On the heels of a round of announcements about a realignment of its advertising infrastructure that saw the departure of ad chief Mike Kelly, moving its corporate headquarters to media capital New York and expanding an HP deal, AOL management discussed the state of play at the Time Warner-owned Internet company.

Speaking at the Merrill Lynch Media & Entertainment conference, AOL Chief Executive Randy Falco projected a return to online ad growth matching industry rates on the heels of current momentum and announced changes, although he gave no time frame.

Investors have demanded more, with some agitating for nothing less than the sale or spinoff of the division and the breakup of Time Warner.

Falco: All I can say is we feel confident with the changes we made, which we think gets ahead of marketplace. Well begin to start to grow inline with the market.

A couple of other data points from the slides and Q&A presentation at Merrill:

• Investment in growth areas included about $500 million in acquisitions over 12 months
• About $650 million in capital and product development in 2007
• Reductions in costs were more than $800 million in the first half of the year
• Out of the $800 million in cuts, about $400 million came from marketing, $100 million in network costs, $200 million from general and administrative costs.
• Less focus on text searches and more focused on video and vertical search
• CNBC’s Jim “Mad Money” Cramer will be blogging for AOL!

This is not a response to Rupert Murdoch’s News Corp scooping up MySpace, Viacom executives tell Fortune’s Richard Siklos.

Now that we’ve got that out of the way, Viacom’s working on two online “stealth projects” that Fortune thinks will give the Sumner Redstone-controlled company back its mojo.

Using social networking tools provided by one of its investment properties, Social Project, Viacom has created a system called Flux, that will eventually let registered users of MTV.com and other properties “personalize pages with blogs, video, photos, online friends, and so forth.” These pages are designed to travel with visitors to other MTV-owned properties.

The other is an investment in a video offshoot of hipster magazine Vice called VBS.tv — Vice Broadcasting System. The site, which launched in March is already producing shows for MTV.com.

The idea here is fragmentation and more of it, says Viacom CEO Philippe Dauman.

“This is the company that invented fragmentation in the cable world. In the digital world we’re going to take the fragmentation further. Through Flux and other methods, we’re going to link all those communities together and monetize them.”

MTV has talked at lengths about the idea of creating sites and digital properties on a very granular level by launching hundreds, if not thousands, of new sites tied to not just its programming, but particular stars or characters. This seems to adhere to the strategy.

A $500 million investment in video games was just the beginning. Dauman tells Siklos he’s got a few more small investments along the lines of Flux up his sleeves.

This all appears to be part of MTV Digital chief Mika Salmi’s handiwork to get MTV’s global digital properties on one common technology platform.

(Fortune)
(paidcontent)

Keep an eye on:

• Dow Jones and its main labor union are near agreement on a contract for reporters and other employees at The Wall Street Journal and Dow Jones Newswires.(New York Times)
• Google will propose at a meeting of European policymakers in France on Friday that national regulators agree on a basic set of global privacy protections. (Reuters)
• U.S. sales of video games and hardware jumped 46 percent in August from a year earlier, with Microsoft seeing sales of its Xbox 360 console shoot up after a price cut. The top game was Electronic Arts’s “Madden NFL 08″ for the Xbox 360, which sold 897,000 units, NPD said. Nintendo’s Wii was the most popular game console. (Reuters)

Are they mining the past to get ahead or going back to the future? We’re not sure. But the creators of “thirtysomething” are planning to launch a new online-only show on twentysomethings on MySpaceTV in November.

A-list creative duo Marshall Herskovitz and Ed Zwick – the force behind “Blood Diamond,” “The Last Samurai” and “My So-Called Life” — say the new show “quarterlife” will be the first “network quality” series to be created exclusively for the Internet.

The guys were mum on how much they would spend. The New York Times reports the budget would be “substantially more than the $50,000 to $100,000 an hour that many higher-end Web series spend.”

“Quarterlife” launches on November 11 and encompasses 36 eight-minute episodes about six young adults in a big city who all long for careers as artists. The main character is a woman named Dylan who posts her own video blog on the Web. Naturally, there will be a social network component to the project. Viewers will be able to network and play a role in the show’s creation through text and video submissions.

