Denver-based ap and six other major newspaper publishers announced a broad partnership today with Internet giant Yahoo Inc. that intends to deliver employment listings and other advertising, Internet search capabilities and news content throughout their respective websites.
The deal, spearheaded over the past 18 months by William Dean Singleton, Media News Group vice chairman and chief executive, is intended to help the newspaper industry find firmer footing in a media and advertising landscape upended by the Internet.
“Many people have asked this question: How will newspapers navigate in the growing, online future?” said Singleton during a conference call with reporters Sunday. “We believe this is the biggest answer we’ve found thus far.”
The multiyear deal includes seven newspaper companies: ap, which owns The Denver Post; Belo Corp. of Dallas; Cox Newspapers Inc. of Atlanta; Hearst Corp. of New York; Journal Register Co. of Yardley, Pa.; Lee Enterprises Inc. of Davenport, Iowa; and E.W. Scripps Co. of Cincinnati.
Together, 176 newspapers in 38 states with a combined daily circulation of 12 million will be involved in the consortium with Yahoo.
“We believe the local segment is largely untapped,” Yahoo chairman and CEO Terry Semel said in a statement.
Yahoo’s share price has fallen from $40 at the beginning of this year to $27 recently as it has struggled to redefine its mission versus online-advertising industry leader Google. Still, Yahoo is the most popular Internet site for U.S. users, attracting 131 million unique visitors each month.
Google recently announced a separate partnership with some newspapers. That deal allows 50 U.S. newspapers to take bids from advertisers for print editions using Google’s system, which auctions off ads for websites.
The market capitalization for Google, based in Mountain View, Calif., is $153 billion. That compares with a $37 billion market value for Yahoo, based in Sunnyvale, Calif.
Building on strengths
Financial terms of the newspaper-consortium deal with Yahoo were not disclosed, but Singleton described the partnership as a marriage that can adapt to online changes as needed.
“We are getting married to Yahoo in a sense,” Singleton said. “We don’t know what the Web is going to look like in three years. We just know we are going to do it with Yahoo.”
The deal seeks to harness the respective strengths of Yahoo and the newspapers without requiring substantial new expenses by either side. Yahoo provides the technology and national platform, while the newspapers provide local content and sales teams.
The partnership encompasses four key pieces:
Advertising. The use of Yahoo’s technology to sell online advertising for the newspapers’ websites.
Search. Incorporating a Yahoo-branded Internet search function on the newspapers’ websites.
Local. Offering Yahoo products such as local listings, maps and events on the newspapers’ websites.
Content. Using Yahoo’s network to distribute newspapers’ content – including archives – in search, news and other ways.
It will create “new channels for great journalism,” said George Irish, president of Hearst Newspapers, who was on Sunday’s conference call.
The partnership between the newspaper consortium and a major Web portal such as Yahoo was described as transformational by John Morton, a newspaper consultant based in Silver Spring, Md.
“Clearly, newspapers recognize they are in the midst of a transformation, and this (deal) is a way for them to be in a good position for whatever happens on the Internet,” he said. “This represents a change in attitude for newspapers.”
Other newspaper companies can join the consortium under existing terms, said Singleton.
Three major players were notably absent from the consortium: Tribune Co. of Chicago; Gannett Co. of McLean, Va.; and McClatchy Co. of Sacramento, Calif. Those three together own the CareerBuilder.com jobs website, which has a market share by revenue of 32 percent in North America, according to Morgan Stanley.
Monster.com has a market share of 31 percent, while Yahoo HotJobs has 9 percent.
Yahoo HotJobs plus the consortium of newspaper partners would significantly increase the group’s share of job listings in certain markets. In Atlanta, for instance, it would control 45 percent, compared with 24 percent for CareerBuilder, according to research firm Corzen Inc.
The newspaper consortium working with Yahoo said its first move will be to bolster Yahoo’s HotJobs online classified service, allowing advertisers to post job listings in newspapers, on newspaper websites and on the Yahoo network. That feature is already available at some Media News papers, including The Denver Post, and will soon be rolled out at other papers involved with the deal, including the Rocky Mountain News, owned by Scripps.
Eventually, there will be revenue opportunities selling other advertising around newspapers’ online content.
The deal with Yahoo is important for the long-term health of its newspaper partners, as the booming local online advertising market is expected to grow from an estimated $3.4 billion in this year to about $12.4 billion by 2010, according to an analysis by Bank of America.
Such growth has been an advertising boon to online companies such as Google and Yahoo. And it has come at the expense of newspapers, which have seen circulation numbers decline for more than two decades as readers and advertisers flock to the Internet and other forms of media for news and entertainment.
“We complement each other,” said Singleton. “We are pooling everything where we are strong, and Yahoo is pooling the things where they are strong, for the benefit of both.”
Singleton has made a big bet on newspapers in recent years, acquiring the San Jose Mercury News, the St. Paul Pioneer Press and the Detroit News – among others – often with partners.
The Yahoo partnership, he said, is a natural extension.
Growth happens online
Online operations today represent about 20 percent of Media News’ profits and essentially all of its revenue growth, Singleton said.
He said online job listings will provide the newspapers and Yahoo “the quickest revenue boost” of any portion of the deal.
He added that introducing a Yahoo-branded search function on the newspapers’ websites, which is expected to happen sometime next year, could eventually prove to be the most lucrative part of the pact.
The deal bolsters Yahoo’s move into local offerings and is expected to drive additional traffic to the company’s help-wanted site.
Yahoo executives said the deal could materially affect its annual revenue, which already tops $6 billion.
“(There are) all kinds of ways to grow the (revenue) pie bigger, and the result is opportunities for both sides,” Susan Decker, Yahoo’s executive vice president and chief financial officer, said during the conference call.
Added Singleton: “We aren’t really competitors of Yahoo in many places. This gets them into a market that they weren’t really in.”
The agreement features a complex, negotiated division of revenue derived from various sorts of advertisements, including search -based ads, online classified and others.
How the revenue will be divided between Yahoo and the newspapers wasn’t disclosed. But Singleton said the share of revenue depends, in part, on which company sold the ads, with the originating companies taking the largest revenue share.
Singleton said negotiating the deal involved outlining a new model for newspaper companies.
“We had to create the wheel,” he said.
The shift will require substantial training for the newspapers’ sales forces, as workers must become familiar with the new bells and whistles to be offered through Yahoo, said Eric Grilly, president of Denver- based Media News Group Interactive.
He added that the partnership will also enrich the local newspapers’ websites by adding Yahoo features such as maps, event listings and perhaps even e-mail access.
“It’s about our ability to utilize Yahoo’s tools and technology to create a far more compelling experience than today,” said Grilly. “Yahoo has some of the best social search tools out there, and I can see us incorporating that into our websites.”
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
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Key points of the deal
Use of Internet giant Yahoo to distribute content from seven newspaper companies, including Denver-based ap
Yahoo Internet search function, as well as maps and event listings on the 176 newspapers’ websites
Use of Yahoo’s technology to sell online advertising for the newspapers’ websites
