanity Fair will be on newsstands in New York and L.A. on September 1, and nationally and on the iPad September 6.

THE VANITY FAIR NEW ESTABLISHMENT

1. Mark Zuckerberg, Facebook
2. Sergey Brin and Larry Page, Google
3. Jeff Bezos, Amazon
4. Tim Cook and Jonathan Ive, Apple
5. Jack Dorsey, Square, Twitter
6. Marc Andreessen and Ben Horowitz, Andreessen Horowitz
7. Reed Hastings, Netflix
8. John Lasseter, Pixar, Walt Disney Animation Studios
9. Lady Gaga, singer
10. Dan Doctoroff, Bloomberg L.P.
11. Dick Costolo, Twitter
12. Mark Pincus, Zynga
13. Jim Breyer, Accel Partners
14. Tim Burton, Johnny Depp, and Graham King, Movies
15. Michael Moritz, Sequoia Capital
16. J. K. Rowling, Harry Potter
17. Trey Parker and Matt Stone, South Park
18. Reid Hoffman, Greylock Partners, LinkedIn
19. Herb Allen III, Allen & Co.
20. Judd Apatow, Apatow Productions
21. Jay-Z, Roc Nation
22. Todd Phillips, Green Hat Films
23. Yuri Milner, DST Global
24. J. J. Abrams, writer, director, producer
25. Robin Li, Baidu
26. Sheryl Sandberg, Facebook
27. Andrew Mason, Groupon
28. Jon Stewart and Stephen Colbert, television
29. Mark Wahlberg and Stephen Levinson, Leverage
30. Angela Ahrendts and Christopher Bailey, Burberry
31. Elon Musk, Tesla Motors, Space X
32. Natalie Massenet, Net-a-Porter Group
33. Paul Graham, Y Combinator
34. Sean Parker, entrepreneur
35. Fred Wilson, Union Square Ventures, Flatiron Partners
36. Peter Thiel, Founders Fund, Clarium Capital Management
37. Peter Jackson, Wingnut Films
38. Ryan Kavanaugh, Relativity Media
39. Mike Allen, Politico
40. Walt Mossberg and Kara Swisher, All Things D
41. John Hennessy, Stanford University
42. Jeremy Stoppelman, Yelp
43. Ashton Kutcher, actor, investor
44. Tyler Perry, director, producer, writer, actor
45. Dennis Crowley, Foursquare
46. Kevin Ryan, Gilt Groupe
47. Daniel Ek, Spotify
48. Henry Blodget, Business Insider
49. Mikael Hed, Niklas Hed, and Peter Vesterbacka, Rovio
50. Justin Timberlake, singer, actor

STEVE JOBS HOLDS THE TOP SPOT ON VANITY FAIR’S LIST OF THE POWERS THAT BE

Embattled News Corp. Chairman Rupert Murdoch in the Top 5

NEW YORK, N.Y. — This year Vanity Fair inaugurates a list of the Powers That Be. These are the people who have shaped the world we live in today — and continue to wield enormous influence. Many are longtime New Establishment members, and their destinies are intertwined with the members of this year’s New Establishment.

Steve Jobs, of Apple, holds the top spot on the list of the Powers That Be. Since Jobs took control of the company 14 years ago, the stock’s share price has risen more than 6,500 percent. At the height of the debt crisis in late July, Apple had more cash on hand than the U.S. government.

Bernard Arnault, of luxury-goods company LVMH, ranks in the No. 2 spot. As an overseer of countless enduring luxury brands, Arnault has left his mark on the industry. Last year he spent $2 billion to accumulate a 20 percent stake in family-controlled but publicly traded Hermès.

Mayor Michael Bloomberg is No.3 on this year’s list while News Corporation chairman Rupert Murdoch comes in at No. 4. The tumultuous News of the World scandals this year have shaken the media baron, but also shown his staying power in the face of just about anything. Brian Roberts and Steve Burke, of Comcast, NBCUniversal, who recently acquired the U.S. media rights to the Olympic Games through 2020, are No. 5.

Jill Abramson is the highest-ranking woman out of six on the list, at No. 9. She is followed by Angelina Jolie with Brad Pitt at No. 11, Sue Naegle with Richard Plepler and Michael Lombardo at No. 15, Anne Sweeney with George Bodenheimer at No. 22, Bonnie Hammer at No. 24, and Arianna Huffington with Tim Armstrong at No. 25.

Because some power is permanent, Vanity Fair nominates a number of regulars to the Hall of Fame this year. Warren Buffett, of Berkshire Hathaway, joins Barry Diller and Diane von Furstenberg, Tom Ford, actor Tom Hanks, and designer Karl Lagerfeld. Network impresario Oprah Winfrey, Jeffrey Katzenberg, of DreamWorks Animation, and talk-show host Charlie Rose all make the ranks as well.

The October issue of Vanity Fair will be on newsstands in New York and L.A. on September 1, and nationally and on the iPad September 6.

THE POWERS THAT BE

1. Steve Jobs, Apple
2. Bernard Arnault, LVMH
3. Michael Bloomberg, mayor, New York City
4. Rupert Murdoch, News Corporation
5. Brian Roberts and Steve Burke, Comcast, NBCUniversal
6. François-Henri Pinault, PPR
7. Bob Iger, Walt Disney Company
8. Jeffrey Bewkes, Time Warner
9. Jill Abramson, The New York Times
10. Steve Ballmer, Microsoft
11. Brad Pitt and Angelina Jolie, movies, philanthropy
12. Diego Della Valle, Tod’s
13. Roman Abramovich, investments
14. Mickey Drexler, J. Crew
15. Richard Plepler, Sue Naegle, and Michael Lombardo, HBO
16. Larry Gagosian, Gagosian Gallery
17. Harvey and Bob Weinstein, the Weinstein Company
18. Marc Jacobs, designer
19. Lorne Michaels, Saturday Night Live
20. David Zaslav, Discovery Communications
21. Jean Pigozzi, investments, art
22. George Bodenheimer and Anne Sweeney, Disney Media Networks
23. Vivi Nevo, NV Investments
24. Bonnie Hammer, NBCU Cable Entertainment and Cable Studios
25. Tim Armstrong and Arianna Huffington, AOL Huffington Post Media Group

HALL OF FAME

Edgar Bronfman Jr., Warner Music Group
Warren Buffett, Berkshire Hathaway
Ron Conway, angel investor
Philippe Dauman, Viacom
Barry Diller and Diane von Furstenberg, IAC, DVF
John Doerr, Kleiner Perkins Caufield & Byers
Larry Ellison, Oracle Corporation
Tom Ford, designer/filmmaker
Ted Forstmann, IMG Worldwide
Tom Freston, Firefly3
Brian Grazer and Ron Howard, Imagine Entertainment
Tom Hanks, actor
Jeffrey Katzenberg, DreamWorks Animation
Vinod Khosla, Khosla Ventures
Karl Lagerfeld, Chanel
Ralph Lauren, Polo Ralph Lauren
John Malone, Liberty Media
Ron Meyer, Universal Studios
Leslie Moonves, CBS
Ronald Perelman, MacAndrews and Forbes
Miuccia Prada, Prada
Charlie Rose, talk-show host
Eric Schmidt, Google
Terry Semel, investor
Oprah Winfrey, OWN

(Full disclosure: Readers who look closely at the list will notice that all things ATD senior editor Peter Kafka is listed as a contributor. This is true! Also true: Peter wrote biographical entries for several people on the list, but has zero input on its composition. He tells us he had no idea that we were being considered for inclusion, and we believe him. He also says that had he been asked for his opinion, he would have voted for us, his bosses, to be included. We also believe that.)

AllThingsD has undergone a lot of changes in the past year that Walt and I are truly proud of, and today we are posting together about changes to social media on the site.

Social media, especially Twitter, has been a major part of the AllThingsD operation since our earliest days. We have always encouraged our writers to be active on the medium — something we continue to do.

That’s why we are launching 15 new Twitter accounts that break out our coverage into categories, as on our site, and also around specialized topics we know our audience follows closely.

Now, in addition to following the main @AllThingsD Twitter account for up-to-the-second updates, our readers can follow accounts that feature only our stories about Apple, venture capital, personnel changes or mobile, to name a few. We hope readers will customize their experience so that AllThingsD can be as useful a resource as possible.

In addition to the Twitter accounts, we also have newly refreshed Facebook pages, and we’ve enabled LinkedIn sharing of our articles as part of becoming one of its recommended news sources.

You can have a look at all the new social features at our brand-new social subscribe page.

We’re adding all of these features while maintaining respect for the personal privacy and data of our readers. Therefore, all social media implementations on AllThingsD require the reader to take an explicit action to share.

You might think this level of disclosure is overboard, but we think it’s the right thing to do.

We’ve also brought on Drake Martinet to be our social media editor.

As social as Walt and I can be, Drake will be your point of contact for questions, concerns and comments about social media and its use on AllThingsD.

If you want more specifics about what we are up to, I encourage you to read Drake’s post on the social media changes. He covers some of the tools and services we are using, as well as explaining a little more about the thinking that went into our new social strategy.