In the creators own words: The central character is Dylan, a young woman whose overly truthful video blog spills the closest secrets of her friends, and the show’s characters–filmmakers Danny and Jed, actress-bartender Lisa, geek-extraordinaire Andy, and still-tied-to-her-parents Debra–chart the sometimes excruciating, sometimes comic, often emotional experiences that comprise coming of age as a part of the digital generation.

ABC passed on the show, inspiring the two to take matters into their own hands and enjoy the rare luxury of creative and business independence in Hollywood.
(Reuters)
(New York Times)

Keep an eye on:

• MTV to debut Yahoo online music performance series on HD. (NY Post)
• Fox Business Network taps five insiders as anchors. When does the poaching begin? (Reuters)
• HarperCollins will publish a new novel by James Frey, the author who admitted to fabricating key parts of his best-selling drug and alcohol memoir “A Million Little Pieces.” (Reuters)
• Amazon may launch Music Service next week, maybe, if it passes muster with Amazon CEO Jeff Bezos. (Billboard)

(Photo: Reuters)

What’s another $5 million in Rupert Murdoch’s $5.6 billion deal to buy Wall Street Journal publisher Dow Jones & Co.? Everything, according to the union representing employees at the Wall Street Journal.

Reporters at the Journal have been working without a contract since the end of January, one staff reporter says. And they’ve had enough.

To drive the point home, Wall Street Journal employees are picketing the paper’s New York headquarters at the World Financial Center at 11am EDT to 1pm EDT on Monday.

From the union’s press release: Staffers will engage in an information picket of WFC, headquarters of Dow Jones and Company. IAPE (Independent Association of Publishers’ Employees) members are disappointed with a “final offer” presented by company representatives last week to union negotiators. The message expressed by union members at today’s event is directed both toward current Dow Jones management, as well as prospective owners, News Corporation.

From Jim Browning, a staff reporter at the Journal: They are increasingly angry because, at a time when Dow Jones is offering multi-million dollar pay packages and golden parachutes to executives, not to mention the $32 million 2007 pay package recently announced for Rupert Murdoch himself, Dow Jones is trying to more than double health premiums and hold down salaries in a way that will cut the real, inflation-adjusted take-home pay of many Dow Jones employees. It would cost Dow Jones roughly $5 million over four years to make employees whole, but for some reason it views that sum as too high.(Photo: IAPE)
(Corrects spelling of reporter’s name)

Warner Bros. plans an aggressive investment in online video production and is expected to announce 24 new Web productions from games to original shows to become a major supplier of programming on the Internet.

Going against tradition, the studio will shoulder the cost and worry about advertising support later. We may have initially had a narrow view, Bruce Rosenblum, president of the Warner Brothers Television Group, tells the New York Times.

Combined, the 24 shows represent a modest investment for the studio, in dollar terms. It will cost less than $3 million altogether, or about one episode of high-end TV. Six more shows are under development.

All this comes on the heels of news Warner also plans to give the likes of Bugs Bunny their own cartoon portal.

Will Warner give former Disney Chairman Michael Eisner’s Vuguru a run for his money?

(New York Times)

Keep an eye on:

• Looking for an overhaul at Yahoo? Keep waiting. (Wall Street Journal)
• Walt Disney Co. taking lead concerns on toys bearing its name into its own hands. (New York Times)
• Hiding the salami at The Wall Street Journal: Posters of Rupert Murdoch with the slogan, “Show Us The Money” go up and down as Dow Jones and its union negotiate a new contract with management. (New York Times)
• Wall Street Journal staffers plan to picket at its New York headquarters at the World Financial Center at 11am EDT to 1pm EDT on Monday. Workers represented by the Independent Association of Publishers’ Employees union are “are disappointed with a ‘final offer’ presented by company representatives last week to union negotiators,” the union said.
• Europe’s largest consultancy Cap Gemini it will recommend its corporate clients use Google Apps, Google’s online alternative to Microsoft’s Office software. (Reuters)
• Australia regulator probes Google’s DoubleClick deal. (Reuters)
• Quote of the day: Actor Alec Baldwin on Time Warner CEO Dick Parsons: “You know how much I love this man? I love this man so much I wont complain about my AOL account! (Intelligencer)

(Photo: Warner Bros.)

