Former Bebo CEO Joanna Shields and Shine Group Chairman and CEO Elisabeth Murdoch have formed a content start-up to produce across media platforms, both online and offline, with a focus on social engagement, according to sources.

The new venture, which does not have a name, is being financially backed both by Shine and by Shields, who left AOL this summer after running its community and communications division.

Shields engineered the sale of social networking site Bebo to the Time Warner (TWX) online unit for $850 million in early 2008.

Sources said this new company, based in London, will invest, develop and partner to create a variety of content offerings that also incorporate interactive and social networking elements. It will also help the vast array of Shine content in interactive efforts.

Shields will be CEO of the start-up, which will operate under Shine, an independent and private television production company with programming in 24 countries.

In the U.S., for example, its Reveille unit is responsible for such shows as “Ugly Betty” and “The Biggest Loser.” (Both of which are BoomTown faves.)

Shine’s fast growth has been spearheaded by Murdoch, who is the daughter of News Corp. (NWS) head Rupert Murdoch.

But Elisabeth Murdoch has struck out on her own in forming Shine, which already has shown a strong interactive bent for a television company.

The combination of television and Web content is an arena that many are once again jumping into, aiming at creating branded interactive content, fueled by advertising.

Former NBC Universal exec Ben Silverman–who sold Reveille to Murdoch, in fact–has recently left his programming job at the television network to start a similar kind of company with longtime entertainment and Internet kingpin Barry Diller of IAC/InteractiveCorp (IACI).

And former ABC programming and Yahoo exec Lloyd Braun also runs a television and Internet production company with longtime Hollywood player Gail Berman, including recently creating the Wonderwall celebrity news site for Microsoft (MSFT).

In addition, Yahoo (YHOO) and a spate of small content start-ups, as well as big media companies, are all trying to figure out how to create and monetize content online in a multimedia effort that bridges all kinds of distribution vehicles and more deeply involves viewers.

Bebo was actually trying to do that too. Under Shields, it had been a pioneer in creating a variety of innovative online original content, including “KateModern” and “Sofia’s Diary.”

But new management at AOL, now headed by former Google (GOOG) exec Tim Armstrong, has sidelined Bebo to its new ventures division and is likely to try to sell it. Company execs at both Time Warner and AOL now say the purchase was a costly mistake.

That might be true, but it was clearly a financial coup for Shields–who has worked at both Google and RealNetworks (RNWK)–and Bebo investors.

And, given the track record of both Shields and Murdoch, it will be interesting to see what they come up with.

BoomTown provided continuing coverage of the Yahoo (YHOO) merry-go-round. This time, PR head Jill Nash announced her departure. As the company’s chief communications officer, she’s had a challenging two-year run. New CEO Carol Bartz definitely has some PR ideas of her own, including offering cash prizes to employees who provide info on their colleagues who leak information to the press. Not a huge deterrent yet, apparently–it didn’t take long for BoomTown to get info on both Nash’s farewell memo and Bartz’s bounty system. Next, New Networks, the publisher behind BarelyPolitical and its hugely viral Obama Girl videos, has widened its purview to include the tech sector with BarelyDigital, which the online network has envisioned to include regular shows, tech news remixes and the like. It’s rumored that Obama Girl will be making a cameo appearance or two. If the first two features are any indication, the future looks pretty funny. In another round of executive musical chairs, Time Warner’s (TWX) AOL ad head Lynda Clarizio will be leaving the online service, to be replaced by former Yahoo ad exec Greg Coleman. Microsoft (MSFT) is launching a slick new celebrity site on MSN called Wonderwall, created, designed and produced by BermanBraun Interactive, a Hollywood company run by former Yahoo media chief Lloyd Braun. And speaking of musical chairs, MSN is clearly upping its content ante–earlier this week, it hired Yahoo’s recent media head Scott Moore, who used to work at Microsoft.

MediaMemo asked: What happens when one of the world’s richest men lets loose a swarm (a small swarm) of mosquitoes at a high-end conference? Nothing too exciting, really, but when you consider that the stunt was the publicity-generating part of Bill Gates’s talk at TED, which was a discussion of malaria and some of the problems the Bill and Melinda Gates Foundation is facing head-on, it gets pretty compelling. Kindle 2.0, the new generation of the device dubbed the “iPod of the book world” will be unveiled Monday at a New York press event, but how many of the devices have been sold thus far? Amazon’s (AMZN) not telling, but Citigroup analyst Mark Mahaney estimates the number at 500,000–and believes that the Kindle will be a $1.2 billion business next year. Obviously, a lot will depend on Monday and the new device’s reception. MediaMemo also took some time out this week to wish Facebook a happy fifth birthday, and to stack its track record next to Google’s at the same age, with interesting results. Even the pros are getting hit hard these days–in its quarterly earnings report this week, News Corp. (NWS) missed its estimates, recorded an $8.4 billion write-off and lowered its guidance. CEO Rupert Murdoch admitted that the downturn is worse than he thought. He also admitted that he spent $2.8 billion too much for Dow Jones. (News Corp. is the owner of Dow Jones and this Web site.)

