Company to be split into three new operating units

After two embattled years on the job, Lloyd Braun has ankled his post as head of Yahoo’s Media Group amid a massive reorg at the world’s biggest Internet company.

CEO Terry Semel announced the changes Tuesday, near the end of a tough year that has seen Yahoo face intense public criticism and a 31% drop in its stock price.

Starting in the first quarter of 2007, company will divide into three groups focused on audience segments in an attempt to streamline and better compete with fast-growing rivals like Google and News Corp.’s MySpace.

Chief operating officer Dan Rosensweig is also leaving, effective in March.

New operating structure would have diminished Braun’s standing in the company, apparently prompting him to resign.

Previously, Braun reported directly to Rosensweig.

But Santa Monica-based YMG, which encompasses all of the Netco’s content sites, such as Movies, TV, Music and News, is now part of the Yahoo Network division of the Yahoo Audience Group. Yahoo Network, which also encompasses search, user-generated media, and the Yahoo front page, will be led by Jeff Weiner, previously the head of search.

Netco is looking for an exec to lead the Audience Group, overseeing Weiner and several other execs and reporting directly to Semel.

Braun likely wanted the job atop the Audience Group and didn’t like the idea of having additional layers added between him and Semel. His departure wasn’t included in Yahoo’s reorg announcement, indicating that he resigned in response to the changes, rather than as part of them.

Remaining senior management at YMG, such as head of entertainment and games Vince Broady, music topper Dave Goldberg and head of news and information Scott Moore, will now report directly to Weiner.

David Katz, who previously headed sports and the Yahoo Studios original content group, ankled late last week in a move that now looks like it was connected to the internal shake-up (Daily Variety, Dec. 4).

Rumors of Braun’s imminent departure started circling the former ABC prexy within months of joining Yahoo two years ago. His appointment was surprising, as he had no experience in online media.

His initial efforts to bring TV-style event programming to the Netco, such as a failed attempt to develop ABC project “The Runner” for the Web, were ultimately stymied.

After what seemed like more than a year of inaction, Braun recently settled on a more conservative strategy, bringing on a senior management team recruited from other Netcos and focusing on redesigns for existing sites, launching sites focused on food and technology, and low-cost, low-risk original programming such as viral video roundup “The 9.”

Tuesday’s changes strengthen the position of chief financial officer Susan Decker, who many believe is being positioned to take over for Semel. She is leaving her job as CFO to head the new Advertiser & Publisher group, which will oversee all advertising and business partnerships. Netco has had particular troubles this year with delays in a new advertising technology that caused it to lower its financial guidance.

Yahoo plans to create a new advertising network that joins all its sites with its thousands of distribution partners in an effort to better appeal to marketers, who have been increasingly turning to sites like Google, YouTube, and MySpace.

Third division in the new structure will be the Technology Group, headed by chief technology officer Farazad Nazem, which will oversee engineering and tech development.

Yahoo was previously divided by product group, rather than by audience segment. That led to some some frustrating internal divisions for execs. Many at YMG, for instance, wanted to work more closely with Yahoo Video (user-generated videos) and Flickr (for photos), but those sites were previously in a different product group. They are now joined together in the Network division of the Audience Group.

Semel seemed to acknowledge that Yahoo has in recent years fallen from its leadership position and described the changes as a way to seize that mantle from younger competitors.

“The Internet is continuing to grow and evolve at a rapid pace, and we’re reshaping Yahoo to be a leader in this transformation, just as we did successfully five years ago,” he said, referring to the time when he first joined the company after having co-led Warner Bros. for many years. “Our strategy capitalizes on big emerging trends and leverages our core strengths in search, media, communities and communications. We believe having a more customer-focused organization, supported by robust technology, will speed the development of leading-edge experiences for our most valuable audience segments.”

Company emphasized that its new primary goals will be to create social media environments that encourage users to participate, rather than just consume; to take the lead in next-generation advertising platforms; and to better compete for top talent.

In a statement, Braun said YMG “has developed and launched a groundbreaking template for the next generation of media experiences on the Internet” and noted that “I am proud to have led this team of extraordinary professionals.” He told the Los Angeles Times that he is “really ready for another challenge, perhaps one that combines old media and new media.”

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