If you have any questions, we encourage you to tweet Drake (he’s @withDrake on Twitter) or reach him at his email here.

Please also see our new features here by clicking this button:

See the new features

Thanks,

Kara and Walt

After Google’s legal head David Drummond let forth with a blog post about how Microsoft and Apple had formed an evil patent cabal against the search giant, the software giant’s PR head Frank Shaw was not having any of it.

In his post, Drummond had claimed the pair ganged up on Google and had not offered to partner over key former Novell patents, in an attempt to stop the growth of its Android mobile operating system.

Except not, according to an email that Shaw posted on Twitter from Google’s legal counsel Kent Walker to Microsoft’s legal head Brad Smith.

Tweeted Shaw: “Free advice for David Drummond – next time check with Kent Walker before you blog. :)”

It was followed by the image of the email, in which Walker seemed to turn down an offer of a partnership over the patents. “After talking with people here, it sounds as though for various reasons a joint bid wouldn’t be advisable for us on this one.”

Smith also piled on on Twitter, noting: “Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.”

Wax on, Google!

Here’s the image of the email:

Please see this disclosure related to me and Google.

It was just supposed to be a three-hour tour, um, quick sale process!

But, like a storm-tossed ship looking for any safe harbor, the Myspace sale is still chugging along, with a deal that continues to be tossed around amongst low-paying and new lesser known buyers who are now in the $20 million to $30 million range, said sources close to the situation.

The price, said others, could go as high as $35 million, but it’s far cry from the $100 million that News Corp. had been aiming for.

As part of the deal, sources said the News Corp. unit will be making significant cuts in staff and costs — up to 50 percent or more — all contingent on the purchaser. The staff cuts are, obviously, directly related to the transaction and the winning bidder.

The media giant might also retain a small minority stake.

The two names — Specific Media and Golden Gate Capital — that are now in the forefront for an acquisition deal that News Corp. hopes to complete by Thursday, its fiscal year end, have not been among the acquirers mentioned previously in the myriad of reports about the deal.

Specific Media — a large, if lesser known, advertising network — seems to be in the lead, said sources. It has been around for a half-decade and has been funded by Francisco Partners.

Golden Gate Capital is a private equity firm with $9 billion under management, which has mostly specialized in turning around companies. It has never invested in a consumer Internet company.

Both companies, sources said, will focus Myspace on music, although it is not clear which rights the site has with music labels will transfer to a new owner.

Until last week, the preferred deal for Myspace centered on an investor group that included Activision CEO Bobby Kotick and in which News Corp. (which also owns this Web site) would retain a large minority ownership stake.

But sources said there were some transactional and legal complexities that made it less attractive and News Corp. opened up the deal talks with others again last week.

Golden Capital and Specific Media emerged most aggressively, although there still remain other interested parties, sources close to the situation said, among them another investor group that includes Myspace co-founder Tom Anderson, one its other co-founder Chris DeWolfe is part of and also interest from the Criterion Capital Partners, which bought AOL’s Bebo social networking site on the cheap a year ago.

But it’s now come down to time constraints and an agreement that can be reached before the end of this month, which is also the end of the media giant’s fiscal year.

In other words, let’s get Myspace off the books for 2012!

How it came to this will likely be the focus of many a business school case. After a spectacular start, Myspace has fallen on hard times both in terms of traffic and advertising revenues.

That’s why the music-focused social networking site has not sat exactly in the catbird’s seat in terms of negotiating leverage.

While there were some rumors last week that News Corp. would close Myspace down, the sale to a small player and the layoffs are the likely outcome.

While that’s cold comfort to its employees, it’s about the best Myspace can hope for right now.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

Back in April of 2009, like all the rest of the parts of the Chinese Internet giant Alibaba Group, its Alipay unit was listed this way on its Web site: “Alipay is wholly owned by Alibaba Group.”

And right now, describing the online payments platform? (my italics): “Alipay is an affiliate of Alibaba Group.”

Memo to Yahoo CEO Carol Bartz: You might have noticed that critical change in Alipay’s corporate status, which happened last August, given the company you lead owns 43 percent of the Alibaba Group.

More to the point, Alipay accounted for $1.7 billion of Yahoo’s valuation.

Not surprisingly, Yahoo shares are down more than six percent in after-hours trading, likely in reaction to an unusual statement by Yahoo yesterday, in which the company said it had no idea until March 31 that Alibaba CEO Jack Ma had transferred ownership of the Alipay unit to a separate entity.

Sources said that apparently happened in a letter from Alibaba to Yahoo’s accounting department. Since then, the company said it has been trying to figure it all out.

Said Yahoo:

On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011.

Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation.

Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.

Translation: Alibaba’s Ma–who cites upcoming new rules about foreign ownership from People’s Bank of China related to operating its payment business–just snookered us and we need to play dumb until we decide whether a lawsuit will be one disaster too many for our much-beleaguered investors.

Really pissed off shareholders is more like it–BoomTown has been on the receiving end of an explosive series of calls from Yahoo’s investors today asking a variety of questions.

They include:

1. How could Alibaba have reported its results with Alipay consolidated in, even though it was a separate entity since last year? And does that spell trouble for Yahoo, since it used those numbers in its own regulatory filings in the U.S.?

2. How could Ma initiate such a transaction without approval from shareholders and its board, as Yahoo claims?

3. In any case, why weren’t Yahoo execs paying more attention to the swirling changes related to foreign ownership in China, especially since Yahoo co-founder Jerry Yang is on the Alibaba board, anticipating that there could be real problems ahead?

4. Why did Yahoo execs not tell shareholders about the situation immediately or even at its April earnings call? Or perhaps before David Einhorn’s hedge fund Greenlight Capital hedge fund took a big position in Yahoo last week, specifically noting the value of the company’s Asian assets as highly attractive.

5. Does this move mean that those pretty Chinese assets Yahoo has touted are not so pretty after all, given that these kinds of things can happen there?

6. Should U.S. investors remove themselves from that Chinese market, given that these kinds of things can happen there?

7. Is Bartz’s extraordinarily tense personal relationship with Ma a big part of the problem, creating a distasteful public feud over issues better left to quiet backroom negotiations?

There will be plenty more, of course, especially around Yahoo’s disclosures to investors.

Yahoo execs will argue that it did disclose in the proper manner from a filing point of view and that it did not reveal the fissure so as not to put its negotiations with Alibaba over the situation at risk.

But–especially given the myriad of continued missteps by Bartz that have worked investors’ last nerve–that probably is not going to fly.

In fact, that irked sentiment will surely be on display at Yahoo’s upcoming investor day on May 25.

Yahoo had hoped to show off its new team of execs and talk about some legitimate momentum the company is making.

Now, it will doubtlessly all be about China and what happened there.

So, Bartz has to have a better line than a take on a Hollywood classic: “Forget it, Wall Street. It’s China.”

Maybe so, but it’s her problem to solve now.

And here’s my favorite version of that line:

Would it surprise you to know that BoomTown doesn’t really care anymore if TechCrunch editor Michael Arrington sidelines as a blogger while he makes investments in tech companies his tech news site covers?

In a post yesterday, titled “An Update to My Investment Policy,” Arrington made his seemingly cogent arguments that plenty of disclosure made it all “fine,” took one of his typical look-at-me swipes at anyone who dared to question this logic (apparently, we’re crappy “direct” competitors, so we haters have no standing to comment!) and presumably went on his merry investing way.

While I was first irked–because it was an appalling show to many of us cranky standards-insisting whiners–I soon realized Arrington had made a good argument about who he is and, frankly, who he has always been.

In other words, it’s a kind of there-he-goes-again thing, vaguely icky but hardly surprising and completely genuine.

Meanwhile, his new boss, AOL content head Arianna Huffington, pointed me to his post in an email.

When I asked her for an on-the-record comment, as usual, she politely and quickly complied, writing in support of Arrington:

“TechCrunch is committed to transparency. Michael has written about the guidelines he follows–that he rarely writes about companies in which he is an investor, and that, when he does, he clearly discloses this information. The same rules apply when TechCrunch’s writers cover these companies.”

Hold the phone.

Because while I kind of understand where Arrington is coming from, what I don’t understand is how this kind of convenient and on-the-fly rule-making can govern a much larger company whose strongly and repeatedly stated goal by Huffington herself is to create quality journalism.

Since I believed Huffington–whom I like very much as an Internet figure and as a friend–I was confused at what the rules for the whole of AOL content were now.

That’s why I sent her a long new list of questions to answer, which are:

1) What are, if any, the ethical guidelines about making investments for the editorial staff at HuffPo media group properties?

2) Since Arrington now seems to have permission to do so from you, can other editors at AOL properties do the same–that is, make very adjacent investments to what their site covers, as long as they disclose it? For example, can an editor who runs the entertainment site make investments in entertainment companies she/he has coverage responsibility over? (By the way, did you give him permission to make these investments? Did he ask?)