Digital Daily followed the trial of four Google executives this week on criminal charges of defamation and breach of privacy after a much-publicized two-year investigation. Google (GOOG) insists the charges are unwarranted and “akin to prosecuting mail service employees for hate speech letters sent in the post.” Clearly, the ultimate outcome will have a huge impact on the future of a free, open Internet. MySpace said this week that it has identified and ousted 90,000 registered sex offenders–and those are just the ones brilliant enough to use their real names. There’s no way of knowing how many are actually using the service or how to prevent them from re-registering once they’re deleted. A free an open Internet, indeed. DD also pondered the future (or lack thereof) of the Motorola (MOT) handset division. Co-CEO Sanjay Jha says the company is committed to making the business work, but its products are looking boring and outdated, and a turnaround would be prohibitively expensive to execute. In the words of one analyst, the company’s problems are “gruesome.” On the other end of the spectrum, Microsoft continues to vehemently deny reports that it’ll be producing its own smartphone. In a report this week, analysts from Broadpoint.AmTech speculated that the device could be uncrated later this month at the Mobile World Congress in Barcelona. Meanwhile, it’s been up in the air for two years whether or not iPhones will ever be uncrated in historic Georgetown. Apple (AAPL) has been around the table a few times now with preservationists wary of the architectural impact of an Apple store, no matter how much the business traffic is needed in the neighborhood. Looks like perseverance may have finally paid off, though–Georgetown’s Apple store could open later this year.

In Personal Technology this week, Walt Mossberg took a look at a program called Foxmarks, which sets out to synchronize bookmarks among all of your browsers and all of your machines. Sound a little too handy to actually work well? Walt found it does a pretty good job, with a few caveats. In Mossberg’s Mailbox, Walt responds to readers who want to know more about doing “techie” maintenance on their PCs to keep them running well, whether or not to buy a 15-inch MacBook Pro, and options for email within Windows 7, which won’t ship with a built-in email program. In the Mossberg Solution, Katherine Boehret tests Google Latitude, an opt-in program that lets users track one another’s movements on their smartphones using GPS, Wi-Fi, and cell towers. Kind of like Gawker Stalker, only with permission and without Lindsay Lohan (unless you happen to be Lindsay Lohan).

Last but not least, Silicon Valley lost one of its own this week. The widely admired and much loved Mike Homer, whose rare, severe illness was a rallying point for many over the past months, passed away last weekend and was laid to rest on Thursday.

More next week.

In an interesting and innovative move compared to what has typically been less-than-hip online programming over the years, Microsoft’s MSN service is debuting a slick new celebrity site called Wonderwall today–created, designed and produced by a Hollywood company run by former Yahoo media chief and well-known television exec Lloyd Braun.

Using an unusual horizontal design with a scrolling “wall,” a plethora of pictures and a deeply visual sensibility, it’s definitely a laudable risk for Microsoft as the company seeks to continue to push itself into the online content business, despite a lackluster record.

The site, by BermanBraun Interactive, which is being launched right before the Grammy Awards, will aggregate content from a variety of partners, but also use a small staff of editors to differentiate it and give it “voice.” BermanBraun will operate Wonderwall for MSN.

Last week, in yet another sign that it is upping the content ante at MSN, Microsoft hired Yahoo’s most recent media head Scott Moore, who used to work at Microsoft (MSFT).

“We are investing more than ever in content,” said MSN GM Rob Bennett. “With Wonderwall, we are creating an offering to attract and retain new audiences, using content that is already at the core of MSN.”

But unlike other MSN sites, there is more subtle MSN branding on Wonderwall, although Microsoft’s search will be an important part of the site. MSN will promote Wonderwall across the service and will also give it an external marketing push.

To make money, Microsoft and BermanBraun are jointly selling the advertising for Wonderwall, which also has a partnership with MediaVest, to bring major brands to the site.

One obstacle is the huge amount of competition in the Internet space, from AOL-backed TMZ to Perez Hilton to omg! from Yahoo (YHOO), which is currently the most-trafficked celebrity site (and, ironically, was pushed through Yahoo by Braun and Moore).

But the interest in this pop culture category is obvious–celeb-focused online programming has grown strongly.

Celeb news-obsessed BoomTown accounts for much of that traffic (How much do we love following the hijinks of Britney? Much!).

So, I hightailed it to the Santa Monica offices of BermanBraun yesterday to have a look-see at Wonderwall and do some video interviews.

Overall, I was struck by the site’s arresting visual design, particularly the easily interactive wall, which has what I can only call an “iPhone” feel combined with a flipping-through-a-magazine tone (see above; click on image to make it larger).

With more touchscreen technology moving to personal computers, you can easily see Wonderwall being manipulated by hand.

And it makes great use of linking out, another plus, without excessively pointing to only Microsoft sites.

One problem: No true ability for users to interact on Wonderwall, via comments or other social-networking tools, which Braun said are coming soon, along with videos being able to be played in the main wall.

But overall, it raises the stakes in the celeb market and gives users a new interface without straying too far.

Here’s my video interview with Braun, along with another below it with his partner, former Fox and Paramount exec Gail Berman, and also Wonderwall’s top creators–all talking about Wonderwall.

