On another level, however, I understand the motivation. When it comes to delivering audio-visual content to a wide audience, the Internet has lowered the barriers to entry so far that anyone with even the dinkiest camera can become a major broadcaster. The television industry may face a crisis of overhead when a large number of scrappy upstarts deliver comparable value with almost no fixed costs. Also, there are some aspects of the television business that the Internet simply does better, specifically when it comes to reaching an audience.

So there is the scent of blood in the water, and out of the resulting frenzy a few lessons have appeared. Here are four of them.

There doesn’t have to be a difference between a “channel” and a “show.”

You probably have a clear understanding about what a television channel is. Comedy Central is a channel. Your local CBS affiliate is a channel. A channel is the thing you tune in to at a specific time to watch a particular show. A channel runs a lot of shows on it. Time Warner Cable offers 900 channels. This seems like too many. Bruce Springsteen wrote “57 channels and nothing on.” That sounds so quaint now.

But if you have a conversation about YouTube channels with this concept of a “channel” in your head you may experience some cognitive dissonance. There are “tens of millions” of channels on YouTube. One company, Machinima, operates 3,380 of them. That’s literally 100 times as many channels as are owned by NBC Universal, and it’s not enough. YouTube just launched 100 more channels with premium content. YouTube must be using the word “channel” differently. Except they’re not.

Both a YouTube channel and a television channel deliver a stream of content from a transmitting device to a receiving one. Viewers tune in to a television channel by selecting its number; they reach a YouTube channel via its URL. The main difference is that the cost of creating a television channel from scratch is incredibly high, while on YouTube it’s pretty close to zero. Unlike television, a YouTube channel can turn a profit with very little programming. The comedian Ray William Johnson, for example, has one of the most lucrative channels on YouTube. It plays one show. That show adds 12 minutes of new programming per week.

If a channel online costs next to nothing, and you can build one around a single show, then why do television shows need television channels at all? Every once in a while there’s a lot of fuss about getting cable channels à la carte. But who cares about that when you can have à la carte programming?

I like to think about this in the context of “The Daily Show.” On cable, you’re limited to 30 minutes of “The Daily Show” per day, and you have to tune in at 11 pm or set your DVR to watch it. There could easily just be a “Daily Show” channel, with all the extra programming that Comedy Central now reserves for the Web site, plus spinoffs for the various “Daily Show” correspondents. More content means more places to sell advertising, which means more profit. One challenge, of course, would be getting the audience to modify its behavior, but new technology seems to be inspiring this already.

Programming can now be delivered to your television set through a remote control.

Let’s define “remote control” as a handheld piece of electronics that tells your television set what to do while you’re sitting on the couch. Smartphones and tablets fit into this category, and before you argue that this definition is too broad, I submit that an iPhone is no less a remote control than it is a camera. It commands your television set far more profoundly than your traditional remote control. At least, if you have an Apple TV. Which you should.

The Apple TV comes with a technology called AirPlay, which allows you to throw videos wirelessly from your phone or tablet to your television set. Got a movie sitting in iTunes on your computer? You can watch it on TV via AirPlay. Find a video you want to watch embedded on a Web site you read? If AirPlay is available, a little button will pop up and you can stream the video to your TV. Need some good recommendations? Try one of the many “discovery” apps out there, like Shelby.tv or ShowYou or VHX. They skim your Twitter and Facebook feeds looking for videos your friends have posted. And you can throw those to your TV.

There are apps for ESPN and Discovery Channel and PBS and other traditional channels that allow you watch their shows, on demand, on your TV, via AirPlay. There are also a growing number of apps for channels that have never been included in a traditional cable provider’s lineup. The Wall Street Journal’s news channel, WSJ Live, is one of them. Time Warner Cable doesn’t carry it, but my iPad does.

I should note that WSJ Live is also available in the main Apple TV library, so you don’t actually need to use AirPlay to watch it. But the fact that you can illustrates my point. The remote control has become a very personal device, one that you carry around with you all day long, one that you use to store and index your favorite media. A viewer is just as likely to watch a channel she’s added to her home screen as anything available in the cable menu. The programming of her choice routes through her remote control.

Marketing and distribution are often the same thing.

Last month, IFC released the entire first episode of the second season of “Portlandia” online a week before its airdate. They used an embeddable video player, so that any online publication could feature the episode on its Web site. Individual sketches from the show were also made available in the same way. IFC didn’t just tease the show or talk it up, they let people actually see it for themselves. The result was an 81 percent increase in viewership among 18-49 year olds when the show returned to the network.

There are few examples of this sort of thing happening before the Internet. A movie poster hanging in a theater where that movie is playing, perhaps, or a DVD insert in a magazine ad. But this is something the Internet does really well. A single sentence can promote a film and deliver it to your computer at the same time. Allow me to demonstrate: “This video is amazing.”

That, of course, is the lifeblood of online publishing. Here’s something that resonated with me, I’m recommending it to you, my audience. They call it “curating” now. Somehow that word got separated from “blogging” recently, and I’m not entirely sure how or why. I think Tumblr and Pinterest had something to do with it. But curating, which is a thing bloggers do, is a distinct talent. It’s highly respected in other manifestations, such as museum curators or fashion buyers or television programmers. It was curators who spread that “Portlandia” preview around. And when you factor in the marketing power they brought to that show, and you consider how much a network pays to advertise a program in general, there’s only one conclusion to draw. Online curators are the most undervalued talent in the television industry.

A few of those new YouTube channels seem to recognize the power of the curatorial voice. Vice, Pitchfork, SB Nation and the Bleacher Report all received funding to create new YouTube programming. Presumably their editors will create shows that they’d want to watch themselves, and with that level of personal investment, they’d vouch for those shows to their readers.

Television is no longer that different from publishing.

Just last week, the Gawker Media site Kotaku announced a programming schedule similar to that of a television network. This strategy was conceived well over a year ago, and is designed to sell audience size to advertisers, the way television does, rather than pageviews, which have been dropping in value for years.

