Yahoo forms partnership with 176 papers

November 21, 2006|By MarketWatch

NEW YORK -- Yahoo Inc. announced a far-reaching partnership yesterday with 176 newspapers to sell ads, share content and deliver Internet search, graphical and classified advertising to consumers.

The multiyear, revenue-sharing deal is shaping up as a blow to Google Inc., which had been in the running for the partnership but eventually lost to Yahoo's broader reach, according to executives involved in the deal.

The arrangement between Yahoo and the consortium of seven U.S. newspaper chains is to start with Yahoo's creation of a jobs board, consisting of its HotJobs listings, that will appear on the newspapers' Web sites.

Next up is for Yahoo to provide Internet search, its own content and local applications to all the newspapers' sites. And the newspapers plan to share their content with Yahoo so it can show up within the company's various online features. This phase is likely to start in early 2007.

In a blow to Google, the agreement also raises the possibility that Yahoo will provide its ad-selling technology to the newspaper Web sites, plus provide such localized products as event listings and Yahoo Maps. That may happen as soon as the first quarter of 2007, said executives involved in the deal.

The newspapers involved, members of seven major chains, are responsible for more than 12 million copies sold daily in 38 states. The chains involved are Hearst, Scripps, Belo Corp., Cox Newspapers Inc., Register Co., Lee Enterprises Inc. and MediaNews Group.

For Yahoo, the deal means it can reach - in some cases exclusively - into local markets to reach the majority of U.S. businesses that don't yet advertise online. The deal also is expected to put the newspaper chains' locally focused stories and brands on a global stage, which has been very difficult to achieve in the past.

"We believe the local segment is largely untapped and provides significant opportunities to expand audience engagement and subsequently grow local advertising," Yahoo Chief Executive Terry Semel said during a conference call yesterday.

Dean Singleton, head of MediaNews Group, publisher of the Denver Post and San Jose Mercury News, called the arrangement a "transformational" deal.

The consortium considered a number of companies to join with in this regard, Singleton said on the conference call. It chose Yahoo over Google and others because Yahoo is the "most trafficked site in world and Yahoo is also a content company that understands content," he said.

"We were more impressed with what Yahoo can do for us," said another executive at Singleton's MediaNews Group. "Google's is a different kind of business model. Yahoo offers many more things to us than perhaps Google might have. Yahoo opens many doors we need to have opened."

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