But if you’re impatient, you can simply look at the following table, which details the publisher’s Q3 performance:

Bewkes has a less drastic spin on the cuts, of course: He argues that among other things, they will help “increase consumer utility.” How’s that? Well, Fortune magazine, for instance, will publish less frequently, which will supposedly make each issue that much better. But you can see where this logic leads…

One item of note so far: While Time Inc. has said that it will not be closing titles during this round of cuts, Bewkes left the door wide open for future moves, promising to “take a hard look at non-strategic and unprofitable titles.”

In the meantime, while I’ve read reports that say folks who work in online operations won’t be affected by the cuts, that’s not the case; I’ve heard of a few different staffers on the Web side who are on their way out.

Here’s the full set of slides Time Warner (TWX) used during the earnings call:

time inc slides –

That won’t help employees at Time Warner’s Time Inc. publishing unit: The company confirmed that it will make big cuts this quarter and spend up to $100 million on restructuring charges. This is different from the $100 million in cuts that had been previously reported, but it will still mean hundreds of layoffs at the publisher.

Time Warner also boosted its guidance for the remainder of the year and confirmed once again that it wants to spin off AOL before the end of the year. As well it should: The company said it has already spent a staggering $24 million on the spinoff so far this year, which includes $9 million in “pretax direct transaction costs (e.g., legal and professional fees).” It has spent another $83 million in restructuring charges at that unit in 2009.

As usual, Time Warner said ad sales have been lousy, but that its cable networks and film divisions had done okay. The breakdown:

• Cable networks: Revenue up five percent, because subscriber fees were up nine percent. Ad revenue was down one percent.
• Warner Bros. movie studio: Revenue down four percent, because of slumping DVD sales.
• Time Inc.: Revenue down 18 percent; advertising down 22 percent. Adjusted operating income down 42 percent. Hence the coming cuts.
• AOL: Revenue down 23 percent. Subscription revenue, which will continue to shrink, was down another 29 percent, and ad revenue, which is supposed to improve one day, was down 18 percent.

That’s the high end of the range Bloomberg will be paying for BusinessWeek, reports BusinessWeek, which has done an excellent job of covering its sale. One important note to make about the price: Those liabilities could total up to $32 million, although it’s not clear whether Bloomberg will assume all of them.

Can’t call this one a surprise, as Bloomberg has reportedly been the lead bidder for some time now. BusinessWeek employees spent most of the day waiting for an announcement to that effect, and finally heard one, via Bloomberg’s wire service, shortly after 5 pm EDT.

Shortly after, BusinessWeek Editor Stephen J. Adler gathered his troops for an informal meeting to discuss the news and to discuss some blocking and tackling: No news on rumored (and expected) layoffs. But he did tell staffers that those who are cut after the deal closes later this year will receive the same severance package they would have gotten if they were still employed by McGraw-Hill (MHP), the magazine’s parent company.

There most certainly will be cuts: McGraw-Hill is selling the 80-year-old magazine because it’s a money pit that was losing between $20 million and $40 million a year, depending on your accounting. And the publisher’s bankers promoted a layoff plan as part of the sales process.

What exactly deep-pocketed Bloomberg intends to do with the publication, however, is unclear. The company, which makes its money renting its namesake terminals to Wall Street traders, is thought to be running its magazine and TV news operations at a loss as it tries to grab a footprint in consumer media. It may ultimately be willing to run BusinessWeek at a loss for a while, as well.

And now a tiny bit of context: At the beginning of this year, there were four major business magazines. Now one, Condé Nast’s Portfolio, has been shut down and another sold at a fire-sale price. Meanwhile, my former colleagues at Forbes expect to hear about yet another restructuring round in the near future. And while Time Warner (TWX) CEO Jeff Bewkes was careful to list Fortune magazine among the core assets at his company’s Time Inc. unit at an industry event today, that can’t assure the queasy souls who work there.

Here’s the memo to BusinessWeek staff from the magazine’s BusinessWeek publisher, Keith Fox:

All,

Moments ago, McGraw-Hill announced that Bloomberg L.P. has agreed to acquire BusinessWeek. This is exciting news on many levels. Joining forces with another of the world’s leading news organizations enhances BusinessWeek’s ability to further serve our global audience and our valued customers. And Bloomberg will gain a powerful brand with a history of editorial excellence and strong reach among business professionals.

While the ink is barely dry and the long-term plans are being worked out, we do know that Bloomberg is committed to and values our brand, our editorial integrity, and our ability to drive advertising, circulation, and new digital revenue.

BusinessWeek will strengthen Bloomberg’s online, television and mobile products and creates an opportunity for Bloomberg News to reach decision makers in the c-suite. Online, BusinessWeek.com and Bloomberg.com will have more unique visitors than any non-portal business and financial site. In addition, Bloomberg expects to build television content around the powerful BusinessWeek brand and our world-class journalists.

I am tremendously proud of the work all of you have done in the past few months. Despite the uncertainty, we have continued to produce first-class products for our readers and advertisers, and I want to thank you deeply for your efforts. I also want to thank Steve Adler, Jessica Sibley, Tania Secor, Roger Neal, and Linda Brennan, for their extraordinary ability to personify the best of BusinessWeek during the deal process while leading their respective organizations.