This is only the latest example of conceptual overlap. Video embedding took off after the launch of YouTube, turning online publications into versions of The Daily Prophet, that newspaper from Harry Potter with the magical moving pictures on the front page. Some Internet video hosting and streaming services are built on content management systems designed for online publishing. When you upload a video to Blip, the last thing you click to make it go live is “publish.” Awl Music, the music video channel launched by The Awl in January, is run entirely on Tumblr. You can watch it on a television set connected to Google TV.

Both traditional and online publishers are producing original video series with increasing frequency. Reuters, Slate and The Wall Street Journal all have news and documentary programming on the new YouTube channel lineup. The New York Times and New York Magazine have been doing their own video programming for years. It’s only a matter of time before some of these compete with the cable news channels.

Eric Spiegelman produces the Web series “Old Jews Telling Jokes,” which is about to launch its fifth season. He helped bring the hit Japanese television show “Retro Game Master” to Kotaku.com, and he helped launch AwlMusic.tv in partnership with TheAwl.com.

If you’re reading this site, you know who all of these folks are. But just for formality’s sake:

Jason Kilar is CEO of Hulu, the video joint venture co-owned by Comcast, Disney and News Corp.’s broadcast TV units. The site has been a huge hit with viewers and subscribers, who have put it on pace to generate $500 million in revenue this year. But its owners aren’t quite sure what to do with it: They put it up for sale this summer, then decided to hang on to it after all. This will be Kilar’s first major public appearance since that tumult, so we’ll have plenty of questions.

Dick Costolo is CEO of Twitter, which has moved from Web oddity to a service used by more than 100 million people a month. Twitter’s founders didn’t like the notion of turning their baby into a media company, but that’s exactly what Costolo is trying to do now; he is ramping up efforts to attract more eyeballs and sell more ads. And he’s leaning heavily on big media companies — especially TV networks and movie distributors — to make that happen.

Martha Stewart is the founder of Martha Stewart Living, the multimedia empire she built from scratch, which now includes magazines, TV shows, a Web site and multiple lines of branded goods; her newest coup is a big-dollar deal with J.C. Penney. She’ll be joined onstage by Lisa Gersh, the president and chief operating officer Stewart brought in from NBC Universal nearly a year ago. At NBC U, Gersh had overseen the acquisition of the Weather Channel, among other duties; she had previously been chief operating officer at Oxygen Media.

They’ll join a lineup that includes ESPN President John Skipper, YouTube CEO Salar Kamangar, Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull and Vevo CEO Rio Caraeff. And we may still have a surprise or two between now and the end of January.

All Things Digital’s first-ever media conference runs Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. See you there.

So is this a good time to be in media? Or a terrifying one? Both? Yes!

AllThingsD covers the media business and the way it responds to technology, every day. But in January we’re going to go really deep into this stuff, at our first D: Dive Into Media event, where we’ll focus on the people who create, finance and distribute what we listen to, read and watch. (Facebook is on to something!)

We’ll gather the most powerful, interesting and innovative leaders from a wide range of media and entertainment companies, and sit down with them for one-on-one interviews.

And just like our flagship D: All Things Digital event, we’ll also be able to give you peeks at the future, by focusing on new voices and new technology you’ll be hearing from in the months and years to come. You won’t see panel discussions with middling players here: Just deep, smart talks with the people who matter.

We’ll be announcing our speakers throughout the fall, but here’s a starter list to give you a sense of what we’ve got planned:

Philippe Dauman is CEO of Viacom, which runs one of the world’s dominant cable networks. We’ll talk to him about what that means in a universe where cord-cutting could become a reality — if it’s not already. We’ll also pick his brain about the future of his Paramount studio, and Hollywood in general.

New Yorker editor David Remnick runs one of the world’s best, most storied magazines. Coincidentally or not, it also happens to be a rarity in the iPad world — a successful magazine app. We’ll talk to the Pulitzer Prize winner about the challenge of making long, immersive content in a fast-twitch world.

Edgar Bronfman Jr. ran Warner Music Group from 2004 until earlier this summer; he’s now the company’s chairman at a pivotal time in its history. Since his resume also includes a stint running what’s now called NBCUniversal, he’ll also be able to give us an interesting perspective on the evolution of the TV and movie business.

News Corp. COO Chase Carey can talk to us about his company’s take on the movie business, the TV business, the cable business, the newspaper business and the Internet. News Corp. also owns this Web site, but that won’t prevent us from having a frank discussion about the company’s challenges and opportunities.

D: Dive Into Media will be held at the stunning Ritz-Carlton in Laguna Niguel, a little more than an hour south of Los Angeles. On behalf of Walt Mossberg, Kara Swisher and the rest of the AllThingsD staff, I’d like to invite you to join us Jan. 30 and 31.

But let’s be very clear about this: The “Amazon Instant Video” service referenced above is the equivalent of the one that outlets like Apple’s iTunes offers. It’s not the equivalent of the subscription streaming service that Netflix offers.

Amazon does have a Netflix-like offering, which it gives free to customers who are paying for or trying out its Prime shipping service. That catalog is now at 9,000 titles, or about half of what Netflix offers to its digital subscribers.

The distinctions are a bit confusing, and Amazon could make them clearer, but perhaps it has a reason for keeping it that way. It’s also possible that Amazon will try to make some significant changes before it rolls out its new tablet device, slated for October. But no need to mix apples and oranges and grapes just yet.

Sassy women-focused content site, Sugar Inc., has raised another $15 million in late-stage venture funding from new investor Institutional Venture Partners, as well as its original one, Sequoia Capital.

The San Francisco-based site, which has now raised a total of $46 million, said it would “use the funds for brand extensions, acquisitions, and international growth…”

Sugar, which runs the flagship PopSugar.com site, is in a media space that is both competitive and fast-growing.

Several bigger sites, such as Yahoo, have been interested in acquiring it, but its husband-and-wife co-founders Brian and Lisa Sugar have wanted to remain independent.

In 2009, the company broke off ties with NBC Universal by buying back its shares and got a Series C funding of $16 million from Sequoia.

Sequoia was an earlier venture investor, having put $5 million into the start-up in late 2006.

NBC invested $10 million in 2007. The media giant had been selling online advertising for the site, an arrangement that had previously ended.

Onward and upward, apparently!

