Philips is a panicky sort, counseling friends last fall to "buy food and guns" — a bit of mordant meltdown humor reflective of his personality.

But with Miller's arrival, Philips's wit is the proverbial knife at a gunfight. He's no match for Miller, a former lieutenant of Barry Diller at IAC before he joined Time Warner to run AOL from 2002 to 2006, in playing corporate politics and catering to a mogul's whims. And Miller surely does not want a rival with Murdoch's ear.

We'd heard that Philips might take a lesser job running some of News Corp's lesser-known Web properties. But that would mean an exile from News Corp. headquarters — an unattractive prospect for an executive who has earned his keep mostly by keeping Murdoch's favor.

The wunderkind is not just rolling over and playing dead. He may be trying to spin the situation, with a friend saying that Miller's expected to have the same portfolio as Peter Levinsohn, the executive Miller would replace. That's not, as has been reported, the broader role overseeing digital strategy Miller's expected to take.

A sign of how insular the world of big media is: Confirmation of Miller's job offer comes from Ross Levinsohn, who held much the same job before leaving News Corp. to start a venture-capital fund with Miller.

It's all a crazy waiting game until the aging mogul can install his wayward children in power. Most believe that's the reason why Chernin left, as it grew increasingly clear that Murdoch would never let the Hollywood hired hand become CEO of News Corp. But there are plenty of takers for the big jobs available in the meantime.

Miller replaces Fox Interactive Media chief Peter Levinsohn, who, as many inside News Corp. expected, is taking a job with the L.A.-based Fox TV and movie units. Miller, though, will have more power than Levinsohn, running pretty much everything with a URL attached and reporting directly to Murdoch. He'll need that authority to rein in wayward MySpace CEO Chris DeWolfe, who has long resisted reporting to the suits rotating through the executive suite of Fox Interactive Media.

If he takes the job, that is. Papers aren't signed yet, for reasons that are mostly legalese. Miller was ousted as AOL's CEO in 2006, replaced by the astoundingly awful Randy Falco. He's since been looking for a comeback, most recently through the VC firm Velocity Interactive Group — but he's been stymied by a noncompete agreement with AOL parent Time Warner, whose CEO, Jeff Bewkes, nastily decided to enforce after Yahoo invited Miller to join its board.

That noncompete ends in three days. Assuming Miller accepts the offer, and it seems like it would be enormously embarrassing for him not to, he'd be ending one long-running drama and joining another.

(Photo via LAT)

Rupert Murdoch's media empire, which stretches from MySpace to Fox to the Wall Street Journal and around the globe, is in turmoil after the departure of longtime COO Peter Chernin. Along with newspapers, TV shows, and websites, Murdochland manufactures drama and gossip. Here's what's been filtering out.

The expiration of two lucrative deals are setting a clock on DeWolfe's career. The first is his own employment contract, which he signed in 2007, along with his cohort Tom Anderson, for a reported $30 million over two years.

The second is a $900 million search-advertising deal with Google, which ends in 2010 and which all observers agree is unlikely to be renewed on the same rich terms. On top of that, MySpace's user growth has stalled out, as rival Facebook looks set to grow to twice its size this year. Without those guaranteed revenues from Google, DeWolfe will have a tough time meeting News Corp.'s demands for better earnings. That has led Pali Research analyst Richard Greenfield to predict big layoffs at MySpace.

Amidst this backdrop comes Wall Street Journal editor Julia Angwin's Stealing MySpace. Most of the stories it tells, like Anderson's ties to an online porn business called TeamAsian.com and DeWolfe's creation of a spam empire, have been reported elsewhere (well, here, to be precise). But their appearance in an authoritative book written by a News Corp. employee gives them fresh currency.

The book surely delights DeWolfe's many enemies within News Corp., who may be behind the vicious (and apparently untrue) rumor of a dalliance with Wendi Deng, Murdoch's wife.

So how is Murdoch setting things up for DeWolfe's possible ouster? One perpetual source of friction has been MySpace's autonomous role within Fox Interactive Media, News Corp.'s internet unit which houses a collection of forgettably schlocky websites like IGN and Rotten Tomatoes. Peter Levinsohn, a longtime Fox executive, oversees FIM and MySpace.

One reshuffle scenario we've heard: Levinsohn heads back to the Fox TV and movies business, whose leadership was jumbled up after Chernin's departure. (Rumor has it that an overworked Murdoch has been reduced to setting Fox TV's primetime schedule himself.)

Fox Interactive Media would then be cleaved in twain, with MySpace running on its own under DeWolfe — for now — and darkly mordant Internet wunderkind Jeremy Philips, currently in an amorphous strategy role, taking over the grab-bag of other websites. That would put him in a position to take over MySpace if DeWolfe bolts.

That's just one scenario, which has already gathered doubters. (If Philips has not gathered as many detractors as DeWolfe, it is only because he is not as well known.) But the unsettled leadership would certainly explain a mystery about MySpace's layoffs: Why they haven't happened yet. We've been hearing rumors of impending layoffs since last June, but instead, MySpace has just made minor cuts. The company's expensive, showy San Francisco outpost ought to be on the chopping block, but it's still open. Perhaps a soft-hearted DeWolfe is hoping to push back layoffs until after he's gone?

Arrington desperately wants to sell, that's for sure. But a Fox Interactive-TechCrunch linkup makes little sense on the surface — Fox Interactive chief Peter Levinsohn is said to loathe Arrington, or at least dislike him. And yet Levinsohn, who has practically no control over Fox Interactive's largest business, MySpace, might conceivably be eager to buy a tech blog which gives him, if not traffic, some industry clout. After all, that's why Murdoch owns the reportedly unprofitable New York Post.

But the biggest problem with an Arrington deal is, well, Arrington. Recent rumors had AOL acquiring TechCrunch for $30 million. That deal didn't go forward, we're hearing, because AOL worried about Arrington's mental stability and doubted whether the brand would survive if the mercurial blogger left. As one prospective buyer put it: "We're worried about buying it and him leaving, and we're worried about buying it and him staying." Before being acquired by CBS, CNET, too, took a long look at TechCrunch, only to decide too much of its value was tied up in the volatile blogger.

Arrington is ready to check out. He was recently heard talking about plans to retire to Hawaii; other Valley sources say he's been spending a lot of time up in Tahoe. It would be the height of irony if Arrington's willingness to let go was what finally greased the wheels for a deal.

But without Arrington, is TechCrunch worth anything? That's the question. And that's why everyone's still talking. Arrington, a master of the deal-gossip game, could well be floating these rumors himself — both talk of a deal with News Corp., and signs of his pending departure — to get AOL to come back to the table. Will it get his company sold? Maybe to AOL, a company gullible enough to buy an also-ran social network like Bebo. But not to News Corp., home to the ultimate media spinner.

All,

Since its inception nearly three years ago, FIM and its properties have experienced phenomenal growth and success as a result of your collective efforts. You have worked diligently to create the largest, most innovative content communities in the world, and, as a company, we are now prepared to take the next step in our evolution.

That next step involves two things: 1) leveraging our industry-leading advertising technologies to create an entirely new business for the company and 2) more closely aligning our products and revenue. We will achieve this alignment through a restructure of our sales and advertising groups that will begin to take effect in the coming weeks.

FIM Audience Network

First, we have created a new business unit called the FIM Audience Network.

Despite the press in our industry about the challenges of monetizing social media, we have built amazing Hyper Targeting and Optimization technologies that dramatically improve our ability to provide better advertising solutions to our clients. Given these strengths, Adam Bain - who has been so instrumental in developing this capability - has been promoted to President of the new unit.

Adam's team will be comprised of FIM's ad technology, ad operations and performance sales groups. Their charter will be to optimize monetization across FIM's content network and those of other third-party publishers. The merging of these groups into a single business unit will provide our family of brands and new third-party clients with the ability to extend their reach and enhance their advertising effectiveness across a vast online audience.

Integrated Sales

In addition to the creation of the FIM Audience Network, we will be integrating our branded sales teams (including client solutions, sales development, and traffic generation) into the operating businesses that they support.

This change recognizes that our individual business units have evolved to a point where it is clear they are best served by dedicated professionals who live and breathe those products alone.

For example, at MySpace we have launched our developer platform, unveiled incredible new features and functionality and, just today, announced our landmark joint venture with leaders in the music industry to form MySpace Music. In order to maximize the benefits of these events it is essential for our product and sales team to work hand in hand.

By integrating the sales teams in this way, each operating unit will be empowered to assume responsibility for its revenue, growth and profitability. Further, each operating group will be afforded greater flexibility to implement processes and programs that meet the unique needs of their respective markets.

Since the sales teams will now be integrated with their respective brands, we will no longer have a separate FIM Revenue Group. In the two years that he's been here, Michael Barrett has built a phenomenal sales team and driven tremendous results - helping to exceed our News Corp estimates and achieve profitability as a division. His efforts have primed FIM to take this important step in the next phase of our growth, and I want to thank him for his contributions. Michael will remain with the company for the next two months to guide the transition before moving on to pursue new endeavors.

Members of affected groups will be transitioning in the next few weeks and will hear more details from their respective leaders.

Closing

This reorganization is a milestone for FIM that will create many exciting changes and opportunities for each of you, as well as for our company going forward.

I am confident that we are moving in the right direction to secure our long-term success, and I am certain that we have the right leadership team in place to take us there.

I'm very proud of all of you, and I thank you for your ongoing commitment to the organization.

Thank you.