The large round by Oak, which was led by Palo Alto, Calif.-based venture capitalist Fred Harman, will give the popular online news and blog site a valuation of just “south of $100 million,” a source said.

The new funding, the Huffington Post’s third, will be used for expansion of its offerings and the hiring of editorial and business talent.

“There is an inevitable shift from offline to online with people increasingly getting their news media online, and this election proved how powerful the Huffington Post could be,” said Harman (pictured here), in an interview with BoomTown. “And I think the post-election perception of the Huffington Post has changed in the eyes of advertisers to being a key mainstream news site.”

Indeed, the Huffington Post–which is now billing itself as ‘”The Internet Newspaper”–has been hitting on all cylinders during the current election season.

And it hopes to continue building that momentum into the Obama administration, which will give the liberal-leaning site a lot of advantages in coverage.

The Huffington Post has also become a powerful news aggregator, much as the more conservative Drudge Report has, sending traffic all over the Web from its site by linking with a variety of online sites. It also has a strong offering of high-profile bloggers.

But the site’s leaders are also hoping its traffic strength will allow it to be as strong in arenas outside of its flagship political arena, including in business, local, “green” and investigative news.

It will also use the money to make acquisitions, the company said in a press release about the funding, which it put out this morning.

It’s certainly a long way from May of 2005, when its high-profile co-founder, Arianna Huffington, was roundly mocked for launching the site. Today, she has seen her power grow as the site’s traffic and influence have.

The site’s namesake operates out of her California-based office in Los Angeles, while the company has its HQ in New York.

The Huffington Post’s traffic in September 2008, for example, quadrupled from a year before to 4.5 million unique visitors, according to comScore (SCOR). That performance made it the No. 1 “stand-alone political blog and news site,” besting Drudge.

“The cycle of print media is accelerating downward and there are not as many companies with a balance sheet and focus to do it right online,” said Harman, who will join the Huffington Post’s board. “The news market is really up for grabs in a lot of ways…and it is a good time for those who are viewed as authoritative.”

But, like a lot of advertising-reliant businesses, the Huffington Post is also facing a tough market and must show it can compete under more dire economic circumstances and build a sustained and profitable business.

This slug of money should give it a lot of room to do so, said Harman, who has invested in several digital media companies, such as Demand Media and Federated Media. He was also one of the lead investors in aQuantive, the digital advertising business that was bought by Microsoft for $6 billion in 2007.

“Who knows how deep this economic situation is going to be,” said Harman, who noted that he and others kept investing in aQuantive through the last Web downturn. “But strong companies that keep investing through a bad cycle can emerge as winners.”

Previous investments in the Huffington Post have totaled about $12 million. That funding has come from Softbank Capital and Greycroft Partners, as well as seed money from co-founder Kenneth Lerer and former AOL exec Bob Pittman.

Funding reports about the Huffington Post appeared about a week ago in the Times of London, with the post claiming a $15 million investment and expansion into investigative and local news.

But the most detailed posts were done by paidContent, which was the first to name Oak as the new investor and said the round was $20 million.

Former Facebook exec Owen Van Natta will take the CEO job at a music discovery site called Playlist, a move that had been speculated last week, after he did not end up taking another position as head of MySpace Music.

Van Natta’s arrival at Playlist was not the only news for the Palo Alto, Calif.-based start-up–former AOL exec Bob Pittman’s Pilot Investment Group is also investing an undisclosed amount of money in Playlist. Pittman will also join its board.

Playlist has previously raised several million dollars, said sources, but the new funding is many times that, to total about $18 to $20 million.

The move to Playlist is an interesting one for Van Natta, who has looked at a number of jobs since leaving the high-profile social-networking site earlier this year.

He has talked to a wide range of companies, sources said, including Microsoft (MSFT) and a range of start-ups, as well as with MySpace, which is owned by News Corp. (NWS). (News Corp. also owns this site).

Those talks between Van Natta and MySpace to run its new music initiative did not pan out for a variety of reasons.

But he has long expressed a desire to become a CEO of a company, rather than just head to another executive job within a larger company, so the move to run a start-up is not a surprise.

In an interview this afternoon, Van Natta told me he got very intrigued by the possibilities at Project Playlist, which was the first iteration of the start-up and in which he is an investor, due to its viral growth.