I know that while this announcement answers some of the questions you’ve been asking over the past few months, it raises others. The sale is expected to close by the end of the year and we will be working on transition plans in the coming weeks. I can tell you that all BusinessWeek staffers will remain employees of The McGraw-Hill Companies until the transaction closes, and that it will be business as usual–producing the magazine and the website, and serving our advertisers–through the close. We will give you more details when we can.

We’ll be holding a town hall meeting later today at 5:45 EST, after which a Q&A will be provided to all employees; you will receive more details shortly. A call for the Asia teams will be scheduled shortly.

Again, I want to thank you all for your professionalism and dedication during a challenging time. I look forward to working with you on the promising next chapter in BusinessWeek’s history.

Keith

At a TVWeek conference in Manhattan, Bewkes repeated arguments he has made in the past: Chiefly, that big media mergers have a lousy track record and that he couldn’t see how Comcast (CMCSA) could unlock any value by buying a majority stake in NBC Universal from GE (GE).

“Somebody has finally noticed that these things don’t work out so well,” he said, adding “We love to see our competitors taking risks.”

But just to hammer that point home, Bewkes compared the proposed deal to the one his company made nine years ago when it embarked on an ill-fated merger with AOL. That deal (made when Bewkes was running Time Warner’s HBO unit)  “basically made no sense” at the time, he said.

The main talking point in favor of that transaction–that connecting Time Warner’s content with AOL’s Internet distribution would create synergy–was “nonsensical,” he said. But “these kind of arguments, you’ll hear some of them this week, in the other merger that we’ve been talking about,” Bewkes said.

Clear enough?

Wall Street, by the way, remains unimpressed with the proposed deal as well: Comcast shares are down about 10 percent since word got out.

In other reiteration news, Bewkes also said, again, that he doesn’t plan on selling his Time Inc. publishing unit. Though he left himself a tiny window of wiggling room by noting that “no public company can ever say that it wouldn’t consider restructuring some part, whether it’s Warner, HBO, whatever.”

But Bewkes insisted that Time Inc.’s best-known magazine brands, including “Time, People, Sports Illustrated, InStyle,” are holding their own as print products and that the challenge will be turning them into online successes.

“We have basically a healthy business in terms of our relationship with readers. These brands mean something and they’re evolving…,” he said. “If you can’t take the leading titles that people have known for decades, and use the new world to make them relevant, really, shame on us.”

Crawford’s thinking: After Time Warner ditches AOL, which is scheduled for a spinoff later this year, the company will ditch its magazine business as well. That will leave it with a portfolio made up only of a movie studio and cable networks, and a big cash pile to play with.

Time Warner won’t comment, but I’m sure the company has heard Crawford make this prediction before. His Capital Research Global Investors owns more than eight percent of Time Warner shares, which means he gets plenty of access to Bewkes and his lieutenants.

But here’s the thing: The body language from Time Warner executives in recent months makes me think they intend to keep at least part of their magazine business in the family. More than body language, actually: “Time Warner without People? I can’t imagine it,” one well-placed Time Warner official told me recently.

That said, I won’t be surprised if the publisher employs fewer people, producing fewer magazines in the future.

Time Warner officials have repeatedly said that Time Inc. has too many titles: The magazine unit publishes 23 magazines in the U.S. How many can you name? And last year’s mass layoffs, while unprecedented for the publisher, were still fairly modest compared to other publishers’ cuts. The six percent reduction left Time Inc. with some 9,400 people on the payroll.

But executives at the publisher love to stress, off the record, that its flagship titles–Time, People and Sports Illustrated–are each on track to generate millions of dollars of profit this year, even though ad pages and revenue are down. And while Time Inc. certainly hasn’t figured out its digital business yet, at least some of its print properties could and should do well on the Web, as People.com is already doing.

There are certainly assets that Bewkes and company could dispose of fairly easily. For instance, its U.K.-based IPC Media unit, which handles many of the 90-plus titles it publishes outside the U.S., is frequently brought up as a sale candidate. But I’d be surprised if he got rid of Time Inc. and its iconic brands altogether.

For the record, here’s how Time Inc. performed in the first half of the year. The company has already said it expects similar numbers for the remainder of 2009 (click table below to enlarge).

Starz, which has the cable and Web rights to much of the Disney catalog, among other assets, says it will make some of those films, including “Wall-E” and “High School Musical 3,” available for Comcast’s (CMCSA) test, which is supposed to launch this month. Also available: TV series like “Crash” and non-Disney movies like Sony’s “Step Brothers.”

The idea is to protect cable subscription revenue by giving pay TV customers–but only pay TV customers–Web access to all the shows they get on TV and hope this keeps them from canceling their subscriptions. Time Warner (TWX) CEO Jeff Bewkes, who has been pushing a parallel effort he calls “TV Everywhere,” signed onto Comcast’s effort last month and offered up a handful of TV shows from his TBS and TNT networks; Comcast also has roped in Scripps, Rainbow and A&E.

I’m told Comcast will have a few more partners before it launches the trial, but the emphasis here is on “trial”: The cable guys appear confident they can handle the technical aspects of the program, but they’ve never tried anything like it before, so this is really a test to see if they can pull it off. And if that works, the real work will be the negotiations between cable programmers and cable providers over who gets what, when.

Time Warner did announce a set of principles for its “TV Everywhere” program, and if you’d like, you can read those at the bottom of this post. And Time Warner CEO Jeff Bewkes and Comcast CEO Brian Roberts did get into some philosophical/optical discussions with us reporters.