3) Is there anyone who polices what is fair coverage of competitors–i.e. companies competing with companies your editors invest in?

4) If an editor makes investments in a company and someone who works for them writes about that company, does that editor have to recuse himself from the story? Is that even possible?

5) Since you just fired someone for what you called an ethical breach–asking freelancers to work for free and also seemingly defending an attempt to curry favor with an advertiser/client–why is this not an ethical breach?

I had a lot more questions, still unanswered by Huffington, but you can see where this is going.

Simply put, does AOL, which is touting itself as a 21st-century media company, need to have 21st-century rules of the road? Or perhaps not so much?

UPDATE: Now, it is a real clown circus at AOL, with the company declaring that editorial personnel cannot make investments, except Arrington!

“As a rule, in order to avoid conflicts of interests, AOL Huffington Post Media Group editors, writers, and reporters may not have a financial interest in a company or industry that they regularly cover,” AOL said in a statement to Business Insider today, even though I nicely asked for a comment on the issue yesterday. “Arrington operates from a unique position.”

And how! Where do I get such a faboo ethical hall pass from Content Principal Huffington?

I suppose I should go all slouching-towards-Bethlehem here, and wring my hands over this unusual ruling, but what’s the use?

As you might have read: “The best lack all conviction, while the worst are full of passionate intensity.”

How did this all start, especially since I feel like this ridiculous tempest in a Silicon Valley teapot over Arrington’s investment-making might actually be my fault a little bit?

Here’s why:

On Tuesday night around 10 pm (just when I start getting revved up), I wrote a testy email to Arrington’s bosses at AOL–Huffington and CEO Tim Armstrong–as well as the Internet portal’s sharp PR head, asking for a response about what seemed to me to be a glaring conflict of interest at TechCrunch related to new investment activity by Arrington and the site’s coverage of those particular companies he had invested in.

It was all disclosed, of course, but it still felt, as I said, icky.

And, given the recent and loudly stated goal of promoting quality journalism by Huffington–including the recent dismissal of AOL’s Moviefone site editor over what the company considered ethical lapses–it seemed pertinent to ask.

Mostly because I don’t think they actually knew much–if at all–about Arrington’s increasing investing action. Armstrong said as much in an email to me, and Huffington assured me they were going to check it out tout de suite.

But rather than the answer I was waiting on, up popped Arrington’s missive yesterday, which I assume came after his bosses asked for some info on this.

In it, he explained his controversial decision to go back into investing again, in what is clearly a more significant manner.

It was a practice he had abandoned years earlier, apparently after being pecked by detractors for it.

But, dear readers, no more! Let Arrington be Arrington!

And that seems to be a talented blogger with a flare for the dramatic, with a clearly sharply-honed news nose and sassy writing skills, but a scribe who much prefers to be a playah than just an observer and chronicler of that play.

And, after more reflection, I thought: Well, maybe it is a better idea for Arrington to go play with all the boys in Silicon Valley, which would probably be more fun than taking flack for lack of traditional journalistic ethics he never ascribed to in the first place.

I once jokingly nicknamed Arrington Yertle the Turtle after the Dr. Seuss book on one dubious king of one small pond in Sala-Ma-Sond, after he went particularly nuts on the topic of news-embargo breaking.

That diatribe on how he saw news rules–which is to say, there aren’t any that bind him–was vintage Arrington, too. And, after reading his latest post, I suddenly realized that it’s pointless to give a turtle a hard time for not being a fish.

But Huffington is another story. She has put herself in word and deed right into the center of the debate on where news is going on the Web, especially after AOL paid $315 million for her Huffington Post news and opinion site.

Huffington has certainly taken a lot of hits over the years as the HuffPo has grown, some deserved, but she has clearly led an impressive effort.

In fact, I think the cute-kitten and celebrity-loving angle played up by her detractors to dismiss her is silliness, because she and the Huffington Post are clearly more than that and are obviously having a major impact on the future direction of content in the digital age.

But that power she has sought also gives her a responsibility to say exactly what that means on a real and granular and consistent level, beyond the platitudes of wanting to make great journalism that she declares all the time now.

In other words, very specifically: What does Arianna Huffington stand for in regards to journalism? What are her rules and standards and codes? And, perhaps more importantly, what does she not stand up for?

These are questions I hope Huffington–who is really good at smacking back at criticism, too (See: the New York Times’ Bill Keller)–will address in one of her patented blog-xplosions and many times over, too.

Until then, here’s a link to my very long and very detailed ethics disclosure on All Things Digital, which is exactly how our little site thinks it should be in the digital age.

In short, besides signing the Dow Jones Code of Conduct–standard at The Wall Street Journal and other DJ publications–all our editorial staff is required to also pen their own in-plain-English personal and detailed account of disclosures that are pertinent to their job.

(You can read an extensive interview with me on the subject, in fact, which was posted here by Two Bananas Marketing, this week.)

My ATD disclosure is probably the most detailed of all of them, since I gay-married Megan Smith a dozen years ago. She later became a VP at Google, which I cover from time to time, especially related to other companies I focus on more, such as Yahoo.

Most of the time, if you care to read my posts on Google, I am probably tougher and snarkier than not, mostly because I know the search giant from its earliest days.

And, even though I once wrote extensively for the Journal about Google since its founding and before Megan arrived there, I thought it wise to lay it all out in detailed detail.

(By the way, if you want to try to tweak me by asking what News Corp.-owned Fox News’ ethics rules are, I don’t know, as ATD belongs to Dow Jones, which has had them forever. I will say, though, that Roger Ailes often freaks me out.)

In any case, as Arrington preaches, the more disclosure the better, and perhaps I should say even more so here, given the current swirl, by noting explicitly that I garner exactly no financial benefits from my relationship with Megan.

That might seem odd, because she certainly earns more. But I don’t know how much nor do I ask, since we have separate bank accounts and she always pays up–well, almost always–when half the bills are due. While it sounds painfully un-romantic, we only spend overall what each of us can afford equally in an exact 50-50 split.

In addition, I also legally signed away all rights to inheritance–although I had no such marriage rights in the first place, being gay–of Megan’s assets, which are in a trust for her relatives and our sons (for when they are too old to have any fun).

More to the point, I believe this makes me the only person to marry an exec at a hot Silicon Valley company with no prospect of any gold-digging.

Thus, I clearly would make the worst investor ever–not that I ever invest in tech or plan to while I am a reporter covering the sector.

Thank god, I suppose, that Michael Arrington is there to take up the slack.

It turns out that if you don’t use the part of the chip that has the problem, it works just fine. The problem is with the SATA port connections on the Cougar Point chipset. There are six such connections and only one is of which four are affected. (For the finer technical points about the design problem, read this post at AnandTech.)

In the days after Intel disclosed the design error on its Cougar Point chipset, PC makers called up to ask if they could continue to ship if they tweaked their designs in such a way that used only the SATA port connections on the Cougar Point chipset that worked. Intel said this was A-OK, and has restarted shipping the chips to those PC makers that have promised to make the necessary changes.

Meanwhile, Intel says it has started manufacturing a new version of the chips, and it should start shipping to new customers later this month

News of the flaw hurt Intel stock last week, mainly because of the potential for financial impact. Intel said it will reduce its revenue forecast for the first quarter by $300 million as it ends production of the old chip and gets volume of the new one ramped up, and that the full impact could reach $700 million for the fiscal year. However, today’s disclosure suggests that Intel may have initially outlined a worst-case scenario just in case. Still, it hasn’t changed its forecast for the quarter. Intel shares, however, are up in after-hours trading.

Update: I corrected this post because I got the number of affected SATA ports on the chip wrong. Sorry about that.

According to a global survey of 1,300 companies by Korn/Ferry, though 98 percent of companies believe a CEO succession plan to be important, only 35 percent currently have one in place. And 49 percent haven’t had one in place for the last three years.

That’s something shareholders calling for Apple to disclose its succession plan annually might want to keep in mind as they prepare for the company’s annual meeting later this month. On this issue, Apple is actually a leader in corporate governance. And it does have a good rationale for keeping its succession plan private:

• A written succession plan would give Apple’s rivals unfair advantage by publicizing its objectives and plans.
• Identifying potential successors to Steve Jobs would invite other companies to recruit those people away from Apple.

Sound reasons and ones that seem to outweigh the main reason for making it public: Making nervous shareholders less nervous.

In a bold and definitive move, AOL is paying $315 million, mostly in cash, to buy the Huffington Post, one of the Web’s most prominent news and opinion sites.

As part of the deal, Huffington Post co-founder Arianna Huffington (pictured here)–who was derided by some when she co-founded the left-leaning site in 2005 with investor and well-known communications exec Kenneth Lerer–will become president and editor in chief of the Huffington Post Media Group within AOL.

The deal was signed late this afternoon, and the board of directors of each company and shareholders of the privately held Huffington Post have approved the transaction.

In an exclusive video interview BoomTown conducted earlier today in Dallas, just before Super Bowl XLV, both Armstrong and Huffington were jovial that the whirlwind deal, begun in November, actually worked out so quickly.

