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Tuesday, July 19, 2005

WSJ.com - Turnover at Yahoo Slows Media Group's Los Angeles Move

WSJ.com - Turnover at Yahoo Slows Media Group's Los Angeles Move
Turnover at Yahoo Slows Media Group's Los Angeles Move

By KEVIN J. DELANEY
Staff Reporter of THE WALL STREET JOURNAL
July 19, 2005; Page B1

Plans to give a stiff shot of Hollywood glamour to Yahoo Inc.'s media and entertainment offerings have instead given the Internet company a case of the hiccups, as several division heads have decided either to leave Yahoo or opted against relocating to new Los Angeles-area offices.

Of eight media division general managers, three heading Yahoo's finance, sports, and movies and television units have decided to leave the Sunnyvale, Calif., company, Yahoo said. Three other division heads have declined to move to Southern California from Silicon Valley and so are leaving their current posts, taking other jobs at the company.

The management turnover partly reflects some internal discontent directed toward Lloyd Braun, the former chairman of the entertainment division at Walt Disney Co.'s ABC network, whom Yahoo Chairman and Chief Executive Terry Semel brought in late last year to oversee the invigoration of the media group. Since then, Yahoo and Mr. Braun have hired a new layer of senior executives overseeing content in entertainment, sports and other areas in the media group. Some employees in the group have bristled at Mr. Braun's management style, according to three people familiar with the matter.

Mr. Braun declined to comment, through a Yahoo spokeswoman. She said criticism of Mr. Braun "doesn't represent the general consensus among the group." She said the management changes played a role in the decision by Yahoo executives to delay the deadline for "a relatively small number" of employees to decide whether to move.

Yahoo in 2001 hired Mr. Semel, former co-head of the Warner Bros. studio, to turn the Internet company around amid falling revenue. Since then, Yahoo has powered back, mounting a credible Web search challenge to Google Inc., among other moves. Mr. Braun arrived in November to oversee Yahoo's content-related activities: News, entertainment and other multimedia content is a centerpiece of its effort to keep Yahoo before Internet users at a time when more of them are consuming media and entertainment via computers and cellphones.

Currently, Yahoo's media activities range from Web sites dedicated to finance, news and health to online videogames. Last year, it edged out rivals to host the official Web site of "The Apprentice," a reality-TV show starring Donald Trump. In May, Yahoo's music division released an online music-subscription service priced aggressively lower than rival offerings. Mr. Braun has spoken publicly about his interest in trying to help create mass-market content hits on the Web, but he and the company have been coy about any specific products or services he plans to unveil.

Yahoo Media Group is a relatively small contributor to the company's revenue and profits now, but a major strategic focus. Yahoo's aim is "to take a leadership role in defining what Internet content will be and how it will be presented to the consumer," Mr. Braun said in a February interview.

Yahoo executives announced this year that most of the Yahoo Media Group would be moving to a new facility in Santa Monica called the Yahoo Center. The facility is big enough eventually to accommodate as many as 800 to 1,000 employees.

The recent turmoil suggests Yahoo may be struggling to keep up with its own aggressive expectations. The Yahoo spokeswoman said the changes hadn't slowed Yahoo's plans. "This is all expected....The groups are doing extremely well despite the transition," she said. A number of employees already have moved from Sunnyvale and additional moves are planned for September, she said. "We view this as a positive and necessary change to strengthen the group's management," she said.

The game of musical chairs is being played out against a backdrop of intensifying challenges to Yahoo's news and entertainment efforts online. Time Warner Inc.'s America Online division is aggressively promoting video feeds on its revamped Web site and scored a hit with its recent online broadcasts of video from the Live 8 concerts. Viacom Inc.'s CBS News division last week announced a souped-up Web site featuring an increased number of free video clips.

Yahoo declines to specify revenue for the Media division. People familiar with the matter said it accounted for roughly $170 million of Yahoo's $3.6 billion in revenue last year. They said they don't expect the changes within the group to affect second-quarter financial results, which Yahoo is scheduled to report today.

Mr. Braun addressed the turnover during a quarterly staff meeting in Sunnyvale last week, according to the people familiar with the matter. During the meeting, he jokingly thanked Neil Budde, general manager for Yahoo News, for his decision to move to the Santa Monica office. He also acknowledged that other general managers had either quit or elected not to move, they say.

Douglas Hirsch, general manager for movies and television, said he had resigned from Yahoo, declining to discuss the reasons for his resignation. Nathan Richardson, former general manager for finance, left Yahoo last month to join Dow Jones & Co., publisher of this newspaper. A Dow Jones spokeswoman confirmed Mr. Richardson's hiring but declined to comment further.

People familiar with the matter say Brian Grey, general manager for sports, recently announced his resignation and has been hired by News Corp.'s Fox Sports unit to oversee its Web site. Mr. Grey said in a telephone interview, "I may be leaving in the near future, but I am still employed at Yahoo," and declined to elaborate further. Yahoo confirmed the three executives had left or were leaving Yahoo.


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