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AOL CEO Armstrong Talks About New Branding Effort and the Investor Road Show! (Plus Internal Aol. Logo Video)

Kara Swisher — Mon, 23 Nov 2009 08:02:05 +0000

After AOL CEO Tim Armstrong unveiled the newly punctuated AOL logo–big A, little o, little l, period–last night, he got on the horn with BoomTown to chitty-chat about the change in image and, more pertinently, how it’s going on the road show to sell investors on the soon-to-be independent company.

First off–while many suggested it–Armstrong said he never considered dumping the AOL moniker for another name, in an effort to rid the company of the 1990s feel of the brand.

“I wanted to keep AOL as the the brand, because bottom line there was a lot of good will around the name,” he said, noting the billions of dollars invested in it. “As a consumer brand, there was a high level of affection.”

Of course, I have a lot of nostalgic affection for Beanie Babies and the kids from “Saved by the Bell.” But, in no way does that mean I want them back, especially Screech.

But Armstrong prefers to use the revival of the Apple (AAPL) brand as a better comparison. “We think that kind of comeback is the way we’re looking at it,” he said.

In that case: Calling Steve Jobs, stat!

Of course, the AOL name has also forever been linked with Time Warner (TWX)–its current owner–in perhaps one of the worst mergers in history, another ding on the brand.

Armstrong agreed that corporate debacle left bad taste in the mouths of investors, which is one of the things he has to change in the road show he is now on to sell the new and improved AOL.

And, while he is only two days in, Armstrong said he is encouraged by the response.

“A lot of initial reaction is what we expected and we have had to do an update on AOL to change perceptions,” he noted. “People did not know we were doing so much…and, I think, they really like our strategy.”

That would be a leaner, meaner staff with a big focus on content.

Still, Armstrong said, investors are going to take some convincing. “Basically, they want to know where we are on the AOL turnaround and are asking us if we can get this company growing again,” he said. “AOL is still the ‘Show Me’ state.”

Actually, that’s Missouri. Perhaps a better goal would be Florida: The Sunshine State!

In any case, Armstrong said it will be critical that AOL show investors that its change is authentic, innovative and meaningful.

The idea of transformation is obviously and sadly clear with AOL’s recent announcement of massive layoffs and the deleveraging of assets.

In other words, it’s not your father’s bloated online company.

On the more positive side, Armstrong said communicating a new brand image and accompanying logo–whose motto is: “one logo/countless ways to reveal” and will include a marketing and advertising campaign–is also key.

“We want to use the new logo to highlight other things within the service,” he said. “And that would be all the things that you can pivot to that come after the dot.”

Here is a first look at a video of Armstrong talking to his employees about the new logo–and, no, I have no idea what the fawn, the goldfish or the weird-looking ghosts mean–as well as images of some older AOL ones (only the yellow running man is staying put):

[ See post to watch video ]

AOL Layoff Package: You Stay, You Pay

Kara Swisher — Thu, 19 Nov 2009 20:25:29 +0000

BoomTown has learned that AOL is offering those who “volunteer” to leave the company now a departure package that ranges from three to nine months of pay, compared to one to four months for employees laid off in the first quarter of next year.

It’s a depressing rock-and-a-hard-place choice.

An AOL spokesperson confirmed the offer, which is part of a massive layoff of 2,500 of its 6,000-person workforce.

Earlier today, AOL said it would be letting go a big chunk of its staff, a third of its payroll, in a regulatory filing.

As reported by MediaMemo’s Peter Kafka:

The voluntary layoff program begins Dec. 4, a few days before the company spins off from Time Warner (TWX). If AOL doesn’t get enough volunteers, it will ax people on its own.

This is lousy news for employees, who are faced with a “jump now or wait to be pushed” decision, but it is designed to cheer investors: AOL says the cuts will drop its annual operating expenses by $300 million. Through the first nine months of this year, AOL’s operating expenses ran around $1.8 billion.

AOL Also Likely to Eye Sale of MapQuest–Is Microsoft a Possible Buyer?

Kara Swisher — Thu, 19 Nov 2009 08:23:38 +0000

Yesterday, BoomTown wrote about AOL’s efforts–including hiring investment bankers–to sell its ICQ instant-messaging unit.

But that’s probably not going to be the end of the shedding of assets at the online site.

In fact, according to sources inside and outside AOL, one of the next candidates for sale could be its MapQuest online map service.

Purchasers of the service that provides mapping and directions, sources said, are likely to be other mapping giants, especially Microsoft (MSFT).

But it is not clear if the software giant or anyone would fork over a huge sum of money for MapQuest.

That would include the $1.1 billion in stock that AOL paid for MapQuest in 1999.

AOL is set to spin itself off in less than a month from corporate owner Time Warner (TWX), and sources said selling off peripheral properties is part of becoming a smaller, more focused company.

MapQuest, like AOL’s Bebo social networking site, fits this description.

While it does have widespread distribution across the Web, reaching over 40 million users monthly, MapQuest lags well behind aggressive efforts being pushed by both Microsoft and Google (GOOG).

Exclusive: AOL Hires Bankers to Sell Off ICQ, as Internet Service Starts to Shed Non-Core Assets

Kara Swisher — Wed, 18 Nov 2009 21:18:39 +0000

AOL has hired a pair of New York investment bankers, Morgan Stanley and Allen & Co., to manage the sale of its ICQ instant-messaging unit.