Perhaps giddy, they hit upon a common motto:

“One plus one equals 11.”

Get it? One and one next to each other is the number 11!

Let’s move on, shall we?

AOL said it is expected to close in the late-first or early-second quarter of 2011.

Once culminated, it will put Huffington in charge of all AOL content and other properties, including well-known names such as Engadget, Moviefone, MapQuest and TechCrunch.

She said she plans to move to New York from Los Angeles, although she will also maintain her longtime Brentwood home there.

And content for all these sites will be integrated deeply into the Huffington Post, giving it a huge new infusion of editorial material.

More to the point, the flashy acquisition–which essentially came together in less than two weeks in January–will become the linchpin of AOL CEO Tim Armstrong’s aggressive, if risky, strategy to focus the long-troubled company as a content and advertising powerhouse.

For AOL, the deal gives it a popular branded site that is very good at generating lots of page views and impressions very efficiently–which is the company’s whole thrust these days.

That means lots more ad inventory to sell and an injection of content talent, giving AOL the scale it desperately needs.

The move also obviously gives AOL a much-needed editorial identity and cohesion, which it doesn’t really have.

In fact, many think AOL needs a rallying point to bring clarity to its hodgepodge of recent acquisitions that all center on the notion that a strong company has yet to emerge in the premium content space.

Here is a mock-up of the front page of AOL tonight (click on it to make it larger):

While it all makes for a riveting narrative by the charming Armstrong, AOL still has not delivered the business turnaround promised after its spinoff from Time Warner in 2009.

Wall Street, which has given Armstrong a lot of rope, has become more impatient of late to see results–especially more robust increases in its display advertising business, as its access business dies off–after AOL spun off from Time Warner in 2009.

In its quarterly report last week, AOL reported earnings of 61 cents a share on revenue of $596 million.

But, as MediaMemo’s Peter Kafka wrote:

The bigger picture is that Armstrong’s turnaround is still in progress. Ad revenue was down 29 percent in the last quarter, although that number is worse than it looks. A big chunk of the decline comes from moves AOL has intentionally made that will cut revenue in the short run in return for more profitable sales down the road.

A more representative data set for Armstrong are his display ad sales, which are down 14 percent overall and eight percent in the U.S..

The bad news is that the rest of the Web ad industry is well into rebound mode; the good news is that AOL has trained Wall Street to expect numbers like these. If you’re waiting to see positive sales numbers, Armstrong said during AOL’s earnings call this morning, wait until the second half of this year.

In any case, the move is a good one for the Huffington Post since it will vault it to the next level of growth.

Other companies, such as Yahoo and NBC Universal, had looked at the company as a purchase target, and many expected it to eventually sell out to a larger company.

Sources close to the Huffington Post said that that outcome seemed the most likely, and the recent expansion of the site and its audience made it a good time to do a deal now.

Talks with Yahoo last year went nowhere, sources said, but Armstrong was not as slow to act.

Indeed, the actual deal happened quickly, said Armstrong and Huffington in a video interview with BoomTown earlier today (which you can see here).

The pair started talking in early November of last year at the Quadrangle Conference in New York and continued their discussions through the holidays.

Armstrong made the official offer to Huffington by phone in January, while she was at the World Economic Forum in Davos, Switzerland, and he was snowed in in New York.

Five time multiple to the Huffington Post’s upward of $60 million in expected revenue for the coming year, and nearly 10 times the $31 million for 2010, the offer was accepted quickly.

AOL used cash for $300 million of the purchase and $15 million in stock for the rest.

“The idea of turning a fire hose of traffic onto our content made enormous sense,” said one person close to the situation. “Everything is changing so fast, it seemed like the time was right.”

An IPO was also considered for the Huffington Post, sources said. But since the site only recently moved into profitability–although barely–such an event would have been farther out.

That’s despite the fact that the Huffington Post has seen fast-growing traffic and influence, spurred in part by Huffington’s larger-than-life persona in both the mainstream media and blogosphere.

The wide-ranging site–which has added a number of content areas in recent years beyond its flagship political offering–currently has almost 26 million unique monthly visitors, according to recent stats, moving in close range to established news organizations such as the New York Times.

That kind of success seemed unlikely when the Huffington Post launched on May 9, 2005, positioning itself as as a liberal counterweight to the popular right-leaning Drudge Report.

But the Huffington Post’s heady mix of celebrity bloggers, personality and voice, as well as aggressive curation of links from other sites, quickly caught on.

To fund its efforts, the New York-based online media company has raised $37 million from angel investors such as Lerer–the largest individual shareholder, followed closely by Huffington–and venture firms such as Greycroft Partners, Softbank Capital and Oak Investment Partners.

The growth has not been without controversy around issues such as lack of payments to bloggers who contribute and accusations that the site uses too much content from other Web sources when linking.

And Huffington herself has also been a lightning rod, which has been both positive and negative for the site.

But, there is no question she is one of the Web’s most prominent players, along with writing books, appearing on television frequently and being a fixture at high-profile events in New York, Los Angeles and Washington, D.C.

That includes a never-ending panoply of parties that feature a potent mix of movie stars, corporate poo-bahs, glad-handing politicians and lots of journalists from all over the media.

In fact, full disclosure, I was at one of those parties this past weekend for actor Colin Firth and others involved in the making of the Oscar-nominated film “The King’s Speech.” (Apropos of nothing, actor Helena Bonham Carter is as smart as you would expect, but much more delicate.)

As part of the AOL deal, CEO Eric Hippeau–who has been integral to professionalizing the business and will be joining Lerer Ventures–and Chief Revenue Officer Greg Coleman will leave the Huffington Post.

Ironically, Coleman was replaced by Armstrong as head of ad sales at AOL after he took over as CEO. Coleman got a big payout and will now apparently get another.

But the rest of the 200 Huffington Post employees are moving over to AOL with Huffington, who Armstrong hopes will be the company’s ace in the content hole going forward.

There are likely to be changes to come too at AOL, within weeks, especially in its content-side management and site staffs.

AOL provided some quotes in support of the deal from prominent Internet figures who know Huffington well.

“Arianna is one of the preeminent authors and editors of our time, and Tim has a remarkable track record of business success,” said Facebook COO Sheryl Sandberg. “Bringing them together creates tremendous potential for AOL.”

And Twitter co-founder Biz Stone said:

“Editorial vision and leadership are essential in order to transmute our shared cacophony of voices into a valuable dialogue. Arianna’s expertise, empathy, and entrepreneurial enthusiasm forms a kind of alchemy turning mere words and phrases into powerful expressions of humanity.”

Inter-Internet harmony: How sweet!

Here is the official press release, with all the details, but there is also an 8 am ET AOL conference call tomorrow:

AOL AGREES TO ACQUIRE THE HUFFINGTON POST

Acquisition Will Solidify AOL’s Strategy of Creating a Premier Content Network With Local, National and International Reach

Arianna Huffington To Lead Newly Formed The Huffington Post Media Group Which Will Integrate All Huffington Post and AOL Content, Including News, Tech, Women, Local, Multicultural, Entertainment, Video, Community, and More

The New Combined Media Group Will Reach 117 Million Americans and 270 Million Globally

Group Uniquely Positioned To Redefine the Future of Brand Advertising and Marketing For an Engaged and Influential Audience

New York, NY–February 7, 2011–AOL Inc. [NYSE:AOL] announced today that it has entered into a definitive agreement to acquire The Huffington Post, the influential and rapidly growing news, analysis, and lifestyle website founded in 2005, which now counts nearly 25 million unique monthly visitors*.

The transaction will create a premier global, national, local, and hyper-local content group for the digital age–leveraged across online, mobile, tablet, and video platforms. The combination of AOL’s infrastructure and scale with The Huffington Post’s pioneering approach to news and innovative community building among a broad and sophisticated audience will mark a seminal moment in the evolution of digital journalism and online engagement.

The new group will have a combined base of 117 million unique visitors a month in the United States and 270 million around the world**. Following the close of this transaction, AOL will accelerate its strategy to deliver a scaled and differentiated array of premium news, analysis, and entertainment produced by thousands of writers, editors, reporters, and videographers around the globe.

As part of the transaction, Arianna Huffington, The Huffington Post’s co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content, including Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList, and more.

“The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers,” said Tim Armstrong, Chairman and CEO of AOL. “Together, our companies will embrace the digital future and become a digital destination that delivers unmatched experiences for both consumers and advertisers.”

Armstrong continued, “Arianna is a singularly passionate and dedicated champion of innovative journalistic engagement, and a master of the art of using new media to illuminate, entertain and enhance the national conversation. Arianna is a remarkable person and she will continue to create remarkable outcomes for the combined company.”

“This is truly a merger of visions and a perfect fit for us,” said Huffington. “The Huffington Post will continue on the same path we have been on for the last six years–though now at light speed–by combining with AOL. Our readers will still be able to come to the Huffington Post at the same URL, and find all the same content they’ve grown to love, plus a lot more–more local, more tech, more entertainment, more finance, and lots more video. We are fusing a legendary and powerful new media brand with a vibrant, innovative news organization, known for its distinctive voice, a highly engaged audience, an expertise in community-building, and a track record for demystifying the news and putting flesh and blood on the data while drawing our audience into the conversation.”

Huffington continued, “By uniting AOL and The Huffington Post, we are creating one of the largest destinations for smart content and community on the Internet. And we intend to keep making it better and better.”

Kenneth Lerer, The Huffington Post’s Co-Founder and Chairman, said, “The Huffington Post team has created a potent brand with the proven track record of knowing how to grow traffic, inform and entertain its readers and build a one-of-a-kind online community. Add that to the powerful scale and resources of AOL and you have the perfect combination for today and the future. Together these two companies will be a premier online content provider. From local citizen reporting through AOL’s Patch, to The Huffington Post’s national reporting on politics, business and culture, consumers will have access to everything they want whenever they want it.”

AOL has agreed to purchase The Huffington Post for $315 million, approximately $300 million of which will be paid in cash funded from cash on hand. The Huffington Post is privately owned by its two cofounders, as well as a group of investors. The proposed transaction is subject to customary closing conditions, including receipt of government approvals. The boards of directors of each company and shareholders of The Huffington Post have approved the transaction. The transaction is expected to close in the late first- or early second-quarter 2011.

The Huffington Post over-indexes on educated, affluent users, reaching the key decision makers in C-suites around the globe. The Huffington Post speaks to this influential audience via a host of prominent voices on its group blog. Among those who have blogged on The Huffington Post are: President Barack Obama, Secretary of State Hillary Clinton, Mayor Michael Bloomberg, Larry Page, Diane Sawyer, Buzz Aldrin, Nora Ephron, Bill Maher, Madeleine Albright, Robert Redford, Katie Couric, Neil Young, Rahm Emanuel, Mia Farrow, Senator Russ Feingold, Senator Al Franken, Ari Emanuel, Harry Shearer, Senator John Kerry, Representative Nancy Pelosi, Madonna, Lawrence Summers, Jamie Lee Curtis, Ryan Reynolds, Craig Newmark, Alec Baldwin, Aaron Sorkin, Natalie Portman, Scarlett Johansson, Russell Simmons, Sean Penn, Bill Gates, Norman Lear, Charlie Rose, Elizabeth Warren, Tavis Smiley, Sheryl Sandberg, George Clooney, and former President Bill Clinton. And the audience speaks back, generating four million comments a month***.

The Huffington Post’s affluent, influential audience, that is growing at a rate of 22 percent (December 2009 vs. December 2010)****, when combined with AOL’s massive scale, video offerings and local expertise, will represent an incredibly desirable demographic for a broad range of advertising partners across the board.

And here is Armstrong’s internal memo to the AOL staff:

AOLers,

We are taking another major step in the comeback of AOL. Today we are announcing that we have agreed to acquire The Huffington Post, one of the most exciting, influential, and fastest growing properties on the Internet. We believe in brands, quality journalism, and the positive role of communities in the world–The Huffington Post shares our values and the combination of the two companies will create the premier global and local media company on the Internet.

Co-founded six years ago by Arianna Huffington and Ken Lerer, The Huffington Post has grown to become an industry leader–one of the Web’s most popular and innovative sources of online news, commentary, and information. Arianna and team have created a brand and a destination that focuses on the consumer experience. By combining The Huffington Post with AOL’s network of sites, thriving video offerings, local expertise and enormous reach, we will create a company that is laser-focused on serving our audiences across every platform imaginable–social, local, video, mobile and tablet.

The Huffington Post is core to our strategy and our 80:80:80 focus–80% of domestic spending is done by women, 80% of commerce happens locally and 80% of considered purchases are driven by influencers. The influencer part of the strategy is important and will be potent.

The Huffington Post is a strong influencer brand and it attracts a valuable audience, including a great focus on women’s content. In addition, Arianna Huffington is a world-renowned expert on women’s topics and issues, and has enabled The Huffington Post to grow rapidly by continually developing new audiences.

In the local area, the combination of the two companies will create a scaled connection between global and local communities on one platform. This will create a new way for people to get local and global information in a timely and entertaining way.

The Huffington Post will join the family of AOL Brands that are destinations for an influencer audience, brands like TechCrunch, Engadget, AutoBlog, and Moviefone. Uniquely, The Huffington Post is the platform for influential people–the people that drive trends, commerce, politics, entertainment, news, and information. Adding this strategic platform to our already strong network of sites, including the AOL homepage, has the potential to make AOL the most influential company in the content space.

Arianna Huffington is one of the most successful entrepreneurs in the Internet space and someone that is even more successful in building communities and relationships in every corner of the globe. The Huffington Post and Arianna have created a company that has partnered with the most successful and well-known leaders in all aspects of society that touch important topics to give consumers direct access to the most influential decision makers and community leaders.

This acquisition will create a high-quality and diverse digital ecosystem encompassing local, national and international news, politics, entertainment, technology, fashion, sports, health, personal finance, green, lifestyle, the arts and more. This deal will combine the amazing talent at AOL with the innovative and talented staff of The Huffington Post. Here are just a few high-level points around what this deal brings to market:

* Together, AOL and The Huffington Post will have 117MM unduplicated domestic monthly UVs, and ~270MM monthly UVs worldwide (according to comScore Dec 2010).

* The Huffington Post is one of the fastest growing web properties on the Internet. It grew 22% last year–that’s faster than Twitter, which grew 18% – and 15x as quickly as the Internet grew last year (comScore Dec ’09-’10).

* Both AOL and The Huffington Post count powerful, affluent users among their top loyal visitors, significantly over-indexing in $100K+ income users.

* AOL passed Hulu in unique viewers on video in the fourth quarter of 2010; video views on AOL are up 400 percent year-over-year.

* Between AOL’s innovative Project Devil ad unit, engaging users for 27 seconds longer than traditional display ads, and The Huffington Post’s highly-vocal community, with 4MM+ comments per month, we will marry attention-grabbing content and brand experiences for both advertisers and consumers.

In the local area, the combination of the two companies will create a premier global/local syndication network at scale. This will create a new way for people to get local and global information in a timely, informative and entertaining way.

To maximize the strategic advantage of this great deal, we will be creating a new group at AOL called The Huffington Post Media Group. Within this group will be AOL Media, AOL Local & Mapping, AOL Search and our new friends at The Huffington Post. We will continue operating the towns structure, AOL.com and HuffingtonPost.com.

I’m thrilled to announce that Arianna Huffington will join AOL’s executive team as President and Editor in Chief of The Huffington Post Media Group. We have asked Jon Brod to lead the overall operational integration on the AOL side of the combined entities. Jon will lead the local group integration and work closely with David Eun and the teams in AOL Media. We will work quickly with The Huffington Post to create a combined organizational design to coincide with the deal closing. While we wait for the required regulatory reviews to be completed and the transaction to close before implementing the design, we will move very quickly to plan the details of the integration of the two companies. To this end, we will announce the new organizational structure as soon as possible.

In the meantime, we will continue creating great content and products for our consumers within the town structure and stay laser-focused on the aggressive goals we have set for our winter luge. We are on the right track and will continue our weekly operating cadence and town structure to drive successful results against our company goals.

Here’s a special message for all of you we taped to welcome The Huffington Post and Arianna to our AOL Family:

http://today.office.aol.com/company-news/2011/02/aol-agrees-buy-huffington-post

And of course we wanted to welcome Arianna to our “You’ve Got” video of the day–check her out on AOL.com.

We will be holding a company all hands meeting to address your questions related to today’s exciting news. We will video conference from our New York office on the 6th Floor at 9:30 AM ET and will be joined by Arianna Huffington and key executives from her organization. We will also be holding a call for our west coast offices at 2:00 PM ET and for our Patch offices at 2:45 PM ET. See below for meeting info (conference rooms will be sent out shortly).

AOL is playing to win…and The Huffington Post and AOL will occupy a unique place in the future of the Internet. Let’s go get it done.

–TA

(More full disclosure: As has been previously reported by MediaMemo, All Things Digital had the briefest and most preliminary of discussions with Armstrong about moving to AOL last year, while exploring several other options. All’s well that ended well: We stayed at Dow Jones, which is owned by News Corp.)

While he won’t officially take over as CEO of Google until April, the recent full-frontal slapfest on Microsoft’s Bing search engine for shoplifting results from the search giant was so Larry Page in tone and temperament that it brought back memories from many years ago when I covered Google more closely.

Like the time in 2004 when he railed on the investment banking system as Google considered its IPO. Or, a meeting in 2005 when Page aggressively argued minutiae about the size of Google’s index size after Yahoo claimed its data trove was bigger.

And my ears are still ringing from a Googleplex lunch we had in the midst of his ire over a 2005 story on CNET that chronicled a lot of personal information about CEO Eric Schmidt, trying to show how much data was easily available on Google.

Page thought it best to be on the offensive and attack the report as a privacy violation, while I took the position that it was accurate and fair game and you don’t argue with the press and win.

