TheWrap’s Sharon Waxman first reported the news Monday evening. I’ve been able to confirm much of her story from people familiar with the plans.

Waxman’s report says the revamped store at Google’s video site “may start as early as this week or next;” I’m told it could be “weeks, but not months.” Big studios including Sony, Time Warner’s Warner Bros. and Comcast’s Universal are on board. So are indies like Lionsgate.

Notable holdouts: News Corp.’s Fox (News Corp. also owns this Web site) and Paramount, whose corporate parent Viacom is still suing Google over YouTube copyright claims.

YouTube started testing movie rentals internally in 2009, and has been renting a small handful to the public since 2010. Those movies have been offered as a streaming file, instead of the downloads that Apple’s iTunes rents, and I’m told the plan is for that to continue.

The difference is that you’ve probably only heard of a handful of the movies in YouTube’s existing store (I think “Made” is really under-appreciated). Post-expansion, you’ll get the same stuff, or much of the same stuff, that you can get from Apple, Amazon, and several other Web services.

So here’s the real question: Will you, or anyone else, use it?

Waxman quotes an unnamed executive who says they are “pretty excited,” but primarily because YouTube is embracing individual rentals, instead of a Netflix-style subscription plan.

A source I talked to from a participating studio, though, is less enthused: “A small VOD [video on demand] deal? Who cares? There are 40,000 other people who are selling VOD. This is a short-term, transactional deal.”

Another source familiar with the plans cautions that the initial expansion will only be the “first inning” of a longer game. Other features that Google could add down the road would be the ability to purchase movies, and store them in a cloud-based locker service.

Google is unlikely to get that ability until it makes several moves to mollify the big studios, primarily around copyright issues: They want the search giant to make it harder to find pirated movies, and they don’t want Google placing its ads on pirate sites, etc.

Google has been making some moves along those lines, but apparently not enough of them. (The flip side of this argument: Many studios are very interested cloud-based lockers, because they think that system, which allows people who own an individual movie to watch it on different machines, will support their eroding DVD sales. That may be more wishful thinking than anything else, but that’s for a different story.)

But the problem for both Google and the studios is that so far digital consumers seem largely uninterested in renting or buying individual movies.

Given the choice, consumers have overwhelmingly gone for Netflix, which now boasts 23.6 million subscribers. Research firm NPD estimates the company has 61 percent of the digital movie market.

Is this a big deal? Sharon Waxman, who broke the news tonight, thinks so, arguing that it positions Netflix as a bona-fide competitor with the likes of Time Warner’s HBO (TWX) for online movie rights. Waxman’s rival Nikki Finke pooh-poohs the pact.

Feels weird to type this, but I’m with Finke on this one. But not for the reason she states–that Relativity makes lots of stinkers. Unless I’m missing something, the bigger problem is that Relativity doesn’t have the licensing and distribution rights to many of the biggest movies it puts out. Those go to Sony, Warner Bros, Universal, etc.

Still, Waxman is on to something here–Netflix does want to gather streaming rights to as many movies as it can, as it transitions from a DVD rental service to one that rents out bits.

That doesn’t mean it’s likely to challenge HBO et al. for the biggest and most expensive catalogs out there. And Netflix is still going to have make subscriber-unfriendly deals like the one it made with Warner Bros. if it wants access to their stuff. But it will be able to pick up a few titles here and there. And over time, those can add up.

Is this a big deal? Sharon Waxman, who broke the news tonight, thinks so, arguing that it positions Netflix as a bona-fide competitor with the likes of Time Warner’s HBO (TWX) for online movie rights. Waxman’s rival Nikki Finke pooh-poohs the pact.

Feels weird to type this, but I’m with Finke on this one. But not for the reason she states–that Relativity makes lots of stinkers. Unless I’m missing something, the bigger problem is that Relativity doesn’t have the licensing and distribution rights to many of the biggest movies it puts out. Those go to Sony, Warner Bros, Universal, etc.

Still, Waxman is on to something here–Netflix does want to gather streaming rights to as many movies as it can, as it transitions from a DVD rental service to one that rents out bits.

That doesn’t mean it’s likely to challenge HBO et al. for the biggest and most expensive catalogs out there. And Netflix is still going to have make subscriber-unfriendly deals like the one it made with Warner Bros. if it wants access to their stuff. But it will be able to pick up a few titles here and there. And over time, those can add up.

I’m sure Waxman will want to respond to some or all of what Wolff says–in particular, his intimation that she wrote a positive piece about Starbucks (SBUX) founder Howard Schultz when she was at the New York Times (NYT) in order to secure Schultz’s investment in her new business. So if and when she answers on her own site, I’ll link to that here.

If for some reason you’re one of those people who cares about this stuff but doesn’t like to read, you’re in luck: Wolff says he and Waxman will go head-to-head on CNN’s “Reliable Sources” this Sunday. In the meantime, here’s some prep video:

Waxman’s volley comes via a cease-and-desist note her site sent to Newser today, embedded below. It comes after a series of back and forths between the two sites, which you can follow here, here and here. Very short version: Waxman says Wolff’s site steals her stuff without attribution; Wolff says his company does attribute the stuff, in some form.

The bigger picture is that the debate about “content creation” and “aggregation,” both of which are pretty ugly and imprecise terms, is just getting started. Even though we’re either 15 years or 40 years into the Internet era, depending on how you want to count. (Probably best to go with 15).

This isn’t the first time Wolff has gotten legal notes from publishers. In February 2009, the New York Times (NYT) complained about Newser’s use of the Times’s iconic “T,” as well as the use of its photos.

Waxman’s argument with Wolff is that Newser either doesn’t link to her site or does it in a way that makes it unlikely that a reader will end up on one of her pages. She’s fine with aggregation in practice, she says, noting that her site repurposes other people’s stories. And it’s worth noting that she’s not firing off an angry letter at the Huffington Post, an aggregator that also uses her stuff extensively.

“There’s a principle here,” she says. “And if everybody who aggregated aggregated the way they do it, we’d all be in a bunch of trouble.”

So what does she expect Wolff and company to do now? “I don’t know,” she says. But “we’re serious… I hope they take it seriously.”

Wolff’s response, via email: “This is a joke letter about a joke allegation based on a joke premise from a joke law firm (in Cleveland at that). Waxman is just looking for press to help her raise a new round of financing. Nothing here is serious.”

Cease and Desist letter from TheWrap to Newser

[Image credit: barnabus]

Could Comcast (CMCSA) be talking to NBC Universal about…something? Could be–that’s what the Los Angeles Times and other outlets reported last night.

And Comcast’s statement says there’s no “deal,” which doesn’t preclude “talks about deals.” Then again, it’s awfully unusual for a company in Comcast’s position to say anything at all.

Clear as mud? Then this won’t help. Check out these comments from Comcast COO Steve Burke at a Sept. 9 conference hosted by Bank of America (BAC) where analyst Jessica Reif-Cohen asked him about his appetite for acquisitions.

Burke said he’d love get more cable channels (like the kind NBCU owns). And he said he didn’t want a really big deal that would require the company to use its shares or take on a lot of debt (like, say, a $35 billion deal for NBCU). He said all this, by the way, in the span of a single answer.

I’ll carve it up and translate for you:

We’ve had plenty of debt, and we don’t want any more right now, thank you very much.

Well, if you look at cable companies over the last 10 or 20 years–I joined the Company 11 years ago. It is really amazing how deleveraged our Company and other cable companies have gotten….We like where we are from a leverage point of view and I think [we] would be uncomfortable if our leverage was significantly higher.

But boy oh boy, are cable channels attractive!

At our core, we believe that content and distribution work well together….I think there are a lot of case studies where content and distribution, particularly in a world where the distribution has technology that can deliver content in new and innovative ways, you really can create a lot of value by putting content and distribution together, particularly if that content is cable content.

And again, when you look at the big media companies, the best businesses that all of us have in the entertainment business I think are the cable content channels and those channels with that dual revenue stream are really good businesses. And I think we wouldn’t be doing our job if we didn’t try to figure out a way to get bigger in those businesses. Those businesses are growing more rapidly than our cable business and if the opportunity came about where we could add cable content to our portfolio, I think we would do it.

But really, we’re not in the market for a mega-deal.

Just to sort of get it right out there, I don’t think that means doing a big deal with our stock. I think all of us think our stock is significantly undervalued. So I don’t think that means doing a big deal with our stock. I also don’t think that means doing a big $50 billion acquisition. I think it is more trying to find opportunities that are complementary with our core business, that don’t take our balance sheet and push it back into a position, which we have worked so hard to get it down.

Never say never!

We are going to try to make sure that we are disciplined and we have high IRRs and good free cash flow generation and we will see if anything comes available. If it does, we will certainly look at it.

Got it? Me either. The only way I can reconcile Burke’s comments with the notion that Comcast is interested in an NBCU deal would be if Comcast was talking about buying Vivendi’s 20 percent stake in the NBCU.

Comcast could swing that one without breaking the bank–the conventional wisdom is that it would cost something in the $5 billion range. And it would technically increase Comcast’s cable network holdings, as Burke says he wants to do. But not really: Comcast would be a minority shareholder with no clear path to control. And it wouldn’t get the “distribution plus content” benefit Burke was talking about last month.

Anyone else have any ideas? Feel free to sound off below.

The deal was hammered out by reps at a Tuesday meeting, Waxman reports, citing “two individuals informed about the meeting.” The $35 billion price tag happens to be the value that a recent JP Morgan report assigned to the company.

Comcast (CMCSA), in a statement, says the story is untrue: “While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate.” NBC Universal has no comment.

Clintonian parsers will note that Comcast’s denial has potential wiggle room: It isn’t denying, for instance, that the two companies had or are having talks. On the other hand, this is exactly the situation where corporate PR protocol calls for the “we don’t comment on market rumor and speculation” line. That way, you have the option of updating your statement if the story does turn out to be true. And for what it’s worth, I can’t recall the last time I saw a big, publicly traded company respond to an M&A story with this specificity.

UPDATE: The Los Angeles Times’s Joe Flint now says that Comcast is “kicking the tires” at NBCU, according to ”people familiar with the situation.” His report is much more hedged than Waxman’s.

All that said, this is a tie-up that has a first-blush logic to it: Comcast is flush with cash and could presumably take on more debt if it wanted to, and the company has shown an interest in branching out into content before. In 2004, it made a run at Disney (DIS). And the drumbeat for GE (GE) to dump its 80 percent stake in NBCU has been more or less constant, even while the industrial conglomerate insisted it had no interest in selling.

Those drumbeats get louder every year around this time, by the way. That’s because Vivendi, which owns the remaining 20 percent stake in NBCU, has a put option that kicks in every November and that could theoretically force GE into buying out the stake or spinning the whole thing out to the public.

More theoretical ammunition for a deal: Comcast is one of the few potential buyers that could swallow up all of NBCU. While there might be lots of people interested in NBCU’s cable properties (USA, Bravo, SciFi, etc.), there aren’t many who also want the company’s flailing broadcast property.

And while Universal’s film library is potentially attractive to some buyers, many of them–like Time Warner (TWX), for instance–have no interest in the film studio because they already have one.

If you want to play out the theoretical implications for digital, things could get very interesting. NBC is one of the founding partners at Hulu, the free Web TV portal that’s caused consternation for Comcast and other cable providers, which worry that the site is undermining the value of the TV programming they spend big money on. And Comcast and Time Warner have been trying out a “TV Everywhere” strategy that is, in part, a reaction to Hulu’s initial success. But let’s let the dust settle for a minute before we head in that direction.

The Nikki Finke auction is over, and the winner is…Mail.com. Jay Penske’s Mail.com Media Corporation, which owns the Mail.com email service and a small portfolio of Web sites, has acquired the blogger, whose Deadline Hollywood Daily is a must-read for Hollywood.

No details on pricing yet.* But, the fate of Finke’s site, which was managed by the LA Weekly, has been the subject of lots of speculation in recent months, including spirited back-and-forths between Finke and competitors like Variety and Sharon Waxman’s The Wrap.

Reading that stuff has been nearly as entertaining as Finke’s column. She provides blow-by-blow Tinseltown coverage–she seemed to post nearly hourly during the 2007-2008 writer’s strike–and relishes her scoops. One of her most recent: Allegations that GE’s (GE) NBC Universal was trying to “stifle” the Hollywood Reporter’s coverage of the entertainment conglomerate and its parent company.

Finke says she’ll keep full editorial and design control as she begins working for Penske, the son of auto magnate Roger Penske. He’s making an interesting move: Mail.com is a white-label email provider that raised $35 million last year, but he’s been expanding into the content business. Earlier this year, he relaunched Movieline with staff from Gawker Media’s Defamer site.

But Finke’s site will remain separate from the rest of Penske’s portfolio. She says she’ll expand her one-woman show by hiring a “senior” journalist based in New York City within the next three months.

That will be a tricky expansion to navigate: Recent history shows that blogs produced by dedicated/obsessive proprietors often stumble when they expand, in part because dedicated/obsessive proprietors may not be the best managers and in part because it’s tough to find people who want, or are able, to work for dedicated/obsessive proprietors.

And from my perch, this seems like a lousy time to sell an ad-supported news site. Not so, says Finke. Or at least, not her site.

“I was not anxious to sell. I was not looking to sell,” she says. “This was sort of a process where various people kind of wore me down….I’m very pleased with what happened. What wound up happening was nothing like the offers I was getting a year ago.”

UPDATE: You can now pick a number, depending on which news source you like, but they range from “low seven figures” to $15 million. It would be awesome if any of them are true–I need a bigger apartment, among other things, and it’d be great to know that you can get rich blogging–but the only one I think is remotely plausible is the lowest one, from Rafat Ali at PaidContent.

Gabe Snyder at Gawker does a nice job of running through the estimates and explaining why they don’t make sense.

The only thing I’d add is that all of the numbers being floated today are almost certain to include earnout clauses, meaning the deal is potentially worth up to X amount–if Finke’s site hits certain performance goals. Which is a lot different than saying she’s actually made X amount in the deal.

Another way of putting it, from a source who buys and sells media assets for a living: “Presumably it’s one of these billion dollar earnout deals. I’ll pay you a billion dollars–one dollar (more or less) upfront, and the rest as a percentage of revenues (or profits if I ever find someone else to sell this to). But in the meantime you can tell your friends that you were paid a billion.”

UPDATE2: Now the WSJ estimates the deal at $10 million — but says that number includes equity from Mail.com, along with a $1 million upfront payment.

While the current meme is that traditional journalism is getting the stuffing knocked out of it by the digital onslaught, it neglects to notice that a lot of really sharp news reporters are actually getting some real traction by finally starting to be serious about creating online sites designed to compete.

As case in point, BoomTown recently went to visit the offices of TheWrap.com, a Web blog aimed at dominating breaking news about the business of Hollywood and the entertainment industry.

Funded by Seattle-based venture firm Maveron, it was founded by former New York Times and Washington Post reporter Sharon Waxman.

With a small team of writers, editors and one single business person–and run out of a cottage in back of her house in Santa Monica, Calif.–Waxman is trying to combine the high standards and ethics of journalism, the news-breaking abilities of longtime pros and a low budget.

The business plan is, no surprise: Advertising.

(Hey, just like All Things Digital! Except Waxman is near a pretty beach and our San Francisco-based World HQ–also known as a cottage behind my house–is foggier.)

In any case, innovative efforts like Sharon Waxman’s might become the rule rather than the exception in the future of the news media.

So far, on her own since its launch in late January, TheWrap.com is garnering several hundred thousand daily visitors each month, moving close to the Web sites of trade publications that cover the industry.

Here’s my video interview with Waxman, in which she gives the who, what, where and why: