Will the Yahoo board stick with Levinsohn?

When CEO Scott Thompson was ushered out the door in May after a resume scandal, the new Yahoo board asked media lead Ross Levinsohn to serve as interim CEO while a new search committee tried to repair the damage of the last one. Levinsohn, who missed the cut when Thompson was hired, would be a serious candidate – but as part of a wider formal search.

In the weeks since, Levinsohn has made key hires,¬†including¬†former News Corp. colleague Michael Barrett as EVP and chief revenue officer, and has unwound Thompson’s version of what the company should look like. Each move lent credence to the idea that he would be CEO when the dust settles, but the search didn’t stop. A week before Yahoo’s(s yhoo) July 12th annual meeting, the drumbeats are getting louder – but that doesn’t mean Levinsohn is out…

Thursday, in an all-caps tweet, Reuters tried to sell the idea that the search committee is talking to Jon Miller, the chief digital officer at News Corp. (s nws)(s nwsa) For nearly any other media CEO job, that report would make sense – Miller is a usual suspect of the first degree. But Miller not only is a friend and former business partner of Levinsohn’s, he endorsed him for the job on stage at paidContent 2012 and explained why he thought the board was going in the right direction. That was a non-starter. (Reuters tried to tone it down later).

Hulu CEO Jason Kilar’s name also has also come up, tweeted by Reuters as being on the shortlist and mentioned by Kara Swisher as the only real contender other than Levinsohn. That wouldn’t be surprising. Kilar has been a natural on many CEO search committee lists and he has a reputation as someone who can lead a product-driven company. Kara paints it as a media vs. product decision for the board. Given her track record on Yahoo personnel moves, it can’t be ignored, but a source tells paidContent he’s not in the mix.

The flurry of reports makes sense in terms of timing. Yahoo’s annual meeting is next Thursday. It’s the first for the compromise board formed with Dan Loeb, the activist shareholder who outed Thompson’s lack of a computer science degree and lobbied hard for a board makeover. Thompson’s resume was the wedge he needed to get himself and two others on the board.

Does Yahoo need someone like Kilar, who would be starting from scratch, more than someone like Levinsohn who is well into the Yahoo learning curve after nearly two years and has a strong digital media background as well as relationships with the key content and advertising players?

The theory behind hiring Bartz and Thompson was they could hire people to lead media — Levinsohn was hired by Bartz — but their tech/business backgrounds made them better suited for the job. Bartz was CEO of AutoDesk; Thompson was president of eBay’s PayPal unit and brought a strong background in ecommerce.

Kilar’s allure, in addition to his product props, is that he has been running a media company for several years now. He gets a bonus making it through those years with a board full of strong-minded senior media execs from Hulu’s equity partners News Corp., Disney and, until the Comcast deal, NBC Universal. He made it through the loss of the initial backers inside those companies, too.

Some people I know have been waiting for him to jump ship for so long that every day could be “Jason is leaving” day. Eventually, they will be right. Others point out that Kilar started with a massive advantage in Hulu’s access to prime-time shows from three of the four majors and deals for distribution. He didn’t have to contend with an existing portal that has nearly 700 million global unique users and years of product.

Timing and momentum

However attractive other candidates might seem, the real decision here may well be one of timing and momentum. Choosing anyone from outside means Yahoo will be starting over. Again. Unless somehow the board hires someone willing to go by another exec’s blueprint, that’s at minimum a three-month process and longer for execution. A company with two CEOs and two interim CEOs in three-plus years can’t afford to start from scratch. (That’s one reason Rob Glaser is back as interim CEO at RealNetworks; as the founder and chairman who never really left, he can step right in).

Levinsohn has supporters on the board; maybe it’s just that no-one wants to be thought of as anything less than thorough at this point. Levinsohn, chosen by Rupert Murdoch to form Fox Interactive Media, made a splash by buying MySpace, IGN and other properties, then got dinged by some as not being an operator. The interim role gives the board a chance to see him operating at that level, a kind of audition, and to get a little distance between the recent unpleasantness and a full appointment. In the meantime, he’s been relatively quiet in public, although he led Yahoo’s delegation to Cannes, where he appeared on stage.

Sometimes interim equals caretaker. Sometimes, it can’t. CFO Tim Morse acted in that regard as interim CEO between Bartz and Thompson. When Levinsohn got the interim nod, I suggested it was a choice between business-as-usual and moving forward but that the board made a mistake by not going all the way:

Starting another CEO hunt at this point when you have a qualified in-house candidate just prolongs the drama and raises another series of questions when the focus should be on answers.

Wait too much longer to make a choice, send out too many vibes you might not stick with the leader you have, and you risk that momentum.

Sometimes “interim” is a solution; sometimes it’s the problem.