When the selling of Myspace winds down in the next week or so, it’ll probably attract a spate of comments about what a failure the whole social networking enterprise turned out to be.

And — especially when you recall what a Web phenom the social networking site was before it got blown out of the water by Facebook — it was.

That is, unless you think of the mob of former execs who have worked at the company over time, many of whom have moved on to some more golden opportunities after leaving the News Corp.-owned property.

That includes, most recently and notably, former sales head Michael Barrett, who is about to score big as CEO of AdMeld, which is reportedly in the process of selling to Google for $400 million.

Also a big winner: Former Myspace CEO Owen Van Natta, who was fired from that job in one of its many putsches and who quickly rebounded to a top job at online gaming powerhouse Zynga.

So, while it is one of the more overused memes of Silicon Valley, the “mafia” analogy — which has been applied to fertile entrepreneurial breeding grounds such as PayPal, before its acquisition by eBay — is useful when thinking about Myspace.

It is also a good thing to keep in mind about any tech company that goes off the rails: There might still be a silver lining, even if the start-up never sees the light of day again.

As proof, herein is a list I created after pinging a bunch of former Myspace folks:

Jason Oberfest: Former SVP of business development. Now, VP Ngmoco, which was sold to Japanese gaming giant DeNA for $400 million last year.

Dmitry Shapiro: Former CTO, Myspace Music. Now, at Facebook competitor Altly.

Adam Bain: While at Fox Interactive Media, he ran the ad platform for Myspace. Now, head of sales at Twitter.

Jeff Berman: Former president of sales and marketing. Now, GM of the NFL’s digital media unit.

Jason Hirschhorn: Former co-president and chief product officer. Now, on MGM board, angel investor, and there are rumors of him working on a curation start-up.

Amit Kapur: Former COO. Now, CEO, Gravity, an information filtering service start-up.

Chris DeWolfe: Co-founder and former CEO. Now, CEO, MindJolt, an online gaming roll-up.

Ross Levinsohn: Former president of FIM, he was integral to buying Myspace. Now, EVP of Americas unit, Yahoo.

Mike Lang: Former News Corp. strategy exec also involved in Myspace purchase. Now, CEO, Miramax.

Aber Whitcomb: Former CTO. Now CTO, MindJolt.

Jim Heckman: Former chief strategy officer of FIM. Now, CEO of 5to1, recently sold to Yahoo for $25 million.

Dani Dudeck: Former communications head. Now, PR head at Zynga.

Travis Katz: SVP of international. Now, CEO of Gogobot, a social travel start-up.

Richard Rosenblatt: Former CEO of Intermix Media and Chairman of Myspace, he sold it to News Corp. Now, CEO of Demand Media.

Angela Courtin: Former SVP of marketing. Now, EVP at Aegis Media.

These folks should be on the call list of whoever ends up buying Myspace. Last week, I wrote that an investor group, including Activision head Bobby Kotick, is now in the lead for the deal.

As an update, according to sources, Kotick has gotten clearance from Activision’s major shareholder Vivendi to do the Myspace transaction as a passive personal investment.

The deal is the latest in a string of pacts that are fast transforming Netflix into a true Web-based movie channel. With streaming rights to films from Paramount, Lionsgate, Sony, Disney and MGM studios, and a new streaming-only service priced at $7.99 a month, the company is increasingly becoming more competitive with the cable incumbents.

The Los Angeles Times had previously reported that Netflix would pay Epix close to $1 billion over the life of a five-year deal; not surprisingly, the announcement from the two companies doesn’t mention price and describes the pact only as a “multi-year” one. There also seems to be a bit of a hedge in the release, which doesn’t say that Netflix gets all of Epix’s movies–just an “array” of them.

Still, it’s a major move for Netflix (NFLX), and undoubtedly a nice cash infusion for Epix, which has struggled to get carriage deals from traditional cable operators.

As I noted yesterday, this deal may make Netflix more competitive with cable, but it’s not designed to threaten Hollywood’s DVD business. Netflix still won’t be able to get consumers the movies over the Web until they reach Epix’s “window,” which means they’ll have been available on DVD for some time before that. Epix is owned by three big studios–Viacom’s (VIA) Paramount, Lionsgate (LGF) and MGM–and none of them wants to cut off their disc dollars.

Also important to note that the deal is designed to mollify Epix’s current and would-be cable partners, via another window–Netflix subscribers will have to wait 90 days after movies debut on Epix before these customers can get the movies over the Web.