Sources familiar with the situation said interest in buying the asset from two major non-U.S. companies prompted execs at the online service to put a process in place for a deal that will likely occur after AOL becomes an independent company in December.

AOL is set to spin itself off in less than a month from corporate owner Time Warner (TWX), and sources said selling off peripheral properties likes ICQ is part of becoming a smaller, more focused company.

Sources added that AOL now wants about $300 million for the property.

ICQ, which was once of the most explosive online communications tools, has lagged since AOL bought its popular software for $287 million in 1998, with another $125 million in earnouts for the team then. It was part of an Tel Aviv, Israel, start-up called Mirabilis.

While ICQ has about 40 million to 50 million unique monthly visitors and is the No. 1 messaging service in Germany, Russia, Ukraine, Israel and other small countries, its has less traction in the U.S. than bigger rival services from Microsoft (MSFT), Yahoo (YHOO) and Google (GOOG). In addition, Facebook and Twitter have also become major players in the status-update space.

AOL’s AIM service, in contrast, is quite strong, typically clocking as one of the top instant-messaging properties.

Said one source about the sale of ICQ, which is still based in Israel with about 100 employees and is moderately profitable: “AOL now has to be asking the hard questions.”

Those hard questions include massive layoffs, which BoomTown reported last week will take place soon. AOL then formally acknowledged the cuts, noting in a regulatory filing that Time Warner would take a $200 million charge for them.

Other AOL properties are also likely to be getting the once-over for sale, including its Bebo social networking site, which AOL bought for $850 million in 2008. But that is not imminent.

AOL to Spin Off Dec. 9, Begin Trading Dec. 10 (Plus Full Press Release)

Kara Swisher — Tue, 17 Nov 2009 00:01:57 +0000

AOL will officially be spun off from Time Warner on Dec. 9, with trading to begin the next day.

Shareholders of record at 5 pm ET on Nov. 27 will get one share of AOL for every 11 shares of Time Warner (TWX) on the day of the long-expected spinoff of the Internet service.

At Time Warner’s current market cap of $38 billion, that gives AOL an implied value of $3.2 billion–a fraction of Google’s (GOOG) $20 billion valuation of the portal in 2005, when it invested $1 billion in the property. And it’s even lower than the $5.5 billion valuation Google gave the company last January, when it wrote down its investment.

AOL will trade on the New York Stock Exchange as “AOL.”

Ironically, before it merged with Time Warner at the dawn of the new century, AOL previously traded on the NYSE.

AOL went public on Nasdaq on March 19, 1992, under the ticker “AMER,” and moved to the NYSE on Sept. 16, 1996 trading as “AOL.”

(Fun fact: BoomTown actually attended both the fancy dinner the night before AOL moved to the NYSE from Nasdaq and the AOL party on Wall Street the next day.)

If you want to get really technical, AOL common stock will begin trading on a “when-issued” basis–you really don’t want to know the confusing regulatory details of why–on the NYSE under the symbol “AOL WI” beginning on Nov. 24, 2009.

On Dec. 10, when-issued trading of AOL common stock will end and “regular-way” trading under the symbol “AOL” will begin.

After that, it will be up to CEO Tim Armstrong to make the long-suffering AOL into the little Internet company that could.

The separation of AOL and Time Warner is also symbolic, dismantling the most potent symbol of Web 1.0, when AOL essentially got control of the media giant, only to see the merger crash in disaster.

If at first you don’t succeed…

Here’s the full Time Warner press release on the transaction:

Time Warner Declares Spin-off Dividend of AOL Shares

Record and Distribution Dates and Final Distribution Ratio Announced

NEW YORK–(BUSINESS WIRE)–Nov. 16, 2009–Time Warner Inc. (NYSE:TWX) and AOL Inc. today announced the timing and details regarding the spin-off of AOL from Time Warner.

The Time Warner board of directors has approved the final distribution ratio and declared a pro rata dividend of the shares of AOL common stock owned by Time Warner that will result in the complete legal and structural separation of the two companies.

On the distribution date of December 9, 2009, Time Warner stockholders of record as of 5 p.m. on November 27, 2009, the record date for the distribution, will receive one share of AOL common stock for every eleven shares of Time Warner common stock they hold.

Fractional shares of AOL common stock will not be distributed to Time Warner stockholders. Instead, the fractional shares of AOL common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to Time Warner stockholders who would otherwise be entitled to receive a fractional share of AOL common stock.

No action or payment is required by Time Warner stockholders to receive the shares of AOL common stock. Stockholders who hold Time Warner common stock on the record date will receive a book-entry account statement reflecting their ownership of AOL common stock or their brokerage account will be credited with the AOL shares. An Information Statement containing details regarding the distribution of the AOL common stock and AOL’s business and management following the AOL spin-off will be mailed to Time Warner stockholders prior to the distribution date.

The AOL spin-off has been structured to qualify as a tax-free dividend to Time Warner stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable. Time Warner stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the AOL spin-off.