It’s unlikely Page remembers any of this, but I do because I kept notes as part of my ongoing assessment of his characteristics as an Internet leader.

In fact, after our first interview in 2001, my notes on the encounter had this one line underlined and in all caps:

LARRY PAGE=BILL GATES.

It was not meant as an insult, but I can tell you I never wrote such a note about Page’s co-founder, the jokey and affable Sergey Brin.

Even then, Gates had a fearsome reputation as a manically competitive exec, a cutting manner to those not as smart as he clearly is and a reputation as a very tough and often eviscerating boss. (And all that was also my experience whenever I was interviewing him.)

While much wonkier, friendlier and more of a sensitive new-aged male, Page, it seemed to me, had the exact same obvious drive and aggression as Gates.

I stopped covering Google as closely years later–for personal reasons (see disclosure above)–and, thus, largely fell out of regular touch with Page.

But in reading the tough quotes and later blog post by Amit Singhal–quite possibly the sweetest dude at Google–accusing Bing of cheating, it felt like he was channeling Page’s very clear and nerdily indignant voice again.

In a nutshell: We have data to prove Microsoft’s stealing. Look at our detailed proof from our complex sting. We are outraged by this violation of geek code. Don’t you lay people get it?!?

I would wager that we’re about to see a lot more of this pugnacious, in-your-face tone from Google under Page’s leadership, which could have far-reaching implications for the company.

While I have no idea if it was his decision to let loose the dogs of algo-war on Microsoft, many with knowledge of how Google manages its public persona observed to me this week that this was just the kind of popping off that the outgoing Schmidt often tried to mitigate and soften.

But such bravado will play well with Google’s elite and pampered engineering corps in Silicon Valley.

And, in any case, PR considerations have never really been the point for Page, who cares not for how it might come off in the media (which he largely disdains anyway).

Which is to say like a temper tantrum of a very smart and very gifted child, who is probably largely right, but should not be quite so exercised given the level of violation.

No matter, since Page likely still lives and breathes data and algorithms and the Spock-like application of information.

It’s the rest of us who are illogical.

The news cycle about the deal spun out of Facebook’s control after leaks emerged around the new year, with the social networking company taking a beating for the tricky and elitist way it had raised funds in a seeming evasion of the public markets, and Goldman changing the rules of the deal after much interest and scrutiny.

Since then, the leaks have kept coming, with no official acknowledgement of the deal from Facebook, until now.

Facebook today shed light on some terms of the transaction: It had the option to accept between $375 million and $1.5 billion from Goldman Sachs, and elected to choose $1 billion in an offering that was completed today.

The company distanced itself from the deal, effectively saying that it didn’t need the money and it expected to cross 500 shareholders this year anyway (something All Things D was first to report).

DST and Goldman Sachs approached Facebook to express their interest in making an investment, and Facebook decided it was an attractive opportunity to bolster its cash reserves and increase its financial flexibility with limited dilution to existing shareholders….

Even before the investment from Goldman Sachs, Facebook had expected to pass 500 shareholders at some point in 2011, and therefore expects to start filing public financial reports no later than April 30, 2012.

Please see the disclosure about Facebook in my ethics statement.

Staying at 499 shareholders or fewer is something Facebook has worried about since at least 2007, and sidestepped by creating a special kind of restricted stock unit for new employees and making small talent acquisitions that avoided, when possible, awarding start-ups and their investors with Facebook stock.

Now that that’s over, Facebook’s acquisitions team may get the go-ahead this year to pursue larger and more complicated deals.

As is now widely known, SEC rules mandate that a company with more than 500 shareholders at the end of a fiscal year must report financial information, something Facebook didn’t want to do as a private company. But if you read the fine print, as BoomTown’s Kara Swisher first reported, Facebook has 120 days to disclose from the end of the fiscal year in which it crosses 500 shareholders.

That means the end of April of 2012, by which point Facebook has said in paperwork for its Goldman Sachs funding deal it expects to file to go public.

Basically, Facebook has exorcised a curse hanging over its head by outlasting it. Like a nightclub bouncer, the company had been letting one shareholder out of the room before allowing another in. And now that’s over, as long as Facebook goes public next year.

(Though at this point, many of the company’s financial details are already leaking out as part of the troubling Goldman Sachs deal.)

For now, Facebook is still being cautious about adding shareholders; the Goldman deal (which we’ve heard still hasn’t closed) was structured to combine Goldman’s wealthy clients into a single entity to avoid adding too many shareholders.

Facebook’s corporate development team has said publicly that part of why it likes doing “acqhire” deals of small, early-stage start-ups is because they are relatively uncomplicated, financially speaking. Wherever it can, Facebook tries to cash out an acquired start-up’s shareholders instead of giving them stock. In the past, if a start-up had too many shareholders, it might not have been an attractive acquisition candidate.

Facebook doesn’t always get its way on that preference; sometimes it pays in stock. For instance, Facebook bought two start-ups that had taken investments from RRE Ventures: Hot Potato (in August 2010) and Drop.io (in October). In the first case, Facebook paid RRE in cash, but the second time around, RRE was able to negotiate for stock.

But now that Facebook seems to basically be giving itself the go-ahead to surge past 500, who gets to be shareholder number 501 or even number 1,001? It’s possible they could be the employees and investors in larger, more complicated M&A deals. Facebook’s name has come up in acquisition discussions for companies like Twitter and Foursquare, but now it may actually start closing more of those deals.

To date, Facebook’s largest acquisition has been FriendFeed for $50 million in cash and stock in 2009. The first time many tech watchers heard of the 10 tiny start-ups Facebook acquired in 2010 was when the deals closed.

But now that big deals are on the table, the question is, who’s next?

Here’s Jon Stewart of “The Daily Show” last night ranting about Facebook avoiding making financial disclosures:

Please see my own disclosure about Facebook in my ethics statement.

For all those in a tizzy–including BoomTown–about Facebook’s deal with Goldman Sachs, which some think is designed to circumvent securities rules related to shareholder numbers and financial disclosure, meet Section 12(g)(1) of the Securities Exchange Act of 1934.

Because if anyone cared to read the actual text of the law in question (as I did, after it was pointed out to me), even if it was determined that Facebook had 500 shareholders at this very moment, it is technically not required to disclose any of its financial details until May of 2012.

As in next spring, which is exactly when its execs have told many sources it will finally have its much anticipated IPO. Thus, look Facebook to finally go public in the second quarter of 2012.

As far as government literature goes, 12(g)(1) is pretty clear, noting that any company of Facebook’s size, after it reaches 500 shareholders, must make financial and other disclosures “within one hundred and twenty days after the last day of its…fiscal year.”

For Facebook, its current fiscal year ends December 31, 2011, making its disclosure deadline April 29, 2012.

As the New York Times noted today:

“Section 12 (g) of the Securities Exchange Act of 1934 came about in the 1960s as over-the-counter trading in shares of privately held companies began to heat up and regulators worried that investors were not getting enough information.”

The huge amount of time Facebook has to adhere to the private company disclosure law has not been noted in copious coverage of the deal, in which Goldman Sachs clients would be able to invest up to $1.5 billion in the Silicon Valley company, as part of a single entity “special purpose vehicle.”

But it brings into focus–given its long lead time–whether Facebook would go to such lengths to keep its shareholder size small at this point.

Nonetheless, from a perceptual viewpoint, the Goldman investment has brought unneeded scrutiny to Facebook, from both the public and also government regulators.

It has also painted the company–which has an everyman, mainstream image, in general–as elitist and consorting with rich Wall Street bankers.

In any case, with the Goldman deal, a lot of financial information about Facebook is now seeping out anyway, as part of the investment bank’s offering documents to the clients it is presenting the Facebook opportunity to.

As The Wall Street Journal reported yesterday:

“According to people familiar with the document, Facebook had net income of $200 million in 2009 on revenue of $777 million. Figures for 2010 weren’t disclosed, but analysts have said the company’s revenue last year could be as much as $2 billion, fueled by advertising growth.”

Whether that smallish net income and revenue deserves a $50 billion valuation or not will be up to investors to decide. But, as the Journal also pointed out, the Facebook offering is oversubscribed already, even without any significant information about the company’s finances.

Which Facebook can keep from us all for a while–although I urge CEO Mark Zuckerberg, Google-style, to FREE THE DATA!

And if you don’t believe me, please enjoy the 12(g)(1) below:

Every issuer which is engaged in interstate commerce, or in a business affecting interstate commerce, or whose securities are traded by use of the mails or any means or instrumentality of interstate commerce shall—(a) within one hundred and twenty days after the last day of its first fiscal year ended after July 1, 1964, on which the issuer has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by seven hundred and fifty or more persons; and (b) within one hundred and twenty days after the last day of its first fiscal year ended after two years from July 1, 1964, on which the issuer has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by five hundred or more but less than seven hundred and fifty persons, register such security by filing with the Commission a registration statement (and such copies thereof as the Commission may require) with respect to such security containing such information and documents as the Commission may specify comparable to that which is required in an application to register a security pursuant to subsection (b) of this section. Each such registration statement shall become effective sixty days after filing with the Commission or within such shorter period as the Commission may direct. Until such registration statement becomes effective it shall not be deemed filed for the purposes of section 18. Any issuer may register any class of equity security not required to be registered by filing a registration statement pursuant to the provisions of this paragraph. The Commission is authorized to extend the date upon which any issuer or class of issuers is required to register a security pursuant to the provisions of this paragraph.

Goldman is asking Facebook to expand the number of shares available through the deal, which may depend on the amount of interest among Facebook employees in selling their personal stock at this time. (Before the Goldman deal, employees were prohibited from selling shares, though they were able to do so for a short time last year as part of a deal with Digital Sky Technologies.)

Goldman plans to stop soliciting interest in the project on Thursday, according to the Journal. Only wealthy individuals and a few hedge funds and private-equity firms have been asked to participate, with a minimum investment of $2 million for people who do not work at Goldman.

Meanwhile, the interest of the Securities and Exchange Commission has been piqued by the Goldman deal, which was structured to avoid adding shareholders to Facebook’s fastidiously maintained count. The company has carefully avoided having more than 500 shareholders to avoid SEC disclosure rules.

It had already been reported that the SEC was looking at the recent growth of secondary market trading of shares in private companies, with some assuming that such an inquiry could lead to the practice being shut down.

However, The Wall Street Journal now reports that the agency is studying whether the 1960s-era disclosure regulations for private companies need a rewrite. That has some on Wall Street wondering whether the SEC inquiry could “open the floodgates” for similar deals, where “hybrid” companies are private yet have their shares traded in a limited way.

The idea that wealthy Goldman clients are the only ones able to invest in Facebook, a company with some 600 million users, doesn’t sit well with many people. BoomTown’s Kara Swisher yesterday described the Goldman-Facebook deal as “sneaky,” “elite” and “opaque.”

Some Goldman clients complained that they were given too little time and information to evaluate the Facebook opportunity, which only emerged this past weekend. Apparently enough of their cohorts did not feel that was the case.

Please see the disclosure about Facebook in my ethics statement.

Many years ago, before Google went public, I had an unusual late-night conversation in the lobby of the TED conference with its co-founder Larry Page about the prospect, about which–despite its inevitability–he had more than a little nervousness.

That would be: Taking the search company public.

After much ruminating, Page concluded that one of the more important reasons he felt compelled to have an IPO was to finally reward Google’s employees for all the work they had done to build the company.

While I have never had a similar chat with Facebook CEO Mark Zuckerberg about the powerful social networking company and an initial public offering, I suspect that he would not express any such sentiment.

And it’s not because Zuckerberg does not value his staffers any less than Page did–instead, it’s because he seems to value his privacy most of all.

I know–ironic!–given how many perceive the company to be cavalier about important issues related to disclosures of personal information uploaded to Facebook by the mountain-load daily by its hundreds of millions of users.

That aside, Zuckerberg’s clear intent to keep the lid on Facebook tight–with no information about the details of financial performance and other pertinent information a public offering would require be disclosed–is clearly about to become a nettlesome issue for the company.

While that effort at preserving secrecy by staying private has resulted in little more than cute Silicon Valley media guessing games about a possible IPO, its most recent machinations are too clever by a half.

That would be the new and giant investment from Goldman Sachs, as well as a deal to get $1.5 billion of pre-IPO shares in the hands of the investment bank’s rich customers.

Aside from the appalling image that only the very wealthy can get an early shot at Facebook shares, which instantly became a press meme yesterday after the Goldman deal was announced, pretending this single investment entity–called a “special purpose vehicle”–simply feels like a Wall Street trick.

Plus, a special purpose vehicle sounds like a car that bankers use to take people for a ride.

Thus, a gaggle of rich doctors in New Jersey are treated like one blob, instead of what is plainly true to all. As the old Latin legal phrase goes: Res ipsa loquitur (the thing speaks for itself).

Of course, this strategic move is designed to keep the number of primary stockholders under 500, which is the IPO tipping point for the Securities and Exchange Commission.

Therefore, by all means, let’s do it!

Or not, because I had an intense déjà vu about all this, and an unease that it felt vaguely familiar as a negative characteristic of Zuckerberg’s leadership that seems to cling to him.

That would be the dicey origins of Facebook, which remain a controversy to this day, including garnering an entire Hollywood movie on the subject.

Anyone with a passing knowledge of Facebook’s history knows the basic question: Did Mark Zuckerberg “steal” the idea for Facebook from the Winklevoss twins, as well as sandbag their efforts, while they were all students at Harvard University?

And, more to the point, was it illegal?

The Winklevii certainly think so, continuing in their Don Quixote quest to take Zuckerberg down in a series of ever-more-comical lawsuits.

For me, the answer is a lot more complex–I think Zuckerberg most definitely screwed with the Olympic rowing twins and it was very creepy that he did.

But, in terms of breaking the law, not so much.

Of course, if you are endeavoring to always act with ethics in your career, this should not be the bar set. But in practical terms, it was most definitely an aggressive knee-capping that is not uncommon in business.

Zuckerberg has shown similar tendencies many times since then, especially around the thorny issues of privacy, where fast-and-loose behaviors are quickly followed by the I’m-sorry-I-didn’t-mean-it excuses.

Okay, fine, I get it. Business is war.

But, as it moves into a more mature place, the question now is whether Facebook should keep stressing this kind of wink-wink-nudge-nudge propensity, because it feels–how can I say this in the nicest way–icky.

Plus it will surely attract unneeded attention from the SEC, which is already looking into the opaque market for trading shares of closely held companies and where Facebook is the star attraction.

And this is to say nothing of other issues–for example, could there be insider trading problems around the buying and selling of these private shares, as one person close to the situation has noted to me?

Facebook, of course, will defend what it is doing as above board, say it’s not unfair to give special access to its bounty to the very rich in what is essentially a private IPO and wag a finger at critics like me and tell us we don’t understand sophisticated financial issues.

But here’s what I grok without a Harvard Business School degree: It feels sneaky, it feels elite, it feels opaque, and this kind of fancy financing footwork could end in tears.

Because these legitimate questions on how Facebook handles its stock will continue to dog the company until–when he is good and ready (and finances at Facebook look prettier)–Zuckerberg eventually pulls the trigger on an IPO.

It would be nice, even if Wall Street applauds his cleverness, if he didn’t keep shooting himself in the foot along the way.

As promised, All Things Digital will be publishing the full videos of the interviews we did two weeks ago at our D: Dive Into Mobile conference in San Francisco.

The first extension of the event, it produced some very newsy sessions. We’ll be posting them all.

Here’s Flipboard CEO and co-founder Mike McCue, a longtime Silicon Valley entrepreneur whose latest Apple iPad app is giving publishers and readers a glimpse of what digital reading could be.

The effort is not without some controversy, as how content is being delivered on the new devices is an ongoing debate.

(Full disclosure: ATD is part of Flipboard’s new publisher beta.)

Here’s the video of the interview that the Mossberg Solution’s Katherine Boehret did with McCue:

Next up: Former Palm CEO and now Hewlett-Packard mobile kingpin Jon Rubinstein.

]]> http://allthingsd.com/20101221/flipboard-mike-mccue-dive-full-interview/feed/ 0 http://allthingsd.com/20101210/full-disclosure-about-full-disclosure-in-blogs/ http://allthingsd.com/20101210/full-disclosure-about-full-disclosure-in-blogs/#comments Fri, 10 Dec 2010 13:02:55 +0000 Kara Swisher http://kara.allthingsd.com/?p=38399

Earlier this week, the Knight Digital Media Center penned a post on the full disclosure policy of All Things Digital.

Titled “Transparency for Journalists: AllThingsD Shows What It Can Look Like,” it’s a very nice review of what we do on the site.

“What I like about these statements is that they aren’t cookie-cutter corpspeak or legalese. They’re human–and even humorous–revelations,” wrote Amy Gahran. “Each writer gets to decide which topics she or he wants to cover, and how. This can get pretty personal, and that’s a good thing. “

We think so too at ATD, which is why you should check in with a whole new bunch of full disclosures we have posted recently, since adding a half-dozen new staffers.

You can click in from our About Us page to read a disclosure penned by each person on the site with editorial responsibilities.

It’s important to us to have them there, as we feel that being transparent and honest to readers is the first step in our commitment to fairness, accuracy and ethical standards.

The Knight story had some good advice at the bottom of its report for crafting a solid disclosure policy:

Publish your key disclosures in one place.

By publishing the ethics statements as static pages, they’re not only easier for readers to find–they’re easier for search engines to index and rank. Transparency is not just about disclosure, but about visibility (which in the online age entails findability). If you dole out disclosures in dribs and drabs, buried within specific articles or posts, you’re less likely to gain the visibility needed to make transparency effective.

Leave what to disclose up to the individual.