Here’s the official press release:

Sugar Inc. Closes Investment from Institutional Venture Partners and Sequoia Capital

San Francisco, CA, April 13, 2011–Sugar Inc., a fast-growing global media company for women, announced today that it has completed a $15 million later-stage round of financing led by Institutional Venture Partners (IVP), one of the premier later-stage venture capital and growth equity firms. The Company’s original and consistent partner Sequoia Capital also participated in the round.

Sugar intends to use the funds for brand extensions, acquisitions, and international growth in pursuit of its goal of becoming the world’s largest media company focusing exclusively on women’s lifestyle. This round brings Sugar’s total funding to $46 million.

Sugar is the online leader in original content, social media, and commerce targeting trendsetting women, with a global audience of more than 20 million. The company has two business segments focusing on original content and commerce with a portfolio of brands including PopSugar.com, ShopStyle.com, PopSugarCity.com, and Fashionologie.com. Sugar has 190 employees and operations in the U.S., Europe, Japan, and Australia.

“On the eve of our five-year anniversary, Lisa and I are proud of the success and rapid growth we have demonstrated to date,” said Brian Sugar, founder and CEO of Sugar. “In the last year we achieved significant milestones, including growing our audience to over 20 million unique visitors per month, driving over $250 million in commerce to our partners, and reaching profitability for the full year. We are excited with the opportunities ahead of us as we continue to pioneer the combination of content and commerce.”

“Sugar is led by an outstanding management team that has driven impressive growth in a diverse set of complementary revenue streams,” said Dennis Phelps, General Partner of IVP. “We see an enormous market opportunity and are excited about Sugar’s ability to execute in a world of slower-moving incumbents.”

“Brian and Lisa Sugar are entertaining a new generation of women. They do so around the clock and on hundreds of millions of mobile and web devices. But Sugar Inc. is still at the beginning of what is possible,” said Michael Moritz, General Partner of Sequoia.

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

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

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

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

Perhaps giddy, they hit upon a common motto:

“One plus one equals 11.”

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

Let’s move on, shall we?

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

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

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

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

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

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

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

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

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

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

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

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

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

But, as MediaMemo’s Peter Kafka wrote:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And Twitter co-founder Biz Stone said:

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

Inter-Internet harmony: How sweet!

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

AOL AGREES TO ACQUIRE THE HUFFINGTON POST

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AOLers,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

–TA

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

The free online television service has become one of the most-watched online video properties in the U.S. and a top earner of web-video ad dollars since its 2008 launch.

But its owners–industry powerhouses NBC Universal, News Corp. and Walt Disney Co.–are increasingly at odds over Hulu’s business model. Worried that free Web versions of their biggest TV shows are eating into their traditional business, the owners disagree among themselves, and with Hulu management, on how much of their content should be free.

Read the rest of this post on the original site »

At a very first glance, some of the new rules imposed by the feds might seem like they require the new company to offer up programming to any online player that wants to pay up.

And technically, they do. But the new rules have plenty of conditions and limits. So the bottom line is you’re not much more likely to get access to “30 Rock” via YouTube, or CNBC via iTunes, then you were before.

The new FCC and DOJ rules do give, say, Google the ability to buy access to some of NBC U shows or channels. But it would require Comcast’s competitors to do the same thing, first.

That is: Unless the people who are reluctant to put their stuff online because they don’t want to upset Comcast go ahead and put their stuff online, Comcast doesn’t have to, either. So it’s theoretically possible, but not probable.

And if it happens, it will happen haltingly. If Viacom sells someone online access to its MTV lineup of reality shows, that might require Comcast to offer up its reality show lineup on Bravo. But it wouldn’t entitle an online outlet to the police procedurals on USA.

The government also gives the option to, say, Netflix, to set up shop as another cable operator, and buy access to all of NBC Universal’s programming. But it would have to buy all of it–just like Time Warner Cable and Cablevision do when they make a carriage deal for NBC U’s shows.

And again, Comcast wouldn’t have to do that unless its peers did. Which means that if Netflix really wanted to set up shop as a direct competitor of the cable guys, it can do so. But it would have to operate exactly like the cable guys, just like the satellite guys did when they entered the market a couple of decades ago.

So if Netflix, or Apple or whoever really wants to offer a full suite of cable programming, at cable prices, it could. But that would be very, very expensive: Analyst Rich Greenfield estimates that the bill for NBC U’s programming alone would run a new entrant $1 billion a year.

Just as, or even more, important, is that those kind of bundled, take-it-or-leave-it deals are exactly the kind of thing that the cord-cutting crowd complains about.

They don’t want to have to pay for USA and Bravo and Syfy and MSNBC–they want to pick and choose channels, or shows. And pay a lot less.

“I don’t think cord-cutting was a major focus” of negotiations, Comcast EVP David Cohen said during a press conference this afternoon. And that may be true!

But the net result reads very much as if Comcast wanted to make sure the government didn’t force it to break its business model. And if that was the case, it got what it wanted.

In a 4-1 vote–Commissioner Michael Copps dissented–the FCC is allowing the deal to go through, but with some conditions, most of them relating to the online video business. One key requirement that’s not happening: Comcast isn’t being required to divest itself of its equity in the Web video site Hulu, which a few lawmakers had called for. It will however be required to give up its role in managing Hulu. NBC U jointly owns it with the Walt Disney Co. and News Corp. (which also owns this Web site).

In a statement, FCC Chairman Julius Genachowski said the conditions imposed “include carefully considered steps to ensure that competition drives innovation in the emerging online video marketplace.”

Among those conditions, the FCC will also require Comcast to offer Web versions of its TV shows to what it calls “bona fide online distributors” under the same terms it offers them to cable and satellite providers. This would indicate that shows appearing on Hulu will probably end up on Apple TV or YouTube or elsewhere, meaning, as MediaMemo’s Peter Kafka suggested last month that Hulu’s exclusive rights to NBC content are over.

Comcast will also be required to offer broadband to some 2.5 million low-income households for less than $10 a month, and will be required to extend its network to reach 400,000 homes, build out service in six rural communities and provide free video and high-speed Internet access to 600 schools and libraries in underserved areas. This will allow Genachowski to claim some kind of victory on one of the Obama administration’s signature technology policy issues, which is spreading the availability of broadband.