Shares of Time Warner common stock will continue to trade “regular way” on the New York Stock Exchange (“NYSE”) under the symbol “TWX” through the distribution date of December 9, 2009, and thereafter. Any holders of shares of Time Warner common stock who sell Time Warner shares regular way on or before December 9, 2009, will also be selling their right to receive shares of AOL common stock. Investors are encouraged to consult with their financial advisers regarding the specific implications of buying or selling Time Warner common stock on or before the distribution date.

AOL common stock will begin trading on a “when-issued” basis on the NYSE under the symbol “AOL WI” beginning on November 24, 2009. On December 10, 2009, when-issued trading of AOL common stock will end and “regular-way” trading under the symbol “AOL” will begin. The CUSIP number for the AOL common stock will be 00184X 105 when regular-way trading begins.

Time Warner and AOL have entered into a Separation and Distribution Agreement and several other agreements related to the AOL spin-off. The completion of the AOL spin-off is subject to the satisfaction or waiver of a number of conditions, including the Registration Statement on Form 10 for the AOL common stock being declared effective by the Securities and Exchange Commission (“SEC”), the AOL common stock being authorized for listing on the NYSE and certain other conditions described in the Information Statement included in the Form 10 and in the agreements filed as exhibits to the Form 10. The condition relating to the authorization of the AOL common stock for listing on the NYSE has been satisfied, and today AOL sent a letter to the SEC requesting that the Form 10 be declared effective. Time Warner and AOL expect all other conditions to the AOL spin-off to be satisfied on or before the distribution date.

AOL: Small Layoff Today, a Voluntary Buyout and, Then…the Big One

Kara Swisher — Tue, 10 Nov 2009 08:00:21 +0000

Essentially–although AOL is located in New York and not California–it’s going to be like tremors before the Big One at the online company today, as about 100 employees are laid off.

Sources said the cuts, first reported by Valleywag’s Ryan Tate, will be widespread across AOL, even as the company inches ever closer to being spun off from its corporate overlord, Time Warner (TWX).

That will come within the next month, once the spate of regulatory comments and approvals is in place, said sources.

And during this time, AOL CEO Tim Armstrong’s “Project Everest”–the code name for cost-cutting across the company–will be chugging along to its final destination.

After tomorrow’s small cut, sources said, Armstrong has told employees he is seriously considering a suggestion made to him on a listening tour of AOL, which he took in his first 100 days on the job, of asking for voluntary departures that would include some sort of buyout.

It’s unlikely that that will be enough to achieve the kinds of cuts needed to bring costs in line with depressed revenue at AOL.

At its third-quarter earnings call last week, Time Warner reported that AOL revenue was down 23 percent. In addition, subscription revenue, which will continue to shrink, was down another 29 percent, and advertising revenue, which is supposed to improve one day, was down 18 percent.

Thus, with that performance, AOL is likely to do a massive layoff of upward of 1,000 employees.

That action will take place right before or, more likely, at the same time or right after the spinoff.

In other words, not very happy holidays for some.

But AOL is not alone in making cuts in the tech space. Last week, both Microsoft (MSFT) and RealNetworks (RNWK) laid off staff, as did Electronic Arts (ERTS) yesterday.

Here is a recent interview I did, while in Germany, with Armstrong, where he talked about AOL’s prospects:

[ See post to watch video ]

Sphere Leader Has Exited AOL–But Staying on as "Special" Venture Advisor

Kara Swisher — Wed, 04 Nov 2009 17:30:28 +0000

Tony Conrad, CEO and co-founder of Sphere–the contextually relevant content engine AOL bought in the spring of 2008 for upward of $25 million–left the Time Warner (TWX) online unit last month, several sources have told BoomTown in recent weeks.

But, in an effort by AOL’s CEO Tim Armstrong to hold onto entrepreneurial talent, Conrad (pictured above) has agreed to become “Special Advisor” to its AOL Ventures Unit, headed by Jon Brod.

Conrad, who also works as a partner at San Francisco venture firm True Ventures, is also apparently looking to launch a new start-up.

These many moves have now been confirmed by a blog post–obtained by BoomTown–set to be published by Conrad at Sphere, which has recently changed its name to Surphace (a goofy moniker that still makes me weep, and not for joy).

Titled, “Next,” the post will also be appearing on the True Ventures site.

In it, Conrad outlined the changes and also gave big thanks all around.

You can read the whole thing below. In the post, Conrad noted that “I also find myself with a burning need to start another company…[and] I’ve decided that I need to move on from Sphere to figure it out.”

Sphere was founded in 2005 and raised about $4.25 million from many investors, some of which included Radar Partners, Trident Capital and well-known Web players Scott Kurnit and Will Hearst.

Conrad, who was involved with Webmail and RSS aggregator Oddpost (acquired by Yahoo in 2004), is also on the board of Automattic/WordPress, the blog publishing system this site uses.

This kind of history gives him a lot of Silicon Valley cred to help AOL, which also recently hired former Yahoo (YHOO) exec Brad Garlinghouse to run its communications arm and be its “CEO of Silicon Valley.”

Both will be working with Brod, who came to AOL via its acquisition of hyperlocal community news start-up Patch Media.

Brod has previously worked closely with Armstrong, who was a major Patch investor.

All these players will have their hands full trying to push AOL’s reputation among entrepreneurs, which is–how can I put it delicately?–pretty nonexistent.

But boosting innovation will be key to success as AOL prepares to spin off from Time Warner later in the year.

