Revenues dropped 3 percent for the first three months of the year, while operating income shrank by 38 percent.

Corporate parent Time Warner blamed the decline on both slowing ad sales (down 5 percent) and newsstand sales (circulation revenue was down 2 percent).

Time Warner CEO Jeff Bewkes occasionally calls out Time Inc.’s efforts to get its titles onto the iPad and other tablets, and the unit has some digital success stories on the Web. But no one expects Time Inc. to turn into a high-growth business again.

Still, over the last few years it has managed to at least show improvements in its operating profits, as a result of layoffs and corporate restructuring.

Laura Lang, the unit’s newly appointed CEO, is Time Inc.’s third boss in two years. She has her work cut out for her.

The two companies say the service will go into a “brief beta trial” and will then be available to all Time Warner Cable subscribers (again, as long as they’re also HBO customers), “in the next month.”

Depending on how you look at it, the agreement either extends the reach of Time Warner’s “TV Everywhere” program, or fills an embarrassing hole. Time Warner and Time Warner Cable are two separate companies that split up in 2009, so programming deals between the two aren’t automatic, by any means.

But that explanation didn’t do much to appease Time Warner Cable customers who wanted the service. The cable company has 14 million subscribers, making it the country’s second-biggest cable provider after Comcast.

Time Warner rolled out HBO Go this summer to very positive reviews; Time Warner says users have downloaded five million apps for Apple’s iOS and Google’s Android devices. Earlier this month, Time Warner CEO Jeff Bewkes said that HBO Go users watch up to 50 percent more of the channel’s programming.

HBO Go users, who can watch shows like “Game of Thrones” on their iPad, iPhones, and Android devices, watch 30 percent to 50 percent more than non-users*, Time Warner CEO Jeff Bewkes said today at the UBS media conference.

But Bewkes said that the pay channel’s subscriber count had been “stable” in the past year, which would mean it still has about 28 million paying customers.

That makes sense, given that the “TV Everywhere” strategy Bewkes has been pushing isn’t focused on attracting more customers but in keeping the ones he has — especially those tempted to seek out video entertainment via the Web, or services like Netflix.

Meanwhile, Bewkes was careful to note that those viewership bumps may not continue, given that HBO Go is still primarily in the hands of early adopters, though that’s still a decent-sized number. Last month Time Warner announced that the HBO Go app had hit the 5 million download mark for Android and iOS users.

Speaking of Netflix — just in case you didn’t get the message via this weekend’s interview with the Financial Times — Bewkes reiterated his position on the service. He’s happy to sell them stuff he can’t sell anymore. Services like Netflix and Hulu “can definitely add value to all of us, if you’re trying to get that obscure movie that you haven’t seen yet,” he said.

That kind of faint praise may explain why Bewkes’s initial assessment of Reed Hastings’s company today — “Netflix is our friend” — drew laughs from the audience.

*Bewkes didn’t specify whether that 30 to 50 percent increase was for TV viewing, or an aggregate number that includes TV + devices. I’m assuming the latter, but have asked Time Warner reps to clarify. UPDATE: Yup, aggregate.

And if you didn’t understand that one, he offered another metaphor: A “200-pound chimp.”

In the following months, Bewkes cut back on his rhetoric, which may or may not have had anything to do with a lucrative deal to sell reruns of “Gossip Girl” to Netflix. But now that deal has been inked, Netflix stock has been crushed and lots of smart people think the video service may be on a permanent spiral.

So here’s Bewkes again, damning his new partners with very faint praise, this time in the Financial Times instead of the New York Times: Netflix and similar services (read: Hulu and Amazon, for now) can’t get the best stuff anymore, he says, and are stuck showing “archival content that nobody would want in Blockbuster.”

Not that there’s anything wrong with that! Bewkes adds. “It can do certain things and not other things. It can fly, it’s not a submarine. Don’t turn a hamburger into a cow.”

And that is how a pro mixes metaphors and backhanded compliments.

Again, remember that the real purpose of this stuff isn’t to hurt Netflix CEO Reed Hastings’s feelings — Hastings can probably take it — but to make Time Warner shareholders feel better about the company’s cable holdings. Because Time Warner’s cable channels — like TBS and TNT, and its HBO premium channel — are absolutely competing with Netflix for viewer time and dollars, no matter how much either company tries to insist otherwise.

Does this sort of semi-smack-talk entertain you? (It’s okay to admit it. Me, too.) Then you’ll want to check back on Tuesday: Both Bewkes and Hastings are scheduled to present that day at the annual UBS Media/Telecom conference. I’ll be there to record the slings and arrows, and I’ll report back.

The video rental company has a new licensing deal for shows from the teen-centric CW network, which is jointly owned by CBS and Time Warner’s Warner Bros. studio.

This one has been in the works for quite some time, despite the fact that Time Warner CEO Jeff Bewkes had made a point of belittling Netflix as “the Albanian Army” last year. But last spring, as the two companies continued to talk about distribution deals, Bewkes softened his rhetoric and explained that he would be quite happy to sell his reruns to the service.

Like other Netflix deals, this will be for reruns that are at least one season old — the company has stayed away from licensing “in-season” content. But if you want to watch last year’s “Gossip Girl” or “Vampire Diaries,” you’ll be able to stream those starting this Friday.

And like other recent Netflix deals, this is an “output” deal, which means Netflix gets the right to run shows that haven’t aired yet; the company has locked in everything the network will air through the 2014-2015 season. Netflix executives are increasingly pointing to this part of their content deals as a differentiator between their service and Amazon, which has been licensing much older shows for its streaming content deals.

The deal isn’t exclusive, though. Warner Bros. and CBS can still sell the shows via traditional distributors and other digital providers, with some restrictions.

Reminder: Netflix, which has lost about 60 percent of its market cap since this summer, reports Q3 earnings Oct. 24.

Google co-founder Sergey Brin paid tribute to Jobs’s “passion for excellence,” while co-founder and CEO Larry Page said he appreciated Jobs’s advice past and present.

Google Chairman Eric Schmidt said in an emailed statement:

Today is very sad for all of us. Steve defined a generation of style and technology that’s unlikely to be matched again. Steve was so charismatically brilliant that he inspired people to do the impossible, and he will be remembered as the greatest computer innovator in history.

Facebook CEO Mark Zuckerberg thanked Jobs for being “a mentor and a friend.”

Here’s his status message:

Pixar’s John Lasseter and Ed Catmull said:

Steve Jobs was an extraordinary visionary, our very dear friend and the guiding light of the Pixar family. He saw the potential of what Pixar could be before the rest of us, and beyond what anyone ever imagined. Steve took a chance on us and believed in our crazy dream of making computer animated films; the one thing he always said was to simply ‘make it great.’ He is why Pixar turned out the way we did and his strength, integrity and love of life has made us all better people. He will forever be a part of Pixar’s DNA. Our hearts go out to his wife Laurene and their children during this incredibly difficult time.

