McClatchy Newspapers Join Yahoo's Ad-Sharing Alliance

Yahoo has expanded its alliance with newspaper publishers, adding the McClatchy chain and four other companies to its recently formed online ad-sharing network, executives involved in the initiative said yesterday.

The effort now includes 12 publishing companies, representing 264 U.S. newspapers, that have agreed to collaborate with Yahoo in selling advertisements and will feature Yahoo's search engine on their online editions, locking out Internet rival Google. The newspapers will offer their advertisers a chance to buy space on Yahoo's Web site and will accept online display ads sold by Yahoo.

Executives on both sides declined to detail the financial terms of the deal. But Gary Pruitt, chief executive of McClatchy, described it as "a revenue-sharing agreement that is advantageous to both sides when cross-selling occurs."

The announcement represents Yahoo's answer to Google's string of highly publicized deals to partner with other Internet and media companies and enter the newspaper and broadcast advertising markets.

Yahoo's cooperation with the newspapers will be phased in during the next 20 months and eventually will include display advertising and ads targeted to Yahoo search results, according to the executives. This would be a substantial increase in the scope of cooperation, which began in the fall with newspaper companies agreeing to post their classified ads on Yahoo's HotJobs site. Yahoo would also increasingly feature articles and other content from the participating newspapers.

"The newspapers and Yahoo are almost perfectly complementary," Sue Decker, Yahoo's executive vice president for its advertiser and publisher group, said in a conference call with analysts and journalists.

While the newspapers could offer quality content and expertise in local advertising, Yahoo would provide national exposure for ads and increased revenue for the financially hard-pressed publishing industry, executives on both sides said. Yahoo is the country's most-visited Web site.

In adding five publishing companies, the consortium expanded its number of member newspapers by more than half and now boasts a Sunday circulation of more than 18.5 million newspapers and an online readership of 50 million unique visitors a month, according to Robert W. Decherd, chief executive of Belo, a founding member of the consortium and publisher of several newspapers, including the Dallas Morning News.

The newest participants are Calkins Media, Media General, Morris Communications and Paddock Publications, in addition to McClatchy. McClatchy owns 31 daily newspapers, including the Miami Herald.

McClatchy's decision to sign on to the Yahoo alliance is a setback for the newspaper industry's two largest companies, Gannett and Tribune, which have formed their own online advertising network. Together with McClatchy, the firms own CareerBuilder.com.

"McClatchy looked around, evaluated various options, determined that this is the industry play," Pruitt said during the conference call, explaining his company's decision to join the Yahoo camp. "This is where the momentum is."

Scott Kessler, an equity analyst with Standard & Poor's, said Yahoo's ad-sharing arrangement with the newspapers gained little public attention when it was unveiled. The announcement yesterday was a signal that "the partnership has been pretty successful so far," he said.