For instance, was the cable industry being “defensive” or “offensive” as it rolled out its authentication plan, which is supposed to give pay TV customers–but only pay TV customers–Web access to all the shows they get on TV? Offensive, declared Bewkes. He also decreed that authentication was a “free gift” to TV watchers.

But authentication is going to involve a whole lot of coordinated effort by a lot of different players, and that means details matter at least as much as philosophy.

For instance: Who else is joining Time Warner when Comcast rolls out its first authentication trial next month? Roberts wouldn’t talk about that–”today’s about Time Warner,” he said–but word is still leaking out. Scripps Networks, for instance, said today that it would play along. Here’s the statement from Lynne Costantini, who runs affiliates sales for the network.

“Scripps Networks’ media brands, such as Food Network and HGTV, enjoy a strong connection with a passionate base of consumers who likely would find value in this type of service. We are committed to providing viewers with content on the platforms on which they engage with our brands, in a manner that adds value to the viewing experience and enhances our current business relationships with distributors. Our participation in the Comcast authentication pilot will help us make some initial assessments regarding this innovative platform.

Also confirmed: Cablevision’s (CVC) Rainbow Media, which owns networks like AMC and Sundance. This one makes particular sense because Cablevision has been more vocal than other networks about not putting its programming on the Web without getting paid for it. I’m also told that A&E Television networks, co-owned by Hearst, Disney (DIS) and GE’s (GE) NBCU, is expected to participate, but haven’t heard back from those folks yet.

None of these buy-ins are huge moves by themselves, of course. They’re commitments for the trial only, and it’s unlikely that any of the companies are going to offer up their best shows at the start. For instance, I’d be (happily) surprised if AMC’s “Mad Men” makes the cut. And we’re likely to see a dribble of announcements over the rest of the year as more programmers dip their toes in and as competing/parallel authentication efforts that the likes of Time Warner Cable (TWC) and the telcos roll out.

In the meantime, in lieu of hard facts, here’s what Time Warner has to say about its intentions:

PRINCIPLES FOR TV EVERYWHERE MODEL
These principles were developed to ensure the TV Everywhere model is consumer-friendly; pro-competitive and non-exclusive.

•    Bring more TV content, more easily to more people across platforms.

•    Video subscribers can watch programming from their favorite TV networks online for no additional charge.

•    Video subscribers can access this content using any broadband connection.

•    Programmers should make their best and highest rated programming available online.

•    Both networks and video distributors should provide high quality, consumer-friendly sites for viewing broadband content with easy authentication.

•    A new process should be created to measure ratings for online viewing. The goal should be to extend the current viewer measurement system to include advertiser ratings for TV content viewed on all platforms.

•    TV Everywhere is open and non-exclusive; cable, satellite or telco video distributors can enter into similar agreements with other programmers.

The idea is to protect cable subscription revenues by giving pay TV customers–but only pay TV customers–Web access to all the shows they get on TV, and hoping this keeps them from canceling their subscriptions.

But that’s old news: Comcast (CMCSA) already told Bloomberg earlier this month that the two companies are linking up, and that Time Warner (TWX) would offer programming from some of its networks in the first part of Comcast’s tests.

Presumably Bewkes and Roberts will offer up a few more details, like which Time Warner networks are participating (good bet: TNT and/or TBS), along with a timetable. But I worry that the press conference will be light on details, in large part because many of the details haven’t been hammered out yet.

Still, I’ve been able to glean more from industry executives who’ve been involved in discussions with Time Warner, Comcast and other players in the authentication effort, which Bewkes has been calling “TV Everywhere” and Roberts has been calling “OnDemand Online.” Some of the details:

• The test will start very small–with some 5,000 subscribers–but Comcast is determined to expand it aggressively and wants to have it available throughout its system by the end of the year. Comcast plans to use its Fancast video portal as a hub for its efforts. And it  may use other digital assets it has acquired as well. Online Rolodex Plaxo, for instance, which the company bought last year, could be used to help subscribers sign in to watch their shows.
• The test is separate from Time Warner Cable’s (TWC) own authentication offering, which is essentially the same thing but will launch later than the Comcast test, using different technology, and will likely offer a different mix of programming.
• And those tests are separate from the one that telcos Verizon (VZ) and AT&T (T) have been working on with satellite operators Echostar (SATS) and DirecTV (DTV). That one also has the same thrust, but will take the longest to roll out.
• Comcast isn’t likely to announce other programming partners for the tests until later this month.
• Hulu is interested in playing along, because its owners–GE’s (GE) NBC, News Corp.’s (NWS) Fox and Disney’s (DIS) ABC–see authentication as a way to appease riled-up cable providers. The cable guys are upset that Hulu shows (some) cable programs for free while they have to pay for the right to air them. In theory, authentication solves that problem for Hulu because everyone will be on a level playing field: Only cable subscribers will get access to cable programming, whether it’s on Hulu, Fancast or anywhere else. But the cable guys aren’t rushing to let Hulu in just yet.
• Separately, NBC has been talking about offering some cable programming that isn’t already on Hulu for the tests. That could also be seen as an appeasement move, but I’ve heard a more benign suggestion: NBC merely wants to figure out if authentication technology works because it is considering using it for some of its coverage of the Vancouver Olympics next year.
• CBS (CBS), which isn’t a part of Hulu and which doesn’t have any cable assets of its own, would still like to get into the mix. The idea is that the network would offer the cable guys shows that it has kept offline until now (say, “The Mentalist”) while tying the Web programming to “retransmission” fees it would like to extract from the cable companies for all of its shows. Comcast executives seem amenable to the notion.
• Big cable players like Viacom (VIA) and Liberty’s (LINTA) Discovery may participate in some trials but not others. Viacom, for instance, has been talking about working with the telco group but not with Comcast during the trials. It has also discussed offering a “premium product”–like access to the full “Spongebob Squarepants” library or other kids’ shows that have a very limited online profile–to Time Warner Cable subscribers for an additional fee.

