Original co-founders Michael and Xochi Birch’s MXB Holdings, Ron Conway’s SV Angel investment vehicle, TV executive Michael Jackson and entrepreneur Richard Hecker have filed suit against Criterion Capital Partners (CCP), which took Bebo off AOL’s hands in June 2010, and its CEO Adam Levin.

The quartet, which invested in Criterion’s Bebo six months after it was dumped by AOL, is seeking $5 million in damages. Their filing in San Francisco alleges:

• Criterion has “exploited” Bebo and has been “fraudulent” by “using its operating capital to pay the salaries of Criterion’s staff”, including $14,000 per month to Levin.
• Criterion has “withheld” Bebo financial operation details from shareholders.
• Bebo has “operated for 20 months and has failed to hold a single board meeting or shareholder meeting”, including one to discuss “a decision to pass on opportunities to sell the company and realise shareholder value”.
• Bebo’s reputation is being hurt by racking up defaults for failing to respond to lawsuits. Bebo defaulted on its San Francisco lease and moved to Criterion’s Los Angeles HQ without board or shareholder approval.

Criterion has not yet filed a response through the court, but CEO Adam Levin told paidContent: “We believe this to be a baseless claim and amounts to a fishing expedition.” A pre-trial hearing is scheduled to take place in San Francisco on August 8.

The dispute is the latest twist in the tale of the teen-focused social network, which the Birches founded in 2005 and which AOL bought from the couple and other original investors in 2008 for a stratospheric $850 million.

AOL off-loaded Bebo to Criterion in June 2010. Six months later, Criterion recapitalised the site by tapping the Birches and the others for new investment. Michael Birch returned as strategic advisor. The plaintiffs are amongst r minority shareholders.

New suitors for Bebo, including a media company, knocked on Criterion’s door within weeks, GigaOM reported at the time. But no sale happened.

In addition to damages, the plaintiffs now want a receiver to be appointed to run the social network - a move which could let them benefit from a subsequent re-sale. That would mean a fourth owner for Bebo in seven years.

The business relationships have gone spectacularly sour. In their filing, the four plaintiffs complain Criterion’s Levin “has not dedicated sufficient time and energy to the operation” and “would almost never show up at Bebo’s office”.

And they say “gross mismanagement” was to blame for Bebo going offline for two days this January – an outage which caused even Michael Birch, at the time, to suppose the site had disappeared for good.

Criterion has not arrested Bebo’s traffic decline, but has previously claimed to have made Bebo profitable by cutting costs and bringing in engineering talent to refresh the technology under Xbox co-creator Kevin Bachus as chief product officer.

Criterion director Tristan Lazareff is also named as a defendant. Criterion buys and tries to turn around troubled companies. More company background:

• After acquiring Bebo, it salvaged video technology from a UK broadcasters’ joint venture to build TV show aggregator SeeSaw. But the service collapsed last year after money Criterion said it had been promised by an investor failed to materialise.
• On the same day Criterion acquired SeeSaw, its CEO Levin and an associate, Hollywood veteran Dan Adler, also bought the troubled Beitar Jerusalem football club. But that deal was aborted after a dispute with the club’s conservative owner.
• Last year, Criterion acquired 10 Fatburger fast food restaurants in California, to go with a franchise of Papa John’s pizzeria it also owned.

PwC promptly shut 277 of its 609 UK and Ireland stores, making 2,104 out of 5,126 staff redundant, but said “a number of parties have expressed an interest in purchasing part or all of the business and assets of the group”.

It didn’t have to be this way. paidContent understands Game Group, three years ago, sought strategic proposals for survival in the years ahead…

• Executives were given a strategy that made clear the industry would see a tipping point from physical to digital game distribution in 2012.
• In response, the strategy recommended cutting down on bricks-and-mortar store count.
• And it made suggestions for using the Game brand to power digital storefronts on PC, console and other platforms.

But paidContent understands Game, under then-CEO Lisa Morgan, did not adopt the strategy, deciding instead that such an advance was not necessary.

At a time when Game was being urged to swap bricks for clicks, it made an even bigger foray in to the high street by acquiring Gamestation. Now it is not uncommon, in some towns and cities, to find two Game stores and an additional remaining Gamestation just a few streets apart.

And Game has been caught in a perfect storm…

• Reliant on console hardware, it has hurt as Microsoft (NSDQ: MSFT), Nintendo and Sony (NYSE: SNE) have introduced new input peripherals but not new machines.
• Dependent on A-list titles and Christmas software sales, it has watched as consumer spending has been impacted and as game choice has contracted around a few, expensive-to-produce franchises.
• Game’s innovative pre-owned retail channel has also made frenemies out of some publishers, which have limited certain features only to first-time buyers or, latterly, subscribers.

Game publishers are more bullish than ever about the prospects for generating such in-game revenue directly from players. And a growing number of titles is available through Xbox Live Arcade, for example.

But the console sector is not yet ready to wholeheartedly abandon plastic-box distribution – tier-A titles are priced at a hefty premium over even the pricey equivalents stocked on Game’s shelves.

That does not necessarily mean a console opportunity for Game, however – although it launched a PC download service, the console retail channel is locked up for operation entirely by the console makers.

In the remaining space, Game recently introduced a version of a digital strategy of its own…

• Selling points cards for Facebook Credits, Zynga games, Xbox Live and Playstation Network.
• It has also tried to secure publisher agreement for exclusive digital content access with boxed titles sold in Game.
• In October, it introduced its own system for online game transactions, GameWallet, adopted sparsely.
• And it had also sought an early foothold in the OnLive cloud game service.

In 2010/11, Game’s digital revenue increased by 27 percent to £41 million.

But, having passed on the earlier digital opportunity, it seemed too little, too late. Now administrators’ priority is likely to strip significant high street presence out of the company, especially where duplication occurs around the UK.

“The group has faced serious cashflow and profit issues over the recent past,” PwC’s joint administrator Mike Jervis told investors. “It also has suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements.

“Despite these challenges, we believe that there is room for a specialist game retailer in the territories in which it operates, including its biggest one, the UK. As a result we are hopeful that a going concern sale of the business is achievable.”

Game’s young staff have always been very helpful and knowledgeable in my experience. Gamers should hope that many of them get to carry on working in a right-sized high street retail business that can go on selling games on discs, until either the industry truly tips to digital or Game can forge a digital path of its own.

Well there we have it. Just had the phonecall to say Game is in adminstration and I have now been made redundant.

— Heather Lawrence (@exeliax) March 26, 2012

Just evacuated all customers an told to close store #GAME

— kyle alleyne (@daddyka89) March 26, 2012

Just been made REDUNDANT KMT #GAME full of shit

— kyle alleyne (@daddyka89) March 26, 2012

Yup, been made redundant. Just been told I need to work out the week to help pack up and my Game store is closed for good…

— Jordan Cormican (@JrdRIOT) March 26, 2012

One sad thing about GAME is that so many young people will be made redundant. Many work lives start there – this isn’t a nice start.

— Alex Donaldson (@APZonerunner) March 26, 2012

So a friend just got made redundant a few minutes into her shift at GameStation. it’s going well then. #GAME

— Jennifer Taylor (@littlejuicebox1) March 26, 2012

Very sad day indeed.Forever proud of my former GAME and gamestation colleagues who have shown such dignity and fought so hard

— Ian Shepherd (@IanAShepherd) March 26, 2012

It breaks my heart to see a business made up of such magnificent people come to this and yes, I think we should have been able to avoid it.

— Ian Shepherd (@IanAShepherd) March 26, 2012

@GeorgeMacD thanks George, I’ve appreciated the feedback today but no getting away from the fact that this happened on mywatch.

— Ian Shepherd (@IanAShepherd) March 26, 2012

I have since learned the app has been ready for months; it was submitted to and approved by Apple (NSDQ: AAPL) months ago. But Virgin Media is choosing to sit on it as it considers how to tackle a problem that will soon be shared by fellow connected TV operators…

For Virgin’s iPad app – which lets users switch channels and record shows from their sofa – to work, customers’ set-top box and iPad must be on the same home network. The problem – unlike iPad, Virgin Media’s TiVo is not WiFi-enabled.

That means customers keen to use the new wave of second screen controllers must run cable from their WiFi router to their set-top box. In many cases, like my own, consumers’ routers are not in the same room as their main TV.

And that poses a big challenge to operators – how can Virgin Media launch its fancy new app experience when it knows it will instantly disappoint thousands of consumers who can’t use it? And how does the company manage requests from customers who want its engineers to relocate their WiFi router or run extra cabling?

I discovered this issue first-hand last week. The social TV startup Zeebox’s app also includes an EPG and controller that already works with internet TVs and Virgin’s own TiVo box. But, for weeks, I tried and failed to get the two talking.

It was only in conversation with Zeebox product head Morten Eidal that I realised a cable must be run from router to set-top box. Zeebox has since improved its user documentation to make the fact more clear. And Virgin Media itself will need to approach the same challenge.

This is an issue that will become more prominent as more TV services launch on wireless gadgets and as more electronics manufacturers ship internet-connectable TVs…

I have been hearing actual connections of connectable TVs range from only five percent to 20 percent, compared with Xbox connection rates of up to 60 percent. Some say the problem may be unedifying internet content, but connection confusion may also be to blame. If the new wave of customers buying 2012 internet TVs gets home to realise further wiring is necessary, they will feel disappointed.

The problem can be solved either by manufacturers WiFi-enabling their devices or by offering bolt-on WiFi-enabling dongles separately.

For example, Samsung sells a dongle for its WiFi-less internet TVs, and BSkyB (NYSE: BSY) offers a dongle for its Sky+ boxes to customers who want its Anytime+ internet on-demand service. Zeebox’s Eidal suggested I use Homeplugs to direct my WiFi router through my home’s electricity loop and, from a wall socket, in to my TiVo via cable.

Each method could be a way for Virgin and others to finally launch its TiVo and other apps. But each also adds extra expense to this new wave of products and services. And that could blunt initial adoption, at least until WiFi becomes more commonplace in them from the start.

paidContent has learned the BBC executive wants to make all its shows available as download-to-own (DTO) at prices including £1.89 per show, under a scheme called Project Barcelona.

It has been negotiating for rights with independent producers that make some of the shows. They support the aims of the scheme, believing it could represent a new revenue opportunity and a defence against piracy.

But the producers, through their umbrella organisation Pact, have so far declined to give their outright blessing, citing uncertainty over revenue share, exclusivity and the potential for cannibalising DVD sales. They have asked for more detailed assurances.

The project, which has not been announced, could be one of the most radical in the BBC’s 85-year history. UK viewers already pay an £145.50 annual license fee under the BBC’s Royal Charter.

Currently, new TV and radio shows are available to watch or listen to again via the multi-platform iPlayer service for up to 30 days after transmission. After that period, rights are passed to the commercial outfit BBC Worldwide or back to shows’ original producers, who each license them to commercial services including iTunes Store and Blinkbox for paid consumer access.

But the BBC is upset that only seven percent of its archive repertoire is available through third parties in this way. So it wants to make the remaining 93 percent available through an own-brand service. The most notable departure is that even new shows from the public service window, not just old classics, would be available for paid download immediately after transmission. A previous news report had said the scheme would leverage only archive.

The BBC is promising producers a greater share of episode download prices than iTunes Store – an average £0.40 on a £1.89 episode fee compared with £0.28 from iTunes, which takes a 30 percent commission. The corporation would handle operational costs like encoding on producers’ behalf. It thinks it can unlock at least £13 million in revenue in the next five years for independent producers.

According to information seen by paidContent, the project is “about making what is effectively seen as non-commercial programming available to the market at a price and ease of use that will encourage consumers to purchase programmes that the commercial market would not make available due to the poor returns and risk involved”.

Some indies do not want to give exclusive rights to Barcelona. The BBC has promised producers can also go on licensing their own shows elsewhere – for example, to iTunes.

Even if the BBC wins suppliers’ eventual full backing, its executive must still put the scheme forward for the approval of the regulating BBC Trust, which, upon public consultation, would likely hear opposition to any plans to charge a secondary fee for publicly-funded BBC content.

If approved, Barcelona could lay groundwork for a pay-for BBC in a post-analogue, post-linear world. But, so far, it concerns only the download-to-own market – a model that may yet diminish as streaming alternatives, which provide cloud-based access but not ownership, grow in popularity.

After previously capping the BBC license fee, the UK government recently urged the BBC to generate more money for itself.

The BBC later told paidContent: “In addition to BBC iPlayer, the BBC already makes some of its content available on a download-to-own (DTO) basis.

“Any proposal to extend this facility would require not just the support of the industry but formal approval by the BBC executive and the BBC Trust.”

The more than $50 million in digital sales represents at least 5.5 percent of the $900 million in advertising NBC Sports already has sold for London. The percentage is also up from Bejing, when digital represented 3 percent of the total take.

It’s not a vast amount but as one exec told me: “It’s real money.” That means it can no longer be dismissed as incidental or only marginally meaningful — a message that has not been lost at Comcast-operated NBC Universal.

By comparison, CBS (NYSE: CBS) brought in roughly $100 million in digital revenue for March Madness from 2007-2010, with sales increasing annually as the online event grew.

Why the uptick? Execs at NBC Sports attribute the increase to several factors, including the decision to put more than 3,000 hours of video from London online. NBC Sports is still a couple of months away from announcing what events will be live online but Mark Lazarus, who succeeded Dick Ebersol as head of NBC Sports Group, already has promised all events will be aired live online or on TV.

Under Ebersol and former NBCU CEO Jeff Zucker, NBC remained TV-centric, holding back video of some events even when the results — and often, the footage — were available. NBC Sports eventually started to provide coverage of results online but continued to hold back on some video to the frustration of online users (self included).

This version of NBC Sports will treat online video more like TV in other ways, including the ability to release more inventory during the Olympics if the demand is there.

[Keep in mind: Some users are still bound to be frustrated if they don't subscribe to multichannel TV. More video online and more live events on TV doesn't mean everyone will have access to everything. NBC Sports has yet to spell it out but some content will only be available to video subscribers via authentication. My hope is that Comcast will leave NBC itself outside of any authentication plans.]

As part of the increased streaming commitment, reported earlier this week by SBJ, NBC Sports is also shifting video technology and promotional partners to YouTube (NSDQ: GOOG) from Microsoft (NSDQ: MSFT). Instead of Silverlight, NBC will use a co-branded version of YouTube’s video player. Instead of a syndication deal that allowed MSN.com also to show Olympic video, YouTube will promote the heck out of Olympic video from its front page and across the video hub but will direct all traffic to NBCOlympics.com.

Rick Cordella, VP/GM of NBC Sports and Olympics Digital, tells me reports that YouTube will be streaming official video as well are inaccurate. Some of that was fueled by a mistake on the NBC Sports advertising microsite that since has been corrected. It may sound like a small thing but it’s important to NBCU, which relies on its cable deals and affiliates, that YouTube not be perceived as a video partner. “All London Olympic video will live on nbcolympics.com,” Cordella said.

The switch is a lot more about demographics than technology. NBCU wants to increase the streams it serves and lower the age of the audience it reaches for the Olympics. YouTube already draws that kind of audience. With YouTube’s promotion hose turned on London, Cordella predicts “we will be able to move those demographics to the Olympics.”

According to its advertising kit (citing Nielsen), YouTube reaches 62 percent of U.S. males between 18-24 and 61 percent of all U.S. men between 18-34, as well as 58 percent of U.S. women 18-34. Users tend to be active, engaged and many of them like to share. Cordella is counting on all that to help NBCU expand its reach for the Olympics — which, in turn, will move that digital ad needle up.

While Cordella didn’t want to go into details, my understanding is the basic deal is a barter but NBCU would have to pay YouTube if certain metrics are surpassed. No revenue sharing is involved and NBC Sports retains control over ad sales.

NBC also has enhanced the technology it can offer advertisers during the Olympics by moving to ad insertion, which wasn’t available for Beijing. Instead of mirroring TV pods during streams, ads can be inserted to match the medium and device. That means that NBC Sports can serve up different ads from the same advertisers for a tablet user and a TV viewer at the same time, for instance.

In this video for paidContent, digital publisher Matt Kelly, digital MD Chris Ellis and digital product director Malcolm Coles discuss the impetus behind the relaunch…

The new site will employ content recommendations from Rummble Labs, automatic content tagging from OpenText, Facebook accounts for reader login, and was redesigned by &&&.

The Mirror’s separate celebrity gossip site 3am.co.uk – previously so distinct from the rest of Mirror.co.uk – is gaining the Mirror masthead for the first time and, Kelly tells paidContent, last week hired new staff despite layoffs elsewhere in the company. The separate MirrorFootball site is not yet getting the refresh.

In December 2011, Mirror.co.uk’s daily average user count rose 44 percent from the previous year to 726,653, but fell 4.2 percent from November. All national news sites pulled fewer December readers than in November except Independent.co.uk, which surpassed Mirror Group thanks to growth following its own redesign.

The Mirror’s red-top rival The Sun has not had a web refresh in some years, with publisher News International seemingly stopping to take a breath amid its ongoing crisis and reports it will launch a Sunday edition.

According to a source, there are about 50 people getting laid off — people who worked on the Bitbop mobile video service. A small group will stay on to help with the final wind-down of operations, which should take about four weeks. The services that were live in the U.S. and Germany are getting shut down today, we have been told.

There were once big hopes for Bitbop, but things took a challenging turn as competition in the form of Hulu, Netflix (NSDQ: NFLX) and others invested heavily in their streaming services and delivering them to mobile devices.

However, this is not the end of Jesta Digital. The Jamba ringtones business — a German company that News Corp. once paid nearly $400 million to purchase in 2008 — is still a healthy cash generator, and it will continue to operate.

Bitbop is understood to have some 20,000 subscribers who pay $9.99 per month to receive premium mobile video services. But with the service never getting a coveted outlet via an iPad app, it’s had a hard time scaling up, and with many of its original content deals up for renewal at the moment, it looks like it became clear that Bitbop’s business model was no longer sustainable.

Earlier in January, we noted the problems at the company, including some executive departures. At the time, Jesta told paidContent in a statement that it would continue to develop new mobile products in the future, without specifying what they were.

We will update this story as we learn more.

Wenner Media’s digital strategy has been more cautious than those of its competitors. In May 2011, Jann Wenner told AdAge that magazine publishers’ “rush” to the iPad was “premature.” Since then, it has made some moves that suggest it has become more of a believer in the iPad and in the importance of a more aggressive digital strategy. It has offered a Rolling Stone-branded Beatles guide for the tablet, and published Rolling Stones’ current content and complete archives online. It plans to launch digital replicas of Rolling Stone and Us Weekly for the iPad this year.

In Kang’s new position, he will have full P&L responsibility for the digital side of Rolling Stone, Us Weekly and Men’s Journal. Kang had been at Hearst since March 2011; his job there was to develop multiplatform franchises across the company’s brands, including digital apps, mobile sites and e-books–Good Housekeeping and Cosmopolitan e-singles, for instance. He also helped create Hearst’s new branded YouTube channel.

The position at Wenner Media was “too good of an opportunity to pass up,” Kang told paidContent. He is “an avid hard rock guitar player,” so “having an opportunity to work for an iconic music brand like Rolling Stone is an ‘Almost Famous’ moment for me.”

In his new role, Kang will “focus on a brand-centric model” that serves fans “based on preferences, data and a seamless multiplatform experience with multiple revenue streams.” He also told paidContent he’ll look to strategic partnerships with companies like Spotify, and to deepen relationships with advertisers through multiplatform integrated deals and branded entertainment campaigns.

Wenner says traffic across its three websites has increased sharply over the last year, using comScore (NSDQ: SCOR) figures to illustrate the point: Monthly unique visitors were up 54 percent for the twelve-month period ending in November 2011, compared to the previous year. Combined, the three brands attract 13.2 million unique monthly visitors and and 4.8 million monthly unique mobile visitors.

From today, AP will appear as a featured content provider on Pulse’s service, which currently works on the iPad, iPhone and Android devices. Included in the service will be AP’s mainstay text-based reporting, but also photography and video content, and users will have the option of selecting all or just specific streams of AP content, such as news, business, entertainment, health, politics and sports.

Pulse tells me that this “one of the first times that AP has opened all their content to a partner (and they have very few mobile partners).” It complements AP’s own efforts to create tablet and smartphone apps for its content such as this one for the iPad.

Update: A spokesperson for AP tells me that, in fact, AP is “providing Pulse a selection of international and national news and associated images. It is a portion of AP’s total content.” So perhaps not all content after all.

Crucially, one of Pulse’s biggest competitors in the newsreading-app space, Flipboard, is featuring only a subset of the AP’s coverage. Coincidentally, Flipboard announced its own AP deal only two days ago: a special focus on the next Presidential race to the White House.

Given that AP does not have a web site that anchors and aggregates all of its content for public consumption, initiatives like this one with Pulse become all the more useful, if a little quirky: Articles that get viewed and saved in Pulse subsequently show up on Pulse web pages — normally, content viewed in the Pulse app would link to the content from the original online source.

Apropos of the Iowa Republican Caucus this week, and in keeping with its Flipboard content campaign, the AP will also be offering a special channel covering November election. Included will be real-time coverage of candidates, polls, voting results and analysis from AP journalists and its partners.

Pulse and AP are not disclosing any financial terms for this deal.

The problems at Mochila come after the company has spent the last year trying to broaden and evolve its revenue model, which was essentially predicated on connecting online news sites with publishers. Back in February, the company brought in MediaLink LLC to help guide its strategy and named the company’s founder and CEO Michael Kassan to its advisory board. Kassan and Mochila separated a few months ago, however.

This past summer, publishing vet Carolyn Bekkedahl left the company to become social shopping site network Gilt City’s chief revenue officer, which was the same role she had at Mochila. Bekkedahl was replaced by ad sales head Steve McEvoy, who is no longer with the company.

It’s not clear what sort of buyer would be a fit for Mochila, but it does have a stellar list of board members with connections across the media industry. For example, Reuters (NYSE: TRI) GM for consumer media Keith McAllister, who was replaced as CEO by Chen two years ago, is apparently still on Mochila’s board. (Chen was previously chairman and CTO before taking over for McAllister.) Digital vet and News Corp. (NSDQ: NWS) exec Jon Miller also joined Mochila’s board in 2009 and may still be involved as well.