Papers, Yahoo expand ad ties

SAN FRANCISCO -- The publishers of more than 260 US 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 the ad revenue that is shifting to the Web.

The alliance disclosed yesterday builds upon a consortium revealed 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 on help-wanted ads .

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 websites.

The financial terms and the length of the contract weren't disclosed. In a conference call yesterday, newspaper executives predicted Yahoo would help their companies recoup some of their recent losses to the Internet. Without providing details, the 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 month when the Newspaper Association of America, an industry group, reported that print advertising at newspapers fell 1.7 percent last year while online advertising increased 31.5 percent. Total newspaper revenue dipped by 0.3 percent.

Sacramento-based McClatchy joined the Yahoo alliance after turning down a chance to participate in an online advertising network being cobbled together by the nation's two largest newspaper publishers, Gannett Co. and Tribune Co.

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

Both Gannett and Tribune have expressed serious reservations about the structure of the Yahoo partnership, concerns that they reiterated yesterday.

"We are open to talking with anyone but are interested in crafting the right solution, not the quickest solution," Gannett said in a statement.