Bewkes and Roberts are scheduled to speak at the Time Warner Center at 9:45 am EDT, so we’ll know more shortly.

Sources say Time Warner is likely to promote Mark D’Arcy, Partilla’s second in command, to fill his post, which reports into CEO Jeff Bewkes. The company is in the midst of corporate slimdown — it has already spun off its cable business, plans to do the same with AOL, and may end up (finally) doing the same thing with its Time Inc. publishing unit. Here’s the release announcing Partilla’s move:

Clear Channel Names Advertising & Marketing Veteran John Partilla as Corporate EVP and
President, Global Media Sales

Partilla to Lead National Business Development Across
Radio and Outdoor in Newly Created Position

SAN ANTONIO – June 8, 2009 – Clear Channel Communications, Inc. today named John Partilla, 44, to the newly created position of Executive Vice President and President of Global Media Sales. Partilla will lead national business development across the company’s radio and outdoor businesses, reporting to CEO Mark Mays.

“We’ve driven a tremendous increase in the value of our radio and outdoor platforms to national brands over the past five years and now is the time to accelerate and expand our attention to chief marketing officers and brand managers,” said Mays. “John is widely respected as a creative and ‘intrepreneurial’ leader with a deep understanding of client needs. His success in crafting differentiated solutions makes him the ideal strategic sales executive for us at this important time.”

Major brands including Disney, Verizon, Kellog’s and others already engage directly with the company on cross-platform and multi-property ad buys.

Partilla joins Clear Channel from Time Warner, where he lead Time Warner’s Global Media Group in its mission to work with major advertisers and help drive the growth of advertising and marketing revenue across all of Time Warner’s businesses. Prior to overseeing Global Media at Time Warner, John was President at Young & Rubicam, and founder and Chief Executive Officer of Brand Buzz. Launched in 2000, Brand Buzz is an “agency within an agency” at Young & Rubicam designed to provide solutions for smaller advertisers. Partilla spent eighteen years at Young & Rubicam and in that time amassed an extensive roster of strategic sales and brand development experience, having worked across many of the agency’s core accounts.

“We’re entering a new era for advertising and marketing, and the strides that Clear Channel has made in digital platforms across both the radio and outdoor businesses are an outstanding match for the new demands being placed on marketers,” said Partilla. “Realizing that potential will require adding strategic and creative value for our best advertising partners – helping them solve their most critical business problems. The result will be more revenue across all of Clear Channel’s businesses. I’m incredibly excited to begin this new chapter with Clear Channel.”

Partilla, who will be based in New York, holds an MBA from Columbia University and a B.A. in Business Administration from University of Delaware.

Time Warner (TWX) has yet to dispose of AOL, but there’s lots of sotto voce chatter about CEO Jeff Bewkes’ next move.

Last month, I reported that people familiar with Bewkes’ thinking believe he’s planning on selling off the company’s namesake Time Inc. publishing unit in 2010. Today, Pali Capital analyst Rich Greenfield picks up the torch.

From a note published this morning, where the analyst raised his estimates and target price for the stock:

“Unlike many of its media peers, we believe Jeff Bewkes and the Time Warner Board of Directors have no emotional attachment to the assets within Time Warner. In turn, we would not be surprised to see Time Warner seek a separation or sale of its publishing division (magazines) following the AOL spin. With Publishing set to represent under 10% of Time Warner’s EBITDA post-AOL spin and the inherent difficulties of shifting Time Inc.’s magazine business to an online subscription model, we believe it may make sense to further simplify Time Warner down to only cable networks and filmed entertainment in 2010.”

Anyone want to hazard a guess about what Bewkes might be able to fetch for the world’s biggest publishing company? It lost $32 million on revenues of $800 million last quarter (click to enlarge).

I’ve asked Time Warner for comment, but don’t expect one.

ADDENDUM: Several readers note, correctly, that Time Warner-ditching-Time Inc. is a recurring rumor that comes and goes every couple of years. So this may well be same old same old.

“I  wrote for TIME for 14 years,” writes John S. DeMott.  “Spinoff talk was happening then, even before the merger with Warner.  Ain’t gonna happen now.” Could be!

That said: 1) Time Warner has new(ish) management and 2) this chatter definitely has some currency. At a media conference sponsored by GCA Savvian today, AOL founder Steve Case mentioned that he’d spoken, in a casual manner, with Bewkes this morning and left with the notion that post AOL-spinoff/disposal “my guess is there might be another move in there in the not-too distant future.” To me the clear implication was that he was talking about dumping Time Inc.

[Image credit: broma]

McNamee, who spearheaded Elevation’s purchase of 40 percent of Forbes Media in 2006, tells the New York Post’s Keith Kelly that his company’s original thesis–that Forbes’s fast-growing Web site would offset its declining magazine business–”has proved to be wrong for reasons that are no fault of Forbes.” More from McNamee:

“The deterioration in the advertising market late last year caused Forbes and Elevation to agree that we could no longer count on Forbes.com to offset declines in print. We agreed to a strategy shift from investment in the Web to aggressive cost cutting.”

As part of that shift, McNamee will be replaced by Elevation’s Bret Pearlman, who has a reputation as an aggressive cost-cutter.

Said McNamee of Pearlman’s appointment: “Elevation’s cost-cutting team happens to be in New York, so swapping Bret in and me out was an obvious play. I remain engaged in strategy and Web technology at Forbes.

I asked Forbes for comment this morning and got back this statement:

Several Elevation partners have rotated on the Forbes Media board. Bret Pearlman, while not formally a member of the board previously, has been involved from day one.  Roger is still very much engaged with the company, particularly web strategy and technology. Cutting costs, while painful, has been necessary at Forbes and virtually every other media company in response to the unprecedented economic downturn. We and Elevation believe that Forbes is well placed to ride out the present market and emerge in a very strong position when the recovery comes.

It’s possible that Forbes’s woes exist in a vacuum, or at least in a vacuum specific to the business magazine sector, which has already seen one title–Condé Nast’s Portfolio–shutter this year. But I don’t think so.

Which means we’ll see even more pressure at Time Warner (TWX) to cut costs at publisher Time Inc. People familiar with Time Warner CEO Jeff Bewkes’s thinking tell me he would like to spin off the publishing unit in the next year once he’s finished cleaving AOL from the company. If that’s the case, he’ll want to clean up the magazine business as much as possible before putting it on the market.

At a Q&A at the cable industry’s annual show today, Murdoch waxed on about the Kindle’s qualities, then made a reference to investing in a machine that could be even more attractive–one that boasted a large, full-color screen. I was covering the event live [original story below], and these are my notes from the relevant part of his chat. Please bear in mind that this is a very rough paraphrase, from notes I was taking in real time:

We need new models. The first inkling of it is the Kindle. You can get the whole paper there. And you can get the whole of The Wall Street Journal on your BlackBerry. We’re investing in a new device that has a bigger screen, four-color, and you can get everything there. [Did I just hear that correctly?]

After the event, I checked in with a News Corp. spokesperson, who confirmed that I hadn’t been hallucinating: News Corp. is indeed in “exploratory” talks about making an investment in a company working on e-reader technologies.

Who might that be? No guidance there. Plastic Logic, based in Mountain View, Calif., has been working on a reader with a 8.5 by 11-inch screen for several years. But that company has already raised $200 million from investors, including Intel (INTC) and Oak Investment Partners. And its device, scheduled to hit the market in 2010, will feature a black-and-white screen that uses the same E Ink technology that the Kindle and Sony’s (SNE) Reader use.

Another option: Rival publisher Hearst, which has plans for its own Kindle. But Hearst’s unnamed reader will initially be a black-and-white affair as well.

Anyone have any other possibilities? You can reach me directly at peter@allthingsd.com. Or if you want to be completely anonymous, which is understandable but less useful to me (I won’t have any way of reaching you for follow-up) you can use the blind tip box here.

EARLIER:
This year’s cable show seems lightly attended, but folks are are buzzing here about Bob Iger’s comments this morning, where the Disney (DIS) CEO alternately tried to placate and challenge the industry with his online plans. I’ve got high hopes for this one, too, a keynote speech from News Corp.’s (NWS) Rupert Murdoch, who will then take a seat and chat with three fellow CEOs: Time Warner’s (TWX) Jeff Bewkes, Viacom’s (VIA) Philippe Dauman, and Liberty Global’s Michael Fries.

Moderating the discussion: Murdoch employee Neil Cavuto, who does anchor work at both Fox News and Fox Business (and since this Web site is owned by Dow Jones, I’m a Murdoch employee, too).

I’ll be covering the Q&A live, which means that any text you read below is an on-the-fly attempt to paraphrase the speakers on stage–unless it’s in quotes, which represent my best attempt to get the words verbatim.

Starts with Q&A with Murdoch.
NC: Are things getting better?
RM: I think the long-term situation is still extremely dangerous. I’m pessimistic because every family is poorer and they’re going to save more and spend less. Even more dangerous if the government throws too much money at the problem:

NC: What if you’re wrong?
RM: “I pray I am”

NC: Markets are up in reaction to G20 plan. Is that the kind of thing you’re talking about (re too much spending from Congress, etc.)
RM: I’ve never seen any money from the World Bank that’s done much good. Maybe the IMF should be recapitalized. But it doesn’t matter, because none of the money will come back to the U.S. “I would say it’s a bear market still. We’re not going back to the old levels anytime soon. We’re two or three years away.”

NC: What about the economy?
RM: May get better in a year. “I walk around the streets of New York, and all I see is “to let” signs everywhere.” Space we rented for $80 a foot on Sixth Avenue is now $60 a square foot. On our business in general: Advertising is flowing out of the big networks, but our cable advertising is up. “They’re in good shape, and we’re very happy to have a number of them.”

