Yahoo expands its newspaper alliance

SAN FRANCISCO — The publishers of more than 260 U.S. newspapers are hitching their online aspirations to Internet powerhouse Yahoo Inc. in an expanded partnership that underscores the battle lines being drawn as the media grapple for ad revenue shifting to the Web.

The alliance announced Monday builds upon a consortium announced nearly five months ago. Since then, the alliance has recruited five more companies, including McClatchy Co., the nation's third-largest newspaper publisher based on circulation. With the latest additions, the group now spans 264 newspapers in 44 states, up from 176 papers in 38 states in November.

In another significant change, the partnership's scope will now cover all major forms of online advertising instead of focusing primarily on help-wanted ads, as had been the case until now.

The newspapers also will funnel more of their stories through Yahoo's heavily trafficked news, finance and sports sections in an effort to lure more readers to their Web sites.

The financial terms and the length of the newspaper consortium's contract with Yahoo weren't disclosed. In a Monday conference call, newspaper executives predicted Yahoo will help their companies recoup some of their recent losses to the Internet. Without providing specifics, the newspaper executives indicated the anticipated revenue gains from the Yahoo partnership would become evident next year.

The amount spent on the Internet by local advertisers — a major source of newspaper revenue — is expected to total $12.4 billion in 2010, up from $3.4 billion last year.

Meanwhile, advertisers aren't spending as much on print. That trend became even more apparent last year when overall print advertising at newspapers fell 1.7 percent while online advertising increased 31.5 percent, according to the Newspaper Association of America, an industry group. Total newspaper revenue dipped by 0.3 percent.

Sacramento-based McClatchy joined the Yahoo alliance after turning down a chance to participate in another online advertising network being cobbled together by the nation's two largest newspaper publishers, Gannett Co. and Tribune Co. The three publishers are already joint owners of CareerBuilder, an online employment ad service that competes with Yahoo's HotJobs.

"McClatchy looked a various options and concluded this is the industry play," McClatchy Co. Chairman Gary Pruitt said during Monday's conference call. "This is where the momentum is. Our message to other newspaper players is, 'Come on board.'"