EPIX AND NETFLIX ANNOUNCE EXCLUSIVE INTERNET-ONLY DEAL TO INSTANTLY STREAM EPIX MOVIES TO NETFLIX MEMBERS

NEW YORK and BEVERLY HILLS, Calif., August 10, 2010 – EPIX™ and Netflix, Inc. [Nasdaq: NFLX] today announced an agreement through which Netflix members can instantly watch an array of new releases and library titles from EPIX streamed over the Internet from Netflix. Movies from the multi-year deal will begin streaming from Netflix on September 1 and include movies from Paramount, Lionsgate and MGM.
EPIX has subscription pay TV rights to new releases and movies from the libraries of its partners and will make these movies available to Netflix 90 days after their premium pay TV and subscription on demand debuts. Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release.

For Netflix, the agreement is a significant step in building the company’s streaming offer, adding many popular movie titles from some of the world’s leading studios. It adds meaningfully to a growing library of movies and TV shows that can be watched instantly on TVs via a range of leading consumer electronic devices capable of streaming from Netflix and on computers.

For EPIX, the deal reflects the value of the EPIX platform which, from its start, has provided new rights and flexibility for the distribution of its movies. The agreement allows EPIX to continue the distribution of popular content on a variety of platforms and preserve the premium television, subscription on demand and online window reserved for cable, satellite and telco television partners.

“Adding EPIX to our growing library of streaming content, as the exclusive Internet-only distributor of this great content, marks the continued emergence of Netflix as a leader in entertainment delivered over the Web,” said Ted Sarandos, chief content officer for Netflix. “The EPIX deal is an example of the innovative ways in which we’re partnering with major content providers to broaden the scope and freshness of choices available to our members to watch instantly over the Internet.”

Mark Greenberg, president of EPIX, added: “Netflix is an incredibly popular service and we welcome them as our newest distribution partner. We are pleased to be able to continue our mission of bringing consumers the movies where they want to watch them, while satisfying the differing needs of cable, telco and satellite operators. This deal also underscores the tremendous value of our offerings in the marketplace.”

Remember Rupert Murdoch’s plan to convince other media companies to join him behind a pay wall and offer their stuff only via subscription? It’s still around, in some form. We’ll hear more about it in “three to four weeks” Murdoch said today during News Corp.’s earnings call.

Just what Murdoch has in store isn’t entirely clear. Last year, he sent digital media head Jon Miller out to convince rival newspaper publishers to join News Corp.’s Wall Street Journal in the pay-to-play ring. But it appears that Murdoch may now be thinking of a subscription offering that extends beyond newspapers and into entertainment.

I’ve asked News Corp. if it has anything to add to Murdoch’s hazy comments this afternoon, but I’m not optimistic. I do think we’ll hear more about this before the press conference Murdoch plans for later this month, though.

Meanwhile, here’s some background on “Project Alesia,” the subscription/pay wall plan that may or may not be what Murdoch was talking about today.

Earlier

We’ve seen the numbers, so we know that News Corp. had a very nice quarter. Now let’s hear what Rupert Murdoch has to say about his company’s performance. I’m also interested to see how much ire Murdoch expresses for Google (GOOG) and how much ardor he has for Apple’s (AAPL) iPad, among other digital topics.

The following is a live paraphrase that includes my editorial notes; I’ll note direct quotes where appropriate.

Liveblog

Dave DeVoe going over numbers from the release.

Earnings include one-time items of three cents per share. [Should net that out of earlier reports when comparing to Wall Street expectations.]

Newspapers: Operating income up nearly five times. Higher advertising across nearly all markets. Forex helps, too.

“Other” (includes Myspace): Lower search and ad revenue, but costs are down.

Some balance-sheet talk: We’ve got a lot of cash on the books, and we know it. Some of it will get paid out to Jim Cameron and other participants in “Avatar.” But we’re working on ways to deploy the extra cash. We’ll get back to you on it by the next quarter.

Guidance: We’ve done better than anticipated in lots of our business for the last nine months, but our next quarter will be down. That’s because we expect the film business to be down $100 million, even including “Avatar” DVD releases (reason: We had very good quarter last year). Also, Fox Broadcast will be down. So we’re only bumping up guidance a bit.

Rupert Murdoch:

Exceptional results, “pretty much across the board.”

We’re psyched for five reasons:

1. Content. Really important, and we’re really good at it. Shout-outs for “Avatar,” Fox News Channel, newspapers, TV shows. “Fortune favors the bold,” etc. “We have the no. 1 national newspaper on all three continents.”

2. Technology: We’re good at that, too. The Apple iPad, “which I believe will lead a revolution in content consumption.” First month, 64,000 active users for The Wall Street Journal iPad app. “Unlike the Kindle, we keep 100 percent of the subscriber revenue from the iPad.” Innovative subscription model coming to deliver content to people whenever they want it (paging Jon Miller, James Murdoch).

[Apologies, lost the thread here. But Rupert is gung-ho about TV and other core businesses]

Q&A

Is there concern that you can’t keep growth in the next fiscal year? Can you?

Murdoch: Absolutely! Hedges on numbers. “We have a great slate of films coming up, but we don’t have an ‘Avatar’ in there.” If ad growth keeps up, “I think we can be very confident.”