And that was not exactly helped by its recently released slate of board picks, who are a little light on fast-paced, Web 2.0 entrepreneurial skills.

So, keeping someone like Conrad in the AOL tent is a good move, especially since several similar execs at start-ups bought by the online giant have left.

They include Michael Jones of Userplane, who is now COO of News Corp. (NWS) social networking unit MySpace, as well as many others.

Here is a video interview I did with Conrad in mid-2007 (which also includes a visit with GigaOm’s Om Malik):

[ See post to watch video ]

And here is Conrad’s blog post:

Next

It’s been almost five years since Martin Remy, Steve Neiker, Toni Schneider and I started working on Sphere. For me, it’s around 10% of a life. And it’s a time when I find myself thinking a lot about a particular question: What do I want to do next?

In 2005, I had the good fortune of being on the founding team of Sphere and joining True Ventures simultaneously. I always thought that I’d eventually focus all of my attention on one or the other, but both were too much fun and I guess I’m selfish in that way. As time passed, I went deeper into each role and I never got around to choosing one or the other. It worked out nicely. True is on its second fund and Sphere had a successful sale to AOL in 2008. Most importantly, Sphere’s business and team are both thriving within AOL. While I’m proud of my contributions to both, the heroes in this equation are Martin, Steve, Toni, Shea DiDonna, Braughm Ricke, Om Malik, Puneet Agarwal, John Burke, Phil Black, Jon Callaghan, Marty Moe, Bill Wilson and AOL–they trusted and empowered me to pursue both. I am extremely grateful.

As I’ve thought through the question of what’s next, I’ve realized that I love the complementary perspectives acquired from building a company as an entrepreneur and investor. They are symbiotic roles and it’s really hard to say which has influenced me more. While my role at True as a Venture Partner will continue to deepen (because there is nothing more rewarding than working with people you admire and trust), I also find myself with a burning need to start another company. I’ve discovered my formula and doing both makes me happiest.

As for my next company, I’m not sure what the answer to that question is, but I’ve decided that I need to move on from Sphere (now Surphace) to figure it out. This may feel like old news as I’ve been working to make myself obsolete as Josh Guttman transitioned into the CEO role. My decision is easy as I know that Surphace is in excellent hands. I wouldn’t feel comfortable leaving if I didn’t believe that Josh was the right leader for the business today. He’s a natural leader and has a strategy for the future that I believe is going to accelerate growth for Surphace and AOL. I couldn’t be more pleased for Josh and excited for the Surphace team.

As for my thoughts about Surphace and AOL’s future, I’m more optimistic than ever. We joined AOL at an opportune time. AOL is doing what great, sustainable businesses do every so often – they’re reinventing themselves. As the business model of the oldest and one of the biggest Internet businesses evolves, Sphere/Surphace has become an important piece of their strategy to reach across and engage the web. In the past year, we’ve had an insiders’ view into how AOL’s new leadership team has moved aggressively to engage their audience (new vertical focused websites; a focus on engagement and not page-views for page-views sake; hiring leading journalistic talent when others downsized; acquisitions in the local content space; shorter development cycles with an emphasis on release, iterate and release). There is nothing like winning and the AOL publishing business is winning. As a result, I’m pleased to also announce that I’ve agreed to serve as a Special Advisor to AOL Ventures as they reinvent themselves. I am thrilled at this opportunity to evolve my relationship.

I want to give a huge thanks to the people who’ve made the last few years what they were: my family tops the list, an entrepreneur is only as good as their support system and this is my secret sauce. My co-founders, Martin and Steve, who trusted me to play a role in helping them get the tech they invented the exposure it deserved. Toni and Phil who taught me about generosity at a moment when I was able to learn. Matt Mullenweg who opened up my thinking of how a start-up operates. Marty and Bill who have been consistently supportive since Day One–I can’t underscore enough how much I appreciate the manner in which they’ve empowered us to thrive in an appropriately independent environment. They have treated me (and the Sphere team) with enormous respect for which I am both thankful and flattered. The original Sphere team, the current Surphace team who have embraced AOL. Our investors and advisors who supported and helped shape our vision. The True team and entrepreneurs who have taught me about sacrifice, vision, execution and the value of pursuing your dreams–and, of course, Lewis Dvorkin, Kevin Lockland and Bill who paid us the nicest compliment of all in offering to acquire our company and then doing so.

It’s been a thrilling, at times difficult, always rewarding and lucky ride I’ve been on. Thanks to all.

As Traffic Booms, Is HuffPo Ready to Make Some Real Dough?

Kara Swisher — Tue, 20 Oct 2009 16:21:53 +0000

For the past few months, the Huffington Post has been on a bit of a tear–both in terms of traffic gains and in its hiring of some big talent for key positions.

Now, those execs are focusing on using that consumer momentum to achieve what has eluded the Huffington Post thus far: Making some serious bank from the privately held news and media site.

How to help marketers to better understand the site and, therefore, spur this significant monetization will be his main focus at the Huffington Post, said Greg Coleman to BoomTown in an interview over the weekend.

Coleman–a former Yahoo (YHOO) advertising exec, as well as one for Time Warner (TWX) online unit AOL–was named president and chief revenue officer a month ago by Huffington Post’s new CEO, Eric Hippeau.