In a dissenting statement, Copps called the merger “a transaction like no other that has come before this commission–ever,” and said “It confers too much power in one company’s hands.”

Harold Feld, legal director at Public Knowledge, a Washington, D.C.-based public interested group, said the organization was largely satisfied with the conditions except for one. It would have liked to see Comcast required to sell broadband service on a wholesale basis. “As longtime supporters of wholesale access, we believe such a condition would go a long way to help consumers by increasing broadband competition,” he said.

It’s not all departures!

Yahoo is hiring former News Corp. and Disney online exec Mickie Rosen (pictured here) to run its Audience unit, which includes the Silicon Valley Internet giant’s powerful content sites, sources said.

Starting next week, Rosen will report to Americas head Ross Levinsohn, who has worked with her before, at both News Corp. and Fuse Capital.

Her new title is SVP of the Yahoo Media Network, which is apparently a rebranding of Audience.

Previous to this job, Rosen was CEO of Tecca, a price-checking service Fuse created in partnership with Best Buy.

It’s likely she will remain based in the Los Angeles area, where Yahoo has a large office in Santa Monica, Calif.

The move is Levinsohn’s first management rejiggering since he took over last year, and there is likely to be more to come.

Rosen, who has also worked at the Fandango online movie ticketing site, will replace interim audience head Raymond Stern, who will be–as before–running partnerships and business development, as well as Yahoo’s listings business.

Rosen’s new job had actually been that of former Audience head David Ko, as well as former Media VP Jimmy Pitaro.

Ko left Yahoo and is now heading mobile games at Zynga, while Pitaro is a top digital exec at Disney.

More to come from Levinsohn, but here is Rosen’s bio from the Fuse Web site:

Mickie has over 20 years of operating, strategy and investing experience. For the past dozen years, she has been at the intersection of media and technology, in both large companies such as News Corporation and The Walt Disney Company and in small, early stage start-ups.

Prior to joining the firm, she was the head of entertainment for Fox Interactive Media where she was responsible for properties such as AmericanIdol.com, Rotten Tomatoes and the entertainment channels of MySpace. Mickie also led content acquisition across the Company, and was a lead in envisioning, structuring and negotiating Hulu, the premier video joint venture between News Corp. and NBC Universal.

Prior to Fox Interactive Media, Mickie was the head of product development, marketing and public relations for Fandango, where she helped lead the company from an early-stage start-up to profitability as it became a leader in its space (acquired by Comcast). Mickie was also a senior executive with an e-learning start-up, an Idealab! consumer robotics company and Disney’s Corporate Alliances group, where she negotiated deals and managed Disney’s top global partners such as Coca-Cola, American Express and AT&T.

Mickie built the foundation of her career with McKinsey & Company, where she spent seven years consulting with senior management on strategy, operational and organizational issues across a number of industries, including media and technology.
Mickie has an MBA from Harvard Business School, and a B.A. in Economics from UC San Diego, and is based in Los Angeles.

That’s my translation of comments from Turner Broadcasting’s Phil Kent today. The head of Time Warner’s cable network told the crowd at a Citigroup investment conference that his company had pulled out of bidding for reruns of “Modern Family” because the show was “a little too prevalent on the Internet.”

The sitcom runs on both ABC.com and Hulu, so I’m not clear if Kent was talking about one or the other, or both. Either way, those comments have to simultaneously please and dismay “Modern Family” creator Steve Levitan, who has complained that giving away streams of his show on Hulu doesn’t do him any good and probably does him harm.

Levitan isn’t the only one who thinks that way: There are plenty of TV people who worry that free streaming on the Web is hurting their business, either by sapping ratings or cutting down on the appetite for DVDs and syndication. In this case, the supposed value shrinkage hurts News Corp., which produces the show and owns the rerun rights, more than it does Disney’s ABC, which airs the initial run. (News Corp. also owns this Web site.)

That’s one of the fundamental tensions Hulu has to deal with, and the primary reason why taking the joint venture public remains such a long shot–until all of its owner/partners are willing to make long-term programming commitments to the site, it’s hard to see the long-term value in the company.

Still, it’s important to note that Kent didn’t abstain from bidding–he simply dropped out. The Los Angeles Times’ plugged-in Joe Flint estimates that Turner was willing to pay about $1 million per episode, which isn’t as much as the winning $1.4 million bid, but isn’t immaterial, either.

Oh. And the winner of the bid? GE’s NBC Universal–one of Hulu’s three owner/partners.

So what does that mean for Hulu, which has already locked up exclusive rights to NBC’s Web video?

A couple of possible answers: Perhaps Federal Communications Commission head Julius Genachowski is trying to put a fork in Hulu. Or maybe the conditions he wants to place on the merger are so toothless that they don’t really count as conditions at all.

Background: Each of Hulu’s three partners/owners–GE’s NBC, News Corp.’s Fox and Disney’s ABC–has agreed to mutual exclusivity pacts. If you want to watch one of their shows for free online, you can see them on the networks’ own sites, or via Hulu–either on the main site itself, or via other sites that are taking Hulu’s feed. (News Corp. also owns this Web site.)

But one of the primary conditions Genachowski wants to place on FCC approval for the Comcast-NBC deal is that Web competitors will get access to NBC’s shows, according to the New York Times and The Wall Street Journal. Here’s the WSJ:

Comcast would be required to offer NBC Universal programming to any online video provider that has reached a similar deal for content with some of NBC’s competitors, such as Walt Disney Co. or Fox Television, a division of News Corp.

That’s a bit vague, so we won’t really know what Genachowski intends until he goes public with his proposed rules. But there are basically two ways to interpret what the Journal is reporting here. Either:

• The FCC wants to make sure that NBC doesn’t prevent Hulu from syndicating its content out to third-party sites, as it’s already doing with Yahoo, AOL and…Comcast. If that’s all Genachowski wants, that’s no big deal, and not really  a restriction at all. Because Hulu’s business plan is predicated on wide distribution. Or….
• The FCC is telling NBC that it has to offer its shows directly to other Web sites. That’s potentially devastating news for Hulu. If, say, Yahoo can license “The Office” directly from NBC, it may not want to bother cutting a deal with the joint venture site. And to be clear: The overwhelming majority of Hulu’s traffic comes from people watching shows from its big three partners.

So which is it? The FCC held a farcical press conference yesterday where it wouldn’t answer any specific questions about the deal. But it would be nice if it could clear this one up soon.

Completists will still need to hear from the Department of Justice, which is also reviewing the transaction, but since both Comcast and NBC announced yesterday that they expected the deal to close in January, it’s hard to imagine there’s much in the way of a surprise coming.

It would be great to tell you what restrictions the FCC wants, but the government agency won’t say so publicly, at least for now.

But since a document with the FCC’s proposed restrictions is currently being circulated to officials at Comcast and GE-owned NBC, the information should get out sooner than later.

The FCC also held a “background” press conference on the deal this morning, in which it asked participants not to quote government officials directly. That’s not uncommon in Washington, but that doesn’t make it any less astonishing: The FCC knows about Twitter, right?

Still, in this case, that works out just fine, since FCC officials didn’t provide direct answers to any questions.

Even those who are voting in favor are doing so holding their noses. Of the five voting members of the commission, only one, Democrat Michael Copps, had been considered remotely likely to vote with the two Republicans who had pledged to vote against it. When he announced he would vote in favor yesterday he said he was doing so with reservations.

Republicans, both on the commission and in Congress, sense an opportunity, the size of which you can discern by the size of the headlines topping the Drudge Report during the last few days. Genachowski is being portrayed in 80-point type as the villain “Julius Seizure” out to ruin the freewheeling Internet by shackling it with a list of bureaucratic rules and regulations. The irony is that the current proposal on the table is a dramatic step back from a far more ominous one: Immediately after losing a court case brought by the cable company Comcast over the extent of its legal authority to regulate the Internet, Genachowski considered reclassifying the Internet under the FCC’s Title II authority, which governs regulation of the phone system. This was an extreme response, thankfully abandoned, that would have certainly warranted the nickname. The current proposal is by no stretch of argument so extreme that it amounts to a seizure.

But rules they are, and no one likes new rules where none existed before, least of all multibillion dollar corporations like Comcast and Verizon. Having established in the courts that they have the right to control the use of certain applications that impact the performance of their network–or, more precisely, the fact that the FCC has no legal authority to tell them not to exercise such control–they’re now going to be required to disclose how and why they exercise such controls.

The rules allow for “reasonable network management” by service providers, which is a squishy phrase. Internet companies like Amazon and Skype, which aren’t service providers themselves, argue that the new rules are weak and don’t protect them from service providers that may “reasonably manage” their products and services out of existence. Get your stopwatches ready, because there will almost certainly be several lawsuits over what constitutes “reasonable network management.”

The scenario is easy to imagine: Embittered broadband customers band together in a class-action lawsuit complaining that their provider refuses to allow them to experience the latest video streaming or video chat application. They argue that the provider favors another inferior application that it happens to own. The provider argues that it’s only engaging in “reasonable network management” allowed under FCC rules, leaving judges to tease out what that means. Lawyers are probably already shining up their Ferragamos as they polish their legal briefs.

These cases are already appearing. Comcast and Level 3 Communications are sparring over the terms under which Comcast conveys to its customers video streaming traffic sent by Level 3 associated with its relationship with Netflix. Level 3 has turned to the FCC and the U.S. Department of Justice at a delicate time for Comcast: It wants federal approval for its takeover of NBC Universal, and wants it now.

The FCC’s new rules, rightly or wrongly, make Comcast and companies like it more vulnerable to similar threats by regulators in response to actions taken in their own reasonable self-interest. Until today, this sort of dispute between companies would normally be worked out by negotiators in private, not regulators on the public dime. No matter whose side you tend to favor, the prospect of government gumming up the work with endless busywork isn’t a happy side effect.

The rules themselves may also be challenged. There’s still a huge question–as FCC commissioners Meredith Atwell Baker and Robert McDowell have both argued in recent newspaper op-eds (one in yesterday’s Wall Street Journal, the other in today’s Washington Post)– about the FCC’s legal authority over the Internet. House Republicans are already making noise about jumping into the policy fray, and another court challenge is probably likely.

The one overarching mission concerning the Internet that the FCC can undertake with some measure of agreement is that of widening the availability of the network to places it doesn’t adequately reach and to people who don’t have broadband access for economic or other reasons. In an age where so much of daily public business–from applying for a job to becoming an informed voter in the presidential election–all but requires a broadband link, far too many remote and rural areas are the victim of market forces where the investment to build infrastructure in sparsely populated areas outweighs the potential for a reasonable return.

Genachowski has argued that by adapting the Universal Service Fund (which helped the telephone network penetrate these same underserved areas) for broadband, providers could get this otherwise impossible job accomplished. Extending broadband availability was one of President Obama’s campaign promises, but the $7.8 billion in federal stimulus funds awarded under the auspices of the National Telecommunications and Infrastructure Administration and the Department of Agriculture’s Rural Utilities Service have not and will not make a significant dent in the problem.

Why not focus on what is clearly the more important problem and without question in the national interest, and leave the finer points of how service providers and Web companies carry content to sort themselves out? Like it or not, a new, more legally complicated Internet is here.

There are of course a lot of moving pieces surrounding this debate, and however the chips fall, it’s going to have a long-term effect over how the Internet operates over the next several years.

Earlier this year, FCC Chairman Julius Genachowski was dealt an important setback when the U.S. Court of Appeals ruled that the FCC doesn’t have the legal authority to impose net neutrality rules on broadband providers. In hopes of still finding a way to rein in the providers, he’s since circulated new proposed rules that would require providers to disclose what kind of traffic they intend to throttle and why, giving consumers a little more information so they can make a more informed choice when picking a provider. And in a speech on Dec. 1, Genachowski also expressed support for “usage-based pricing,” which would essentially allow providers to charge variable pricing plans where consumers would pay higher fees for using higher amounts of bandwidth.

Certain Internet companies that aren’t providers, but who rely on having unfettered pipes through which they can deliver their services, aren’t happy with the proposed rules either. Companies like Amazon, Skype and Netflix, want stronger rules that would prevent the providers from slowing down traffic from their sites or blocking them altogether. They’ve even pushed the FCC to reconsider regulating the Internet outright as a telecommunications service, as it does the telephone system today, an idea that Genachowski briefly considered, then abandoned.

