$5 billion offering comes as music, movies grow on social network

Facebook’s IPO is expected to take its first formal step Wednesday in what’s likely to be Silicon Alley’s biggest ever public offering, one that will create a new deal currency for a company’s that becoming an ever larger partner with Hollywood.

The social networking giant will file initial documents with the Securities Exchange Commission for a $5 billion offering although the size could be increased later if there’s demand, which there likely will be. The eight-year-old company is a household name across the globe with 800 million users. Founder Mark Zuckerberg was Time’s 2010 Person of the Year at age 26.

The company has spawned entire industries that cling to it like barnacles on the world’s most massive tanker. Zynga, an online game company that generates 90% of its revenue from Facebook, went public last month in a $1 billion offering.

While Facebook initially tended to keep Hollywood at arms length it’s inevitably been forging closer ties as both sides see benefits. Chief operating office Sheryl Sandberg joined Disney’s board of directors in December 2009. Netflix founder-CEO Reed Hastings sits on Facebook’s board.

The deal puts an eye-popping value of about $84 billion on Facebook — a valuation that has fluctuated from $75 to $100 billion. In comparison, the biggest media company — Comcast — has a current market capitalization of $72 billion. Disney follows with $69 billion. (Apple has one of the biggest market caps of any company in the world at $425 billion.)

F-commerce — the name for the swirl of e-commerce and marketing that has evolved around Facebook — allows users to comment, chat and share movie viewing experience with friends.

With the kind of exposure Facebook can bring, studios have started to release movies that can be rented and viewed on Facebook including Warner Brothers’ “Dark Knight” and Universal Pictures’ “The Big Lebowski.”

Last month, Lionsgate said it would make its pic “Abduction” available on Facebook the same day it is released on DVD and digital download, the first time a new release has debuted on the social network.

Driven by fans, the social network has pushed into music, including a deal with popular service Spotify last fall.

Facebook, based in Menlo Park, Calif., has about 3,000 employees $4 billion in revenue. It continues to grow, grabbing ad share from Yahoo and others and accounting for 28% of U.S. online display-advertising impressions in 2011, according to tracking agency ComScore.

Morgan Stanley, which worked on the IPOs of Zynga and another major online player Groupon, is lead underwriter, working with Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan.

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