Storied Internet biz mag The Industry Standard is exploring a comeback. Barron’s writer and blogger Eric Savitz spotted the holding page at thestandard.com, which coyly teases that it’s “coming back.”

Full disclosure: I spent two great years as a staff writer at The Standard writing some of the most critical stories about any era. It will probably the first and last time I’ll ride the zeitgeist.

Six years since its closure, a potential comeback appears oddly timed — in the same week another bubble era magazine, Business 2.0, announced its closure.

Savitz: For a while, the company tried to keep the web site going on the cheap, simply recycling content from various trade mags published by IDG, which founded the Standard, owned a majority of its stock in the bubble days, and bought back the remnants in bankruptcy court in 2001.

Paidcontent’s Rafat Ali reached owner IDG. Here’s what they said: IDG Communications is exploring the creation of a media property covering emerging technologies and the internet economy, potentially using IDGs Industry Standard Brand.

Ali also pointed out that a Polish version, called Internet Standard, is still going strong.

Will the fifth time be the charm? The sixth? Sony is readying an online video service rival to the Apple’s iTunes, seeing video — not music — as its best (only?) foot forward in playing a larger role in digital media, the Wall Street Journal reports, quoting unnamed sources.

The company that invented mobile music with the Walkman, but lost the market to Apple’s iPod, recently dumped its Connect music service, conceding further defeat to Apple. Part of the problem in competing in digital media has been the very reason why Sony appears well positioned: They own the hardware and the entertainment. Competing interests between its electronics division aiming to give consumers what they want and content divisions looking to prevent piracy have hurt one of the world’s largest electronics companies.

Sony CEO Howard Stringer thinks the time is right to flex the power of its PlayStation 3, PlayStation Portable and Bravia television line to take on Steve Jobs.

Eyeing how Apple came to dictate prices in a devastated music industry, Hollywood and TV content owners have been reluctant to repeat the mistake. Last week, NBC Universal said it had no intention to renew its contract to offer shows on iTunes by the end of the year.

Just one problem with Stringer’s plan: the PS3, PSP and Bravia are far from market dominants despite garnering critical acclaim. Sony also must do what it has failed in the past 10 years - get its fractious corporate fiefdoms to get along. Moreover, Microsoft has a head start with its Xbox Live service, which already lets consumers rent high and standard definition versions of new Hollywood releases.

Good luck, Sony.

(Wall Street Journal)

Keep an eye on:

• Google Phone rumors abound. More fact than fiction? (GigaOM) (Boston Globe)
• Virgin Media hires Spencer Stuart to find new chief. (FT)
• Sony Ericsson president Miles Flint steps down. Sony Electronics USA Chairman Dick Komiyama to take over. (Reuters)
• In-game advertising company adopts TV ad model
• IFA: The $100 billion-plus TV industry watch with envy the success of consumer electronics makers as they wait frustrated, for the next big technology push. (Reuters)
• Division over next-generation DVDs deepening. Awaiting one clear cut winner in the next gen DVD wars? Keep waiting. (Reuters)
• Online shrines for ‘death networking.’ (Reuters)

Nothing. And that’s the point. NBC Universal and News Corp. joined the legions of meaning-deprived dot-com company names on Wednesday, dubbing its ambitious “YouTube Killer” online video joint venture “Hulu.”

“We just wanted a name that is short and easy to spell. We like the idea that it rhymes with itself. We wanted a fun name. It captures the spirit of what the team and the service is like,” Hulu spokeswoman Christina Lee tells us. “It doesn’t have a definition in the dictionary.”

The LA Times explains the phenomenon that afflicts new startups aiming to separate themselves from the pack, but ending up with names that sound like baby noises:

New Internet companies are being baptized daily with handles that sound like a cross between toddler-speak, scat singing and what the aliens will greet us with when they land … One approach is whimsy: picking a name that seems inspired by Dr. Seuss. If the late author were to tell a story about Internet start-ups, he could pit Qumana and Qoosa (blog editing and Web browsing) against Tagtooga and Tendango (both social networking). Peace would be brokered by Ooma (Internet phone calling). BooRah (restaurant reviews) would hiss, then cheer. Lala (music sharing) would sing.

Hulu doesn’t quite accomplish this; it’s actually Chinese for the gourd we know as the calabash.

It also is the name of a Swedish company that provides WiMax equipment.

Then there’s the Hulu Cafe, and the Hulu Project from two men whose music they describe as “a radical mix of electronica, crossculture, avant pop and contemporary music.”

Since throwing open its doors to software developers, Facebook has transformed into a hub for applications makers eager to tap into the fast-growing social network. But prodigious growth is not without its pains.

To that end, Facebook has tightened up its policies over the past two weeks. It has now removed the ability for developers to display content that the user is not aware of. In other words, no more hiding “Add this app!” boxes that are hidden from the user while shown to friends.

Facebook now also forbids the sending of misleading notifications, and will be removing e-mail notifications entirely to cut down on spam messages. “Deceptive and misleading notifications will continue to be a focus for us, and we will continue to block applications which behave badly and we will continue to iterate on our automated spam detection tools,” Facebook’s Dave Morin writes on Facebook Developers blog.

More from Morin:
Over the last few weeks we have noticed several developers misleading our users into clicking on links, adding applications and taking actions. While the majority of developers are doing the right thing and playing by the rules, a few arent and are creating spam as a result. Going forward, if you are deceptively notifying users or tricking them into taking actions that they wouldnt have otherwise taken, we will start blocking these notifications.

Fostering a healthy developers environment — while protecting its users from shady tactics — is a work in progress. But we’re already starting to hear grumblings from the developers community over the policy changes.
(Facebook)
(TechCrunch)

Keep an eye on:

• Recently revamped Johnson & Johnson’s BabyCenter.com buys mom-focused social network Maya’s Mom. Maya’s Mom, backed by Flickr-co-founder Caterina Fake, Yahoo’s Jeff Ralston and others, sees itself as cross between Yahoo Answers and Facebook. (Paidcontent.org)
• NBC Universal lands deal to buy Sparrowhawk Media for an estimated $350 million. (Reuters)
• MySpace launches fashion community in time for New York’s fashion week. (BusinessWeek)
• Internet companies brace for subprime fallout. From the FT: A lot of the subprime [advertising] has gone away, said David Jakubowski, general manager of Microsofts MSN service. (Financial Times)
• FCC Commissioner Michael Copps speaks with PBS’s Bill Moyers, discussing media consolidation, license renewal and the notion of what’s in the “public interest.” (Orbitcast)

(Corrects name of Sparrowhawk Media from an earlier version of the post)

Are the lunatics running the asylum? “South Park” creators Matt Stone and Trey Parker landed a three-year renewal with Viacom’s Comedy Central for the show that involves $75 million in upfront cash and will see the creation of a joint venture SouthParkStudios.com.

In an unusual move in the media industry, the two will also receive a 50-50 split of advertising revenue, according to the New York Times. (Actually a Viacom spokeswoman told us after we first published this that the split is just for digital ad revenue.)

SouthParkStudios “is intended to be an incubator not only for new applications for characters the likes of Cartman, Kyle, Stan and Kenny, but also for new comedy concepts that could one day mature into TV series of their own.”

The new site is designed to spread the show’s related material across the Internet, cell phones and video games.“If I’m overseas and have to get an episode right away,” Stone lamented, “you literally have to go to an illegal download site.”

Stone might have to keep on lamenting. We couldn’t find any full-length episodes on the new site.
(New York Times)

Keep an eye on:

• Buried at the bottom of Washington Post media columnist Howard Kurtz’s column on Money Honey 2.0 (Erin Burnett) is an item on CNBC “Fast Money” regular Eric Bolling. Bolling, who quit last week, popped up on Neil Cavuto’s Fox News show. With Rupert Murdoch’s Fox Business Channel launching less than two months away, let the poaching begin! (Washington Post)
• NBC Universal preparing to buy Hallmark channel owner Sparrowhawk Media for $351 million? (Sunday Telegraph)
• As if the music industry didn’t have enough bad news, Russian music retail site AllofMP3.com is BACK. (TechCrunch)
• Yahoo revamps e-mail, enables texting to cell phones. (Reuters)

(Photo: Reuters / Matt Stone, Trey Parker)