COO Chase Carey: I agree! The ad market is actually picking up. Sports has been a little slower than other ad markets, and they’re now picking up. “Looks great.”

Question for Devoe: Please talk more about that big cash pile.

Murdoch: I can answer that! “We’re well aware that our balance sheet…is inefficient at the moment.” Increased dividends, stock buy backs, investing in our businesses, possibility of “opportunistic investments,” which we’ve been “nervous” about doing in past year but now we have some things we’re looking at. Cue M&A klaxons!

More color on the TV biz, please.

Carey: Strong recovery in most categories. Not just auto and telecom. Financial, insurance, all sorts of stuff. “It’s pretty broad.”

Murdoch: “We’re seeing pretty optimistic and expanded advertising budgets from the big advertisers.” Not sure when that money is coming, but would guess Q2, when they’re launching new cars. “There’s a lot of money out there on the boards.” And as free over-the-air audiences shrink–and ours is shrinking less–that money is finding its way to cable. So any show that can show any sort of advertising can attract money. “It feels good; that’s all I’m saying.”

Please talk about new retrans/carriage negotiations.

Carey: Fox News deals starting to come up. Will be staggered over a couple of years. “I think the Fox News network…is certainly–maybe with ESPN–second to none.” So pay up, cable guys! (And customers!)

Carey mounts a long defense of Sky Italia. I’ll refrain from transcribing.

Similarly, you’re probably not interested to read what he has to say about satellite TV in Europe.

Netflix is killing it. What does that mean for you guys? Good news because it says good thing about your library? Or maybe an opportunity for you to do more with your library?

Carey: Noncommittal answer. But: “There is a question whether the Netflix model is getting us fair value for our product.” So we’ll keep looking at windowing content and whether we’re getting paid enough for our stuff. “I think it’s a focus.”

Please talk about Fox Audience Network plans and MySpace/Google plans.

Carey: Google plan doesn’t affect FAN. Not going to comment on “rumors.” “I don’t think that’s productive.” But! The key is to build enough traffic to attract enough dollars. FAN has a done a good job.

Let me try to re-ask the same question regarding restructuring or spinoff of FAN.

Murdoch: Praises MySpace. In the past few years “we made some big mistakes,” but we have fine new management now. “Early indications, and they’re only indications, are that we’re getting new visitors, and they’re staying longer,” so ad dollars will follow.

[Sorry missed this question, but I believe it is about guidance.] Murdoch is not talking up the film slate, but indicates that he’s spending a bunch of money on movies, and the company will take hits on those initially before they see dollars come back.

Carey: The film business fluctuates from quarter to quarter. But our team is great, and we have great movies coming. “We couldn’t be more excited and positive about the film business.”

Murdoch: Our movie investors praise us.

Any film properties you’re interested in?

Murdoch: “We’d look if something real came onto the market,” but we don’t put MGM in that category, at least not at the price it’s asking. We prefer to invest in our own stuff, and that goes for TV shows as well. “Glee” is a big hit and we own it. Same goes for “Modern Family.”

More info on digital, please. What about MySpace profitability? What happens when Google deal ends w/MySpace?

Carey: “Clearly, MySpace is a work in progress.” [This is a familiar refrain.] But promising signs. Talking up “Glee” tryouts. Improved the platform, etc. By the end of 2010, we want a foundation installed that we can go forward with, and we want to have a cash positive business going into 2011. “The trends are better but they’re not what they need to be….A number of the key metrics are not going up, but they’re better than what they were.”

Are you getting retrans fees for Fox broadcast now?

Not yet.

Why isn’t TV station top-line growth showing up on overall segment results?

Has to do with way we present results. [Confusing and confused discussion about bookkeeping ensues.]

[Still going!]

Press Q&A! (Usually much more entertaining)

Question about Australian news story about…mining?

Murdoch: “Nothing to do with media.”

Same guy has a question about Australian football (?). Rupert professes shock about whatever the scandal was.

Eighty-one advertisers bailed on Glenn Beck. Now it seems as if the only ads are in-house and for gold. When will you stop subsidizing the show and require it to carry its own weight?

Rupert says the 81 number is wrong and that Glenn Beck show doing great.

More color on that subscription model, please.

Rupert: Press conference coming in three-to-four weeks.

But: We’re getting about $4 a week for The Wall Street Journal… [voice trails off].

So this would be about entertainment as well?

Oh, you bet. Everyone’s been talking about negotiating with Apple.

[Both Rupert and FT's Ken Li seem confused. Me too.]

How much did you invest in Wall Street Journal New York edition?

Rupert. “Happy to tell you. We invested nothing.” Maybe $1 million in it. But ti already covers its costs. The notion that we’re spending $30 million on it is “BS.”