And, indeed, Playlist has grown quickly to become one of the larger music communities on the Web, claiming that more than 38 million music fans monthly, sharing playlists via its Web site and also widely distributed embeddable widgets. The site has tens of millions of daily page views, according to surveys.

To get to those big-scale numbers, Playlist essentially has offered users a giant linking service for music, not unlike Google (GOOG) with all information, pointing users to promotional, free and sometimes illegal music and music video tracks all over the Web.

Those links to illegal music have resulted in a lawsuit aimed at Playlist from the music industry, sources said, a sadly typical experience of many online music services.

The usual tactic for the music giants: Sue first and shake down later.

Under Van Natta, I would guess, Playlist is likely to reach out to music companies and strike deals.

The company also needs to settle on its main business plan, which appears to me to have been less important than its explosive growth.

Playlist currently does have some small amount of advertising on the site, and seems to be making most of its scratch from sending leads to ringtone sellers.

Van Natta did not want to reveal specific strategies for Playlist going forward, only noting the opportunity is large.

“Discovery around music is exploding on the Internet,” said Van Natta. “And the company that does the best job of taking advantage of that is really going to be huge.”

That said, there have been a lot of music-aimed efforts like Playlist in the music space, with a lot of different business plans and varying degrees of success, ranging from the Apple (AAPL) behemoth iTunes site, which sells single songs, to the CBS (CBS) music service, Last.fm, which relies more on advertising revenues.

Other contenders in the space include the Rhapsody subscription service from RealNetworks (RNWK), music discovery service iLike and many others. MySpace has also waded deeply into the music space, and Facebook is also reportedly weighing its own service.

Van Natta was one of Facebook’s earliest and most prominent execs, serving in jobs like COO and also Chief Revenue Officer while there.

He came to Facebook in the fall of 2005, after a stint as VP of Worldwide Business and Corporate Development at Amazon, and was part of the founding team of A9, the Amazon search company.

“I am excited to be building a company again,” said Van Natta, who has taken many months off since he left Facebook in February.

Oh, there had to be much, much gnashing of teeth in the corporate offices of the Time Warner Center in New York yesterday with news of the sale of DailyCandy to Comcast for $125 million.

Why?

Maybe because that tasty payment is going right into the hands of Bob Pittman’s Pilot Group Ventures, which bought the fashion and shopping newsletter business for $3 million in 2003.

Longtime media exec Pittman was the former star AOLer, whose nickname was Bob “Pitchman” for his smooth-as-silk selling and even more marked spinning skills.

But the Web 1.0 supernova fell quickly to earth, after the online service merged with Time Warner (TWX) in early 2001, in what is now considered one of the more significant world-class corporate disasters.

After being tossed out of AOL Time Warner in mid-2002, Pittman (pictured here), along with AOL head Steve Case, was blamed for the stock decline and other woes at the media giant by the Time Warner side, whose deep bitterness toward him has never really faded away.

Now, with Time Warner trying to make a deal to sell the AOL unit for up to $10 billion to Yahoo or Microsoft–despite it being valued at $20 billion only a few years ago–Pittman’s small but impressive score has got to grate.

“I have been associated with the start-up, turnaround or acceleration of many companies and major brands, and rarely have I seen the kind of creativity, commitment and passion I’ve seen day in and day out at DailyCandy,” said Pittman in a letter to DailyCandy staff yesterday about the sale. “And the results speak for themselves: Since we made our investment in 2003, subscriptions have grown from just over 200,000 to over 2.5 million.”

In the letter, Pittman said the company’s EBITDA was over $10 million this year on revenues of $25 million.

This is certainly different from the situation almost exactly six years ago when Pittman was driven out of the then-named AOL Time Warner on the proverbial rail.

If you want a taste of those once-grim times for Pittman, here is an excerpt from my book, “There Must Be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest for a Digital Future,” which was published in 2003.

The section comes from Chapter Six, “Way, Way After the Goldrush,” as the deal imploded:

THERE’S NO BUSINESS LIKE NO BUSINESS

But while Time Warnerites rejoiced in their hope that the merger turmoil was finally over, the company’s troubles wouldn’t leave the front pages for a long time to come.

We’ll see if that has changed at all, after Time Warner announces its second quarter earnings later today.