No surprise, they’ve been lobbying the FCC heavily, as have the telecom providers. According to Capital Business, a Washington Post publication, 150 organizations have hired 118 lobbying firms to try to influence the outcome of tomorrow’s vote.

The pressure isn’t stopping there. Republican commissioner Robert McDowell has pledged to vote against the rules, saying, as he did in a Wall Street Journal op-ed today, that imposing regulations would threaten everything that makes the Internet a source of innovation. Commissioner Meredith Baker Attwell, also a Republican, has attacked the proposal and similarly pledged to vote against it, arguing that only Congress, not the FCC, has the authority to regulate the Internet.

Congressional Republicans, with their heads full of steam after their November electoral wins, are rushing into the fray. Michigan’s Republican Representative Fred Upton, who will chair the House Energy and Commerce Committee when the new Congress comes into session early next year, wrote Genachowski and called his proposal “the most controversial item the FCC has had before it in a decade.”

Meanwhile, Congressional Democrats are pressing fellow Democrat Michael Copps to vote for Genachowski’s rules, fearing that a vote against them would hurt President Obama politically, as Sara Jerome wrote in Hillicon Valley. In the end, he is expected to fall in line and vote in favor.

Perhaps a harbinger of things to come is the spat between Level 3 Communications and Comcast. Level 3, which operates much of North America’s fiber-optic network, last month accused Comcast of “trying to set up a toll booth” by charging Level 3 recurring fees whenever a Comcast subscriber streamed content that got delivered by Level 3. This happened right after Level 3 cut a deal to become the primary delivery network for Netflix.

The dispute has reached sufficient intensity for Level 3 to ask federal regulators to impose conditions on Comcast in its efforts to acquire NBC Universal, arguing that Comcast’s demand for the fees “adversely changes the nature of the Internet.” The FCC may yet get serious about reviewing the merger, as Politico reported last week.

Comcast for its part has argued that Level 3 is gaming network peering rules, and has “demanded unlimited capacity at our cost.”

Whatever the outcome of tomorrow’s vote, expect lots of unhappy people.

But! You only know English.

Solution: ViKi, a site that shows videos from around the world and provides captions in 100 different languages.

Cool, right? And capital efficient, too: The two-year-old start-up gets all of its translation for free, courtesy of some 100,000 volunteers. Hence the name–”Vi” for video and “Ki” for Wiki.

ViKi has relatively modest traffic, and is just starting to ramp up revenue, via third-party ad network sales. The company says it’s looking at a $1 million run rate, but that’s a gross number that doesn’t account for the money it has to pay out to content owners as well as to distributors like Hulu. (The site also puts out some of its stuff on Google’s YouTube, but there’s no revenue in that relationship, for now.)

Still, the pitch has been compelling enough for the company to round up $4.3 million in funding in the past 18 months, from lots of bold-name investors like Greylock Partners and Andreessen Horowitz.

But now that the company is talking publicly about the money it’s raising, and the money it would like to make, won’t its army of volunteers start asking for a cut, too?

Probably not, argues CEO Razmig Hovaghimian, a veteran of GE’s NBC Universal. He says ViKi has already approached some of its most senior and prolific volunteers with offers to pay them, but they haven’t wanted cash–they’re doing it for fun.

“We are creating a playground for them,” he says. And if that works, great: ViKi needs the money to acquire online distribution rights. But I wonder what happens if its free workforce starts asking for a check.

In a blog post announcing the move, Hulu CEO Jason Kilar doesn’t explain the rationale for the price cut, which comes less than two weeks after the service’s formal launch.* So feel free to make your own guess.

But the announcement highlights the core tension facing Hulu, which is jointly owned by Providence Equity, GE’s NBC, Disney’s ABC and News Corp.’s Fox: The best move for the online service is often at odds with its owners’ strategies for their businesses.

In this case, Kilar has been pushing for a price cut while the networks have been trying to effectively establish higher prices for their programming, in the form of new fees they’re demanding from cable providers (see: Fox. v. Cablevision, etc).

The new $7.99 per month price should make Hulu Plus more competitive with Netflix, which offers DVD rentals along with all-you-can-eat streaming for $8.99. So will another move to add more programming from NBC Universal, which Netflix got access to in September.

Hulu Plus is supposed to appeal to customers who want access to a deeper catalog than Hulu’s free service, and who want to watch the shows via devices like Apple’s iPad and Microsoft’s Xbox 360–all of which support Netflix.

Hulu says it will provide $2 credits to existing Hulu Plus subscribers who signed up during the trial phase this summer, and is also offering a few other promotional bells and whistles to push the service. From Kilar’s post:

• One free week trials for all new subscribers. In addition, current subscribers who joined during the preview period will receive a credit for one week of Hulu Plus toward their next month’s subscription.
• Two free weeks of Hulu Plus for both current subscribers and friends they invite through our referral program. Subscribers can learn more by clicking on the “Referrals” tab on their Hulu profile page.
• 11 weeks ($20 worth) of free Hulu Plus with the purchase of a Sony BRAVIA connected TV or Blu-ray player through January 31, 2011. (See sony.com/huluplus.)
• One free month of Hulu Plus with the purchase of a Roku device through December 15, 2010. (See roku.com/hulu.)

*Hulu points out that Hulu Plus only formally came out of beta today; two weeks ago it dropped the invite-only requirement for the service.

Amy Banse, currently the president of Comcast Interactive Media, is shifting into a job as head of a new Silicon Valley-based equity fund aimed at making digital investments for the television cable giant, as well as its new NBC Universal unit, according to sources with knowledge of the plans.

While most of the attention related to the soon-to-be-completed merger of Comcast with NBC U has been on the musical chairs of its high-profile news and entertainment divisions, this move is potentially significant for the companies by putting a stake in the ground–and a presence–for it on the West Coast.

As part of the shift, sources said, Banse will be charged with combining two existing corporate investment funds: NBC U’s Peacock Equity and Comcast Interactive Capital.

The New York-based Peacock Equity is a $250 million fund that was founded as a joint venture in 2007 by GE Capital and NBC U.

Its investments have ranged from $3 million to $25 million each, including a lot of online advertising start-ups such as Adify and the Rubicon Project.

Comcast Interactive Capital–founded in 1999 and based in Philadelphia, where Comcast’s HQ is–has $500 million under management.

It has focused on broadband, interactive and enterprise businesses.

According to its Web site, “early successful investments” include About.com, CitySearch, Half.com, TiVo, and VeriSign.”

Current investments include SB Nation, BlackArrow and JiWire.

It is not clear how much more money the new still-unnamed equity fund will raise, but it will be aimed at early-stage companies, said sources.

The combined fund will debut by the end of the year or early next year.

Banse’s shift to become a VC comes after many years of leading Comcast’s online strategy, which has included the acquisition of the Fandango movie ticketing site and Daily Candy, an email newsletter.

She has also been in charge of the development and management of Comcast’s many Web sites, including Comcast.net, Xfinity.com and Fancast.

MediaMemo’s Peter Kafka recently reported that the high-profile Banse was moving out of her post, which was being split up into two jobs.

Many thought she would likely depart the company, but it appears she will stay for a while longer at least.

As it happens, Banse will be in San Francisco this week for the Web 2.0 conference, so please be sure to give her a warm welcome and explain “Fear the Beard” to a likely Phillies fan-atic.

And just to get acquainted in advance, here is her bio from the Comcast Web site:

Amy Banse serves as President of Comcast Interactive Media (CIM), a division of Comcast Corporation that is responsible for developing and operating online tools and businesses focused on entertainment, information and communication.

Since founding CIM in December of 2005, Ms. Banse has led Comcast’s online strategy, overseeing the acquisition of Fandango (the movie ticketing site), Daily Candy (the popular email newsletter), Plaxo (the smart contacts site), and thePlatform (the industry-leading provider of digital media publishing solutions) as well as the in-house development and management of, Comcast.net and xFinity.com(Comcast’s portals), Fancast, (a leading tv entertainment site), xFinitytv (Comcast ‘s online video portal), and Swirl (Daily Candy’s sample sales site). In this role, she has grown CIM into an 800 person team with significant digital capabilities and has played a key part in the industry’s development of its TV Everywhere strategy and in Comcast’s execution of that strategy, Fancast/xFinitytv.

Ms. Banse joined Comcast in 1991 as an in-house attorney responsible for programming acquisition. Most recently she served as Executive Vice President of Content Development where she oversaw the development of Comcast’s cable network portfolio including the company’s investments in E! Entertainment Television, The Golf Channel, and VERSUS and the development and launch of G4, PBS KIDS Sprout, TV One and Comcast’s sports networks.

Ms. Banse has represented CIM and Comcast as a featured speaker in venues around the country discussing the rapid evolution of content consumption in a digital world and the opportunities and challenges facing the cable and entertainment industries. She has been named among the “Most Powerful Women in Cable” and the “Top Programmers to Watch” by CableWorld magazine. She has also been named among the Cable 100 by Multichannel News and the Digital Power list, by The Hollywood Reporter. She was honored as a “Wonder Woman” by Multichannel News and Women in Cable Telecommunications (WICT) in 2004, received WICT’s Geraldine B. Laybourne Fearless Award in 2009 and ProMax’s Brand Builder Award in 2010 Ms. Banse sits on the Board of The Morris Arboretum and Springside School for Girls. In 2007 she received “The Distinguished Alumni Award” from Springside School, and in 2006 she was honored by Girls, Inc. as an outstanding role model for girls during their annual Celebration Luncheon. Ms. Banse is also a member of The Forum of Executive Women, the Philadelphia region’s premier women’s organization.

Ms. Banse received a BA from Harvard University and a JD from Temple University Law School. She and her husband and their four children live in Philadelphia.

Boxee CEO Avner Ronen is scheduled to make the announcement tonight at an event celebrating the release of the Boxee Box, his company’s first move into the consumer electronics business.

The arrangement with Hulu, which is primarily owned by News Corp.’s Fox, Disney’s ABC and GE’s NBC Universal, marks the end of a conflict that dates back to February 2009. That’s when Hulu insisted that Boxee take down links to its service, then tried severing the connections itself.

Hulu said it made the move at the insistence of its network partners (an argument that outgoing NBC U boss Jeff Zucker said was not true). But recently it has stopped complaining publicly about Boxee.

And as I noted earlier this week, the big networks have warmed to Boxee in the last year or so. And with the appearance of Google TV, which offers something similar to Boxee, they appear to be more amenable to working with Ronen and company.

Boxee will also have other content partnerships to announce tonight, I’m told, including a deeper relationship with Netflix. More details on that, as well as timing of the Hulu move, as I hear about it.

UPDATE: Alas, no details from Boxee on either–just confirmation that Netflix will come to Boxee by the end of the year, and that Hulu Plus will come “soon.”

EARLIER:
One new twist in the Cablevision-News Corp. fight: News Corp. has cut off Cablevision subscribers’ access to its shows on Hulu, the video site joint venture, as well as on its own Fox.com.

Here’s a screenshot from Fortune.com columnist Seth Weintraub, taken this afternoon when he tried to watch a Fox show on the site, which is co-owned by News Corp., Disney’s ABC and GE’s NBC Universal:

News Corp.’s comment, via Fox Networks PR guy Scott Grogin: “Fox.com and Fox content on hulu is unavailable to Cablevision subscribers.”

And here’s Hulu PR rep Elisa Schreiber:

Unfortunately, we were put in a position of needing to block Fox content on Hulu in order to remain neutral during contract negotiations between Fox and Cablevision. This only includes Fox content. All other Hulu content is accessible to Cablevision internet subscribers. We regret the impact on Cablevision customers and look forward to returning Fox content to those users as soon as possible.

This is an important escalation from News Corp. (which owns this Web site) in its fight to extract more dollars from its cable partners.

In the past, cable subscribers who couldn’t get Fox shows during fee disputes were still able to watch some of them via Hulu. I know that News Corp. has discussed shutting off access to the site during past fee fights, but as far as I know this is the first time they’ve actually done it.

It’s also a logical move, at least from News Corp.’s perspective.

If it’s trying to increase the pain felt by Cablevision and its subscribers, it may as well use every tool it has. And in the past, the Web has been used against programmers like Fox in these fights: Last year, when Time Warner Cable was fighting with News Corp., it prepared a video showing customers how to find their favorite shows on sites like Hulu.

But while the move is certain to rile up the digerati (astonished industry executive to me, over the phone, just now: “That is crazy!) I’m not sure how much real impact it will have in the fight.

News Corp.’s most valuable weapon is access to the Phillies-Giants playoff game tonight, and the New York Giants-Detroit Lions game tomorrow.

Both are scheduled to air on Fox, and many of Cablevision’s three million subscribers who live in the New York area will holler loudly if they can’t see them. But they wouldn’t be able to see them on Hulu or Fox.com, anyway.

Instead, those sites are used to show reruns of Fox broadcast shows. That means Cablevision subs can’t see Sunday night’s episode of “The Simpsons” on Monday, but that’s not the same kind of impact.

Unofficially, that is. For the record, GE says that Jeff Zucker and company booked flat revenues and saw operating profit drop by 15 percent. But a year ago NBC had booked a gain after moving around ownership stakes in the A&E TV venture it co-owns with Hearst and Disney.

Strip those one-time benefits out, GE says, and its 2010 Q3 would show a seven percent revenue hike and a five percent bump in operating profit.

That’s better. “A pretty solid quarter,” in the words of GE CFO Keith Sherin.

Here’s GE’s highlight reel for the business, which Comcast will likely own by the end of the year. (Click to enlarge.)

Meanwhile, Zucker, who has a few months left on the job, is much, much more enthusiastic about his company’s performance. Here’s his all-hands letter to employees sent out this morning:

GE reported its earnings today, and I wanted to take the opportunity to congratulate everyone on NBCU’s very strong results. Looking just at our operations, these are our best third-quarter results since the NBC-Universal merger more than six years ago. Truly a record performance.

Although our segment profit as reported by GE shows us down, this is driven by the impact of one-time, non-operating events and transactions that took place in the third quarter of last year (such as the one-time gain from the change in our interest in A&E Networks). On an operating basis, our profit was up 32% versus last year (or 5% excluding the impact of charges taken by certain divisions in the third quarter last year). Given that the economy, although improving, is still far from robust, these are excellent results driven by superior execution throughout our operations.

We had exceptional performances from a number of our divisions, including Cable Entertainment, Local Media, Film, and Theme Parks. Cable Entertainment posted a double-digit increase in operating profit, behind great results at each of our networks. Local Media was up an amazing 87%, as increased revenues from a resurging local ad market hit the bottom line. Film op profit was up 57%, driven by Despicable Me, which performed well ahead of expectations. And Theme Parks had the best quarter in its history, with op profit up 59%, the result of the new Harry Potter attraction in Orlando and the new King Kong 360 in Hollywood.

Here are some of the other highlights:

· USA was the No. 1 cable entertainment network for the 17th quarter in a row, an incredible string of success, and Syfy finished the quarter ranked No. 8 in adults 25-54

· Bravo had its best quarter ever and now has 20 consecutive quarters of ratings growth, and Oxygen had its best 3rd quarter ever

· CNBC posted increases in both revenue and op profit, and MSNBC continues to operate from a position of strength, beating CNN in primetime for the 4th quarter in a row and beating CNN in total day for the first time in a decade, while also launching a very exciting new marketing campaign

· Through the first five weeks of the NFL season, Sunday Night Football is averaging nearly 22 million viewers, the most for the first five weeks of a primetime NFL package in 14 years

· NBC is tied for No. 2 through the first three weeks of the new season, up 4% versus a year ago to make it the only major English-language network to grow year-to-year

· Jay Leno continues to be No. 1 since returning to his old timeslot, and Jimmy Fallon holds a 35% lead over CBS in his time period

· NBC News remains No. 1 across the board and recently hosted a fantastic public-service programming event called Education Nation, an effort that should make us all proud to be part of this company

· Telemundo has the highest-rated novela in its history with Donde esta Elisa, and mun2 had its best quarter in all key demos

There is so much to be proud of! Congratulations and thanks again to everyone, because I know, whether you are part of one of the businesses mentioned above or not, you are working hard to keep this company great, and I truly appreciate it.

At the same time we are notching these business successes, our transition teams are hard at work preparing for the new NBC Universal. We’re on track for a close of the transaction with Comcast, hopefully by the end of the year. As I’m sure you know, the timing will ultimately be determined by the FCC and the Department of Justice. We’ll have a clearer idea about timing as we get into November.

One other thing about the transition. You have received information about your new benefits, and I urge you to pay attention: review the information on the intranet, attend the benefits sessions, and enroll yourself and your family in both the GE and the new NBC Universal benefits plans. I hope each of you give this the attention that it deserves.

The company is really in a terrific place right now. We have a Cable Entertainment group that is on track to record its fifth straight year of record earnings. A Theme Parks division that is on track to have its best year ever. A Local Media division that will likely more than double its earnings from a year ago … and much more. And making it all happen are 15,000 employees who love this company, understand what we do, and are committed to doing it better and better every day. Thank you very much. Your strength of character, and the strength of our operations, will ensure a strong end to this year.

NBC Universal plans to announce Tuesday an investment in Invidi Technologies Corp., according to the companies. Terms of the deal aren’t being disclosed. A NBC Universal spokeswoman called the investment “small.”

Google (GOOG), Motorola (MOT) and WPP’s GroupM are already investors in Invidi, which targets ads to set-top boxes based on the geographic location of the box and other data.

Ed Swindler, executive vice president and chief operating officer for ad sales at NBC Universal, said the company made the investment to be able to test future advertising models. “We would anticipate doing some testing as soon as it becomes possible,” he says, adding NBC hadn’t worked out any details.

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Yahoo (YHOO) is not the only HR excitement these days!

Here is a very funny spoof of the firing of NBC Universal CEO Jeff Zucker last week by new owners Comcast (CMCSK), which was on the “Jimmy Kimmel Live!” late-night television show.

BoomTown interviewed the media mogul at the seventh D: All Things Digital conference in 2009, which is also below.

But I kind of like the spoof better than his actual appearance at D7.

Enjoy: