Time Warner Inc.’s HBO cable network is thisclose to reaching a deal to have its programming delivered through Apple’s iTunes. Portfolio broke the story this morning, noting that when the deal is announced it will be the first time Apple agreed to a different price structure for a content provider.

The details are still vague, but HBO apparently got a better deal than other content providers. “One possibility is that HBO programming will have a higher retail price than the flat $1.99 fee Apple currently charges for video content; another is that HBO will receive a larger cut of the same flat rate than other iTunes content providers receive,” Portfolio’s Josh Saul writes.

Although both companies are likely to bill the agreement as a victory—Apple gets more content and HBO more distribution—the deal could inspire other content providers to seek better deals from Apple. Many of those who have struck deals with Apple are reportedly dissatisfied, arguing they should be getting better economics from Apple, which makes money both on the distribution of content through iTunes as well as the sale of iPods and iPhones.

HBO In Your Pocket [Portfolio.com]

Dear Time Warner Shareholders,

I’m not going to pretend to say I’m sorry to say this—it’s so trite, so phony, so somewhat conciliatory, so just not me, Carl Icahn—so I’m just going to say it, without pretense: I told you bitches so. Yeah, that felt good.

-Carl

More Talk of a Time Warner Revamp [Dealbook]

We don’t want to harp on the story of Gary Wandschneider, the Pepsi Bottling Group executive who went to the Feds when his attempt to get a little on the side made him the target of a twenty-two year old scammer extortionist. He’s certainly not the first wealthy, older man to find himself in a compromising situation with a nice-looking younger girl. And he probably never expected the whole thing to end up with his picture splattered across the New York Post and the internets. And now he’s out of a job. (But don’t feel too bad. He pulled down six million bucks last year, so if he’s not an idiot, he’ll be okay.)

But the news that Wandshneider was fired/quit/just stopped coming to work had us recalling another executive caught up in a sex-scandal of sorts. We’re talking, of course, about William Wayne Pace (pictured above and left), the Time Warner executive who allegedly gave lots of money and gifts to Andrea Schwartz, who police claim was leading a drug and prostitution ring. We made a couple of calls this morning but no one returned them. Nonetheless, it seems that Pace is still toiling away as chief financial officer for Time Warner.

So maybe that was Wandshneider’s biggest mistake—he was working for the wrong company. If you want to have an “inappropriate relationship” with a young woman—the kind where lots of money changes hands—you go to work for Time Warner. Pepsi is for prudes.

It’s totally cute. Yesterday Time Warner CEO Dick Parson’s was all over Carl Icahn, crediting the high profile investor with helping Time Warner get in touch with their shareholders and convincing the company to increase its share buyback plan.

Reuters reports on Parson’s comments at the Reuters Media Summit:

“When someone accumulates even 3 or 4 percent of your stock and starts making the kind of noises Carl was making, it causes you to get in touch with your other shareholders,” said Parsons. “There was a sense that you could use more of your capacity to buy back the stock.”

Parsons said he’s not worried about another assault by Icahn. “Someone asked me if he is happy. I’m not sure if that’s a word I would use. I’m sure he is happier.”

Icahn, for his part, said he is happy, now that Time Warner stock has risen over the past several months.

“I’m happy concerning Time Warner,” said Icahn in a phone interview on Tuesday. “The hedge fund make over $200 million and to me, that’s a lot better than having a debilitating proxy fight.”

“Dick kept the promises he made to me and that makes me happy,” Icahn added. “He promised to cut expenses and do a huge buyback.

“We helped facilitate some of those changes. I think some of those things would not have happened to the extent that they did if we hadn’t been around,” said Icahn, adding that he “got some criticism for backing off” and dropping the campaign for a full breakup.

Reuters has the whole thing up on an audio file that you can listen to here.

Time Warner CEO gives Icahn some credit [Reuters]

Time Inc’s sale of Time4 media properties, according to a DealBreaker source, is set to include: Popular Science, Marine Group (Yachting, MotorBoating and SaltWater Sportsman), Time4 Outdoors (Field & Stream, Outdoor Life), TransWorld Media (TW Skateboarding, TW Snowboarding, TW Surf, TW Motocross, Ride BMX, Quad) and Mountain Sports Media (Ski, Skiing, Warren Miller Entertainment). Golf, Golf.com, and This Old House Ventures, including This Old House television production and This Old House magazine, will be staying at Time Inc.

As reported earlier, Time Inc’s The Parenting Group is also for sale. This group includes the magazines Parenting and Babytalk, as well as the online site Parenting.com

According to our well-placed source, In all there are 18 print titles for sale. 440 employees work at the Time4 Media titles involved and another 120 work at The Parenting Group. Employees have been told that there will be no lay-offs before the sale.

Time Inc hopes to close the deal by Christmas, the source informs us. The company expects the buyer will be a private equity firm. Hmm. Who could that be?

DealBreaker has been told by sources inside Time4 that all the division editors will be meeting with co-chief operating officer John Squires—aka chief executive “Ann Moore’s assassin”—at 3 pm this afternoon in connection with the news that Time Inc plans to a bunch of its magazines up for sale today, including the Parenting Group and most of its Time4 Media magazines. The Time4 division consists of a group of leisure and special-interest titles that the company bought for $475 million in December 2000. The division includes titles such as Field & Stream, Popular Science and Outdoor Life. Its unclear exactly which titles will be sold off.

Time Inc. Sell-off of Titles to Begin Today [Ad Age]

As Dan Gross points out, Time Warner seems pretty uninterested in making major investments or innovations in its magazine business. Maybe its planning on selling it off. Who would buy? Oh, we don’t know. Maybe the folks who just hired Time Inc’s editor-in-chief?

And here’s a leading indicator. The Carlyle Group, the huge private-equity firm that constantly scours the marketplace for multibillion-dollar deals, last month added a new senior adviser to its media and telecommunications team: Norman Pearlstine, the former editor-in-chief of Time Inc. Pearlstine’s new job? He’s supposed to tell Carlyle which huge media companies it should buy.

A few years ago we almost supported Mike Bloomberg for mayor because greek shipping heir and poison penned essayist Taki persuaded us that New York City needed to be led by a rich man who understood business. We’re still not sure Taki was right in saying Bloomberg deserved our backing. There have been too many betrayals and too much bungled. But he may be right that it is New York’s destiny to be led by such men, and that they tend to be marginally better than the usual alternative—career political hacks who have never spent a day weaned from the tits of tax-payers.

All this is by way of saying that we suppose the entrance of Time Warner’s Dick Parson’s into the race for New York City mayor, which New York magazine says is almost certain, is not entirely unwelcome. Word is that he’ll run as a liberal Republican—along the lines of Bloomberg and what we used to call the “Rockefeller Republicans.”

Is Parsons the New Bloomberg? [New York Magazine]

Andrea Schwartz, a thirty-one year old woman accused of running a prostitution ring, denies the prostitution charges by claims that she was showered with gifts and money by wealthy and powerful men, including Time Warner Chief Financial Officer Wayne Pace, according to the Daily News.

Pace’s lawyer tells the News that his client knew Schwartz as a real-estate agent but denies that there was any “inappropriate relationship” between Pace and Schwartz.

It’s probably important here to keep clear exactly what Schwartz is claiming. She’s not claiming that Pace patronized prostitutes who worked for her or solicited sex from her. In fact, she denies being a prostitute herself (although an earlier Daily News story quoted her as admitting she was in the “prostitution business” and had sold drugs). She’s just claiming that Schwartz gave her some gifts. Speculation about whether or not Pace used company funds to pay for sex, which we heard on SquawkBox this morning, is getting a little ahead of the facts.

Looker says I’m no hooker! [Daily News]

DealBook, in pointing to a Boston Globe story about Ted Turner’s departure from the Time Warner board, notes that Turner left “quietly”. (The Globe calls it “uncharacteristically understated.”) The TW shareholders were, during the course of Turner’s leaving, subjected to a video tribute to Turner that we didn’t get to see, but that probably included shots of Turner smiling and laughing in slow motion, against a track of “Wild Horses” by the Rolling Stones. Or at least that’s how we imagine it.

But we say all of that not without a pang of sadness. We loved Turner for the same reason we loved Scott McNealy: he was so damn quotable. So in memory of Ted Turner’s TWX board tenure, we give you Ted Turner quotes for all occasions:

Most relevant: this one - “I know what I’m having ‘em put on my tombstone: ‘I have nothing more to say’.”

Ted Turner Steps Down Quietly

When Carl Icahn was pursing Time Warner, we kept hearing that Icahn didn’t really understand the business—or businesses, as it were. (And we couldn’t help but think that Icahn’s assertion that TWX was big and bloated and might function more efficiently in smaller pieces wasn’t exactly a rocket-science observation.) But Dick Parsons directly suggests as much in an interview with The Oxford Press, while indirectly suggesting that the shareholder base as a whole understands the company better than Icahn:

Our shareholders who have been with the company a long time. They understand its strengths, they understand the industry. … I’m not sure that Carl really did. While I would be wrong to say there isn’t a lot of frustration, the whole media sector right now is in a little bit of a malaise. No one who really has been around this space for any period of time believed that Carl had any answers that were novel or likely to result in the stock moving up.

Conversations with Dick Parsons [The Oxford Press]

Henry Blodget on Susan Kalla’s (Caris & Co) suggestion in BusinessWeek** that Microsoft taking over Time Warner would be a “great move”:

I don’t know Susan and it’s certainly possible that she was misquoted. If not, however, I have some questions: Where was she five years ago, when AOL bought Time Warner? Would she care to expound on why a proposal frighteningly similar to what has been deemed the most disastrous merger in business history would be a “great move”? Would she like to explain how the same company will be effective at competing against IBM and Linux on one end and sitcom production companies on the other? Would she care to hazard a guess as to where the headquarters of this fantastic new $100 billion corporation will be located? Would she… Never mind.

Other than that… terrible idea!

** We’ve said it before, but… people read BusinessWeek?

Inaugural “Doh!” Award Goes To… [Internet Outsider]

Eddy Elfenbein of CrossingWallStreet writes in:

The NYT article the other day about corporate travel mentioned (in passing) Dick Parsons’ family crest. I wondered what he could possibly have on his crest. Carl Icahn? Steve Case? Ted Turner? How do guys from Brooklyn get family crests anyway? Well, one of my readers found it.

Just when you thought Time Warner couldn’t get any bigger or dumber**, TW CEO Dick Parsons tells the FT that he wants to move into wireless via acquisition or buying spectrum. His explanation:

“The ultimate table has to be constructed with four legs, not three. The fourth leg will be wireless – how one solves the equation I don’t know,” Mr Parsons said.

Well, that’s simple: you divide the second leg by the sum of the tabletop and a chair, then subtract four.

On the upside for Parsons, the TW bar for what constitutes a successful acquisition is pretty low. (Thank you, Gerry Levin, wherever you are…)

** Statistical correlation between “big” and “dumb” = 0.96

Parsons Says Time Warner Needs Mobile Assets [FT]