Hippeau, who was himself just appointed in June, is another well-known online media exec and has been a big investor and board member of the Huffington Post. (You can read a thorough interview by Staci Kramer with Hippeau on paidContent.)

“It’s important for advertisers to know how big we have gotten, while also highlighting this amazing audience of influencers we have gathered,” said Coleman, in his first media chitchat since taking on the job. “I think it is the beginning of a tipping point.”

Well, of course, Coleman would say that, as the guy looking to drum up interest among marketers in spending their money on the Huffington Post.

But stats seem to indicate that consumers are increasingly liking what the Huffington Post is creating, because it is starting to surpass some well-known media icons on the Web in traffic.

While more of this increase is going to be due to a socialization of the news–the Huffington Post has an aggressive deployment of Facebook Connect called HuffPost Social News–the growth is more about building a brand people trust and seek out.

According to recent reports from both comScore (SCOR) and Nielsen Online, for example, the site just became larger than several online brands of big media companies, such as the Washington Post (WPO), in terms of unique monthly visitors.

In its September report, Nielsen clocked the Huffington Post at 9.47 million uniques, up 26 percent, while the Post site was at 9.2 million–a drop of 30 percent.

According to the Nielsen, the Huffington Post is within spitting distance of USA Today’s Web site (9.9 million), a Gannett (GCI) property.

And, it is bigger than Hearst Newspapers Digital (7.9 million) and the BBC (7.2 million).

For September, comScore has the Huffington Post (at 6.83 million) besting the Post (6.77 million)–as well as WSJ.com (6.7 million), a unit of Dow Jones, which is owned by News Corp. (NWS).

(The Wall Street Journal site, to be fair, makes a chunk of its revenue from subscription fees, rather than relying solely on advertising from traffic like the Huffington Post. And full disclosure: Dow Jones owns this site.)

In any case, big traffic is key for most news sites, and internal numbers from Google (GOOG) Analytics that Huffington Post execs cite are higher, as is typical for most sites, pegging traffic at about 27 million monthly uniques with more than two million reader comments per month.

Huffington Post co-founder and blogging icon Arianna Huffington attributes the recent boost in traffic to the site’s proclivity to “start conversations” that interest readers, such as her recent suggestion that Vice President Joe Biden should resign.

“We are aiming to go beyond just facts, to create a narrative,” said Huffington, who thinks the speed of news helps attract visitors to the site. “We think bringing journalism to a new level is exactly what people are looking for.”

Perhaps. But, even if traffic increases continue to bear her theories out, she and others have said that the Huffington Post still has not been regularly profitable despite doubling annual revenue–mostly in advertising–to what some estimate to be about $8 million in 2009.

While the site is aiming to invest rather than focus too hard on showing profits, Coleman said he would like to make revenue seven times larger in the next years, building on the performance of the site to vaunt past old media giants online.

“This kind of thing is a milestone for the marketing community,” he said. “Our goal is to be the top Internet newspaper, and this points out that we are on our way.”

To do that, he will have to spend some of the $37 million in funding that the Huffington Post has raised from venture investors.

While the edit side is using the money to expand the number of news categories, Coleman said his focus will be on building a higher caliber team of sales and marketing execs with deeper relationships to big clients.

“Unlike selling an auto page on Yahoo (YHOO), our site has a more complex sales process that takes some time for people to understand,” said Coleman. “But once they get it, it should be an easier sale.”

Until then, check out the video of the entire interview I did at the seventh D: All Things Digital conference with Huffington and Washington Post publisher Katharine Weymouth in which they talk about the future of journalism and more:

[ See post to watch video ]

Will Facebook and Twitter Keep "Paranormal Activity" From Turning Into "Snakes on a Plane"?

Kara Swisher — Mon, 05 Oct 2009 10:30:37 +0000

Four years ago, the movie, “Snakes on a Plane,” became a genuine Internet phenom well before the movie was in theaters.

Which, in the end, only showed that online buzz had negligible impact on the viewing public, given that the movie’s box office turned out to be tepid at best.

But will another small film, about a demon-plagued couple with an infrared-equipped videocamera, called “Paranormal Activity,” prove that the chatter of Facebook and Twitter has more legs today?

It looks like it, given that the very-low-budget film–acquired by Viacom (VIA) studio Paramount Pictures as a remake–performed spectacularly well last weekend, selling out midnight-only shows focused on college towns.

That middle-of-the-night tactic was made larger this past weekend, creating a ton of online heat, which led to an expanded release planned for this coming weekend at all hours.

Of course, along with a clever television marketing push, the studio is using Internet feedback to discern where to head next and how.

Well, “Paranormal Activity” looks scary and all–although BoomTown would like to know exactly when people will stop trying to irk demonic spirits.

That quibble aside, it will be interesting to see if the reliance on Facebook (where the movie has about 32,000 fans, most whom are posting variations of “It scared the crap out of me!!!!”) and Twitter (where is it now a trending topic) turns a cult win into a mega-hit.

That’s what many predicted would happen to camp thriller “Snakes,” starring Samuel Jackson, especially considering the deluge of Internet frenzy starting in 2005 that actually forced Time Warner (TWX) studio New Line Cinema to finally release it.

But the movie buzz peaked too early, well before the film debuted, and it limped to a weak box office–leaving the blog-fueled “Snakes” as an asterisk in the annals of failed Web marketing hype.