Here’s Disney CEO Bob Iger’s statement:

Steve Jobs was a great friend as well as a trusted advisor. His legacy will extend far beyond the products he created or the businesses he built. It will be the millions of people he inspired, the lives he changed, and the culture he defined. Steve was such an “original,” with a thoroughly creative, imaginative mind that defined an era. Despite all he accomplished, it feels like he was just getting started. With his passing the world has lost a rare original, Disney has lost a member of our family, and I have lost a great friend. Our thoughts and prayers are with his wife Laurene and his children during this difficult time.

In a tweet, AOL co-founder Steve Case called Jobs “the most innovative entrepreneur of our generation.”

I feel honored to have known Steve Jobs. He was the most innovative entrepreneur of our generation. His legacy will live on for the ages.

October 5, 2011 5:36 pm via Twitter for iPhoneReplyRetweetFavorite

@SteveCase

Steve Case

Bill Gates said: “I will miss Steve immensely.”

Twitter CEO Dick Costolo tweeted that Jobs had gone beyond raising the bar.

Once in a rare while, somebody comes along who doesnt just raise the bar, they create an entirely new standard of measurement. #RIPSteveJobs

October 5, 2011 5:58 pm via webReplyRetweetFavorite

@dickc

dick costolo

Netscape co-founder Marc Andreessen said in an emailed statement, “Steve was the shining light of our industry — he showed us what was possible … He set the bar.”

Time Warner CEO Jeff Bewkes said:

The entire Time Warner family mourns the loss of Steve Jobs. The world is a better place because of Steve, and the stories our company tells have been made richer by the products he created. He was a dynamic and fearless competitor, collaborator, and friend. In a society that has seen incredible technological innovation during our lifetimes, Steve may be the one true icon whose legacy will be remembered for a thousand years.

RIAA CEO Cary Sherman said:

Like all music fans, we are saddened to hear of the passing of Steve Jobs. Steve was a larger-than-life personality — passionate about music and one of its biggest fans and advocates. He was a true visionary who forever transformed how fans access and enjoy music. With the introduction of the iTunes software and other platforms, Steve and Apple made it once again easy and accepted to pay for music. His legacy will live on, long past his all-too-short time on earth.

New York City Mayor Mike Bloomberg said:

Tonight, America lost a genius who will be remembered with Edison and Einstein, and whose ideas will shape the world for generations to come. Again and again over the last four decades, Steve Jobs saw the future and brought it to life long before most people could even see the horizon. And Steve’s passionate belief in the power of technology to transform the way we live brought us more than smart phones and iPads: it brought knowledge and power that is reshaping the face of civilization. In New York City’s government, everyone from street construction inspectors to NYPD detectives have harnessed Apple’s products to do their jobs more efficiently and intuitively. Tonight our City — a city that has always had such respect and admiration for creative genius — joins with people around the planet in remembering a great man and keeping Laurene and the rest of the Jobs family in our thoughts and prayers.

Electronic Arts CEO John Riccitiello said:

Steve was one of a kind. For many of us working in technology and entertainment, Steve was a new kind of hero that lead with big, bold moves and would not settle for less than perfection. He is the best role model for a leader that aspires to be great.

News Corp. CEO Rupert Murdoch:

Today, we lost one of the most influential thinkers, creators and entrepreneurs of all time. Steve Jobs was simply the greatest CEO of his generation. While I am deeply saddened by his passing, I’m reminded of the stunning impact he had in revolutionizing the way people consume media and entertainment. My heart goes out to his family and to everyone who had the opportunity to work beside him in bringing his many visions to life.

Warren Buffett said: “He was one of the most remarkable business managers and innovators in american business history.”

Former Yahoo CEO Carol Bartz (full interview at the Wall Street Journal):

It’s the ultimate sadness … He was a very special person, and he didn’t get to where he was by having people like him all the time. He got to where he was because he had a vision and a purpose. It’s easy to try and please everyone, but he kept to his principles.

AT&T Chairman and CEO Randall Stephenson:

We are saddened by the passing of Steve Jobs. Steve was an iconic inventor, visionary, and entrepreneur, and we had the privilege to know him as partner and friend. All of us at AT&T offer our thoughts and prayers to Steve’s wife, family, and his Apple family.

Microsoft CEO Steve Ballmer:

I want to express my deepest condolences at the passing of Steve Jobs, one of the founders of our industry and a true visionary. My heart goes out to his family, everyone at Apple and everyone who has been touched by his work.

Google has posted a Jobs memorial on its homepage:

Conde Nast President Bob Sauerberg:

Steve was a great visionary and innovator. He invented paid digital content and we are grateful for that. His products over the years have been key in the development of high quality Conde Nast content. Our companies have always be aligned on unique design and high quality. Conde Nast sends sincere sympathy to his family and our friends at Apple.

Mike Lazaridis and Jim Balsillie, co-chiefs of BlackBerry maker Research in Motion, said:

“Steve Jobs was a great visionary and a respected competitor. We extend our deepest condolences to his family and to all of the employees of Apple.”

Hewlett-Packard CEO Meg Whitman said:

“Steve Jobs was an iconic entrepreneur and businessman whose impact on technology was felt beyond Silicon Valley. He will be remembered for the innovation he brought to market and the inspiration he brought to the world.”

Amazon CEO Jeff Bezos said:

“Steve was a teacher to anyone paying attention, and today is a very sad day for everyone who cares about innovation and high standards.”

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Which sounds cool!

But let’s be clear about what this is: An extension of the “TV Everywhere”/“authentication” concept that lets cable subscribers watch programming via alternate delivery systems.

And let’s be clear about what this isn’t: A tool for cable cord cutters or cord shavers.

Bloomberg laid most of this out last month in a story previewing tomorrow’s announcement. Steve Ballmer has been “promoting the Xbox 360 console as a way to switch easily between games, DVDs and pay TV” — not as a way to ditch cable. Which is why cable providers and programmers like Comcast and Verizon are working with him.

Another way to think about it: Look at the iPad and iPhone apps we’ve already seen from the likes of Comcast, Time Warner Cable, Cablevision and ESPN. They let subscribers watch some (though usually not all) of what they can get from their various cable packages on a different device. The Xbox deals should work the same way.

A more direct analogy: This will be an extension of deals Microsoft has already put together with the likes of ESPN, which gives some cable subscribers access to the network’s ESPN3 digital channel via their game boxes. (UPDATE: Readers note that the ESPN3-Xbox deal doesn’t require a cable subscription, but a broadband Internet subscription from particular providers. So it’s theoretically possible for an Xbox owner to get Comcast broadband — but not cable — and still get sports beamed to his TV.)