The most effective transparency statements are personal, not cookie-cutter. Don’t require journalists to disclose information that they would prefer to keep private. But similarly, don’t prohibit them from sharing whatever personal information or context they wish to offer. Ultimately, these disclosures are about people, not organizations. Editors and managers can supply examples and encourage good judgment–but if a writer really thinks it’s important to let readers know that he votes Republican, vacations in Brazil, volunteers as an abortion clinic escort, loathes cilantro, or has a favorite Beatle, that’s his business.

Make it easy for journalists to update their statements.

Life goes on–which means life circumstances, current concerns, and personal views constantly evolve. New issues always come up, so a journalists’ transparency statement should be a living document that the journalist can modify at will. Make sure your content management system makes this easy. It’s not a good idea to edit this document daily (that could make you look obsessed with what others think), but it should be revisited at least annually or every few months.

]]> http://allthingsd.com/20101210/full-disclosure-about-full-disclosure-in-blogs/feed/ 1 http://allthingsd.com/20101209/new-miramax-ceo-lang-talks-digital-options-for-movie-company/ http://allthingsd.com/20101209/new-miramax-ceo-lang-talks-digital-options-for-movie-company/#comments Thu, 09 Dec 2010 13:02:47 +0000 Kara Swisher http://kara.allthingsd.com/?p=38359

While the news has been be out there for a month, Miramax officially confirmed this morning that former News Corp. exec Mike Lang was named CEO of the Hollywood movie company.

What will be interesting about that for digital content players will be to see exactly what the man who was deeply involved in deals to buy the Myspace social networking site and also create the Hulu premium video service will do with Miramax’s rich trove of more than 700 award-winning films, including “Shakespeare in Love” and “Pulp Fiction,” in its movie library.

Lang left his post as EVP of business development and strategy at Fox Entertainment, including its film studio, broadcast network, sports and cable channel, earlier this year.

BoomTown spoke to him last night about his new job, which came after he advised the group that finally won Miramax–Filmyard Holdings.

“We are trying to take this company to the next level by exploring not only our traditional options, but our digital ones,” he said.

Miramax will not be aggressive in making new movies, but in taking advantage of the sequel rights it has to a number of hits, as well as the existing movies, which include four of the last 15 Best Picture Oscar winners.

“Our strategy is still emerging, but we want to exploit our assets in a variety of ways,” said Lang, who noted that could include everything from subscription deals with online video services, such as Netflix and Amazon, to digital content lockers in the cloud.

“We want people to be able to access our content across multiple medias,” he said. “We’ll take any payment, of course, but we also have to be smart about how we do these things.”

Lang, who has always had a foot in both worlds, said he thinks that digital media could develop similarly to the way traditional media has.

“There is no reason to think that digital will not emulate older media, with different windows in which subscribers watch content,” he said.

But, said Lang, he also thinks there is still life in physical media, such as Blu-ray players.

Since the deal just closed with former Miramax owner Disney, there are no employees yet for the Santa Monica, Calif.-based company.

But once he staffs up, Langs said he hopes to present a different picture of Hollywood to the digerati than the more typical wary hostility.

“Our goal really is we want to send a signal that we are a different company,” said Lang. “Not only about digital, but in being an innovative company.”

Here is the official press release about Lang:

MICHAEL LANG NAMED MIRAMAX CEO

SANTA MONICA, CA–December 8, 2010–Miramax today announced that Michael Lang has been appointed chief executive officer, effective immediately. Lang will be based at the new Miramax headquarters in Santa Monica and will oversee the renowned Miramax film library, which was acquired by Filmyard Holdings on December 3, 2010.

“I have known and worked closely with Mike for almost 20 years and have always respected his talents,” said Richard Nanula, chairman of Miramax and a principal at Colony Capital. “We are confident that he is the right person to lead Miramax in its next phase of growth.”

“I have always admired the Miramax library, which includes many respected titles and award-winning films,” said Lang. “Based on the quality of these assets, I believe bringing new life to this library–by working with traditional and new partners–will be an exciting and unprecedented story of growth and innovation. I am honored by this opportunity, and I look forward to working with my partners as we build a new kind of media company.”

Lang, 45, most recently served as a consultant to Filmyard in its acquisition of Miramax. Prior to that, he was EVP, Business Development and Strategy at Fox Entertainment, responsible for strategic initiatives across News Corp.’s entertainment assets, including Fox’s film studio, broadcast network, sports and cable channels. Lang played key roles in the acquisition of MySpace and the formation of the MySpace Music joint venture, and he led the creation of Hulu, with major broadcast partners. In addition, Lang was involved in Fox’s mobile, digital and video game initiatives. He joined Fox in 2004.

Prior to Fox, Lang served as a consultant on media-related investments. In the late ’90s, he was a founding executive of Z.com. Lang began his career at The Walt Disney Company in Strategic Planning. Lang earned his MBA with high distinction at Harvard Business School and he holds a Bachelor of Arts degree from Claremont McKenna College.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

]]> http://allthingsd.com/20101209/new-miramax-ceo-lang-talks-digital-options-for-movie-company/feed/ 0 http://allthingsd.com/20101206/ign-and-gamestop-combine-online-content-and-media-sites/ http://allthingsd.com/20101206/ign-and-gamestop-combine-online-content-and-media-sites/#comments Mon, 06 Dec 2010 13:15:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=38208

IGN Entertainment, the online gaming content site, and GameStop, the largely offline games retailer, are integrating their online media and retail offerings in an effort to target videogamers from discovery to purchase.

The partnership is an unusual effort, given content and retail are not often so explicitly combined.

As part of the deal, said the companies:

* IGN will be creating branded media advertising products on GameStop.com, and will be its sales representative online. Consumer advertisers will be able to buy branded ads on the retail site.

* IGN content will appear on GameStop.com, with all kinds of cross-linking, and there will be copious buttons for e-commerce on IGN.com.

* GameStop will be buying its ads on IGN.com.

* The traffic of both GameStop and IGN will be combined. Currently, GameStop has 7.2 million monthly uniques worldwide and IGN’s videogame content has 28.9 million.

IGN, which is profitable, has been pushing hard to grow its branded advertising recently, as well as its traffic.

And, over the summer, it introduced IGN Social, adding social elements, such as gamers talking with each other, to its content offerings.

(Full disclosure: IGN is a division of News Corp., which also owns Dow Jones, which owns this site.)

]]> http://allthingsd.com/20101206/ign-and-gamestop-combine-online-content-and-media-sites/feed/ 4 http://allthingsd.com/20101202/flipboard-partners-with-web-publishers-for-full-content-full-disclosure-including-atd/ http://allthingsd.com/20101202/flipboard-partners-with-web-publishers-for-full-content-full-disclosure-including-atd/#comments Thu, 02 Dec 2010 17:22:33 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=956 Yesterday, I wrote about Pulse, a news-reading app with innovative design, going social by integrating Facebook.

Now Flipboard, a social news-reading app based around Twitter and Facebook, is adding publisher feeds.

One thing’s clear: There’s a lot of excitement and energy going into how the iPad can re-create content consumption.

Flipboard is launching a beta test with eight publishers, including, full disclosure, All Things Digital.

The other publishers are ABC News, Bon Appétit, Lonely Planet, SB Nation, SFGate, Uncrate and the Washington Post Magazine.

Participating advertisers, through a partnership with OMD, include Pepsi, Gatorade, Infiniti, the CW Television Network, Showtime, Levi’s, Dockers, Hilton Worldwide, GE, Hawaii Visitors and Convention Bureau, Project (RED), Standup2cancer.org and Charity: Water.

They are contributing full-page ads that are inserted into longer-form articles.

During the beta period, no money will change hands between any of these parties, including our site, according to Flipboard CEO Mike McCue.

Later, McCue said he expects to add many more publishers to the Flipboard app, and perhaps help publishers create their own “iPadified” content experiences to distribute themselves.

Instead of prompting users to go to the iPad’s Safari browser to read full versions of articles, as it has done to date, Flipboard will now import partner publisher content and lay it out automatically. For these stories, Flipboard formats images, divides them into pages and offers different layouts for portrait and landscape modes.

McCue said Flipboard users’ No. 1 most requested feature is the ability to add content through RSS feeds.

But he’s not giving them that with this update. Users can still only subscribe to publishers through Twitter accounts and lists. The reason, according to McCue, is Flipboard is dedicated to the social aspect and beautiful design of content, and RSS contains neither of these things.

McCue speaks of scrolling through Web pages with advertising units and side bars as a relic of the early Web and crappy Internet connections, saying Flipboard represents a return to the pagination and image emphasis of print.

Unlike print, though, Flipboard doesn’t work offline; that’s a future feature, said McCue. He also said his team is still singularly devoted to developing for iPad, and will divert focus to Android tablets only after they have an established user base.

By the way–more full disclosure–seeing ATD content get iPadified in McCue’s demo wasn’t as fun and glossy as you might imagine, especially given our small images.

And in what might be a problem for other content publishers like us, the quick blog posts we often write are not as easily transferable to this layout, given Flipboard does not yet differentiate between short stories and longer articles.

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