[Sorry, missed next two questions.]

Soon to-be Murdoch employee Claire Atkinson has questions about TV ads and online video ads.

Murdoch: WSJ.com is up 11 percent. $100 million in digital revenue at Dow Jones. At Fox news.com, “absolutely thriving.” [If he answered TV question, I didn't hear it, but I think he passed on that one.]

That’s all, folks.

• News Corp. CEO Rupert Murdoch tried to lower expectations that his Fox broadcast network would hire Conan O’Brien.
• Murdoch hinted that his book publishing unit is in line to get a new deal on e-books from Amazon, just as Macmillan has demanded (as will other publishers).

On the second point, here’s my on-the-fly transcription and paraphrasing of Murdoch’s comments about Amazon (AMZN), Apple (AAPL) and e-book pricing. It’s one of the most candid descriptions you’ll hear from a top executive about Big Media’s reluctance to embrace digital distribution at the expense of its existing system and revenue:

“We don’t like the Amazon model of $9.99….We think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books; on the contrary, we like them very much” because they cost us less to distribute, “but we want some room to maneuver.” The Apple deal…“does allow some flexibility and higher prices” though e-books will still be lower than print versions. And now Amazon is willing to sit down with us again and renegotiate.

UPDATE: Here’s a more complete transcript from Seeking Alpha:

We don’t like the Amazon model of selling everything at $9.99. They don’t pay us that. They pay us the full wholesale price of $14 or whatever we charge. We think it really devalues books and it hurts all the retailers of the hard cover books. We are not against [inaudible] books. On the contrary we like them very much indeed. It is low cost to us and so on. But we want some room to maneuver in it. Amazon, sorry Apple in its agreement with us which has not been disclosed in detail does allow for a variety of slightly higher prices.

There will be prices very much less than the printed copies of books but still will not be fixed in a way that Amazon has been doing it. It appears that Amazon is now ready to sit down with us again and renegotiate pricing.

Again, it’s impossible to stress how scarring the music labels’ experience has been for Big Media. And they’re determined not to repeat the experience. Their takeaway, though, seems to be that they can stave off digital distribution by keeping prices high and inventory relatively scarce. Hard to believe consumers are going to go for that.

Earlier

A first glimpse at News Corp.’s fourth-quarter earnings (which, due to the company’s weird fiscal calendar, is technically the company’s Q2 for 2010): Pretty good. And much better than a year ago (thankfully). After factoring out one-time charges, the company posted earnings of 25 cents on revenue of $8.7 billion.

The Street was looking for earnings of 20 cents on revenue of $8.23 billion, and analysts were also hoping the company would boost its earnings forecast, due in part to a bump from the ginormous success of “Avatar.” No word on guidance in the earnings release, though.

I’ll pick through the release for other worthwhile nuggets for the next few minutes. And then the real show begins at 4:30 Eastern, when the company’s earnings call–easily the most entertaining one in its peer group due to the censor-free presence of CEO Rupert Murdoch–begins. We’ll be looking for commentary on his battle/negotiation with Google (GOOG), upcoming content deals with Apple and the iPad, his thoughts on paid content in general, a dash of political commentary or two, and an update on the turnaround effort at MySpace.

From the release: A pretty nice quarter at most of the conglomerate’s divisions, including the previously battered broadcast TV and newspaper groups. News Corp. says print revenue at The Wall Street Journal was up five percent and ads on the Journal’s digital network were up 17 percent.

MySpace and the company’s other digital properties, shuffled into the “other” category, don’t get much of a mention, but don’t seem to have done much, not surprisingly.

But News Corp does mention that digital media earnings were down $32 million compared with a year ago, “principally due to lower search and advertising revenue.” And the company lost $29 million on “digital media dispositions”–i.e., the fire sale/giveaways of properties like Rotten Tomatoes and Photobucket.

Here’s the breakdown by segment (click table to enlarge):

Liveblog

CFO Dave DeVoe: “Extremely pleased” with the quarter.

Movies: Revenue up due to decent DVD sales (no MGM problem here). Also high costs due to “Avatar,” but big profits from the movie will be coming in during the next couple quarters.

Broadcast TV: Local ads are improving; the telecom, fast food, finance categories are all improving.

Cable: Revenue is up 18 percent. Affiliate revenue is up 21 percent (more money for Fox News subs), and there was a “single-digit” boost in ad dollars.

Newspapers: Journal dollars are up, operating costs down. Ad revenue got better as the quarter progressed.

Books: Revenue up, expenses down.

“Other”/MySpace: Digital media revenue down, but cost-cutting helped trim losses.

News Corp. is boosting its dividend by 25 percent.

Guidance: The company’s operating income growth rate is expected to grow from single digits to the high teens. Better than anticipated: Film group, TV and cable. But revenue goals for digital media, including MySpace, will take longer than anticipated.