There’s always a miniscule chance that one of Microsoft’s partners will stray way outside the reservation and actually offer cable-like programming without requiring a cable subscription. One day, for instance, I could see Time Warner finally giving its HBO unit the go-ahead to start selling a la carte subscriptions to the pay service, at the same rates that it’s charging the cable guys.

The cable guys wouldn’t like it, but they didn’t like when HBO, et al, did the same with the satellite guys in the ’90s. There’s not much they can do about it.

But given that Time Warner CEO Jeff Bewkes is the chief proponent of the cable-protecting “TV Everywhere” plan, I don’t see it happening anytime soon.

More tomorrow, once Microsoft makes it all official.

I’ve given the service — which uses the Flixster brand that Warner Bros acquired earlier this year but which the studio built on its own over the last 12 months — a quick spin. Given that it just went into public beta yesterday, there’s no way to really assess how it’s going to work. Particularly since it’s supposed to be a social experience, and if no one you know is using it, it can’t be that social.

That said, you can at least get a sense of what Warner Bros. is trying to do here, and it’s a lot: They want Flixster to serve as your starting point whenever you’re thinking about renting, buying or watching a movie, or even when you’re thinking about thinking about it.

The free service ties into users’ Amazon, Apple iTunes, Hulu and Netflix accounts — as well as your hard drive, if you let it. And it lets you and your friends see what you’ve already watched, via “collections” that get displayed as movie posters (it doesn’t seem to have hang-ups about the “Bork law” that Netflix says prevents a Facebook integration the rental service wants to launch in the U.S.). It can also direct you back to those services when you want to watch something else.

And if you’d like to see a movie that’s actually in theaters, it can help there, too, via links to movie reviews, trailers and online ticketing services. You can also imagine how this will tie in to “Ultraviolet,” the cloud/locker system for video that Warner and a big coalition of movie studios and tech companies (except for Apple and Amazon) are pushing.

Sound like a lot of … stuff? It is! And the scope of the service’s offerings, plus the fact that it requires a standalone download (for Mac and PCs only for now, though mobile apps will be coming), may be a lot for casual video fans to take in. Especially since Facebook and Twitter already do a pretty good job of letting you and your friends gab about movies — without the privacy worries of letting a service look into your Netflix queue or root around in your hard drive.

And again, since the service is really supposed to shine once you can start sharing your likes and dislikes with friends, getting enough folks to sign on might be a challenge. Still, there’s nothing wrong with trying something big and ambitious.

He’s full of good will, too! No surprise: The Netflix CEO has always tried to present his company as an ally to Hollywood and the TV guys. So everything should be cool from here on out, right?

The reality is that the studios and TV networks aren’t quite sure what to do about Netflix: They’re happy to take Hastings’s checks, but they’re worried he’s using the money to disrupt their businesses.

So let’s hear Hastings make his case in his own words, via an interview I conducted with him on Tuesday. That’s a day before Bewkes made his latest comments about Netflix and other Web video services. But I don’t think Bewkes said anything that would have changed Hastings’s answers.

I used my time to focus primarily on Hastings’s approach to the TV business, but we touched on some other topics as well, including his take on competition from Amazon and Hulu.

Alas, right after I finished up with Hastings, I realized I had forgotten to ask him about Apple’s new subscription rules and what impact they would have on his Web service. I tried following up, but it was too late: Hastings, via a PR rep, declined to comment.

Here’s an edited and condensed transcript from our talk:

Peter Kafka: There’s been a lot of rumbling from Hollywood about slowing down your growth by delaying or cutting off your access to content, and Time Warner has been the most vocal about this. What happens if they follow through?

Reed Hastings: We license only a small part of our streaming content from Warners today, and we hope to be able to license more as we go. We’ll see what their perspective is on it. But we’re doing great, even though we haven’t licensed essentially any Time Warner streaming content.

But beyond streaming, they could make it much harder for you to distribute their DVDs, too. You have a distribution agreement with them now, but it will expire this year.

Discs I think we should set to the side, because we’re mostly focused on streaming. And on streaming we only license a few shows from them today. It’s a very tiny amount.

And [because they're] not licensing to us, they’re missing out on a lot of revenue, and we’re putting that revenue into their competitors. We spend a lot of money with News Corp. We spend a lot of money with Viacom. That’s a choice that they’re making.

Do you think Jeff Bewkes is more concerned about your impact on his Warner Bros., or his HBO pay channel?

I’m not sure. You’d have to ask Jeff that.

I ask because in the ongoing cord-cutting/cord-shaving/cord-nevers debate, there seems to be a growing consensus that services like Netflix are most competitive with premium TV like HBO.

We compete with HBO like baseball and football compete. We sell to the same person, we deliver some of the same emotion, but it’s not direct competition. People subscribe to both. And the people who love us often subscribe to HBO.

They don’t have any of the same content we have, and we don’t have any of the content they have. So it’s a pretty indirect competition for time and money.

How many Netflix subscribers also have HBO?

The last time we checked was a couple years ago. It was about a third.

Again, there really isn’t a direct competition. We’re creating this new market where consumers get to choose what they want, and it’s on demand, and it’s a very different experience.

In your last shareholders letter, you specifically referred to competition from Amazon and Hulu Plus. Do you think those are your two biggest threats?

What we said is that they’ve entered the market in the last year, and that we’ve continued to prosper and grow.

You’ve been focusing more energy on acquiring TV programs. And while you keep saying you’re not interested in providing TV shows the day after they air, like Hulu does, many people think that’s what you’ll do sooner or later. How do you look at TV programming?

TV content on DVD was about 20 percent of our viewing. And on streaming it’s about half. The difference between “Terminator” 1, 2 and 3, and episode 1, 2 and 3 of a TV show is not that large. We’ve always been consistent that movies and TV shows are what we do, and we haven’t changed.

We’re not focused on same day [TV shows], because what we really want to do is spend that money on prior. You can buy two or three prior season shows for the price of a same day show. You can get same day on cable, satellite, pretty easily.

What about when you have more money? Would you get into same day then? Or do you always want to be an archival business?

I wouldn’t call it archival. [Comcast CEO] Brian Roberts’s phrase was “rerun TV.” And there’s a lot of great reruns, because you might not catch everything when it’s new and fresh. At least for the next five years, we’re really focused on that rerun model on television, and the pay [TV window] model on movies. And we have our global expansion, which we’re putting a lot of money and time into.

But you are paying for the first run of “House of Cards,” and possibly other shows. That seems like you’re edging closer to premium content.

We like premium content. We just did a big deal licensing “Glee,”and a big deal licensing “Mad Men.” And “House of Cards” is similar except that it’s premiering on Netflix.