So, until all the tweeting gets you to the theater–I shall pass, as I prefer skeletons in my closet–here is the clever promo for “Paranormal Activity,” as well as the classic line from “Snakes”:

Fox Slaps Back (Legally) at Redbox

Kara Swisher — Thu, 01 Oct 2009 23:03:13 +0000

In the ongoing fight between Redbox–which rents DVDs from kiosks for $1–and major Hollywood studios, 20th Century Fox Home Entertainment just filed a brief to dismiss Redbox’s lawsuit against it.

Said Fox in a statement:

“Redbox’s legal claims are fatally flawed. Fox’s filing today makes clear that, in the end, the case is all about Redbox’s refusal to make a business deal on general terms similar to those paid by others in this industry. Instead, Redbox has insisted that Fox sell DVDs to them through distributors, on the date they demand, at the price they want to pay. Unable to get the terms it wanted at the bargaining table, Redbox instead decided to file this meritless lawsuit.”

In a statement, Redbox president Mitch Lowe responded to the filing by stating that Fox was anti-consumer.

“Twentieth Century Fox continues its pursuit to prohibit consumer access to new release DVDs at affordable prices…Redbox remains steadfast in our commitment to protecting consumers’ rights and to providing our customers the DVDs they want, where they want and at the low price they want.”

In two briefs filed this afternoon, refuting Redbox’s allegations, Fox is asserting that it has not refused to provide DVDs to the outfit and has tried to negotiate a deal.

Under contention between the two are the price and terms of when DVDs of hit movies can be released to Redbox.

Redbox has asserted that Fox is violating antitrust laws and copyright misuse in not selling DVDs to the company.

Fox denied that claim in the brief, noting that Redbox simply did not want to pay up in order to get certain DVDs on the “street date,” as do other retailers.

Fox is one of three studios that have become embroiled in lawsuits with Redbox.

Located in Oakbrook Terrace, Ill., and is wholly owned by Bellevue, Wash.-based Coinstar (CSTR), Redbox is seeing strong rental growth due to its $1-a-night price for first-run movies, which the company distributes via its 15,000 freestanding machines in supermarkets and convenience stores, as well as in big chains like McDonald’s (MCD), Wal-Mart (WMT) and Walgreens (WAG).

Its fascinating legal battle with the studios centers around the issues of steep discounting, release windowing and the price for premium content.

Redbox recently sued Warner Home Video, owned by Time Warner (TWX), for denying it the opportunity to buy DVDs without being required to wait a month or more to rent them out.

It has previously gone after NBC Universal’s Universal Studios Home Entertainment, owned by GE (GE) and Fox, a unit of News Corp. (NWS), for similar release restrictions.

The trio’s movies make up 40 percent of the DVD rental market.

In its brief today, Fox noted that it was willing to sell to Redbox directly, rather than via wholesalers, but that talks collapsed over pricing issues.

And while some studios are holding fast to fighting price declines represented by consumer-friendly, idiot-proof tech solutions like Redbox, others are not.

Redbox has inked deals with Sony (SNE); Lions Gate (LGF); Paramount, a unit of Viacom (VIA); and also gets movies from Walt Disney (DIS).

Here are two briefs filed by Fox in U.S. District Court in Delaware, the first, a motion to dismiss the lawsuit by Redbox, and the second to transfer venue to California:

FINAL Opening Brief in Support of Fox’s Motion to Dismiss

Redacted Transfer Venue Brief

(Full disclosure: Fox is owned by News Corp., which also owns Dow Jones, owner of this site.)

AOL Readies Board Picks for Spinoff–While Holding Off Search Suitors (Plus, BoomTown Director Choices!)

Kara Swisher — Thu, 24 Sep 2009 04:01:35 +0000

According to sources close to the situation, AOL has been busy selecting the board for the company, which is still set to spin itself off by year’s end–even as it slows down a decision on a new search deal with either current partner Google or a more emboldened Microsoft.

AOL is using Spencer Stuart in the search for directors, led by well-known headhunter Jim Citrin, sources said, and the company has already settled on several outside candidates.

The final board is likely to have about 10 members, and up to a dozen.

At least one of those seats will go to CEO Tim Armstrong, with one or two more claimed by its current corporate owner, Time Warner (TWX).

AOL and Time Warner made their own wish list of potential directors earlier this year, but some people are also lobbying the company to join the board.

BoomTown is working on discovering all those names, but sources added that the candidates being looked at are a mix of personalities culled from the media, advertising and Web worlds.

Among the key attributes: More presumably fast-forward and innovative Silicon Valley types that can help burnish AOL’s tarnished tech cred.

Here are some of my picks:

Facebook COO Sheryl Sandberg, Guitar Hero CEO Dan Rosensweig, WordPress founder Matt Mullenweg (actually, AOL should buy the start-up), eBay (EBAY) CEO John Donahoe, LinkedIn Chairman Reid Hoffman or CEO Jeff Weiner, Juniper Networks (JNPR) CEO Kevin Johnson, Netflix (NFLX) CEO Reed Hastings, and former AOL iconic exec Ted Leonsis.

And, just for fun, News Corp. (NWS) digital don (and ousted former AOL head) Jon Miller or former Yahoo President Sue Decker.

