Arianna Huffington pushed out TechCrunch founder Mike Arrington in September, cementing her role as AOL's one true blog master. Now the slow gutting of TechCrunch continues.

Jason Calacanis, the Mahalo CEO and email list administrator, and Michael Arrington, editor of TechCrunch and hero to hopeless website creators, held a meetup in Menlo Park last night for finalists in their TechCrunch50 startup beauty contest at the British Bankers Club. Our spy infiltrated the proceedings — and served Arrington a milkshake. "He didn't seem too happy about it," reports our informant. More photos from the event — including a surprise appearance from CNET TV star and former TechCrunch writer Natali Del Conte, who came after the proceedings were over for a brief tête-à-tête with Arrington.The crowd was small, our spy reports — "about 20-30 people, mostly TechCrunch50 finalists." SearchMe.com was one of the finalists — "some woman even Twittered that they got in." Arrington drives a gray Porsche, and "left with a ladyfriend, didn't get to see who." (Anyone know who he's dating? Do tell!) On to the pictures! Arrington, even as host, never could seem to crack a smile:

A startup founder tells us that, over the weekend, he and his friends overheard TechCrunch writers celebrating the sale of Michael Arrington's blog to News Corp.'s Fox Interactive unit — Rupert Murdoch's home for MySpace, Rotten Tomatoes, and other wayward websites. The source tells us that the deal has been signed, but TechCrunch is waiting for its summer party at August Capital's Sand Hill Road offices to announce it. Another source who's spoken recently to Arrington says that a deal is on. But a highly placed News Corp. source says there's "no truth" to the rumor. What's behind this wave of TechCrunch sale talk?

Business advice, that is. Despite Paul Boutin's entreaties, I find I just can't leave Automattic founder Matt Mullenweg alone. Neither, apparently, can acquisitive buyers. TechCrunch reports that Automattic, maker of the popular WordPress blog software, just turned down a $200 million offer. Interesting timing, considering that Mullenweg was spotted just last week at David Hornik's Hawaiian funconference, The Lobby, having a very close chat with Harde. In the moment when the two were spotted by gutter-minded gossips having a tête-a-tête, was Harde advising Mullenweg on whether or not to take the offer? And, in the process, helping score an exclusive for TechCrunch editor Michael Arrington? (Photo by True Ventures)

I'm not going to make one of those crying videos, but as Valleywag's Very Special Correspondent (read: over the hill) I need to stomp a heel down. Why are we reporting that two people I've never heard of were reportedly touching each other in public? I had to look up who Mullenweg is. I think we use his software. Or we did, or we're going to, or something. Anyway, he's from Houston. That means he infuriates San Franciscans merely by existing, which makes him cool with me. The lady in question turns out to be the PR genius who emailed me the most ridiculous embargo demand ever. That backfired perfectly, so everybody won. Commenters say we shouldn't print this rumor 'cause it's cruel. Worse than that, it's dull. Call me back when one of them runs Google and films a three-way on the Boeing. (Photo by True Ventures)

Would someone please shut down the Valley and lock the doors? I don't know if I can take another week like this. Seriously, can you remember another week filled with such drama? Microsoft showers Facebook with cash, making Mark Zuckerberg a paper billionaire — and turning Facebooker Dave Morin's relationship with a Googler into forbidden fruit. Meanwhile, venture capitalist David Hornik attempts to have an off-the-record conference in Hawaii and completely fails — because gossip will out. Gossip like BusinessWeek's Sarah Lacy throwing a drink at TechCrunch editor Michael Arrington, while his CEO, Heather Harde, stays up suspiciously late with WordPress creator Matt Mullenweg. Yahoo loses a devoted cheerleader and its top marketer. Larry Ellison tries to reel in BEA. Special correspondent Nick Douglas, meanwhile, demands I stop reading all of my favorite sites. I need something. Not a unicorn chaser. How about ....

When David Hornik pitched VCs and entrepreneurs on his tropical funconference, The Lobby, part of the sell was that the whole affair was to be off the record. Ha! Good one, David. Turns out what happens in Hawaii only stays there long enough to launch itself toward our inbox. Take for example, what struck some attendees as a budding romance between TechCrunch CEO Heather Harde, the former Fox executive Michael Arrington hired to run his blog's business end, and Matt Mullenweg, the creator of WordPress. Now, TechCrunch runs on WordPress, so it's possible that Mullenweg was just giving Harde blogging tips. But witnesses to their late-night canoodling at the bar say that wasn't the kind of pointer in question.

Update:

My fellow Valleywaggers Owen Thomas and Nick Douglas were banned from the TechCrunch40 conference, and, odds are, I would have been banned from the afterparty at Fluid nightclub, had I asked permission to attend. So, I didn't bother asking, and scrounged up a ticket though back-channel connections, instead. Specifically, through the generosity of my new crush, the mysterious "TechCrunch40" Twitter guy, who left an envelope with an extra ticket and a cryptic note with the bartender at the House of Shields around the corner from Fluid. (Turns out "TechCrunch40" is a group effort — the note was signed by Rick Diculous, El Guapo, Mr. Gray, and Harvey Farquard.)

Newsweek, from 3,000 miles away, bills TechCrunch editor Michael Arrington's parties as "harder to get into than Studio 54 in its heyday." So much for the periodical's vaunted factchecking: I waltzed right in. And the scene? Last Friday's TechCrunch9 was, at heart, the same meet-and-greet that takes place several times a week somewhere between San Francisco and San Jose. Except on steroids. A reported 900 people showed up on the Sand Hill Road patio of August Capital to schmooze, deal, and — oh, yes — sucking up to Arrington in the hopes of a mention on his site.