NC: They are rioting in London against capitalism “they’re rioting against success…they don’t like rich people. Are you offended?”
RM: No. There’s only about 4,000 of them. “Makes good television, someone with blood on their face…but it’s greatly overstated.” I have had worse problems when I had strikes 20 years ago.

NC: So you don’t buy this sort of “new global class warfare.”
RM: It’s very dangerous. “We all know in the last two or three years there have been notable headline-grabbing excesses, in this country and in Europe, despite what the Europeans are saying, and we’re paying for that.” But I don’t think we’re going to have class warfare. “We do need an SEC that’s awake,” in part so we don’t have work with the French and their regulators.

NC: Everyone’s piling on the U.S. What does that mean for the U.S.?
RM: I don’t care what the French say. “But when the Chinese speak, I pay some notice.” The Chinese don’t want us in an inflationary situation, or they won’t lend us money.

NC: President Obama talked about working with the rest of the world. Is Washington saying that “we are this big global powerhouse together”?
RM: It’s very nice for the President to say that, but I don’t think Bush ever did that. He was talking to world leaders every day. He wasn’t as articulate about it as Obama. But “we’re the big boy on the block” so naturally people are jealous, but we better remain “damned sure” that we remain the big boy.

NC: But we owe everyone lots of money.
RM: That’s what worries me. I worry that we’re going to start printing lots of money, we’ll have runaway inflation.

NC: You just said Obama is brilliant. Your companies “have a reputation for being slightly more conservative than he is.”
RM: “We’re fair and balanced.”
NC: “Absolutely.”
RM: The monolithic liberal press complains when they don’t get a corner of the world; “if they want to smear you, or me, that’s fine.” Re Obama: “I’ve had a couple of very charming conversations with him.” He talks about how pragmatic he is. “We’ll see.” So far, a couple of little tests have been disappointing. With regard to Teamsters and school vouchers in Washington.

NC: So you’re saying he has a reputation for being pragmatic, but he isn’t. And he doesn’t seem to like Wall Street either.
RM: “That’s putting it too strongly” I think it offends him to see people making $200 million dollars a year, or whatever it is.

NC: Taxes are going up for the wealthy.
RM: Yes. So “we’ll go live in Texas.” It’s serious. a 60 percent tax rate is going up. Not just the federal taxes, but states, and counties. My Long Island house “is not very big at all” but what Nassau charges for taxes is enormous. The bill has gone up from $3,000 to $7,000 or $8,000. “I’m trying to sell my house.”

NC: You’re a newspaper guy. Newspapers as a physical product are dying. San Francisco may not have a paper at all soon. What do you think of that?
RM: “It’s sad. But let’s face it. San Francisco is a pretty small area. And there’s some pretty good papers in that area,” and they’re not folding. “People are getting used to getting everything on the net for nothing. That’s going to have to change.” Take the New York Times. No matter what you’re going to say about it, it has a very very good Web site. But it’s never going to make enough money to cover what it’s losing on the print side. The question is: “Should we be allowing Google to steal all our copyrights? Just take them? Not just Google but all the aggregators? Yahoo? And I feel that if you have a brand that’s strong enough, like the New York Times, they should be able to go to Google and say ‘no.’” So when you go to search on Google, it doesn’t show up. But there’s only 10 or 15 of those, probably.

We need new models. The first inkling of it is the Kindle. You can get the whole paper there. And you can get the whole of The Wall Street Journal on your BlackBerry. We’re investing in a new device that has a bigger screen, four-color, and you can get everything there. [Did I just hear that correctly?]

[Time to bring on the other panelists]

PD: “If I may, I’d just like to say bon jour to Rupert.”

NC: Philippe Dauman, you said you’re seeing some positivity in your business. Where?

PD: Theater sales are healthy. Cable is OK. Saw some deterioration in ad sales, but in last few weeks, we’re seeing some plateauing. On the kids’ cable channel upfront, we’re starting to do well. “There are some advertisers that are increasing their spend. They’re healthy, and they see an opportunity to expand market share. Advertising works, even for banks.”

Jeff Bewkes: We’re pretty much seeing the same thing. Advertising for print is down, cable is very strong. AOL, “not so strong.” The problem is that outside the U.S., growth rates have come down, and financial problems are much worse. “But I think it’s short-term” so we’re still investing. Invested in Eastern Europe.

Michael Fries: We’re doing OK, too. Cable isn’t immune, but we’re selling products people need. Our Eastern European markets aren’t doing great, but fundamentally we’re still growing. We’re still growing through this. Since we’re not ad-supported, we’re not having down markets or down quarters. In some of our markets, there will be some consolidation, and we can get some of our competitors out of the way.

[Missed a section on broadband and infrastructure outside the U.S. Apologies]

NC: You have great content but on the Web, but many people don’t pay for it. What can you do about that? Do you have to do deals with the likes of Hulu, and get pennies on the dollar instead of giving it away?

PD: There’s a middle ground we’re trying to follow. Consumer behavior changes, revenue models have to change, too. We put a lot of content on line, we also do a lot “windowing.” Some content like news goes online right away, and the “Daily Show.” That’s on Hulu. But you do get incremental monetization “if you do it right.” “Daily Show” ratings are up since we went on Hulu. We have to experiment and see what we can do to enhance the experience.

