Former Warner Bros titan Terry Semel has surprised the entertainment world by being named the new chief executive and chairman of Yahoo!, the struggling Internet portal that has been frequently bandied as a merger candidate for virtually every Hollywood studio conglomerate in town.

He replaces Tim Koogle, who will stay at the once high-flying dot-com darling as the transitional vice chairman until August 1st. Both Yahoo!'s existing president and chief operating officer Jeff Mallett and its chief financial officer Susan Decker will stay on in their current jobs, reporting to Semel when he joins on May 1st.

Brooklyn-born Semel, now 57, first became involved in the film distribution business in 1965, before joining Warner Bros. In the course of 24 years, he worked his way up the executive ladder and eventually spearheaded Warner as co-chairman and co-CEO with Bob Daly. Ironically enough, their enduring partnership at the helm of the studio ended not long before the world's largest Internet empire, AOL, acquired Warner Bros along with the rest of the Time Warner colossus in a merger that finally kicked thisJanuary.

Semel, who also bought one million common Yahoo shares, certainly brings Wall Street credibility to Yahoo!, which has been stung by a dramatic year-long slump in its share-price. However, analysts immediately questioned whether a former studio boss, even with his staunch track-record in production and distribution, was the best choice for Yahoo!, whose problems stem not from content but from a drop in advertising revenues and widespread investor pessimism about the new economy.

Indeed, Semel's arrival will only fuel further speculation that Yahoo! is ready to align itselfwith an established media partner, rather than continue as a resolutely independent standalone. Last summer, Semel himself was cited as a possible candidate to head a new management team at Vivendi Universal, the same entertainment giant that has struck on-line music distribution deal with Yahoo! last week.

At the very least, Semel, who has been spent the past two years since leaving Warner Brosinvesting in Internet start-ups, can be expected to explore the potential for introducing other new entertainment delivery mechanisms as Yahoo! sets about refining its business model.

"Yahoo! is a company with incredible potential," Semel said in a statement on Tuesday."Yahoo!'s management team has rapidly and successfully built an industry-leading global company with the world's largest audience, a strong brand and a talented employee base, and I am proud to be leading the team that is going to enable Yahoo! to achieve its next level of growth."

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