(And, as an added bonus at the bottom, Oasis singing their hit, “Wonderwall.”)

Lloyd Braun:

Gail Berman and Wonderwall Staff:

Oasis:

In an unusual homecoming and odd job switcheroo between two Internet execs, former Yahoo media head Scott Moore is returning to Microsoft to lead its U.S. content efforts, according to many sources both inside and outside the company.

Moore (pictured here) will become U.S. executive producer, responsible for leading the content and programming strategy for the MSN online service. He will return to Microsoft’s Seattle area HQ in mid-March and report to Greg Nelson, GM of the MSN Global Media Group.

Microsoft (MSFT) declined comment about Moore’s new job, but sources said news of the appointment will be officially announced Monday.

But a memo about Moore’s new gig went out internally to some of the MSN staff earlier today, sources said. In fact, the return of Moore had been widely rumored inside Microsoft, even though there were several other internal and external candidates considered–including another former Yahoo, one source said–for the job.

Moore left Yahoo (YHOO), which was first reported here, last November due to unhappiness over the turmoil at the company and also to pursue a start-up idea he had about a local news site.

Moore even talked about the idea on the record with BoomTown (see video below), just as he was leaving Yahoo’s Santa Monica-based Media Group. Since he left Yahoo for good in December, Moore has been working on his start-up plans and took time off to go on a safari trip to Africa.

(Here’s a link to Moore’s Africa photos, in fact, which are quite good.)

But with the economic downturn making it harder for new start-ups to get funded on good terms, a desire to be back in the Seattle area, where his children live, and a new effort by MSN to compete better in the content business with top-ranked Yahoo, sources said Moore felt the powerful job at Microsoft would be a terrific challenge.

In what is a case of Web exec musical chairs, Moore had previously been replaced at Yahoo–in a rushed appointment–by Jeff Dossett. Dossett came to Yahoo from, wait for it, Microsoft, where he had held the job Moore is now taking.

In that move, also first reported here, Dossett was given a different title at Yahoo than Moore, as SVP of the U.S. Audience Group (Moore was SVP of the Media Group at Yahoo).

When he first started talking to Yahoo, Dossett (pictured here) was actually up for a job to run business development for Yahoo. But Moore’s sudden decision to leave had his boss, Yahoo’s EVP of U.S., Hilary Schneider, scrambling to fill the post. Dossett’s experience at MSN made him the obvious choice.

Now Moore’s appointment puts the pair in head-to-head competitive positions in the online content business, a clash that has been consistently won by Moore, when he had Dossett’s job at Yahoo and Dossett had Moore’s job at MSN.

Moore should also be comfortable at Microsoft and move into his job more easily. Previous to coming to Yahoo in mid-2005, he was president of MSNBC.com and publisher of Slate.com. He had worked at Microsoft for a decade.

Moore will oversee Microsoft’s involvement in the MSNBC.com joint venture again, along with all of Microsoft’s domestic content programming, which makes up a bulk of its efforts in the area.

And with Moore back on board, how MSN will better compete with the content juggernaut Yahoo is–due to Moore’s efforts, in part, and one of the troubled company’s stronger units–will be interesting.

That’s because Yahoo’s news, finance, sports and other properties typically rank as No. 1 online by far.

Time Warner (TWX) online unit AOL has also tried recently to improve its content offerings and has gotten some traction. It recently upped the ante with its new MediaGlow online studio effort of niche blog sites.

At the very back of this pack, Microsoft has made innumerable efforts in the content space over the years, mostly unsuccessful–Underwire!, Mungo Park!–and has settled more into the aggregation model.

But it still has a lot of interesting original content efforts under way, such as an unnamed celebrity-focused site property it is reportedly launching within the next week with former Yahoo media exec–and Moore’s former boss–Lloyd Braun.

Ironically, Moore launched a Yahoo celebrity site, omg!, initially pushed by Braun when he was at Yahoo, which has been successful.

Here is the video interview I did with Moore at his Yahoo going-away party about his future plans. Below that is another one I did when he was czar of Yahoo content, in which he talked extensively about the future of content on the Web.

There it was again–like the gnarly ghost of Christmas past–in the Los Angeles Times this week. But this time Lloyd Braun wasn’t going to take it anymore.

The object of his ire was dropped right in the middle of a blog post on how Yahoo was “reversing its Hollywoodification” with–egads–no more reserved parking spaces for top execs at its Santa Monica offices.

The Times said the new rule “signals a stark new era of austerity that overshadows the elimination of the last vestiges of the corporate culture war spurred by the hiring of former Warner Bros. chieftain Terry Semel and ABC’s Braun.”

Knock, knock, L.A. Times! Because that war is actually still raging at Yahoo (YHOO)–although the parking spaces carry little symbolic weight anymore at the company, which has much bigger problems to solve these days.

But even more unusually, the piece also abruptly dropped in old allegations the newspaper had included in a devastating story in November of 2005 by Chris Gaither about Braun and Yahoo’s media push at the time, titled “Can Yahoo Sign on to Hollywood?”

It was noted in the post as an aside:

(Braun also converted a conference room with a patio into his personal office and requested a corporate jet for the Santa Monica office. Oh, and there was the time he reportedly took an umbrella without paying for it from the Yahoo store on a rainy day and then asked the clerk who requested payment: ‘Do you know who I am?’ He later explained that he just wanted to make sure the clerk knew he was good for it. But we digress).”

Digress is right, because it turns out, the bulk of those juicy anecdotes about him in the new blog post and the old story actually don’t check out, after extensive reporting BoomTown had done previously and this week too, talking to a range of key execs at the company at the time.

Thus, when I saw the Times post this week, I contacted Braun (pictured here) and sent him the link. He quickly responded via email:

“I am not an umbrella thief–and I promise I never will be. I never once asked for a corporate jet. I was and continue to be a big fan of Southwest Airlines. And I certainly never engaged in any kind of office construction while at Yahoo.”

Braun–who now runs his own online and traditional media production company called BermanBraun in L.A. with Gail Berman–also said he had immediately asked the Times for a correction of the blog post, as he says he did three years ago when the original story ran.

Times Business editor Sallie Hofmeister, whom I also contacted (but who was not in charge at the time of the 2005 piece), said the Times was looking into the situation and wrote in an email to me:

“The story we published in 2005 was a reflection of the sentiments within Yahoo at the time. We worked very closely with Yahoo on the story, so the company’s top management had every opportunity to challenge our reporting. After the story ran three years ago, neither Yahoo nor Lloyd requested a correction and no correction ran. What you hear from people today probably would be different than what they would have said three years ago. Lloyd is long gone and so are the tensions of entertainment’s invasion at Yahoo. People’s recollections also change. Enemies then are friends today.

“As for blog post, we strive for accuracy and when people in our stories take issue with our coverage, we take them very seriously.”

So do I.

Thus, it is long past time to set the record straight and put to bed a fable of raging Hollywood high-handedness–with too-good-to-be-true-because-they’re-not, clichéd lines like, “Do you know who I am?” and filched umbrellas.

Why bother looking into it at all these years hence? Well, for one, it is just not fair for inaccuracies about Braun to remain, complete with a never-die life on the Web and a nagging perception that he was some digital version of Ari Gold from “Entourage.”

But, more importantly, the struggles at Yahoo back then have everything to do with what is going on now. And that is a company culture at war with itself about what it is and should be.

I have, in fact, been collecting string on Braun’s alleged escapades for years, mostly from Yahoos. I was fascinated since, like a game of telephone gone awry, those who worked with Braun closely and would know, told a different story from some of those in Sunnyvale, who might not.

That did not stop many there from telling various stories about Braun, almost none of which were accurate when I actually followed up.

Because of that, I started to look very closely at Yahoo to figure out why such fallacies went unchecked about him and later, about an ever longer string of departed execs.

But let’s start with what was clearly true in that 2005 piece, which began with another parking kerfuffle and a hissy-fit email from a new Yahoo exec, recruited from Fox, threatening to tow “someone” who parked in his assigned place.

It was a classic opening, trying to show in an anecdote the clash that was going on at Yahoo at the time.

And it was an apt one. There was indeed a lot of resistance to the decision by then-CEO Terry Semel, who was pushing Yahoo as a media company.

To do it, Semel hired Braun–a highly successful Hollywood figure (think being key to initiating and developing “Lost,” “Desperate Housewives” and “Grey’s Anatomy,” and you have a good idea of his stature)–to pull it off at a big new and splashy office complex in Santa Monica.

Thus, the lines were drawn by some at Yahoo HQ, where execs mostly work in cubicles and where a we’re-all-equal ethos prevailed among some of the techie old guard especially, at least in their skewed perceptions of themselves.

(Guess what? They do work in cubicles, but some Yahoos in Sunnyvale are more equal than others.)

Still, back in 2005, it was easy to make an ebullient, brash and sometimes abrasive entertainment exec like Braun into a tidy little caricature and mock the idea of his task.

And who was hired to make new and innovative kinds of online programming hits, much as Braun had on television so well.

There is no doubt there were tensions. The Times story began focusing on the level of distrust, which in my estimation–I also was watching Yahoo closely at the time–was mostly from the tech side and mostly without interface with those in Los Angeles.

But, as Gaither noted correctly:

Yahoo’s ability to blend the cultures, milking each for what it does best, will be key to reaching its ultimate goal: to build on its success as the most visited destination on the Web by leveraging the links between content and the technology used to create and deliver it.”

Unfortunately, the Times story then launched into a series of really broad clichés about Hollywood versus Silicon Valley, using the typical “conspicuously expensive car” in LaLaLand versus the “energy-saving” one in Geekville.

(Again, my experience is that the tech folks always seem to have Porsches too, much as many Hollywood slickies drive Prius hybrids.)

The story went on to talk about the arrival of Semel, whom Gaither reported was seen as not as Hollywood at first as was expected by some wary Yahoos. He then got to Braun, who apparently was.

That’s where the problems come in, first by making it seem as if Braun was responsible for the pricey lease for the new Santa Monica offices at the Colorado Center.

Actually, according to top execs like Dan Rosensweig–Braun’s direct boss–as well as sources close to Semel and many other execs involved, that facility’s planning was directed largely from Sunnyvale, as most such projects are.

Braun did give an interview when the lease was announced, but was in no way the driver of the building’s renovation, which was actually being done by the company Yahoo rented the space from.

Next, came an assertion that the execs in Santa Monica got “Hollywood-style perks,” pointing out that Braun had “converted a conference room with a patio into his personal office. He also reserved a parking space close to the elevators for his car.”

Well, Braun did have a reserved space, which was no real crime to my mind, and which was actually not particularly close to the elevators.

How do I know? I have walked Braun to his car in the parking garage, which is about as nonluxurious as it gets, as opposed to Yahoo HQ, which used valets.

More importantly, Braun converted no office space and was assigned a temporary office elsewhere during the renovation, according to a panoply of execs and workers at Yahoo, such as Rosensweig, Jeff Weiner, Scott Moore and sources close to Semel.

It was a good office–after all, Braun was the boss of the Media Group.

And while both offices did have patios, the large outdoor spaces were also kind of dingy, especially compared to the manicured lawns of Yahoo HQ. And the patios were accessible to many parts of the floors, as I noticed on my many visits.

(As an added note, after the renovations were complete, Braun’s official office was not by any means fancy and was very standard in its drone-like look.)

The worst part was the next line: “Yahoo’s top executives drew the line when Braun asked for a corporate jet,” which was followed by a stunning quote by Semel.

It read:

The reaction was basically, ‘No,’ said Semel, who does not ask Yahoo to foot the bill when he flies to Northern California in his own private plane. ‘A lot of the more traditional media companies are doing their best to scale back on some of the perks and put the investment into the products and the consumers.’”

But, top Yahoo execs have uniformly told me over the years and this week that such a request from Braun never happened.

What was actually occurring, again directed by Yahoo’s Sunnyvale HQ, was an analysis about whether the company should start a charter air shuttle for the many engineers in its Burbank facility, working on its then-Panama search project, and employees at its growing Santa Monica facility.

There could be up to 20 workers going back and forth north daily, and the Southwest Airline bills were getting high.

Thus, a look-see to determine if an L.A.-Sunnyvale shuttle for everyone was needed. But it was conceived as a less-than-high-end plane, essentially a puddle-jumper that left at 7 a.m. and came back at 7 p.m.

Braun thought it was a good idea to examine and told Rosensweig, who was in charge of looking at the charter idea. But Braun was not part of the consideration of it.

Ultimately, Semel nixed the idea as too costly, and Braun did not object.

Why Semel seemed to tell Gaither that is curious. But a person familiar with Semel’s thinking said he was only referring to an company shuttle for everyone and not a corporate jet just for Braun and his minions, as the story opaquely implied.

“The discussions over the charter had nothing to do with Lloyd,” said the person. “And he did not ever ask for a corporate jet ever.”

Rosensweig, Weiner and several other top execs at the highest echelons–many of whom did not get along with Braun–support this version, on the record.

“I never saw anything out of the ordinary or Lloyd playing by Hollywood standards,” said Vince Broady, who worked for Braun, after being brought to Yahoo by Rosensweig. “I mean, Lloyd is a colorful character, which makes people notice him, but the idea that he was more difficult than anyone else was overblown.”

There is no doubt why Braun would attract attention–he is very noticeable and had a long and bruising career in Hollywood, with lots of stories of his dishing it out. He’s a genuine character, indeed, but not really that unusual compared to others in the entertainment sector, except perhaps to some at Yahoo.

Thus, I have no doubt, though, that such a story went around that Braun did desire a jet of his own and that Gaither heard it told, just like this most incredible of anecdotes in the piece.

The infamous umbrella!

Here is what Gaither wrote:

Braun’s long career in Hollywood has led to some awkward moments and misunderstandings inside Yahoo–and provided gossipy fodder for critics eager to cast him as a technically illiterate egomaniac.

According to one widely recounted tale, on a rainy day Braun took an umbrella from the Yahoo merchandise store without paying for it. Then, when asked for payment, he reportedly berated the store clerk, asking, ‘Do you know who I am?’ In fact, Braun’s representatives say, it was an innocent question to ensure that the clerk knew he was good for the money.

A Yahoo spokeswoman said the umbrella ultimately ended up in a pool of umbrellas available to all employees.”

I could not, obviously, find the clerk to whom Braun allegedly said this. But I can say that there are free baskets of umbrellas for staffers all over Yahoo, and top execs like Braun can also buy them at company stores and just use their names as part of an account system.

And while I have no proof, the use of such a clearly hoary Hollywood phrase–“Do you know who I am?”–seems like it was simply made up to me by critics bent on making it a much better story than it was.

To be fair, Gaither does portray it as a “tale” that was circulating around Yahoo. But that probably should have alerted him that it was a very tall one indeed and not very reliable–a kind of digital urban legend rather than an actual event.

That’s why I would not have used it, without a much more explicit explanation that it was more an example of the tensions at Yahoo between the media and tech units than it was reality.

Perhaps worst of all was the impact of the piece, which forever cemented Braun’s reputation as a Hollywood-gone-wild exec.