So it’s a little bolder and a little riskier than other shows, but we’re not really in the original content business. We didn’t create that content, we didn’t find the script, we didn’t put the cast together, we didn’t talk Kevin Spacey into it. And it’s a small part of what we do, as a test.

If it works, will you build out a staff to find more of this stuff, or develop it?

If there’s a market of buyers, then those shows tend to get developed. We’ll take it year by year and see what happens.

We tried an experiment a couple of years ago with Red Envelope entertainment, where we bought films out of Sundance and similar festivals. And it was very fun, but we lost $10 million, and then we stopped. So we’ll see what we find.

So you don’t see yourself producing originals in the way that HBO does?

Very unlikely, especially given my background. What we’d prefer to be is the buyer of prior season, or expired season, like an “In Treatment.” Or have all the episodes of “Dexter.” We think if we focus on prior season, we can help build audience for current season.

Speaking of expired season, I’ve heard some networks talk about extending the life of shows they were going to cancel if you’re going to pay them to keep going. Does that make sense?

Yes. For example, “Friday Night Lights” wasn’t going to get continued two seasons ago on NBC, and DirecTV did a deal to extend that show. So we can see ourselves doing something like that–extending a season of something that was doing well on Netflix.

And semi-privately, Bewkes’ lieutenants have been suggesting that they’re going to pull back on content they supply to Netflix, and may cut it off entirely in the near future.

There’s definitely some theater involved here, put on for the benefit of investors worried that Netflix poses a threat to several of Time Warner’s properties: His Warner Bros. studio, its Turner cable networks, and its HBO premium cable network.

Because even while Bewkes and company have been lobbing spitballs at Netflix, they’ve been talking to the service about new distribution deals, sources familiar with the companies tell me.

In any case, Bewkes has been taking pains to soften his rhetoric recently. Last week, at the Tribeca Film Festival, he sent some verbal bouquets toward Hastings. And today he did much the same during Time Warner’s earnings call.

I’ve transcribed and edited Bewkes comments below. But he’s wordy, so even my abbreviated version runs long. Short version: We’re cool with Netflix because they’re complementary, not competitive. But that means we’re not going to give them our newest stuff, either.

This also happens to be what Hastings himself says. But more on that later. Here are Bewkes’s comments from this morning’s conference call:

Analyst: Can you talk about your relationship with Netflix?

Bewkes: Our view of Netflix has been very consistent. I’ve tried at times to be humorous about it, sometimes to make a point, so let me be clear: We think there’s definitely a role for subscription VOD services, library services, and Netflix in the ecosystem.

What is the role? Clearly it’s a way to give consumers access to a deep library of content that they couldn’t easily get before, particularly older shows. Although they’ll probably be able to get them more easily in other places now.

But it’s been a useful thing to get subscription services for products you couldn’t get before. There’s been some utility for viewers in being able to get serialized shows that don’t play as well on traditional cable networks or in syndication.

And because SVOD monetizes some content that couldn’t be monetized before, and it monetizes some content better than it was monetized before, particularly the older library stuff, then it can add money to the ecosystem. And that’s good for everybody.

But what we’ve always said is that you need to make sure SVOD doesn’t devalue the content and disrupt the ecosystem. So our view has been that it is not usually the right outlet for the newer, higher-value content that is functioning much more powerfully for viewers, on other kinds of networks, in other windows.

We’ve said because of all of that that we do not think it would be a suitable substitute for multichannel TV for most consumers. And therefore, we don’t think it will upend the multichannel TV business.

Q: Can you talk a bit more about cord-cutting, and whether you think Netflix and other Web services encourage it?

Bewkes: We watch it closely, but we haven’t seen it yet.

I think Netflix has around 23 million subs in the U.S. But we believe there are only about 4 million households that have broadband and no multichannel TV. And that number is almost unchanged since Netflix started its streaming service.

So even though people like the service, it has not led to very many Netflix subs cutting the cord. Looking forward, it’s hard to see how subscription TV becomes a replacement for multichannel TV.

Because as far as we can see, it probably won’t be able to economically offer a lot of the current shows, sports, live events, first run things of all kinds, that are available on all the high-value networks. And we don’t think that very many subscribers are going to be willing to give those things up.

We don’t think U.S. consumers want less choice. The record of the last 30, 40 years has been they want more choice.

Just to really acid test that, there are already a number of stripped-down TV packages that are available. And very few consumers take them.

Dish Network has a “focus on value” package, and its lowest-priced package is $24.99. Most people don’t take that, which is why the average revenue at Dish is closer to $70.

And then add the last part of the puzzle, which is you can see it this week at HBO GO: TV Everywhere [which means] VOD availability, for all the networks everybody loves. It’s going to make the current network subscriptions, foremost among them HBO, even more palatable.

So this really suggests that things like Netflix are welcome additions.

Time Warner CEO Jeff Bewkes, who hired former Meredith magazine head Jack Griffin in August, has now let him go. “I concluded that his leadership style and approach did not mesh with Time Inc. and Time Warner,” Bewkes writes in a companywide memo.

Bewkes hasn’t announced a replacement, and says that in the interim, a troika of Time Inc executives — which notably includes Time Inc. editorial head John Huey — will run the business and report to him.

Griffin lasted less than six months on the job, so there’s going to be a lot of well-deserved scrutiny into Bewkes’ decisions to hire, then fire him so quickly: Does Bewkes get credit for getting rid of Griffin early, or penalized for bringing him aboard in the first place? Or both?

The early word from Time Warner and Time Inc. employees is that Griffin’s employees were extremely unhappy under his tenure, and that the company was facing the possibility of losing valued employees.

One example of a move that didn’t win him any fans at the tradition-bound publisher: Placing his name first on the masthead of its monthly magazines — and requiring weekly magazines, which hadn’t traditionally run mastheads, to start publishing them.

The move supposedly cost Time Inc. millions in lost ad revenue, but it’s hard to see that being a firing offense; I note it only because it was one of the first complaints I heard about Griffin after the news broke this evening.

More worrisome: One Time Inc. source notes that the company distributes annual bonuses in March, suggesting that the move was made now in order to persuade disgruntled workers from bolting in a few weeks.

Here’s the memo.

To:                   Time Inc. Colleagues

From:               Jeff Bewkes

Subject:            Jack Griffin

I regret to inform you that Jack Griffin is leaving his position as Chairman and CEO of Time Inc. Although Jack is an extremely accomplished executive, I concluded that his leadership style and approach did not mesh with Time Inc. and Time Warner.

Until a permanent successor is identified, Time Inc. will be led by an experienced interim management committee, reporting directly to me, composed of Howard Averill, Maurice Edelson and John Huey. You will be hearing from them within the next several days regarding their plans during this transitional period.

This company and its executive team have made many important advances in the last few years. Throughout, you have distinguished yourselves with professionalism and dedication to your craft, and as a result of that hard work the company’s momentum has been restored.