The reason is a noncompete Miller (pictured here) signed, part of a severance agreement he reached with the media giant after it unceremoniously tossed him out in late 2006.

A Time Warner spokesman said Miller was barred from working “for a variety of competitors, including Yahoo, until March of 2009.”

Like it matters.

According to sources at Time Warner (TWX), the decision came from on high at corporate and not from the AOL unit. And it is not due to jealousy over attention Miller has received of late–Microsoft was also interested in hiring him to take over for departing exec Kevin Johnson.

Miller, sources said, was called by Time Warner CEO Jeff Bewkes (pictured here) last night and told by him, “We’ve changed our mind.”

Why?

Well, to be sure, Miller is no Time Warner favorite, even after being gone for almost two years.

But Miller, whom Time Warner and AOL execs never miss an opportunity to bash, off the record, is also no threat to AOL, which he actually helped revive from the ruins of the disastrous AOL-Time Warner merger.

While working on my second book about AOL in 2002, I will always remember visiting Miller at AOL HQ in Dulles, Va.–where he took up residence in former AOL exec Bob Pittman’s office–and finding him unusually calm after he got the thankless job of following Pittman and AOL icon Steve Case.

Time Warner forces, in the form of new CEO Dick Parsons, had finally managed to take back control of the company and–in a fit of misguided pique–brought holy hell down on the AOL unit.

It was a profoundly emotional reaction, which cost Time Warner precious years and much, much money, as the Internet business revived itself and AOL largely sat on the sidelines.

Miller was in the unenviable position of cleaning up the mess, while also having to listen to endless griping from his bosses.

And, despite the line being put out by Time Warner, he did a pretty good job.

While he might have dumped the dial-up business sooner and been more of an organized manager (the two big complaints about him), Miller did strike AOL’s lucrative Google search ad deal and also bought Advertising.com. (He also tried to buy YouTube, to no avail.)

That purchase should be reason enough for Time Warner to erect a small altar to him, given that it is one of AOL’s only truly valuable assets and the reason Microsoft (MSFT) and Yahoo (YHOO) have been interested in possibly buying the unit.

But no.

Instead, there is the usual he-said-she-said wrangling about whether Miller got approval for being let out of the noncompete clause.

Time Warner apparently claims Miller never got an official waiver, and Miller forces say Bewkes okayed the issue weeks ago, when it was first announced that Miller was one of the board picks being put forth by activist investor Carl Icahn.

It defies belief to go with Time Warner version, given everyone and their mother’s mother knew Miller was the likely pick of both Icahn and, especially, Yahoo CEO Jerry Yang.

More interesting is why Time Warner would choose to speak now, especially on the day of Yahoo’s board meeting.

At the meeting, the Yahoo board approved expanding its number of directors from 9 to 11 and formally voted to let Icahn take over the seat being vacated by Robert Kotick.

Miller was the shoo-in, with other likely choices. including former Nextel (S) exec John Chapple, media exec Frank Biondi and former Grey Global Advertising head Edward Meyer.

Perhaps Bewkes imagines somehow that Miller will be a leverage point in talks Time Warner has been having with Yahoo to be acquired. But the smooth exec is an expert negotiator and that seems unlikely.

More likely is that those talks, like AOL’s talks with Microsoft, have gone a little cold of late as everyone shuts up and stops making ill-conceived moves, to show Wall Street that they have their forward-leaning Internet strategies figured out.

No one does. Not Yahoo. Not Microsoft. And, most definitely, not Time Warner’s AOL.

That’s why Bewkes should stop the saber-rattling and free Miller to serve on the Yahoo board.

Yahoo could benefit and, as it stands now, Time Warner just looks silly–it does not want Miller, but it doesn’t want anyone else to have him.

My three-year-old knows how to share better than that.

On one of my many trips to Los Angeles (what can I say? I like to hang where LoRo* hangs), I dropped in to see Nick Grouf of Spot Runner.

As many might know, Spot Runner is an online-offline ad agency play that has gotten big funding and even bigger hype of late.

We’ll see how that goes. But Spot Runner actually seems to be tackling an underserved (and unexciting) market of local and national clients in need of cheap online ad solutions married to more traditional marketing venues to boost revenue.

Here’s my video interview with Grouf at Spot Runner’s offices on Wilshire Boulevard:

I met Grouf many years ago when he–along with Spot Runner partner David Waxman–founded PeoplePC and Firefly Networks.