Murdoch sings the praises of content. [I will not argue with him, for now]. “Avatar” is awesome, he says, a “harbinger of fundamental change in the industry.” Also really good: “Alvin and the Chipmunks.” Fun to hear Rupe say “Alvin and the Chipmunks.”

WSJ is the No.1 paper in U.S. in terms of circulation, influence, quality. WSJ.com is a “digital model for newspapers around the world.”

Fox News Channel’s audience is both “loyal and lucrative.” Roger Ailes is doing an “admirable job” [translation: Bite me, Michael Wolff--the author of a recent Murdoch biography].

Last year, Murdoch says, News Corp.’s pay-to-play ideas sounded nutty, but now “the content clan has gathered around our ideas.” Consumers must pay and will pay “to be entertained and informed.” All those awesome new gadgets being made in China and sold at the Consumer Electronics Show need content or they’re worthless. Content, content, content. Get it? Content, content, content.

Murdoch says he’ll be wringing more dollars from cable operators. And “when it comes to online news, we’ll be changing that model too,” adding that News Corp. is in “substantive conversations with device makers on developing subscription models” to deliver content. And don’t forget about 3-D!

Not performing well but “long-term growth drivers”: Sky Italia satellite service. Also Sky Deutschland. And MySpace is “not yet where we want it.” In the last quarter, however, MySpace “started to see signs of traffic stabilization.”

Shout-outs for Chase Carey and other managers (but not by name).

Q&A

Question: How big a deal is retransmission consent in coming years? $40 million a month? $100 million a month?

Chase Carey: No numbers, but it’s going to be a “transforming event.” We have two of top 10 distributors done, more coming. It’s a three- or four-year process to knock these deals out.

Q: Does this fix the broadcast model?

Carey: “Yes, I guess you could say simplistically, it fixes it.”

Q: What’s the timing on an “Avatar” DVD, and what about a sequel? Also, how do TV ads look this year?

Murdoch: For “Avatar,” we think about 60 percent of profits will be in the next six months. Which means the DVD will be coming “as soon as possible,” but the movie will stay in cinemas for a while because we’re doing huge dollars in theaters still. Sequel? “Very early talks about it. Jim has ideas for one. We haven’t come to any agreement with him….Being Jim Cameron, I wouldn’t hold your breath for an early one.” Asked about the economics of a future release (“Will you keep the same revenue split?”), Rupe sort of rumbles and growls and sort of doesn’t have much to say. “Ask anybody; it is very easy to drop a $100 million in a hurry on a film, and we’d like to lay off some of the risk.”

Carey: TV trends for this year are “positive.”

Murdoch: TV stations will be up 18 or 19 percent, but last year was terrible. We’re still down compared with two years ago. Hard to see more than a quarter in advance. In newspapers, it’s hard to see more than a few weeks.

[Missed a question on Sky Italia here.]

Q: What are growth prospects for cable networks? They’ve been driven a lot recently by new subscriber fees. How much longer can you get those boosts?

Murdoch: Overall, “we think we have great potential for growth. Quite a long way to go yet.” Look at how NBCU’s USA is growing.

Carey: In the U.S., we’re moving to “quality over quantity”–we can wring more out of foreign exchange, etc. Fox News is only getting more powerful; it has “great upside.”

Q: Regarding newspapers, what growth came from organic increase versus currency fluctuations?

The majority is from foreign exchange.

Q: Does your guidance assume that the “Avatar” DVD is coming in the next two quarters?

Murdoch: “Yes, but it won’t be 3-D” [which I don't think the analyst was asking about].

Q: Back to retransmission consent: You’ve been getting more and more money from cable guys. Why can’t you get $4 or $5 per subscription for Fox broadcast subs?

Murdoch: “We’re modest people.”

Carey: Hyuk, hyuk. Real answer: It takes time. “We try to approach this constructively. We’ve built businesses with [cable guys], we’ve built valuable cable channels” [translation: patience!]. We want to extract more without killing the cable guys.

Murdoch: That said, we’re asking for the same thing [for broadcast channels] that the cable networks are getting, which “certainly won’t kill the cable companies.”

Q: Please talk about value of film libraries (i.e., MGM). They’re generating big operating profits for cable now. How long will this last?

Murdoch: Regarding the MGM auction, “you can count us out of that one altogether” because others will pay more than we’re willing. And we’re not pursuing the Miramax catalog at all.

Carey: A film library by itself, without new stuff coming through, is a “depreciating asset.”

Q: On guidance: You say the ad market getting better, etc., but it sounds like you’re saying Ebidta growth is slowing.

Murdoch: “We honestly do not have any visibility about the last quarter.”

Q: On books/e-books/Apple, what’s going on with that?

Murdoch: We don’t like the Amazon model of $9.99….We think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books; on the contrary, we like them very much, lower costs to us, but we want some room to maneuver. The Apple deal does allow “some flexibility and higher prices” though e-books will still be lower than print. And now Amazon is willing to sit down with us again.

Press Q&A

Q: What’s up with plans to charge for newspapers on the Web?

Murdoch: “Not ready to announce yet [long pause]. We won’t be ready yet to make an announcement.” A “lot of talks with a lot of people.” There will be more to say within the next two months, Murdoch adds.

Q: Are you still going to fall $100 million short on the Google deal?

Murdoch: Yes. People using social networks don’t use search a great deal. Facebook has seen this, too. It’s “really too early to make confident predictions…but from going down, we’re beginning to go up.”

Q: Can we get some details about Time Warner Cable (TWC) deal?

Nope.

What about Conan O’Brien on late night?

Murdoch: If the programming people can show us we can do it and make a profit on it, we’ll do it in a flash. I’m sure there have been conversations with Conan, but “if you mean real negotiations, no.”

[Missed two questions here.]

Q: Another late-night question: If you do go into negotiations with Conan, how do you placate your affiliates?

Murdoch: It’s a different deal than NBC. They screwed up 10 pm, which reduced the lead-in to local news. Our affiliates run syndicated programming at 11:30, though, so it will take time to adjust there.

Call ended. This one seemed short to me.

More or less redundant disclosure: News Corp. (NWS) owns this Web site.

It’s important to remember this whenever you see stories about Hollywood’s resurgence, measured by box office receipts. Because box office receipts don’t do that much for Hollywood’s bottom line–that’s the role of DVDs.

It’s also important to remember this when you see stories about Hollywood’s conniption fit over “windowing” and the lawsuit/hardball deal combo the studios have used with Redbox and Netflix (NFLX). Because the studios’ desire to wring every last penny from DVDs is what’s driving those moves.

Ditto for Hollywood’s desire for a 3-D boom: The studios are in desperate need of a new revenue stream to replace the disappearing discs.

So here’s the one-sentence story I promised, which illustrates the collapse. It comes via Edward Jay Epstein’s dissection of MGM’s blowup, published on Defamer (nice get!):

In the US alone, MGM’s net receipts from DVDs fell from $140 million in its 2007 fiscal year (which ended March 31, 2008) to just $30.4 million by 2010.

That clarifies things, no?

Yes, you can add plenty of caveats if you’d like. For instance, MGM has been more or less dormant except for its Bond films the last couple years, and studios rely on new releases to juice DVD sales. And the DVD slump hasn’t hit all studios equally–Disney (DIS) and DreamWorks Animation (DWA) have done less poorly, because parents still need to buy stuff to occupy their kids.

But that’s still a staggering 78 percent drop in a couple years. So even if you’re running a studio whose DVD sales don’t look that bad, you’re looking at plummeting sales. Scary stuff.

Parsons will be a part-time adviser says the New York Times and will keep his current job as Citigroup (C) chairman as well. Providence’s media bets include MGM and Univision, which haven’t worked out, and Hulu, which has.

Providence and Parsons have worked together at least once before: In 2004, Parsons sold Warner Music Group (WMG) to a consortium that included Providence, Thomas H. Lee Partners and Edgar Bronfman Jr.

Perhaps Providence will tap Parsons’s knowledge of his former employer for another deal: Time Warner executives keep murmuring about the need for magazine publisher Time Inc. to shed some of the 115 titles it operates.

CBS (CBS) will join previously announced partners Time Warner (TWX), which is offering up programming from its Turner channels and HBO; Liberty Media’s Starz; and smaller players like Scripps, Rainbow and A&E. The twist is that CBS is the only broadcaster to sign up for the trial.

I noted that this was in the works last month, and it makes plenty of sense: For one thing, CBS would like to tie up with Comcast (CMCSA) as a way to extract “retransmission fees” from the cable company for the rights to carry its programming, which it currently doesn’t get paid for. The broadcaster also needs a big ally, as its broadcast competitors at GE’s (GE) NBC, News Corp.’s (NWS) Fox and Disney’s (DIS) ABC have already tied up with Hulu.

Comcast’s trial program, which is supposed to start this month and which parallels plans being promoted throughout the cable industry, is in many ways a response to Hulu, which has unnerved the pay TV business. The industry is worried about the specter of “cable cutters” who dump their cable TV subscriptions and watch free Web TV instead. So it’s trying to convince subscribers that if they keep paying up, they’ll get to see whatever they want online, legally.

CBS, meanwhile, passed on the chance to join with Hulu early on, and has since been complaining that the joint venture’s business terms undermine broadcasters’ chances of making real money on the Web.

CBS and Comcast aren’t talking about what the economics of this tie-up look like, but given that it’s a trial, it’s likely there isn’t much to talk about yet. But ultimately, CBS imagines a world where cable companies pay it for the right to put its shows on the Web and where it can charge Internet advertisers the same rates it gets for on-air TV.

That’s a long way off, but this is a start. “This is about extending the economics of the television market to an already independent, healthy online market,” says CBS digital boss Quincy Smith.

UPDATE:  Comcast has a few more programmers on board. In addition to Scripps, A&E and Rainbow, which I’ve written about before, but which have not been formally announced, Comcast is bringing in BBC and MGM Impact, a VOD channel it runs with MGM.

Here’s the release.

CBS TO PARTICIPATE IN COMCAST’S ON DEMAND ONLINE ?NATIONWIDE TRIAL

As the First Broadcaster To Participate, CBS Agrees to Test Standards and Principles for
“TV Everywhere” Model

NEW YORK and PHILADELPHIA, July 14, 2009–CBS Corporation (NYSE:  CBS.A) and Comcast Corporation (Nasdaq: CMCSA, CMCSK) announced today that CBS is the first broadcast network to participate in Comcast’s technical trial of On Demand Online. The new service will significantly expand the number of top-rated TV shows available online and across platforms at no additional charge to Comcast’s cable customers while delivering increased advertising value to content owners. During the course of the trial, CBS plans to test various types of current and library content.

“CBS and Comcast share the same vision of giving consumers more–more content, in more places,” said Matt Bond, Executive Vice President of Content Acquisition, Comcast Cable. “On Demand Online is a major step in extending consumers’ television experiences online, and ultimately across platforms by giving any television network, including top brands like CBS, the ability to make their content available on the Web.”

“CBS is very supportive of initiatives that help extend our content to new platforms in such a way that we gain new audiences and additional value for our advertisers,” said Quincy Smith, Chief Executive Officer, CBS Interactive. “Comcast is already a trusted platform to distribute CBS content on air as well as on demand; expanding this relationship online is a logical step. In addition, CBS’s strategy has always been about open, non-exclusive distribution of our content in a consumer friendly way, which is a core tenant of TV Everywhere and On Demand Online.”

CBS’s participation in Comcast’s technical trial comes on the heels of last month’s joint announcement between Time Warner Inc. and Comcast which introduced a set of principles called “TV Everywhere.” Developed by the two companies, the principles are designed to serve as a framework to facilitate deployment of online television content in a way that is consumer friendly and pro-competitive.

Comcast will begin its technical trial of On Demand Online with approximately 5,000 customers from across the U.S. in the coming weeks–the first national trial of its kind. A major focus of the trial is to test Comcast’s new “authentication” technology, which will allow Comcast customers to receive the same content online for free that they subscribe to on TV. The service will utilize a simple log-on system for streaming content and, in the future, will allow for download content to go. The On Demand Online service will roll-out in phases, adding new features, functionality and content over time to provide consumers with a new way to watch television.

On Demand Online is part of Comcast’s Project Infinity, the company’s long-term vision to give customers an ever growing amount of video content on multiple platforms, whenever they want.

What’s not included: almost any first-run TV show or newly released movie. That’s the content that’s made Hulu successful and what’s also driven traffic to offerings from CBS and Disney’s ABC.

You can’t accuse the Google guys of overselling this: In a press conference today, they described it as a “first step, a baby step.”

Google (GOOG) did say that it had added new content partners, but it was maddeningly imprecise about which ones it had signed up and what content they were providing. The company did confirm, however, that Sony (SNE), via its Crackle video site, would be providing content.

Google also said that it now has “thousands” of television shows and “hundreds” of movies; prior to this, the company said its catalog consisted of just “hundreds” of TV shows and “dozens” of movies.

But this is still primarily “long tail” stuff. The only first-run CBS (CBS) show YouTube offers, for instance, is “Harper’s Island,” which YouTube already offered. And if you recognize any of the following new YouTube partners, then it means you’re a show business insider: Endemol, Anime Network, Scott Entertainment, Entertainment Rights, Shout Factory, Telenext Media, Documentary Channel, First Look Studios, IndieFlix, Saavn, Snag Films, Venevision and Bandai.

Still, YouTube needs as much licensed content it can get its hands on in order to lure more advertisers to the site, which has underperformed to date.

Advertisers who do want to sign up will have a new option: a “Google TV ads” product that inserts ads into the shows, à la Google’s Adsense for Web publishers. Google said it will use “pre-roll,” “mid-roll” and “post-roll” ads–i.e., video ads that run before, during and after the movie or TV show–as well as the overlay ads that cover the bottom part of the screen, briefly, with a translucent pitch.

Google will also allow video providers to sell their own content, and in some cases, will allow them to use their own video player, a first for the company. Sony, for instance, will use its Crackle video player for its content.

Reports that YouTube had a deal with Sony to show full-length movies and TV shows on the site surfaced earlier this month. Last month, reports also indicated that YouTube was talking to Disney (DIS) about getting movies and ABC TV shows on the site, but since then I’ve been told that Hulu, the joint venture between News Corp.’s (NWS) Fox and GE’s (GE) NBC, has all but locked up ABC shows for an exclusive deal.

Here are two releases, one describing the new section and the other describing the new ad product. Screenshots follow.

Watch Shows and Movies on YouTube: Today we’re excited to announce a new destination for television shows and an improved landing page for movies on YouTube, where partners like Crackle, CBS, MGM, Lionsgate, Starz, the BBC and many others have made thousands of television episodes and hundreds of movies available for you to watch, comment on, favorite and share. This addition is one of many efforts underway to ensure that we’re offering you all the different kinds of video you want to see, from bedroom vlogs and citizen journalism reports to music videos and full-length films and TV shows.

To help you navigate through all this great content, we’re introducing two new tabs to the YouTube masthead: the “Shows” tab allows you to browse shows by genre, network, title and popularity, while the “Subscriptions” tab will grant logged-in users one-click access to fresh content from their favorite creators.

Another change you’ll notice today is the wider roll-out of in-stream ads, which we’ve been testing since October, to support our shows and movies content — not unlike what you might see when viewing this type of content on TV.

While shows and movies are currently limited to users in the US, we look forward to expanding to other regions as soon as possible.

We hope you enjoy watching shows and movies on YouTube. There’s still work to be done and we look forward to iterating with you, whether that’s rolling out new engagement features, expanding our content offering or improving your viewing experience. And, as with everything we do, we’ll track your usage and feedback to preserve your fundamental YouTube experience while we take these steps to enhance it.

Yours,
Sara Pollack
Entertainment Marketing Manager
The YouTube Team

Reach TV viewers through more than one screen
By Geoff Smith, Product Manager for Google TV Ads

Google TV Ads makes it easy for advertisers of all sizes to reach customers watching television. These days, many full-length television programs are also available for Internet users to watch online. These programs may appear in various places, including the websites of the networks which originally broadcast them and on other sites that specialize in video content. What if an advertiser wants to reach the audience of a particular program, no matter whether they’re watching on a television or online?

We’re excited to announce the beta launch of Google TV Ads Online. This is a new feature of Google TV Ads that lets advertisers place commercials into the ad breaks of TV programs watched online. It works in the same way as Google TV Ads: advertisers can target specific programs and select their cost-per-thousand (CPM) bid. Based on their targets, budget and bid, ads are inserted in the same program breaks that were designed for advertising when the programs first aired. (Ads may also be shown “pre-roll”, before the program begins, or after the online presentation of the program “post-roll.”) And like Google TV ads, we provide advertisers with measurement tools that give greater insight into how their ads perform with users.

One website where viewers are consuming more and more full-length content online is YouTube. Today, YouTube launched a new destination for full-length shows and movies, and advertisers will be able to use Google TV Ads Online to reach the millions of people who come to YouTube to watch this content. That’s not only good for advertisers, but content partners who are looking to generate revenue from their videos online. Ads will also be shown on other websites that carry full-length video programs.

Google TV Ads Online is still in beta and available to advertisers by invitation only. If you’re interested in learning more about it or would like to be considered for the program, please contact Erin Bouchier at erinb@google.com.

Here’s what the new YouTube video player looks like in full-screen mode (click to enlarge):

And here’s a “landing page” for YouTube TV shows:

New tack, which YouTube has slowly been adopting: Run longer stuff that will theoretically appeal to advertisers. Like, say, indie movies. Or shows from CBS (CBS). And now, a handful of movies from the MGM library, starring the likes of Chuck Norris (“Bulletproof Monk”) and Yul Brynner (“The Magnificent Seven”).

So far, YouTube’s catalog of studio-sanctioned movies and TV shows pales in comparison to those offered at Hulu. But that’s going to change sooner than later: At some point in the not-so-distant future, all of the Web video sites will have the same access to the same catalogs. Video industry executives predict that even NBC and Fox, the JV partners in Hulu, will end up distributing their stuff widely once the video site’s exclusive ends next year.

Trickier question: Just because these sites have long-form video, will there be enough eyeballs, and advertising dollars, to make a real business out of showing them?

Hulu, for instance, is supposed to be the gold standard for Hollywood-approved Web sites. But as Rafat Ali at PaidContent points out, it’s unclear exactly how much money Hulu is actually making.

The site’s boosters never fail to point out that 100 percent of its inventory is advertiser-friendly (as opposed to a small fraction at YouTube). But that doesn’t mean that 100 percent of views have been sold to advertisers, despite frequent reference to inventory being “sold out”: Watch Hulu for any length of time and you’ll quickly start seeing freebie public service ads–the kind you don’t see on TV until the middle of the night.

Something doesn’t add up right now. When will it?

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”