With our deep and talented pool of employees, I’m confident that during this transitional period Time Inc. will continue to grow and prosper, and that you will continue the brilliant work that has defined our company.

Jeff

Instead, the magazine pushed users to read its app in just the horizontal “landscape” mode, and essentially disabled the vertical “portrait” mode.

At the time, Time Inc. editor Josh Quittner said the publisher was doing so because:

• Viewing the app horizontally was better for users;
• Producing just one version of the app saved money;
• And since Apple wasn’t cooperating with Sports Illustrated‘s effort to sell subscriptions to the app, it didn’t make sense to throw more resources at the project.

That was back in September, and since then Time Inc. (like just about every other big publisher) has yet to reach an agreement with Apple about how to handle subscriptions in iTunes. But in the meantime, Sports Illustrated has apparently thought things over, because readers can once again view the app in landscape and portrait modes. Behold!

I only noticed the change today, but it turns out it has been in place since the magazine’s October 18 issue. What gives? Or what gave?

A statement from a Sports Illustrated rep doesn’t shed much light: “We are constantly exploring the iPad’s numerous functionalities for innovative ways to present Sports Illustrated to consumers. Each issue delivers something unique either in its design, functionality or content.”

So in the absence of better information, I’ll make a couple of guesses that aren’t mutually exclusive:

• I think app users complained quite a bit about the change, because conventional wisdom is that people like access to both modes, and they particularly enjoy reading magazine apps in the vertical mode, because that’s the way they read the paper-and-ink versions.
• Someone at Time Inc., or its parent company Time Warner, rethought the notion of negotiating with Apple by making its product look less attractive.

That said, it’s worth noting that Time Warner CEO Jeff Bewkes himself has been quite vocal, in a corporatespeak sort of way, about his company’s eagerness to work with tablet makers beyond Apple. (This mirrors what the magazine industry’s Next Issue Media joint venture is saying, too, by launching with Google’s Android platform first.)

Bewkes made noises about it during his company’s earnings call earlier this month. And he got more forceful about it–again, by his standards–yesterday during an onstage interview with the New York Times’ David Carr.

If somebody that makes a tablet–you can nominate who it is–wants to not have app support for what we’re going to put over the internet, they will degrade the capability of the tablet that you bought.

So if you’ve got a tablet that whoever gave it to you, they don’t want it work well, that will be their actions not ours…

You’re the customer, you bought the device. Are you going to tolerate a device, that doesn’t let its app support give you the full range of capability that is offered by the publisher or the network?

Because we’re going to be very public about what we offer, and it’s going to be all free, for anybody who buys the magazine. And if some tech company stands between you and that experience, they should answer to you.

In fact, it’s worth watching Bewkes deliver this speech in real time, and it’s a hoot to watch him onstage with Carr. If you’re in a rush, the magazine/tablet stuff kicks in around the 26-minute mark.

Research firm SNL Kagan says the U.S. pay-TV business lost 119,000 subscribers last quarter. That’s only the second time in history that this has happened, and the first time was the previous quarter.

And it’s important to note Kagan is talking about all pay-TV businesses, not just the cable guys. Or more accurately: The cable guys like Time Warner Cable and Comcast are losing more customers (741,000) than the satellite guys and telcos like Verizon are adding (621,000).

If you want to spin this positively for the pay-TV business, you can argue that the losses are slowing: In Q2, pay TV lost 216,000 subs.

And if you want to be a little less positive, you can argue, as the cable guys do, that if they are losing customers, it’s because the economy stinks.

Nonsense, says the cord-cutting crowd, who believes that people are starting to leave pay TV, in increasing numbers, for a combination of the Internet, rabbit ears and the likes of Netflix and Apple TV.

And Kagan is with the cord cutters here. From their release:
“It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”

Or in English. People are cord-cutting. It’s happening now.

But here’s the thing: There’s a valid reason for the pay-TV guys to say they don’t see what Kagan is talking about. Because they don’t. Or at least they have numbers that say otherwise.

Here’s Time Warner CEO Jeff Bewkes, who owns several very successful cable networks, speaking at an industry conference today. “The trend, as far as we can see it, continues up…it’s all good,” he told the New York Times’ David Carr. “They’re not cutting.”

And look at these numbers from cable powerhouse Viacom, whose CEO Philippe Dauman just dismissed cord-cutting talk as “much ado about nothing”. They show Viacom’s overall subscriber count, network by network, for the third quarter. And all of the domestic channels’ sub numbers, at least, have increased in the last year (click to enlarge):

So something, somewhere doesn’t add up.

Next Issue‘s initial incarnation will only work for devices running Google’s Android software, CEO Morgan Guenther tells me.

It’s not a technical issue, Guenther says, because “we’re ready to support Apple as well,” and he says he’s confident that will happen. But “Android is a very important tablet platform, and a very important platform for smartphones.” (Read Walt Mossberg’s review of Samsung’s Android-powered Galaxy Tab.)

Guenther wouldn’t disclose other details about his launch, but you don’t have to squint to read between the lines here. The takeaway is that Google has been flexible on the business issues that are important to the publishers that own his company. And that Apple’s not there yet.

The key split, still: Publishers want the ability to sell their tablet magazines directly to consumers, or at least to be able to access the data that iTunes collects when it sells them.

Some publishers tell me that Apple’s stance has softened somewhat since this summer, when the company refused to let Time Warner’s Sports Illustrated sell subscriptions for its app. But that hasn’t led to any real concessions so far.

If you buy a subscription to Newsweek’s iPad app, for instance, the publisher has no idea who you are or how to reach you: Apple keeps all the data, as well as 30 percent of every dollar.

Presumably Guenther and his publishers are hoping sales of their magazines take off on Android tablets and phones, giving them leverage in discussions with Apple. And that seems to be what Time Warner CEO Jeff Bewkes was getting at it with his oblique but pointed comments last week.

But all of this wrangling may be non-issues if publishers can’t figure out how to come up with digital magazines that people are interested in, at a price they’ll pay. Aside from a few outliers like Condé Nast’s Wired, early sales numbers from iPad magazines haven’t blown anyone away.

[Image credit: Hard seat sleeper]

Here are Bewkes’s prepared remarks from Time Warner’s earnings call this morning:

In Magazines, Content Everywhere means offering our subscribers a convenient, attractively-priced way of enjoying our titles in print and enhanced electronic versions, across as many devices as possible.

If you’ve downloaded an iPad version of one of our Time Inc. magazines, you know it’s a rich and compelling consumer experience. As you’d expect, we want to offer our customers a range of purchase options including single copy sales, digital subscriptions and combined print and digital subscriptions. For instance, subscribers to People’s print edition can now access the People iPad app for free.

In the near future, we expect to announce deals with other tablet makers that offer our readers flexible ways to access all our electronic titles. We’re confident that as competition increases in that space, every tablet manufacturer will want to give its consumers the same range of choices and the same value.

That’s a classic bit of corporatespeak, since it doesn’t pin Time Warner or its Time Inc. unit down to anything, with anyone. But it’s also easy to translate: “We were psyched about the iPad, but now we’re frustrated over the ongoing subscription standoff. But we bet Google will be very happy to help us out–and maybe that will prompt Apple to come around.”

It’s no secret that Time Inc., like every other magazine publisher, would very much like to work with Google*. Both because they think the new Android tablets will be a hit, and because publishers want leverage when they talk to Steve Jobs.

And it would make sense for Google to go out of its way to give content makers what they want–in this case, the ability to sell magazine subscriptions and keep all of the customer data–because more content makes its tablets more attractive.

We still don’t know what that will look like in practice. For instance, will publishers be able to sell subscriptions “in app,” or will they have to do it via a Google store?

And we also don’t know if the inability to buy digital magazines via subscriptions is what’s really holding back buyers, or if it’s just something they like to complain about on iTunes comments (which, it turns out, publishing executives take very, very seriously–every time I talk to one, they cite the anonymous scribblings).

But now Bewkes says we ought to know in the “near future.” Stay tuned….

*Yes, the content guys want to work with Microsoft on its Windows-flavored tablets and even RIM and its BlackBerry device, too. But Google’s the real focus here.

Today, as news of the departure of Yahoo’s U.S. head Hilary Schneider and two other top execs got around Wall Street, investors and dealmakers were actually thinking of things other than executive turmoil.

As in: Does the uncertainty, along with a naggingly lackluster stock price and weak growth, create pressure on its CEO Carol Bartz and its board to do something dramatic?

In addition, does the messy public situation even provide an opportunity to put Yahoo into play, despite its market cap of $19 billion?

These and many more are the scenarios being debated in boardrooms of big media and Internet companies today, as well as at private equity firms, investment banks and even in Asia.

That’s because many are focusing on Yahoo’s Asian investments. Yahoo (YHOO) itself owns almost 35 percent of Yahoo Japan and a 40 percent stake in China’s Alibaba Group, assets that now make up–along with cash on hand–most of the company’s valuation.

Alibaba and Yahoo have recently gotten into an ugly public tussle over the Chinese firm’s desire to buy back the shares now, with Bartz holding out for more appreciation.

Now, she might have to do a deal with Alibaba, according to one theory, because a sale of its stake would give Yahoo’s stock a significant boost.

One problem: Alibaba CEO Jack Ma has made it known to anyone who will listen that he loathes Bartz personally, after a series of awkward encounters. That said, he has a close relationship with former Yahoo CEO and co-founder Jerry Yang, who is on both companies’ boards.

That puts Ma in an interesting position, according to another theory, because other U.S. companies with an interest in Yahoo might try to make a deal with him to do some kind of deal with Yahoo.

Most frequently mentioned by big investors in Yahoo: AOL (AOL) and its CEO Tim Armstrong.

Armstrong, said sources, has not shied away from the idea of Yahoo acquiring AOL and installing him as CEO with Bartz as chairman. AOL’s valuation is just $2.65 billion.

Although AOL has also been trying to turn itself around and is in a much less powerful position than Yahoo, Wall Street likes Armstrong’s story for AOL as a modern-day media and media distribution company.

“At least he has a narrative that is believable,” said one big investor in both companies. “Bartz has no vision.”

Another plus for Armstrong: His friendly and Don Draper-smooth demeanor, in contrast to Bartz’s tough-talking and now too-often curse-laden patter.

And while Bartz is losing execs, Armstrong has assembled an experienced staff. And he himself has deep online advertising sales experience, given his last job as head of U.S. sales at Google (GOOG).

Also likely to be interested: New Corp. The reason is that its own digital efforts, especially at the MySpace social networking site, have gone sideways.

And there’s history: News Corp. (NWS) tried to facilitate a merger of MySpace, MSN and Yahoo into a company codenamed “TrafficCo” at the time Microsoft was attempting a takeover of Yahoo.

It was supposed to be headed by former Microsoft exec and now Juniper (JNPR) CEO Kevin Johnson, another possible Yahoo CEO candidate.

That plot did not pan out and News Corp. has been trying mightily to revive MySpace ever since. It certainly would trade it into Yahoo for some stake.

Another hook: Its digital head Jon Miller, who used to be CEO of AOL, almost was CEO of Yahoo, during that same takeover fight. But a noncompete agreement with Time Warner (TWX) was enforced by CEO Jeff Bewkes at the time.

Both AOL and News Corp. could certainly make approaches to Ma or Yahoo Japan’s Masayoshi Son to agree to help them get back their Yahoo stakes.

Son was the one who made the move recently to switch out Yahoo search for Google in Japan.

And, by the way, Son was one of Yahoo’s earliest investors.

Confused? Well, it is certainly shaping up to be a lively Silicon Valley goat rodeo, as there are also all kinds of private equity companies with spreadsheets already figured if Yahoo shares decline enough.

And there are other ideas spinning on spins into Yahoo, such as Demand Media, which is prepping an IPO, and its perpetually enthusiastic CEO Richard Rosenblatt.

One unlikely player is Microsoft (MSFT). The once hostile suitor is now a partner to Yahoo in search and online advertising.

Of course, the last and biggest question is what happens between Bartz and the board. While they seem to have backed her this far, she has not performed as she has promised and now seems to have gotten publicly grumpy about all the pressure to do so.

Will the directors, who proved themselves pretty ineffectual in the past, continue to support her? Or will they find some self-protecting way to ease her out?

Some directors are definitely unhappy, sources said, but no one seems to be in charge or particularly influential.

Which could mean even more confusion as Yahoo moves unsteadily forward.

Until it all settles down, please enjoy this video of an actual goat rodeo:

“We think the rest of the studios will see the light and get on board pretty fast,” Steve Jobs said earlier this month of the TV studios wary of its new 99-cent iTunes TV rentals initiative. And while it’s never wise to bet against the Apple CEO, it’s beginning to look like “pretty fast” was an optimistic choice of words. Because in a flurry of public comments recently, a growing number of TV execs have decried the 99-cent rental model, which they say undervalues their content.

At the Goldman Sachs Communacopia conference last week, Viacom (VIA.B) CEO Philippe Dauman said of it, “The 99-cent rental is not a good price point. It doesn’t work for us. We value our content a lot. We don’t think Apple has it quite right yet.”

And during his appearance at the conference, NBC Universal CEO Jeff Zucker said pretty much the same thing. “We do not think 99 cents is the right price point for our content,” he argued. “We thought it would devalue our content.”

Then there was Warner Bros. Entertainment Chairman Barry Meyer, who trashed Apple’s (AAPL) effort at the
Bank of America/Merrill Lynch 2010 Media, Communications & Entertainment Conference. “We just don’t think the value proposition is a good one for us,” Meyer said, adding that he’d rather sell season passes to the studio’s TV series and $1.99 and $2.99 per-episode downloads than “open up a rental business in television at a low price.”

And now Time Warner (TWX) CEO Jeff Bewkes has come out against 99-cent iTunes TV rentals. Speaking at the Royal Television Conference in London, Bewkes echoed the comments of his colleagues, warning that the new model Apple’s pushing will threaten sales of TV shows to network television. “How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?” he asked. “These new entrants must meet a few criteria: They must provide consumers with a superior TV experience, and they must either support or improve the overall economics that funds and creates the programming in the first place.”

Early reviews suggest that Apple has met Bewkes’s first criteria, but given the statements above it’s looking like it may take a bit longer than expected to meet the second, or convince the studios that it has.

JACK GRIFFIN NAMED CEO OF TIME INC.

Succeeds Ann Moore, Who Is Retiring After 32 Years at Time

NEW YORK, August 9, 2010 – Time Warner Inc. (TWX) Chairman and CEO Jeff Bewkes today announced the appointment of Jack Griffin as Chief Executive Officer of Time Inc.

Mr. Griffin will succeed Ann Moore when he joins the company at the end of September. Ms. Moore, who is retiring after 32 years of service at Time, will remain as Chairman through the transition, after which Mr. Griffin will also assume that role. Earlier this month, Mr. Griffin left the Meredith Corporation where he had served as President of its National Media Group.

In making the announcement Mr. Bewkes said: “I am delighted that Jack is joining Time Inc. He is an exceptional executive who knows how to expand the reach and relevance of strong publishing brands, and he will be a champion of our high-quality journalism. As CEO, Jack will further advance our lead position in the industry and accelerate the expansion and innovation of our titles on all platforms.”

Mr. Bewkes continued: “On behalf of all our colleagues, I want to thank Ann Moore for her 32 years of distinguished service at Time Inc. She has made so many contributions over that period, including launching some of our biggest brands and diversifying our advertising client list, and, most recently, advising me on recruiting Jack. And she has done a remarkable job of leading the company over the past eight years, a challenging time in publishing. Ann has also been a visionary in digital, leading the industry to innovate across all emerging platforms. And through it all, she proved to readers and advertisers that there is great value in both the old and the new publishing formats.”

At Meredith Mr. Griffin nurtured and aggressively expanded the company’s titles while also creating highly successful advertising and marketing programs. He played a significant role in helping acquire publisher Gruner + Jahr USA, overseeing its integration into Meredith Corporation, which doubled the size of its magazine business.

Mr. Griffin said: “I am honored to join Time Inc., the world’s pre-eminent branded content company. Time Inc. has a strong culture of excellence and leadership, and I look forward to working with the great team there to continue moving the company forward. It is a great privilege to follow in the footsteps of my friend and colleague Ann Moore, who has done so much for Time Inc. and the industry.”

Ann Moore said: “I have believed for some time that Jack is the right person to be the next CEO of Time Inc., and I couldn’t be more pleased that he will lead this Company into the future. It’s a vote of confidence in our strategy that Jeff and the Board have landed one of the most experienced leaders in our industry.”

While President of the Meredith National Media Group, Mr. Griffin oversaw the company’s portfolio of media and marketing properties, and managed the company’s Brand Licensing and book publishing operations. He is well known for creating Meredith Integrated Marketing (MIM), the company’s digital marketing services unit. MIM tripled in size under Mr. Griffin’s leadership, becoming an industry leader in CRM and multiplatform marketing programs. Prior to Meredith Corporation, Mr. Griffin was at Parade, a division of Advance Publications, from 1999 to 2003, where he became its President.

Mr. Griffin has won many awards and industry honors – including being selected as the Publishing Executive of the Year in 2005 by Advertising Age and receiving the AAF Jack Avrett Award for industry and community service. He has also received the National Human Relations Award from the American Jewish Committee in 2005 for his charitable work. Mr. Griffin is currently Vice Chairman of the Magazine Publishers of America, Director of the Internet Advertising Bureau and the Audit Bureau of Circulations, and a member of the AAF Hall of Achievement.

Mr. Griffin graduated with a BA in philosophy, cum laude, from Boston College and received his Master’s Degree from the Yale School of Management. He is a former president of the Yale School of Management alumni association and a director of the Yale Center for Customer Insights.

Today’s reminder: Time Inc., the industry’s biggest player, generated more than $900 million in revenue in the last quarter.

Some of that does indeed come from digital, but the vast majority of that revenue still comes from readers who buy magazines and advertisers who pay to reach them. And it can be a profitable business, too: Time Inc. generated operating income of $153 million.

The not-great news in those numbers is that while profits are up 50 percent over the previous year, that’s all because of $50 million worth of layoffs and other cost cuts. So revenue hasn’t really budged. And given the state of the economy a year ago, many media companies are showing big year-over-year increases. So that’s a problem (click image to enlarge).

On parent company Time Warner’s (TWX) earnings call this morning, CFO John Martin said that the flattish ad sales numbers are in part because Time Inc. used to publish more titles a year ago. Adjust for that, and domestic ad sales are up in the “high single digits.” he says. Ad sales will also be up in Q3, when the comps are more challenging, and for all of 2010, he predicts.

So what about the iPad? Well, Condé Nast sold more than 100,000 copies of its Wired launch issue at $4.99, which nets out to $350,000 for the publisher. But Time hasn’t sold anything close to those numbers, or it would be boasting about them too. And even if it had, that wouldn’t mean a lot to a company that does nearly $1 billion a quarter.

Still, Time Warner CEO Jeff Bewkes needed to say something about the iPad, so he did: He said that the apps are great and that “very shortly” the publisher would be offering similar apps for “every tablet.”

Since Apple (AAPL) is the entirety of the tablet market for now, you’ll have to guess about who he had in mind. But presumably Google (GOOG) and Microsoft (MSFT) will make this a bit clearer in the near future.

• TWX reported revenue of $6.38B, vs. our estimate of $6.06B, up 7.7% Y/Y. Adjusted operating income of $1.20B was $90M better than our estimate. We note that the beat came from cable networks, which we see as higher quality than film.
• Filmed Entertainment revenue was $2.52B, ahead of our estimate of $2.26B, up 7.8% Y/Y. Segment operating income was $173M, while we estimated $171M.
• Cable Networks revenue was $3.17B, and Adjusted Operating Income was $981M, while we estimated at $931M.
• Publishing revenue came in at $919M, in line with our estimate, up 0.4% Y/Y. Segment Adjusted Operating Income was $153M, vs. our est. of $142M.
• Reported diluted EPS ex-items of $0.50, vs. our estimate of $0.44.
• On the call we will be looking for commentary on the advertising market recovery and cable networks cost trends as well as for an update on capital allocation.

—————–

Mashable says AOL has sold Bebo, but doesn’t know who bought it or the price paid for the social network. PE Hub’s Dan Primack (via Business Insider) thinks the buyer is in Southern California.

What does AOL say?

No comment. Or more precisely: “We haven’t announced anything,” says PR boss Tricia Primrose.

Okey-dokey! More info if and when it surfaces.

But if Tim Armstrong can get anyone to pay anything for Bebo, it will be a small victory for AOL (AOL).

The previous AOL regime bought the social network for $850 million at the height of the last Web bubble, and the portal has since had to write the whole thing off. For some reason, Time Warner (TWX) boss Jeff Bewkes, who signed off on the purchase, never gets tarred for that one, but I digress…

Armstrong has already announced that if he can’t find a buyer for Bebo, he’ll shut the whole thing down. Which makes it pretty hard to drive a hard bargain. Anyone want to hazard a guess?

Not going to happen. At least not anytime soon, says Jeff Bewkes. The Time Warner (TWX) boss was asked about that scenario during yesterday’s earnings call and promptly batted it down. The short version goes something like this: The cable business is a very good business for us. Why would we want to screw with that?

The longer version, via Seeking Alpha, is worth reading, too:

Don’t get ahead of yourself. I would say, yes, HBO could easily do that. The question is, is whether it would in its interest to do that. Remember, HBO GO means that all the HBO subscribers in the United States are going to have HBO programming on demand across every device for no extra charge. So that is a powerful offering. And that will mean, if they want to access it on the broadband device, including any device made by any company, could be Korean, could be Apple, when they turn the thing on, they’ll be looking at HBO. So they don’t need to make a deal or an arrangement or diffuse some of the money or leverage to a device maker because they’ll view on every device for no extra charge. It’s a very powerful position. Not only HBO will be in that position, every network on the dial is going to be in that position, and so is every magazine.

There’s a twofer buried in there:

• A reiteration of the “TV Everywhere” strategy Bewkes champions, whereby paying cable subscribers–but only paying cable subscribers–get to watch their shows on the Web, too.
• And some chest-pounding about not letting Apple (AAPL) or anyone else dictate how Time Warner distributes its stuff.

Still! Note that Time Warner’s Time Inc. unit is falling over itself to rush out magazine apps for Apple’s iPad. Apple has a great deal of say over how those apps work, and it gets to collect 30 percent of the sale price. So Bewkes’s position has plenty of flexibility.

In fact, I wouldn’t be shocked if HBO does market an online-only subscription in a couple of years, especially if cord-cutting moves from apocryphal trend to documented fact.

The cable guys won’t like it, but the cable guys didn’t like it when HBO and other networks began selling their stuff to the satellite guys back in the 90s. As long as Bewkes can tell the cable guys that he’s selling his online stuff at the same price as his offline stuff, there’s not a lot they can do.

But if you’ve got an offer, you can go ahead and contact Allen & Company, the media banker hired by Associated Content late last year.

Associated Content looks and acts a lot like Demand Media, the Santa Monica-based “content mill” that’s drawn a lot of attention in the last year or so–though both companies bristle when you compare the two. It’s also thematically related to AOL CEO Tim Armstrong’s push to automate the production of content at that company.

That’s why Armstrong worked very hard to buy Associated Content last summer, as Silicon Alley Insider reported. I’m told a deal in the $90 million range was all but done, but ultimately nixed by Time Warner (TWX) CEO Jeff Bewkes, who wanted Armstrong to buy stuff on his own dime after AOL (AOL) spun out from the media giant.

AOL is free and clear now, but it doesn’t have a bankroll for big acquisitions. Earlier this year, the company spent $36.5 million on video platform StudioNow, but AOL execs have said they can’t and won’t spend any more than that on acquisitions for some time.

So if Associated Content, which is backed by Canaan Partners*, Softbank and Armstrong himself, wants an exit in the near term, it will have to look elsewhere.

Like where? Prior to bringing on Allen, the company flirted with Yahoo (YHOO), which has yet to do much M&A in the Carol Bartz era, but will one day. And sources says CEO Patrick Keane has even chatted to Demand Media, his company’s chief rival, about the possibility of a combination.

Another possible route: Conventional media outlets, some of which are already using the start-up to help fill their Web pages with cheap content.

Alternately, the company can stay solo and hope its story becomes more attractive as time goes on. People close to Associated Content say it’s on a $15 million run rate, up from $4 million earlier in the year. ComScore pegs the company’s audience at 10 million unique visitors (though as usual in these cases, the company says it has many more, and Quantcast puts the number at 20 million).

Associated Content declined to comment.

*An earlier version of this article incorrectly described Polaris as an investor in Associated Content.

No replacement has been named, and if Adler has a new gig, he hasn’t announced it yet.

Adler is the kind of old-school big-media gatekeeper/messenger you see less and less of these days, simply because there’s more flux among old-school big-media companies.

Beyond that, he’s of note among us media types for a couple of reasons:

• He is a long, longtime veteran of what used to be described as the world’s biggest media company. He moved into the top PR slot there in 1997, which means he was there for all of Time Warner’s last couple decades of ups (AOL) and downs (AOL), as well as three CEOs: Gerald Levin, Richard Parsons, and now, Jeff Bewkes.
• He also used to be one of us: Many moons ago, Adler was a reporter at Time magazine, before he wised up and got out.

So says JP Morgan’s (JPM) Imran Khan. He predicts that Jeff Zucker’s screwup is good news for Jeff Bewkes since Time Warner makes a lot of “scripted programming,” and that’s what NBC will need to replace Leno at 10 pm.

The whole point of moving Leno to 10 pm, recall, was to save money on “scripted programming”–what you and I call “shows that aren’t reality shows.”

But it’s not as if NBC stopped running scripted shows altogether, and at max, the network is going to need an additional five hours a week. Khan says this will represent “incremental spending” for Time Warner (TWX), but it’s not as if NBC’s pressure to save on programming costs is going to go away. And even if the network buys all of five of those hours from Time Warner, it’s hard to see how that does much for a company that generated revenue of $6.3 billion last quarter (not counting AOL).

Khan also thinks the same logic means bad news for Disney (DIS) and News Corp.’s (NWS) Fox because increased demand for nonreality shows “could result in higher talent and production costs.”

Again, this seems like a stretch: It seems like the lesson to draw from all this isn’t that expensive programming is good, but that bad programming is bad.

And as ad dollars inevitably leach out from TV to the Web, the pressure on all the networks will be to keep their viewers’ eyeballs while spending less on content. The real winners will be the ones who figure out how to make good stuff cheaply.