(I might also add former AOL exec, Netscape co-founder and all-around entrepreneur Marc Andreessen, but if he joins another tech/Web board, he is going to get splinters.)

That’s because Armstrong has set a strategy centered around the turbocharging of online content, powered by a more flexible platform and paid for by goosing AOL’s graphical advertising business.

This puts the online icon–once a powerhouse and now not so much, having operated inside Time Warner since its merger early in this decade–in more serious competition with Yahoo (YHOO).

Yahoo now dominates content on the Web, with powerful news, sports and finance sites, and has recently been trying to reinvigorate its brand. This week, it launched a new marketing campaign with the motto, “It’s Y!ou.”

Yahoo also recently struck a search technology and advertising partnership with Microsoft (MSFT), which has now aimed its efforts at AOL.

According to sources, Microsoft execs have been aggressively courting AOL to switch its search business from Google (GOOG).

The search behemoth has long been AOL’s partner in what sources at both companies said has been a productive and lucrative relationship.

Armstrong is also a former top exec at Google, which many at the company hope will further cement its chances.

And while the renewal of that deal does not officially need to be struck until late next year, sources add that Google has already prepared and offered what it considers an attractive new deal for AOL.

But, much to Google’s chagrin, with a focus on the spinoff and preparations for some more cost-cutting in the months ahead, AOL has decided not to accept it yet and is not likely to anytime soon.

While hedging the situation in a recent video interview with MediaMemo’s Peter Kafka, Armstrong has also recently met with Microsoft execs, sources said, who have discussed a number of partnership options with him, including a tighter relationship with its MSN content properties.

“There’s no need to rush, especially since there is already a lot on AOL’s plate,” said one source close to the situation. “And, since it has options, AOL is going to take time considering them.”

(For more on Armstrong’s thinking, here’s a link to another video interview I did with Armstrong while both of us were in Germany today, in which he talked about the ad market and AOL’s strategy, but was cagey about being more specific.)

Please see this disclosure related to me and Google.

AOL CEO Tim Armstrong Speaks (Though He's a Cagey One)!

Kara Swisher — Thu, 24 Sep 2009 03:38:20 +0000

Here is a video interview I did today with AOL CEO Tim Armstrong in Germany–really!–where we both were appearing at a digital marketing conference.

In it, the former Google (GOOG) exec talked about a range of things, including the possibility of charging for content, innovating in the graphical advertising market, competition with Yahoo (YHOO) and the upcoming spinoff of the Time Warner (TWX) unit.

But Armstrong did not talk about merging or other big search deals with other companies–including Microsoft (MSFT), which I wrote about here, along with AOL’s search for directors.

In the interview, I also insulted the famous AOL yellow running man, even though the mascot icon apparently just won “a vote to be inducted into the Advertising Walk of Fame, beating out 25 rivals, including Ronald McDonald and the Vlasic Stork,” according to a report in The Wall Street Journal.

There must be hope yet for AOL if it bested a pickle-loving bird and a freaky clown.

Here’s the interview:

[ See post to watch video ]

Former Bebo CEO and AOL Top Exec Shields and Shine's Murdoch to Form Interactive Content Start-Up

Kara Swisher — Wed, 16 Sep 2009 22:53:45 +0000

Former Bebo CEO Joanna Shields and Shine Group Chairman and CEO Elisabeth Murdoch have formed a content start-up to produce across media platforms, both online and offline, with a focus on social engagement, according to sources.

The new venture, which does not have a name, is being financially backed both by Shine and by Shields, who left AOL this summer after running its community and communications division.

Shields engineered the sale of social networking site Bebo to the Time Warner (TWX) online unit for $850 million in early 2008.

Sources said this new company, based in London, will invest, develop and partner to create a variety of content offerings that also incorporate interactive and social networking elements. It will also help the vast array of Shine content in interactive efforts.

Shields will be CEO of the start-up, which will operate under Shine, an independent and private television production company with programming in 24 countries.

In the U.S., for example, its Reveille unit is responsible for such shows as “Ugly Betty” and “The Biggest Loser.” (Both of which are BoomTown faves.)

Shine’s fast growth has been spearheaded by Murdoch, who is the daughter of News Corp. (NWS) head Rupert Murdoch.

But Elisabeth Murdoch has struck out on her own in forming Shine, which already has shown a strong interactive bent for a television company.

The combination of television and Web content is an arena that many are once again jumping into, aiming at creating branded interactive content, fueled by advertising.

Former NBC Universal exec Ben Silverman–who sold Reveille to Murdoch, in fact–has recently left his programming job at the television network to start a similar kind of company with longtime entertainment and Internet kingpin Barry Diller of IAC/InteractiveCorp (IACI).

And former ABC programming and Yahoo exec Lloyd Braun also runs a television and Internet production company with longtime Hollywood player Gail Berman, including recently creating the Wonderwall celebrity news site for Microsoft (MSFT).

In addition, Yahoo (YHOO) and a spate of small content start-ups, as well as big media companies, are all trying to figure out how to create and monetize content online in a multimedia effort that bridges all kinds of distribution vehicles and more deeply involves viewers.

Bebo was actually trying to do that too. Under Shields, it had been a pioneer in creating a variety of innovative online original content, including “KateModern” and “Sofia’s Diary.”

But new management at AOL, now headed by former Google (GOOG) exec Tim Armstrong, has sidelined Bebo to its new ventures division and is likely to try to sell it. Company execs at both Time Warner and AOL now say the purchase was a costly mistake.

That might be true, but it was clearly a financial coup for Shields–who has worked at both Google and RealNetworks (RNWK)–and Bebo investors.

And, given the track record of both Shields and Murdoch, it will be interesting to see what they come up with.

Former Yahoo and AOL Ad Exec Coleman Poised to Join the Huffington Post as President

Kara Swisher — Wed, 16 Sep 2009 13:40:28 +0000

In the ongoing game of Internet exec musical chairs, Greg Coleman (pictured here), who has been a top exec at both Yahoo and AOL, is poised to become president of the Huffington Post, as well as chief revenue officer, several sources said.

The deal for Coleman to come on board at the privately held online news site–which has grown significantly over the last year and just added well-known online media exec Eric Hippeau as CEO–came together only recently.

And it is not clear what the role of current Huffington Post Chief Revenue Officer James Smith will be going forward.

The Coleman hiring is most likely the work of Hippeau, who has known him from Coleman’s days as head of ad sales at Yahoo (YHOO). Hippeau has been on the board of the Internet giant for many years.

Hippeau was also a key player in the $5 million investment in the Huffington Post by SoftBank Capital in 2006.

He has also been a director on its small board, which also includes co-founders Arianna Huffington and Kenny Lerer, as well as Oak Investment Partners’ Fred Harman.

Oak recently added $25 million to the funding kitty at the Huffington Post, which is headquartered in New York.

The money will be used to expand the site into the local arena, investigative news, and verticals such as tech, a section set to debut Sept. 21.

It is all being done to build on what has been a strong traffic year for the Huffington Post, which claims it has over 21 million unique monthly visitors.

Nielsen Online has pegged that at the lower figure of 8.9 million, but reported that the Huffington Post was one of the fastest-growing, year-over-year news sites.

Despite that, the site still has not been regularly profitable, despite doubling annual revenue–mostly in advertising–to what some estimate to be about $8 million in 2009.

Presumably, goosing that revenue is what Coleman is being pegged to help do–and he certainly has a lot of online advertising experience, having made stops at a lot of Internet companies in the past few years.

He was head of advertising sales at Yahoo for seven years, after another long stint at Reader’s Digest. Yahoo’s ad business grew strongly under him.

But Coleman ran into Yahoo’s management buzzsaw after trouble hit the company in 2007. He was one of the first in a long line of execs to leave the troubled company, departing in one of its many controversial reorganizations.

He was soon running a Los Angeles-based start-up called NetSeer, which focuses on ad targeting.

He then headed to AOL in February to run its Platform-A division.

But when new management was suddenly put in place by Time Warner (TWX) in the spring, Coleman left after only a few months on the job.

After taking the summer off, several sources said, he has recently been looking at a variety of jobs.

That included MySpace, where former Yahoo colleague Wenda Harris Millard–now with Media Link–was hired recently as an outside consultant to help the News Corp. (NWS) social networking site rejigger its ad business.

The Huffington Post spokesman declined to comment when BoomTown inquired about Coleman’s hiring.

Yahoo's Bartz (No. 8), Facebook's Sandberg (No. 22), Google's Mayer (No. 44) and More Techies Make Fortune's 50 Most Powerful Women List

Kara Swisher — Fri, 11 Sep 2009 07:15:02 +0000

Fortune magazine–which never met a list it did not like to make–had a solid group of women tech types on its “50 Most Powerful Women 2009” roster, the annual survey it posted yesterday.

Yahoo CEO Carol Bartz made the Top Ten this year, clocking in at No. 8.

Other women geek types–many from Silicon Valley–on the list include:

Ursula Burns, CEO of Xerox (XRX) at No. 9; IBM (IBM) Global Sales and Distribution SVP Ginni Rometty at No. 11; Oracle (ORCL) President Safra Catz at No. 12; Hewlett-Packard (HPQ) Technology Solutions Group EVP Ann Livermore at No. 13; Facebook COO Sheryl Sandberg at No. 22; Charlene Begley, president and CEO, GE (GE) Enterprise Solutions at No. 27; Lorrie Norrington, president of eBay (EBAY) Marketplaces at No. 40; HP CFO Cathie Lesjack at No. 42; and, finally, Google (GOOG) Search Products and User Experience VP Marissa Mayer at No. 44.

The conference associated with the Fortune issue, spearheaded by Pattie Sellers, will take place next week, starting Monday, in Carlsbad, Calif.

Fortune is part of Time Inc., which is owned by Time Warner (TWX).

Bartz, Sandberg and others will be interviewed onstage, along with Berkshire Hathaway (BRK.A) chairman and CEO Warren Buffett.

Will BoomTown be in attendance, with my trusty Flip digital video at the ready? Yes, indeedy, so the lady geeks should beware–and I am talking to you, Sandberg!

Until then, here’s a cable television interview Bartz did today on CNBC’s “Squawk Box.” Clocking in at almost 12 minutes, it’s classic Carol, with sassy catchphrases and jokes about being a really tough lady, but with little new news–except for her saying she would have sold to Microsoft (MSFT) when it was offering $33 a share way back when, because she is not “stupid.”

Indeed not.

Here’s the video: