The U.S. House of Representatives will hold hearings next week on HPGate. Tune in at 7 AM California time to hear CEO Mark Hurd try to defend his action and inaction.

The Committee on Energy and Commerce

I was asked by the Wall Street Journal to “blog” the announcement by CEO Mark Hurd today about the spy scandal that just won’t go away. Here is the concluding comment I sent:

Today was an effort to sacrifice the queen in order to save the king. But nothing suggests that HP is Bobby Fischer or Gary Kasparov. It has been bungled from the beginning and goes back to the amateurish behavior of Keyworth and Perkins who used leaks for their own political purposes. In my view, Hurd will end up out of HP within a few months as the lawyers, prosecutors and politicians descend on the company. This is a sad day for Silicon Valley.

Meanwhile, my engineer father reminds me that the real HP, the HP of garage startup fame, is really not this HP – it is Agilent, the instrument company spun off by HP a few years back. No such scandal seems to have engulfed that entity located just down the road from HP’s headquarters in Palo Alto. Thank god for small miracles – maybe there is hope for the Valley after all.

The potential for “synergy” between Silicon Valley and Hollywood continues to grow – Disney’s Bob Iger certainly is happy about it as his recent remarks to an investment banking conference suggest. Apple’s new iTV strategy suggests the possibility of rescuing television from its doldrums by squeezing a revenue stream from the new digitial video recorder technology that more and more consumers (me, too!) can no longer live without. This prospect makes the Disney CEO positively “giddy” with delight.

AppleInsider | Disney chief talks up Apple’s iTV media hub

Sadly, the scandal at HP continues to deepen. With documents now emerging in anticipation of the House hearings next week, it appears that HP Chairman Dunn and the CEO Mark Hurd had a direct role in approving a sting operation against an outside reporter. Clearly more change is needed at the company – so where are the institutional investors that own nearly 80% of the company’s stock?

HP CEO Allowed ‘Sting’ of Reporter – washingtonpost.com

Could the scandal at HP reach the CEO? The LA Times interviewed me about this issue for today’s paper.

HP Spied on More Than Phone Calls – Los Angeles Times

In light of the debate among actors about whether collective bargaining is feasible in the world of new media, it is enlightening to consider the kinds of deals already being inked between production companies and digital distribution companies.

Some representatives of the employers in EMI, like Nick Counter at the AMPTP argues digital technology is “so new” and “so unknown that it would be…a mistake to try to work out a formula at this point.” AMPTP’s Counter tackles virtual future.

Even some in the labor unions that represent EMI workers echo this argument as became clear rather abruptly at the Screen Actors Guild last week. (See my post below.)

Why is it so difficult to engage in collective bargaining over these new revenue streams? Apparently YouTube has no problem figuring out how to reward Warners Music Group for content as indicated in this joint announcement by the two companies today.

YouTube – Broadcast Yourself.

HP Board Chairman Pat Dunn was ousted today but the debate about the “pretexting” investigation of board members continues. Today’s WSJ Law Blog featured a comment by me and Professor Rhode of Stanford to kick off a debate about the role of the HP general counsel in the controversial events at the company.

Law Blog � H-P Mess Casts Harsh Spotlight on Ann Baskins

The merger of Silicon Valley and Hollywood continued to accelerate this week. First there was the widely covered announcement by Apple of a new iPod with higher resolution capable of playing back movies. And those movies will be available on the same day of DVD release – yet another sign of the window compression underway in the entertainment industry. Why rent from Netflix or buy from Amazon when you can download the same film with a few clicks on the computer?

And linked here is a story about Rupert Murdoch’s News Corporation on the hunt again for high tech companies that advance the digital revolution. News Corp is taking a controlling interest in Jamba, a mobile entertainment company now owned by VeriSign.

News Corp. Buying Jamba

Here is a smattering of reactions to the Freston ouster at Viacom from Wall Street analysts. Generally, the view is hostile. The Street hates uncertainty and volatile shakeups certainly qualify. But technological change is hitting this industry fast and it is only natural to expect a great deal of volatility in the board room as well as on the stock ticker. One interesting piece of speculation – will Viacom do a quick deal with a significant internet player (can you say Yahoo!) to counter the apparent advantage that Murdoch/Fox gained with the (pricey!) acquisition of MySpace. Keep in mind that Terry Semel, CEO of Yahoo!, has an extensive Hollywood background, including stints with Warner, Disney and CBS (the latter a recent spin-off from Viacom).

WSJ.com – Analysts React to Viacom Shakeup

The Hollywood Reporter interviewed Sumner Redstone today on the dramatic changes underway at Viacom of late. The dismissal, first, of Tom Cruise and now of CEO Tom Freston points to an aggressive and creative effort of Redstone to respond to changing technology in the industry. In the interview Redstone sidesteps, smartly, questions about Cruise and, of course, sheds tears about losing Freston. But business pressures won out and those clearly dictate a shift away from star dominated product to new forms of digital delivery.

The connection may not be immediately clear, but the fact that Viacom lost out on the battle to purchase MySpace (which went to the Aussie who dominates American entertainment) clearly lies behind the change. MySpace is emblematic of the potential of new digital consumer driven platforms for entertainement and media products. Those products are likely to be shorter than today’s feature films and may not be simply the vehicles for a handful of stars like Tom Cruise or Tom Hanks as many films have been of late.

Of course, getting this right is no easy task and the new dual leadership has something to prove to Wall Street which rewarded the announcement by dumping Viacom stock. This is ironic since the new leaders, Dauman and Dooley, have been running an investment firm for the last few years.