MF: Content doesn’t follow eyeballs. Content follows money. Content providers want first and foremost to get paid. Consumers want random access to content. They want high-quality content. I like the idea [i.e., to put all their stuff online] that Time Warner and Comcast is promoting “is a no-brainer.” Online now has a negligible impact on TV, so right now it’s something we can get a hold off.

RM: It varies from show to show. A good show can get improved ratings over time, via the DVR. Like “24.” A lot of stuff that’s DVR’d is played that evening. “There’s no loyalty to audiences at all. There’s loyalty to certain shows.”

NC: Journalists are moving to the Web, but they’re not going to get paid as much on the Web [yup]. Point being: Aren’t authors and artists who produce work for the Web, or the Kindle, going to get screwed?

PD: No. You can charge lower prices but you have lower costs. If you have a secure download-to-own business, you can protect revenues for everyone.

NC: But generally, don’t all content creators have to realize that their content is worth less?

JB: This is the cable convention. Rupert’s right about not having loyalty to broadcast networks. But there is, or at least different identities, on cable. The broadcast business has its challenges, as we know. But the cable channels have the most value and the most future….This industry can now deliver all our great stuff on broadband, and over mobile. [Rambling here but basically Bewkes is repitching his "TV everywhere" idea] “We’re not trying to make the Internet not free. We’re just saying that if you use it for free, you ought to get what you have in your home….Look how slow we’re being. We’re all being too slow to put all these channels and put them broadband….We ought to do it, and we ought to do it now….Put it on the Hulus and YouTubes if you need too, but only if people are subscribing to the cable plans. You can’t just blow up the financial structure….We ought to be taking the advertising model from cable networks and moving it over to broadband.”

NC: That isn’t what I was asking about. What about us content creators?

PD: “We treat creators of content really well.”

JB: “Yeah.”

PD: Back to Bewkes’s plan. People get the advertising model.

RM: People are used to the free content being free, and “the fact is that nobody’s making money with the free content on the Web, except for search.” We’ve got to find a way to charge.

MF: This notion that we’ll figure out how to pay for something, someday, is wrong. There’s value in aggregators and editors, and people go to Fox News because they know what they’re getting. “We have a generation below this lost generation that we can capture and retain, if this industry does it right.”

JB: Hey, want to see what that looks like? [Now it's time for Bewkes to run a promo, literally for HBO. "HBO GO." The "coolest way to watch HBO on your computer....If you have the key, it's free." I am assuming that this is a mock ad for a product that Bewkes would like to exist--HBO OnDemand, online.

JB: I apologize for running a commercial.

PD: That works well for pay cable channels like HBO and Showtime and our new channel. Not sure about other channels.

NC: Let's say our recession/depression lingers for a while "a real protracted type of a deal." What then for entertainment?

JB: It will hold up.

NC: What about advertising?

JB: Less.

PD: It will be slow, but we'll get through it. We have to plan for the possibility that it will be bad for a long time. You spend less, you have to be careful about not spending on things that aren't you core brands, and acquisitions, and that can be self-defeating. We're dependent on Washington in some ways, but what we really need are the credit markets to work again.

MF: Bingo.

NC: How has recession affected you personally? Do you change the way you display your wealth, or your own personal behavior?

JB: [Sitting next to Murdoch] “I tend to sit next to people who are richer than me.”

PD: Hotel managers are beside themselves because no one has business meetings, and then they have to fire working class people. But I think this “populist surge” about abuses will pass. “We’re going through an extreme period, and this is a country that still values entrepreneurial behavior.”

[Panel is over.]

Everyone who wondered why Randy Falco and Ron Grant were still running AOL gets an answer: Time Warner (TWX) was lining up their replacement.

Google (GOOG) sales chief Tim Armstrong becomes chairman and CEO of the troubled Web property, effective immediately.

The move is getting immediate cheers from current and former AOL employees I’ve talked to. The snap consensus is that anyone would have been better than Falco, a longtime NBC executive, and Grant, who was Time Warner CEO Jeff Bewkes’s chief lieutenant before being elevated to his role as President and COO of AOL.

But they’re particularly happy to see a sales guy running the organization: AOL once had a much admired sales operation. But in recent years, the group has been roiled, as a series of sales chiefs came and went. (From Kara Swisher, here are more details on the shakeup, and an interview with Armstrong. And here’s some early betting on Armstrong’s replacement at Google — former Doubleclick CEO David Rosenblatt has a lot of fans).

The current AOL sales chief, former Yahoo (YHOO) sales boss Greg Coleman, was installed just last month. He’s been deep into a reorg of his own.

It was desperately needed after AOL’s miserable performance in 2008, which concluded with a quarter that saw ad revenue drop 18 percent. But those plans may be up in the air now.

In any case, here is the full press release from Time Warner about the firing of Falco and Grant, after the jump:

NEW YORK, March 12, 2009–Tim Armstrong, Google Senior Vice President, has been named Chairman and CEO of AOL, LLC, Time Warner Inc. (NYSE:TWX) Chairman and CEO Jeff Bewkes announced today. Current AOL Chairman and CEO Randy Falco and President and COO Ron Grant plan to leave the company after a transition period.

