A broad partnership between Internet giant Yahoo and 176 newspapers should open up new streams of revenue, analysts said, but shares ended flat Monday for the publicly traded companies involved in the deal.
Shares of Yahoo, based in Sunnyvale, Calif., shed 19 cents to close at $26.72 on a day when stock prices were mixed.
Investor reaction was tepid because few financial details were provided at Monday’s announcement – and much of the revenue will not show up, at the earliest, until sometime next year, said Edward Atorino, a media analyst with The Benchmark Company in New York.
“This (deal) does bring revenue in the door for 2007, 2008 and 2009, but Wall Street doesn’t care about looking beyond the next quarter,” he said.
William Dean Singleton, vice chairman and chief executive of Denver-based ap Inc., said Monday that the deal was not intended to satisfy Wall Street.
“It was done to cement our long-term future,” said Singleton, who was instrumental in brokering the deal with Yahoo. “Wall Street will become impressed when revenue shows up.”
Privately held MediaNews is the nation’s fourth-largest newspaper publisher and owns The Denver Post.
The Yahoo deal includes six other companies, four with publicly traded stock. Of those, Belo Corp. of Dallas lost 18 cents; Cincinnati-based E.W. Scripps Co., owner of the Rocky Mountain News, lost 38 cents; Lee Enterprises of Davenport, Iowa gained 4 cents; and Journal Register of Yardley, Pa., rose 3 cents.
Other privately held newspaper companies in the consortium are Cox Newspapers of Atlanta and Hearst Newspapers of New York.
The participating newspapers span 38 states and combine for 12 million in daily print circulation.
The Yahoo deal initially allows newspaper advertisers to post job listings in the newspapers, on the newspapers’ websites and on Yahoo’s HotJobs online classified listings. Next year, the newspapers will introduce a Yahoo-branded search on their websites. Revenue sharing by selling advertising around newspapers’ online content is also planned.
Terms of the multi-year deal were not disclosed.
Yahoo and the newspaper consortium are trying to capture a slice of the online local advertising market, which is expected to grow from $3.4 billion today to $12.4 billion by 2010, according to Bank of America.
Colby Atwood, president of Borrell Associates, a media consultancy, said Monday that some small companies don’t advertise with newspapers because the price is too high. But with newspapers expanding their content online – where advertising is often less expensive than print – new advertisers could emerge.
“It’s the final pot of gold at the end of the rainbow,” said Atwood, who is based in Seattle. “To make their online operations grow, newspapers need to go after advertisers that aren’t already in the paper.”
Singleton said less than 10 percent of metro-area businesses advertise in The Post or News.
“As we offer a lower cost, more direct content offering, it opens up the market to a whole bunch of new clients,” he said.
Advertising on newspaper websites increased by 33 percent, to $667 million, during the second quarter, compared with the corresponding quarter a year ago, according to the Newspaper Association of America.
That compares to a decline of 0.2 percent, to $11.7 billion, in total print advertising from the comparable quarter a year ago, according to the association.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