Grouf sold the struggling PeoplePC–which hawked computers bundled with an online service–to Earthlink (ELNK) in 2002 for $10 million and assumption of $35 million in liabilities, in a Web 1.0 meltdown deal that followed a disastrous IPO.

He then started working for the Presidential campaign of Sen. John Kerry, helping figure out how to best and most cheaply place critical television ads–crunching all sorts of data about lots and lots of neighborhoods and towns and cities nationwide to figure it out.

What Grouf figured out, though, was that a system for doing so was nonexistent.

That experience turned into Spot Runner, which is essentially a do-it-yourself model that tries to iron out inefficiencies in the buying and selling of advertising and bridge the gap between the traditional and online ad markets.

Offering cheap ad templates, clients can make and place low-cost television and radio ads for small and national businesses, as well as political campaigns, and get analytics about the impact of the ads. Some ads cost as low as $500.

Spot Runner got a pile of cash to try to do that better, recently nabbing $51 million in funding to add to the $60 million already raised.

Investors include international media giants Daily Mail and General Trust (DMGT.L) and Grupo Televisa (TV), investment company Legg Mason Capital Management (LM) and luxury conglomerate Groupe Arnault/LVMH (MC.PA).

Spot Runner’s previous investors are Allen & Company, Battery Ventures, Comerica Bank (CMA), Lachlan Murdoch, Vivi Nevo, Capital Research and Management, CBS (CBS), Index Ventures, Interpublic Group (IPG), Tudor Investment Corporation and WPP.

Its board includes Index’s Danny Rimer and former AOL exec Bob Pittman.

All that money has given Spot Runner an eye-popping valuation upwards of $500 million.

This is its biggest burden, I think, setting expectations very high for what is still a little start-up.

And while there are rumors of both Microsoft and Google, as well as Comcast, being interested in acquiring the company, Grouf dismisses the speculation.

He says Spot Runner is more intent on using the money raised to buy companies and improve its offerings.

For example, it recently bought Weblistic, a local search listings creator, and hired former Microsoft exec Joanne Bradford.

Bradford, who was a VP and chief media officer of MSN Media Network, is executive vice president of National Marketing Services at Spot Runner, focusing on getting national advertisers to also think small and targeted.

Who knows whether the company will be able to overcome its hype, but time (and money) will tell.

(*And a free D6 bag for anyone who correctly identifies who I am referring to here, either by sending in a comment or an email to me at kara@allthingsd.com.)

On my recent trip to Seattle, I visited the offices of iLike in the Capitol Hill section of that lovely Pacific Northwest city to take a video gander at one of the more interesting start ups to emerge from the social-networking arena.

The music discovery site, unlike a lot of others in its sector, has been plugging away for several years with much less funding–about $16 million from the founding Partovi twin brothers, former AOL (TWX) wunderkind Bob Pittman and a big slug from Ticketmaster (IAC)–but with a lot more impact.

Like its competitors, such as Last.fm, it has forged its popularity by focusing on linking its users with one other and musical artists via what they like to listen to.

Kind of like that old shampoo cliché: She told two friends and she told two friends and so on and so on and so on.

It’s actually quite an infectious app and also Web site, with 30 million registered users, and it’s one of the few that is useful on social-networking sites like Facebook, hi5, Orkut and Bebo.

So useful, in fact, that Facebook has selected the service as one of only two “preferred” partners, a designation Facebook announced today at its second developers conference in San Francisco.

iLike was the brainchild of Ali and Hadi Partovi, longtime Web entrepreneurs who have also worked at big companies like Microsoft (MSFT), and whose interest in music and online delivery was the inspiration for the site.

To make money, iLike has a number of businesses.

First and foremost it is essentially a lead-generator for sites like Amazon (AMZN), iTunes, Ticketmaster, and more recently, the Rhapsody subscription music service, with which it just added a somewhat restricted full-song playback offering.

And iLike has just launched an ad platform for concert promoters.

The brand itself, although focused on music right now, obviously has extension possibilities (iLike movies? iLike TV? iLike tacky theme parks?).

Most observers of iLike assume it will sell to a larger entity eventually, such as Ticketmaster, for whom the site has become a major referrer.

But the Partovis–who have sold start ups before–insist they want to build the iLike brand.

Here’s a video interview with Hadi Partovi in which we talk about all this and more, along with a tour of iLike’s offices:

Spot Runner, the online ad agency, delivered yet another Web 2.0 miracle today, raising another $51 million in funding from a diverse group of investors.

Among other services, Spot Runner makes and places low-cost television and radio ads for small businesses and is trying to bridge the gap between the traditional and online ad market.

In this round, those stepping up to invest in the Los Angeles-based start-up include international media giants Daily Mail and General Trust (DMGT.L) and Grupo Televisa (TV), investment company Legg Mason Capital Management (LM) and, curiously, luxury conglomerate Groupe Arnault/LVMH (MC.PA).

This group, along with existing investors, forked over the $51 million to add to the $60 million already raised. This appears to give it a massive valuation of upward of $500 million.

Well, at least in the land of Web 2.0 it does. In the real world, it still remains to be seen. But that has not stopped the nonstop investment party of late for Web 2.0 start-ups.

Web-based instant messaging company Meebo recently raised another $25 million at a reported $250 million valuation, while widgeteer Slide got $50 million for a $550 million valuation.

Of course, the champ of them all has been the social-networking site Facebook, which now has a $15 billion valuation.

Wheeeeeeeeeeeeeee! Or maybe not so much, but obviously no one in Silicon Valley is listening to BoomTown at this Kool-Aid carnival.

Spot Runner’s previous investors are: Allen & Company, Battery Ventures, Comerica Bank (CMA), Lachlan Murdoch, Vivi Nevo, Capital Research and Management, CBS (CBS), Index Ventures, Interpublic Group, Tudor Investment Corporation and WPP.

So far, this group has invested $60 million in Spot Runner. Its board includes Index’s Danny Rimer and former AOL exec Bob Pittman.

“We want to use the investment to make a real penetration in the market,” said Nick Grouf, chairman and CEO of Spot Runner. “We want to expand both organically and through acquisitions, as well as expand our staff, and these strategic investors will help us do that.”

Spot Runner has already been doing that. For example, it recently bought Weblistic, a local search listings creator, and hired former Microsoft exec Joanne Bradford.

The Daily Mail is a large media company based in the United Kingdom, with newspapers, online and radio assets, while Grupo Televisa is one of the largest media conglomerates in the Spanish-speaking world.

Groupe Arnault/LVMH owns some of the world’s toniest brands, including Moët & Chandon, Hennessy, Louis Vuitton and Givenchy.

Grouf, again along with partner David Waxman, also previously founded PeoplePC and Firefly Networks.

In the spirit of the funding, here’s one of my favorite Kool-Aid commercials:

Yesterday, the powerful portfolio manager at Yahoo’s largest investor, Gordon Crawford (pictured here) of Capital Research Global Investors, a division of Capital Research & Management Co., made some very public and very harsh remarks directed at Yahoo (YHOO) CEO Jerry Yang for blowing the Microsoft (MSFT) deal.

All told, between two funds, Capital Research owns 16% of Yahoo. The fund run by Crawford, a legendary money manager and media power broker, holds 6% of that total. No surprise, then, that those funds took a big hit yesterday after the Microsoft takeover bid for Yahoo collapsed.

So a lot of people paid attention yesterday when Crawford, in a high-profile interview with The Wall Street Journal, laid into Yang (pictured here) in such an in-your-face manner.

Said Crawford: “I’m extremely disappointed in Jerry Yang. I think he overplayed a weak hand.”

Crawford was fuming even more to the New York Times yesterday:

“I am extremely angry at Jerry Yang and at the so-called independent board. … I’m hoping that there is such an outpouring of outrage that the board is embarrassed into revisiting this thing, but I’m not optimistic about that.”

Uh-oh, because BoomTown has seen this story before.

It was back in 2002 and the exec under Crawford’s withering gaze then was former AOL Time Warner (TWX) Chairman Steve Case (pictured here).

Jerry Yang might want to take notes, as the situations are a little too familiar to ignore.

Thus, here is a longish excerpt from my book, “There Must Be a Pony In Here Somewhere,” which shows just how active and relentless Crawford can be as an investor when he gets irked by execs who disappoint him:

Gordon Crawford was still very, very angry.

“He did not do it to embarrass Steve,” said this person. “Steve was just a festering boil at AOL that needed to be cauterized and removed.”

Note: Case resigned on Jan. 12, 2003.

Of the explosion in the sector–every report and poll shows a giant leap in online video watching by consumers–Pittman (pictured here) is not so sanguine in a Q&A he did with VideoNuze that was published yesterday in advance of the National Association of Television Program Executives conference in Las Vegas next week.

(FYI, I will be there to appear at a panel on Wednesday with execs like former Disney head Michael Eisner, along with others, aptly called “Possibilities and Perils of Internet TV.”)

Of online video, Pittman focuses on those perils and notes that short-form Web fare is not really a big deal, however temporarily popular some of it can become.

“So we have to be careful not to talk about fringe uses as if they’re going to be major uses,” said Pittman. “But I don’t think broadband is competitive with TV, putting TV shows on the Internet is nice, but you’re talking about small audiences.”

Currently heading a New York-based investment firm called the Pilot Group, Pittman (who also co-founded and ran MTV Networks) is more disposed toward broadcast networks. Pilot has been buying broadcast, of course, in smaller markets.

Said Pittman (whose salesguy smoothness–his nickname was “Bob Pitchman”–I realized I really missed by reading the interview):

“Broadcast stations are greatly unappreciated. TV is America’s hobby. Look at any category, the biggest is always the most important. So we want to invest in a place where most people are. It is a fantastic advertising medium. There’s no substitute for TV advertising. It works like nothing else. It’s still wildly cheap–for the most part it’s a $7 to $8 CPM–compared with newspapers and magazines, which are $25 to $30, and it outperforms by every measurement–reach, time spent, effectiveness. It’s still wildly underpriced.”

I am not so sure I agree with Pittman, whom I got to know well when covering AOL and also writing two books on the company.

But he does have a point about how hard it is to watch quality online video and the need to get Web content to the television.

Said Pittman: “I think it’s going to be pretty hard to get something in the home that’s easier to use than pushing a button on my TV set that I already know how to do and I’m set up to do. To start connecting a box and moving stuff around, then my rule of thumb is about 10% of the population will adopt new technology because it’s cool and neat, but it will be hard to get past that threshold.”

More strongly than any TV exec I have talked to of late, who are mostly in a serious state of depression over declining viewership, Pittman insists that the Web is not hurting television.

“People keep talking about Internet as if it’s competing with TV. But what the Internet has really done is replace print–things like yellow pages, newspapers and traditional research books. It’s also replaced communications–phone calls, voice mail,” Pittman said. “So when you hear these stories about the Internet replacing TV, I think they’ve got it all wrong.”

Well, he’s got it all wrong, of course–it isn’t replacing it apples for apples. But it is replacing it in terms of time and attention of consumers, especially young people, which is exactly the same thing.

Nonetheless, it’s good to hear from the always pugnacious Pitchman.

To: Terry Semel
From: Kara Swisher
Re: Some unsolicited advice on being under fire as the Chairman and CEO of Yahoo! Inc.

Terry baby,

Has it actually been six years since I last shot you a memo offering some thoughts on getting the top-dog spot at Yahoo? Back then, I wanted to be among the first to congratulate you, as I wrote:

“on getting the green light on one of Silicon Valley’s most boffo projects. Or as we say here, on deploying a major multi-platform operating system with a simplified user interface and innovative support services using a world-wide network that focuses on standards-based security, manageability and reliability.”

I hope by now you know what all that means and, if not, that you sound like you do. It’s hard to live in one of those tiny cubicles at Yahoo all this time (memories of that swanky Warner Bros. office you once luxuriated in must seem like a dream) without absorbing some of the jargon that techies like to throw around to make you feel stupid. (I know you still don’t know what SOAP is, nor should you.)

But it’s not your geek learning curve I am concerned with right now. It’s these persistent rumors that you might soon be ankling your way out of Yahoo’s HQ in Sunnyvale or even get the big heave-ho from Chief Yahoo (I will bet that even on his craziest day Ted Turner never asked you to call him Chief Yahoo) Jerry Yang and the board or perhaps a passel of irritated investors.

Ingrates! When you arrived at the company, it was gasping for air after the Internet bubble it rode to the top had popped. You cleaned up that place like your good pal Clint Eastwood might take out all the baddies in a troubled Western town, except without a lot of shooting. Your Hollywood reputation as a world-class schmoozer and soother was true–all sweetness and light, but investors loved it.

It was a good plot, but, I think we can agree, not enough for today’s fickle audience. Now, you seem to be box-office poison with a lackluster stock, disgruntled employees and questions about your vision. In other words, you appear to be in “turnaround” in that bad Hollywood way (meaning a film project that has been in development for ages so that it is not likely to see the light of day, let alone a theater). But let’s change the story and make it the kind of turnaround the whole family will enjoy.

First, the big surprise: Rethink your whole approach to search. You have certainly put a lot of powder behind this new online advertising system called “Panama” and have promised big results in upcoming quarters. Maybe it will deliver, but the fact of the matter is that it is likely you will be running behind search leader Google for the foreseeable future. It’s not that they have such much-bigger brains over there (they don’t, except for that one guy they hide in the back) or that the food is better (well, it is), but that Google is and always will be a technology company that dabbles in media. Yahoo is almost the exact opposite, starting out as a directory and not as a technology superstar. All this wrangling with Google in a nerd version of “Highlander” is only going to get you to the reality: “There can be only one!”

While some have been suggesting you get out of search, selling off Overture and doing a big money deal with Microsoft or even, yes, Google, to handle the algorithmic heavy-lifting, I think a better approach might be to spin off the search part of the company, perhaps combining it with a spin-off of Microsoft’s search assets. Thus, you create a separate company that could focus only on making Larry Page and Sergey Brin sweat a little bit. Put it in the hands of a real techie star (think the Brad Pitt of servers), and I will bet top engineers will find a tech-focused outfit more attractive to work for.

Most important, it will free you up to focus Yahoo on what it does best: Media and consumer products. While Google gets all the hip glory, the fact of the matter is your email is much better, as are your mobile doodads, as are all your news and entertainment offerings (pitting scrawny Google Finance next to Yahoo’s mighty site is a fine illustration of what you do best). And when I say media, I don’t mean you have to spend all your time creating stuff–in fact, you might consider throwing in the towel on your Santa Monica satellite–but that you could be the best friend Hollywood ever had. The news business, book publishing industry and most of Hollywood (from television to movies to music) is justifiably scared out of their wits by Google and only more so after the YouTube and DoubleClick acquisitions. It is true that the enemy of my enemy is my friend, which I think is a line in some Mel Gibson flick you helmed.

Speaking of acquisitions, go back and give that Mark Zuckerberg the love and $1 billion he wants. Facebook needs to hook up with a big player and fast, because despite its hypergrowth, its advertising ambitions are still hard to reach (even though a few ex-Yahoos are running the show in that department). They need help. Unlike the messy and looks-like-the-wheels-could-come-off-anytime MySpace, it is a really useful, well-made and sticky social network and seems to have a pretty defensible and young audience. As long as you keep things hopping, of course. Even us old folks are looking for a useful and relevant way to stay in touch, and Facebook can easily handle a lot of different communities, unlike many others where it’s hard to feel like you belong without a tattoo. I know it is a lot of money, but you know hiring a star is probably the best way to produce a hit, since a series of indie hits is not going to get you there.

Closely related is a more defined approach to marketing and rewarding customer loyalty. You can’t be a catchall anymore, as it is no longer a reach game. You must try to keep your best customers engaged. Let’s practice this one word: Relevance! What do I mean by that? I mean not turning into the soulless, ad-choked, spamfest that AOL became as it grew. Yahoo has to be relevant to each and every one of its users and that means letting them pick and choose any Yahoo product, even if it is not branded that way. Think Flickr (that was a terrific move) and you have the right idea.

Speaking of Flickr, I got this one off it. One personal aside: I love the loyalty, but can you possibly stop inviting Tom Cruise to Yahoo? It seems a bit goofy, and you’d be better off having some tech legend in from time to time.

There is a lot more to say, but let’s just end with the vision of your friend, Gov. Arnold Schwarzenegger, who, in the third “Terminator,” always kept to his task of protecting the leader of the resistance. Last time I wrote you, I advised you to use that old Hollywood technique of blaming the last studio boss if things went south after you arrived. Clearly, you can’t do that now, given your long tenure. So you have to stick to the course and say loudly you are doing that. After all, it’s not likely, even with the recent troubles, that the Yahoo board has the kind of guts it would take to oust you and there are no angry shareholders massing at the gates (and the last time I checked, even the obstreperous Carl Icahn couldn’t get rid of Dick Parsons at Time Warner).

And if you are going to go, then do it sooner rather than later. Unlike Burbank, Silicon Valley loves failure and even embraces it. In other words, even if you leave, you will eat lunch in this town again.

Tom Cruise/Terry Semel photo by Mitchell Aidelbaum.

From: Kara Swisher

To: Terry Semel

Re: Some unsolicited advice on becoming the Chairman and CEO of Yahoo! Inc.

Terry, sweetheart, let me be the first to congratulate you on getting the green light on one of Silicon Valley’s most boffo projects.

Or as we say here, on deploying a major multi-platform operating system with a simplified user interface and innovative support services using a world-wide network that focuses on standards-based security, manageability and reliability.

Am I going too fast for you, Terry? Sorry, but that’s the way we operate on the Web–at warp speed a la “Star Trek,” if that helps you understand it better. I thought it might be helpful if I gave you the 411 on what you need to know if you want to put this baby in turnaround.

In fact, your movie-making expertise could save the day. It’s looking a lot like “Titanic” here recently–and I’m not talking about the DiCaprio version. (Quick hot thought: Can we get Leo to replace Jerry Yang as the Yahoo founder?)

First, the Trekkie image is a good one to visualize as you go into this, since the Internet is still too much about how the insides of computers, servers and devices that multi-task work (don’t ask). Your new company is full of bright young techies, all dressed alike in khakis, who like nothing better than to chatter about Linux, XML, WAP and SOAP (really, don’t ask).

That’s been fine, up to now, since the Web has been growing faster than the number of starlets hoping to date Russell Crowe. But presumably, Terry, you’ve been hired to change the entire focus of Yahoo, transforming it into the 21st century’s leading media and entertainment company.

Your first job, then, is probably a top-to-bottom overhaul, recasting the crew, the characters and even the whole story line.

Yahoo’s troops may resist, because the company is one that hasn’t changed a lot in its entire life–sort of like Norma Desmond in “Sunset Boulevard.” So as not to end up like the poor sap face down in the pool, you’ll have to evaluate quickly who can make the needed changes in style and focus.

While the old plot was a hit (ambitious youngsters take on grumpy older generation, make a king’s fortune and lose it all to hubris), it was so 1990s. Yahoo can no longer be about simple-living, burrito-eating geeks dedicated to making the Internet easier to use.

So you’re going to need an image makeover.

Are you aiming to be a Schwarzeneggerian media company like America Online Time Warner , delivering a mass of news and entertainment to tens of millions of subscribers? That may mean a quick marriage with a traditional media giant like Viacom or Sony to give you power and influence.

Or are you going to opt to be a classier outfit (think Miramax before Walt Disney) that cultivates a smaller but more dedicated audience with a top-notch bunch of services to help them manage information overload in this increasingly complex world? If so, you’ll need to figure out what products you have that customers will pay a lot for now.

Bringing in some money is obviously key, since you can ill afford any bombs at this point. Yahoo has been profitable for years, unlike almost every other Internet company, but it has primarily been an ad-based business. That’s box-office poison these days. What you need today is locked-in consumers, ownership of proprietary media assets and a dozen flavors of high-margin revenue.

Fail at that and you might as well take another cartoon to the big screen. Wall Street is now like a pack of dyspeptic critics, and their pans have taken a toll on Yahoo morale, its once-soaring stock price and, most important, its momentum.

But you can do Frank Capra and make the underdog role work for you. Yahoo can be the beleaguered George Bailey in “It’s a Wonderful Life”–the virtuous alternative for the masses of humble customers. Your major competitor, Bob Pittman at AOL, is the obvious person to play the Mr. Potter of the Web, greedily consolidating the medium.

Yahoo can’t depend on an angel to get it out of this jam, so go with what you have: lots of daily users, a killer database and a dedication to a high level of technological service.

While you’re not in Burbank anymore (Silicon Valley actually makes Burbank seem exciting), your Olympic ability to schmooze will allow you to attract the talent and build the relationships the company needs to be a sure-fire hit.

And if it doesn’t work out, you can always use that old Hollywood trick: Blame the previous studio head.