In making the announcement Mr. Bewkes said: “Tim is the right executive to move AOL into the next phase of its evolution. At Google, Armstrong helped build one of the most successful media teams in the history of the Internet–helping to make Google the most popular online search advertising platform in the world for direct and brand marketers. He’s an advertising pioneer with a stellar reputation and proven track record. We are privileged to have him preside over AOL as its audience and programming businesses continue to grow and its advertising platform expands globally. He’ll also be helpful in helping Time Warner determine the optimal structure for AOL.”

Tim Armstrong said: “I’m very excited about the opportunities presented in leading AOL. AOL has a wide-ranging set of assets and audience. The company is well positioned to enhance those assets into a larger share of the Internet audience and advertiser communities. AOL and Google have been partners for years and I look forward to collaborating with Jeff Bewkes and his team as we explore the right structure and future for AOL.”

Mr. Bewkes added: “Randy led AOL in its transition from a subscription business to an audience business. Under Randy and Ron, AOL’s programming sites exhibited year-over-year growth in unique visitors for 23 consecutive months with many of its sites now in the top five of their categories. They also assembled Platform-A, the number one display ad network in the U.S. with a reach of more than 90%. They also aggressively cut costs as they restructured the Audience business portion of the company into three distinct operating units: People Networks, MediaGlow, and Platform-A. As Randy and Ron move on, they leave AOL with our gratitude and appreciation for remaking the company and bringing it to a new and promising level.”

Tim Armstrong was a member of Google’s Operating Committee and served as the president of the Americas Operations. Under the Americas Operations, Armstrong’s team managed publishers and advertisers’ relationships and platforms with some of the world’s most widely recognized media and agency brands.  Armstrong started at Google in the year 2000 and opened the first office outside of the Mountain View, CA headquarters.

Mr. Armstrong joined Google from Snowball.com, where he was vice president of sales and strategic partnerships. Prior to his role at Snowball.com, he served as director of integrated sales & marketing at Starwave’s and Disney’s ABC/ESPN Internet Ventures, working across the companies’ Internet, TV, radio, and print properties. He started his career by co-founding and running a newspaper based in Boston, MA, before joining IDG to launch their first consumer Internet magazine, I-Way.

Mr. Armstrong sits on the boards of the Interactive Advertising Bureau (IAB), the Advertising Council, and the Advertising Research Foundation, and is a trustee at Connecticut College and Lawrence Academy. He is a member of Mayor Bloomberg’s MediaNYC 2020 committee.  He is a graduate of Connecticut College, with a double major in economics and sociology.

Thanks to all the readers who set me straight. It turns out there’s an easy answer for MegaVideo’s popularity: It’s a really good way to watch pirated movies and TV shows online.

The trick, it turns out, is not to go to MegaVideo itself to look for “The Dark Knight” or HBO’s new “Eastbound & Down” show. Instead you head to sites like movietvonline.com or sidereel.com, and they’ll direct you to one of MegaVideo’s streams. The stuff generally appears to be pretty good quality, and it’s much easier to access than a BitTorrent download–if you can use Hulu, you can use this stuff.

Apologies to anyone who finds this old hat. It’s obviously becoming more and more common for many of you. Again, take a look at this comScore (SCOR) growth chart. This is how you move from obscurity to the 10th-most popular video site in a year’s time (click graphic to enlarge):

Can’t Hollywood try to crack down on sites like MegaVideo and the sites that showcase their streams? After all, Google’s (GOOG) YouTube was once a piracy haven, and is much less so now. Same thing with DailyMotion, etc.

Sure. But the Chinese government has, um, a mixed record when it comes to IP protection. And in any event, we’re certainly going to see more of these coming down the pike, and it’s only going to be more commonplace.

All of which means that Hollywood, network TV and the cable companies have no choice if they want to keep viewers from turning to the pirates: Give them easy access to whatever they want, whenever they want it.

It’s the same scenario the music guys faced at the end of the 1990s, and they screwed it up. Look at them now.

Right now some of the players are talking a good game–“We think everything on television should become available to you on broadband for free,” Time Warner (TWX) CEO Jeff Bewkes said yesterday at an investor conference. He doesn’t really mean free, by the way–he means free to cable and satellite TV subscribers.

The industry can hash out payment plans later. But first, those who make money creating and distributing video need to move very fast to get their stuff in front of viewers, wherever they want to see it. Because MegaVideo is already doing it.

Here’s an unpleasant bouquet for Time Warner CEO Jeff Bewkes from Google CEO Eric Schmidt: An accounting move that places the value of Time Warner’s AOL at $5.5 billion, at least for now.

The move comes via Google’s (GOOG) fourth-quarter earnings: The company said it had written down the value of the $1 billion investment it made in AOL three years ago by $726 million.

Given that Google’s 2005 investment gave it a five percent stake in AOL and valued the service at $20 billion, the write-down pegs AOL’s new value at about $5.5 billion.

This is no big deal for Google, which also wrote off $355 million of its investment in Clearwire, the wireless provider. The losses are on paper, and the company certainly wasn’t banking on the investments for financial purposes.

And Schmidt didn’t sound broken up about it on the company’s earnings call this afternoon: “Both deals made sense to us then and make sense to us now.”

But this can’t be positive for for Bewkes, who had been trying until recently to get something like $7 billion for AOL. It’s not clear that Time Warner (TWX) or anyone else–chiefly Yahoo (YHOO)–thought anyone would pay that much after the economy collapsed this fall.

But it’s one thing to think that, and another to see it in black and white.