Most interesting was that, according to both the Times and Yahoo sources, the company complained about the tone of the piece, but never asked for a correction.

Why? Sources familiar with Semel’s thinking said that he and PR execs thought it would cause more attention to focus on Braun, if they contested the piece, and it was better to just let it go.

It was probably a bad decision, given it was in the L.A. Times, which had a lot of credibility.

And, indeed, the high-profile Braun was later slapped silly by Valleywag, as the Times piece kept circulating within Yahoo. By the next year, Braun became one of the gossip blog’s first targets.

Valley–which knows a good character when it sees one and likes to poke and prod many, many such Silicon Valley-linked figures in mocking glee (with varying levels of accuracy)–even had a countdown to when Braun would be fired.

Because of this kind of thing, Braun said he tried to get Gaither to take another look at the stories about him, and met with Times editors to get them to make corrections.

The Times said Braun never formally asked for a correction and instead just complained about the story. To me, that is the same thing, but I am not privy to the Times’s internal corrections process, and Hofmeister declined to elaborate.

In any case, looking back, Braun told me this week the lack of support from Semel and Yahoo to fight the story was hugely disappointing and was the moment he realized he felt he would probably have to leave Yahoo.

Eventually, the feeling was mutual, as tensions escalated even further after the article appeared.

Braun–who had a particularly rocky relationship with Rosensweig, which is now patched up–was eventually pushed out in late 2006, after Yahoo moved away from its media focus to drill down in search.

That turned out to be a bad move, as Yahoo got its head handed to it by Google in search efforts. And it has since seriously been in tailspin in the wake of a series of jarring events.

Those include: the sudden departure of Semel mid-2007; the appointment of Co-Founder Jerry Yang as CEO; a painful public struggle to redefine Yahoo; a botched takeover fight with Microsoft (MSFT); a messy proxy battle with Carl Icahn; a collapsed search partnership with Google (GOOG); a decimated stock price; a scarily declining graphical advertising market; wrenching layoffs; and the stepping down of Yang and the thus-far uncompleted search for a new CEO.

You get the idea.

More importantly, with the cutting off of its more vaunted media aspirations, Yahoo closed the door on possible innovative directions that could have made it more competitive now, as it continues to struggle to define itself.

One of Yahoo’s great strengths–and it still is–has been its content properties, which are the most popular, by and large, on the Web. Instead, stinging from the article and the fallout of it, the company retreated from pushing forward aggressively in media.

Had it not, I can imagine a host of stuff it might have done.

And, ironically, Braun is now working on an online project with Microsoft, a celebrity site that will debut early next year and use a lots of the concepts he worked on at Yahoo.

In the 2005 piece, Gaither quoted Yahoo exec Jeff Weiner as saying, in a Yin-Yang concept: “We’re often asked, “Is Yahoo a media company or a tech company?”

Sadly, that question never got resolved then and still has not today.

It almost makes one nostalgic for stolen umbrellas, controversial parking places, questionable patios and wrangling over corporate jets.

Almost.

Aside from upcoming layoffs, it seemed as if Yahoo had stanched the flow of major execs from the company.

Not so, it seems, as several sources with knowledge of the situation confirm that the two top execs of the troubled Internet company’s media unit will be announcing their departures later this week.

SVP Scott Moore (pictured here), who runs Yahoo’s media group out of its offices in Santa Monica, Calif., and also Alan Warms, who came to Yahoo from its BuzzTracker acquisition last year and is head of Yahoo News, Tech and Education, will both be leaving.

It is not clear what their future plans are.

Moore declined to comment when reached by phone, and Warms did not return an email requesting comment. Yahoo also did not yet respond to a request for comment.

In any case, the departures are troublesome as Yahoo (YHOO) tries to right itself, especially since its content operations are among its bright spots. Yahoo’s various sites are some of the largest on the Web, such as its news, finance and sports online franchises.

Overall, the media properties hit more than 70 million unique visitors monthly.

Losing top execs is also a problem as Yahoo also attempts to complete a merger with Time Warner (TWX) online unit AOL. Talks between the companies have been ongoing for months.

With high-ranking Yahoo execs like Moore gone, it will likely fall to AOL execs, such as its content head Bill Wilson, who will be more likely to head integration efforts, if a deal is ever struck.

And while no replacement for Moore has been selected, insiders note that Yahoo Sports head James Pitaro, who has reportedly gotten a number of outside offers, would be a likely internal candidate for the job.

Then again, Yahoo’s management might reorganize yet again, creating another new set-up for its content operations or add new execs.

[Update: Later today, Yahoo named former Microsoft digital exec Jeff Dossett, who was the lead for audience, content and programming strategy and execution in the U.S., as its new SVP for Audience. I had reported last month that Dossett was being considered for a big job at Yahoo, although Microsoft denied it at the time.]

Rumors of Moore’s departure have been swirling for months, especially recently outside the company. BoomTown previously reported he was looking at starting a new venture.

I did a video interview in July (see below) with Moore about his plans for the Media Group, where he has worked since he came to Yahoo in mid-2005 from a series of major posts at Microsoft (MSFT).

At Microsoft, he ran its various content operations for many years. Moore came to Yahoo to work for Lloyd Braun, the Hollywood exec who left Yahoo under yet another swirl of controversy.

His portfolio grew when Braun’s other No. 2–Vince Broady–was re-orged out of his job last December, giving Moore purview over the whole Media Group.

In Yahoo’s latest reorganization, Moore has been reporting to U.S. head Hilary Schneider, in a move to better align its media and advertising sales.

Moore and his staff have tried a range of large and small experiments in original content, some of which have worked and some of which have not.

Interestingly, Yahoo has not abandoned its original content effort at all, doing newsy programming like political debates and even an online interview with President George Bush.

But the company seemed to be settling into a pattern best exemplified by its recently launched Tech Ticker, which is a combination of Yahoo’s own inexpensively produced but well done content and videos and that of outside contributors (AllThingsD.com content is featured there, for example).

More to come, but here is the interview with Moore from this summer:

While the Media unit has had its ups and downs over the years about exactly what it should be–such as the controversial Hollywood-esque Lloyd Braun strategy–one thing that Yahoo (YHOO) has consistently done well is to aggregate and distribute its own and others’ content.

So well, in fact, that May’s comScore monthly unique visitor numbers show that sites like Yahoo News (38.8 million), Sports (22.2 million), Finance (18.5 million), Entertainment News (12.5 million), TV (15.3 million) and Games (18.3 million) are the No. 1 destinations for their genres on the Web.

Overall, the media properties hit 70 million uniques monthly.

That’s probably a plus these days, given all the turmoil around the company in the wake of the Microsoft (MSFT) takeover bid and the ensuing proxy fight mess–coming to an annual meeting near Santa Clara soon!–with activist investor Carl Icahn.

The whole mess has thrown Yahoo’s future into question, demoralized employees and given the company a decidedly sad-sack image, in spite of all the powerful assets it has like its many media properties.

Moore (pictured here) came to Yahoo to work for Braun in mid-2005, after toiling for many years at–wait for it–Microsoft, running MSNBC, Slate and MSN.

(I met him back when he was at Microsoft, in fact, where he tended more to suits and ties and geeky glasses–and I have the picture to prove it–rather than his current hipster SoCal look.)

His portfolio grew when Braun’s other No. 2–Vince Broady–was re-orged out of his job last December, giving Moore purview over the whole Media Group.

In Yahoo’s latest reorganization, Moore now reports to U.S. head Hilary Schneider, in a move to better align its media and advertising sales.

Moore and his staff have tried a range of large and small experiments in original content, some of which have worked and some of which have not.

Interestingly, Yahoo has not abandoned its original content effort at all, doing newsy programming like political debates and even an online interview with President George Bush.

But the company seems to be settling into a pattern best exemplified by its recently launched Tech Ticker, which is a combination of Yahoo’s own inexpensively produced but well-done content and videos and that of outside contributors (AllThingsD content is featured there, for example).

So, as part of our exciting new “Meet the Yahoos: Survivors Edition” series, here’s a video where I chat with Moore about all that, ad monetization and more:

Lloyd Braun–the former Hollywood super-programmer turned Yahoo entertainment czar turned Hollywood and online programmer–has signed a multimillion-dollar deal to make an original destination site for Microsoft’s MSN portal, aimed at aggregating celebrity, entertainment and pop culture news, according to several sources.

With the still-unnamed site, MSN plants its own Paris Hilton flag in a very crowded field, which has numerous competitors such as People.com, PerezHilton.com, AOL’s TMZ.com, PopSugar.com and Yahoo’s OMG.

It is also interesting that Microsoft (MSFT), which has focused its efforts of late on its technology, especially related to online advertising and search, is making another foray into the content arena via MSN, where it has had mixed results in the past.

Ironically, Braun (pictured here) was the exec who green-lighted the OMG site, which aggregates celebrity-oriented content and has since become a big traffic success for Yahoo (YHOO).

The deal, which will be announced tomorrow, will be a joint venture with Microsoft and BermanBraun Media–an independent multimedia production company headed by Braun and also former Hollywood studio exec Gail Berman.

Braun left Yahoo under a cloud, after clashing with his superiors who had brought him in to make new online programming, as he is doing now.

But that has not stopped Yahoo from making its own deal with Braun, sources said, a much smaller effort to produce a daily “Lunacy Report.” The deal has not yet been announced, although it has been signed.

That online project will be focused on “weird news,” which is an amazingly huge driver of page views on Yahoo’s news site–almost 7%–featuring stories like one today about a man who was jailed for faking his own death.

The video-heavy “Lunacy Report” will have Vance DeGeneres, who is the executive producer of the HardlyNews online parody site and also brother of Ellen DeGeneres, as its host.

But the MSN deal is a much larger one, requiring BermanBraun to staff up, and it already has many former Yahoo employees involved in the project, sources said.

That’s because, akin to a regular Hollywood production studio, BermanBraun will be building both the front and back end using Microsoft technology. Both BermanBraun and Microsoft will be selling ads for the site.

But it is Microsoft that will be footing much of the multimillion budget for the site–to launch in early 2009–and will own it outright. It will get support on the main MSN page and also throughout the service.

Advertisers briefed on the project said the site is aiming for higher integration of branding than just simple display ads, looking for innovative ways in which marketing messages are integrated into content.

And it will be designed to be much more interactive to spur more engagement. In fact, the new site does not look like a typical MSN site, said sources who have seen it, with a highly stylized design and a wide range of applications.

Braun was reportedly pitching advertisers last week in New York, who said he described it as focused on the wider pop culture scene and not just on celebrities, which is an area of much user interest online.

It is not clear if PepsiCo (PEP) will be a major advertiser yet. BermanBraun announced a deal last July with Pepsi to support original entertainment content developed for online platforms.

The entertainment and marketing arm of the beverage giant has a “first-look” at BermanBraun online projects and has a chance to fund and sponsor original online content it produces.

What will be most interesting will be what happens to the new MSN site and OMG, if Microsoft and Yahoo do manage to strike a merger deal at some point, despite a failure to do so thus far.

But that’s just the feeling I got when I read the always sharp Joseph Menn of the Los Angeles Times, who penned an interesting piece earlier this week about writers in Hollywood turning to venture capitalists as the strike drags on.

Wrote Menn: “At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.”

That includes meetings with Silicon Valley VCs like Jim Breyer of Accel Partners, whose investment in Facebook gives it insight into the creation of new audiences.

The hope for the–let’s just say it, shall we–unnatural pairing of tech VCs and Hollywood folks?

That the sour lemons being thrown between studios and writers–ironically over future Internet revenues–will actually yield delicious lemonade, spurring the creation of quality online programming using the Internet’s massive distribution system that could also make lots and lots of money.

“Could” is obviously the operative word here, because–as we have noted many times in this column–very little original content created on the Web has had any true payoff yet.

Um, well, none, actually. (Save porn, which is an almost perfect content format for the Web.)

To be fair, there have been promising signs.

Ex-Yahoo exec and Hollywood player Lloyd Braun struck a deal with PepsiCo to pay for and create online content.

MySpace has been backing a range of online-only shows made by Hollywood types (although none has shown strongly increasing popularity and even seem to display worrisome declines in viewership, despite the justified potential touted by creators).

Of course, there’s the high-profile Sequoia Capital-backed and Will Ferrell-fronted FunnyorDie.com, as well as MyDamnChannel.com, from former MTV executive Rob Barnett.

And Viacom agreed this summer to create a new online entertainment studio in a 50-50 split with the creators of the popular “South Park” TV program.

Finally, Creative Artists Agency, which is the biggest talent agency in Hollywood, is apparently working with Silicon Valley VC firm Draper Fisher Jurvetson to raise up to $200 million to invest in the digital entertainment sector, even as other such firms as UTA and William Morris are making similar moves.

While that is a very little amount of money considering the billions of dollars that slosh around Silicon Valley to fund things like dopey widgets and yet another movie-comparison site, it is still a start.

The presumable goal is that by creating and distributing content for the Web in a lower-cost way, many kinds of revenues could be garnered via everything from advertising to getting back investments by selling the online material to television and the movies.

That sounds like a plan, except for the fact that the current state of advertising innovation related to Web videos is quite nascent, even pre-fetal.

While a lot of companies are focusing on this and advertisers seem willing to move in the direction of more online ad spending, it will simply be a long time before these investments pay off.

Which is just not part of the no-risk-and-all-reward mentality of most players in Hollywood, who wouldn’t know a start-up unless it took their prime table at the Ivy.

In all seriousness, it seems unlikely that the high cost of production now in place in the entertainment industry would in any way lend itself to the critical need for that kind of massive shift in economics required to make online content pay off now.

Currently, studios still only grudgingly want to consider sharing ownership of content, and the talent seems even less willing to take the burden of risk required onto its shoulders.

Still, I admire all the efforts on the part of writers to not just strike, but strike out from their current comfort zone and move into the future, where online entertainment production and distribution seems obviously inevitable.

The problem is that it might take a longer while than those creators have patience for and they will prematurely abandon their efforts and return to propping up a system that is destined for, while not oblivion, then certain diminution.

So what’s needed–as in all marriages–is a crazy leap of faith, like this one from “Heroes” Peter Petrelli on NBC.

I am definitely no expert on this topic, except to say that the problem is that the delta between falling flat and succeeding is frighteningly close.

In other words, I Has No Idea what to do.

The video card is part of a recent deal the online video creators just inked with BermanBraun Media–an independent production company headed by Hollywood players Lloyd Braun and Gail Berman–to make personalized ads using JibJab’s comic head-cut digital short technology.

The videos, which users can create for free with an ad at the start from Diet Pepsi Max, is the first major initiative for BermanBraun’s online division using Pepsi-sponsored online content.

BermanBraun announced a deal last July with PepsiCo to support original entertainment content developed for online platforms.

You can see one with a 10-second pre-roll ad embedded here, as well as another one here called “Menorah Hora,” which stars Google’s Larry Page and Sergey Brin and Page’s soon-to-be wife Lucy Southworth (Happy wedding this weekend!), as well as YouTube’s Chad Hurley and Steve Chen.