Papers are said to plan Yahoo deal expansion

A dozen companies that own about 250 daily newspapers are preparing to expand a ground-breaking partnership with Yahoo Inc. to share advertising and editorial content, several newspaper executives familiar with the situation said.

The companies, facing the flight of readers and advertisers, are working with Yahoo to give wider Internet play to their news reports, draw users to their Web pages and offer national advertisers a one-stop solution for multiple newspaper websites, the executives said.

The Yahoo-newspaper partnership began last November when seven news companies teamed up to sell employment ads through Yahoo’s classified job site, HotJobs. The consortium has been growing since and will be strengthened considerably by the addition of McClatchy Co., the nation’s second-largest publisher by circulation, the executives said.

The deal with Yahoo will allow the newspapers to gain access to Yahoo’s giant audience of hundreds of millions of daily viewers. For its part, the Web portal will be able to take advantage of the local news content and advertising sales forces of the newspapers.

One newspaper executive called McClatchy, owner of the Sacramento Bee and 30 other newspapers, “a huge swing vote in the industry” whose participation could encourage other companies to sign on with the Yahoo newspaper partnership. Right now, the consortium includes Cox Newspapers Inc., Hearst Communications Inc. and MediaNews Group Inc., which publishes the Daily News, the Pasadena Star-News and the Long Beach Press-Telegram.

An executive at another large newspaper company said: “Is this a cure-all to our ills? Probably not. But we are very excited about it. It’s a lot of revenue at a time we need it a lot.”

Both executives asked not to be named because they hadn’t been authorized to speak in advance of a formal announcement, which could come as early as Monday. Spokeswomen for both Yahoo and McClatchy declined to comment.

The agreement would come on the heels of a deal with Viacom Inc. in which Yahoo agreed to place so-called sponsored search and short text ads on 33 of the media company’s websites, including MTV, Comedy Central and Nickelodeon. Yahoo hopes to close the gap with Google Inc. in part through such cooperative agreements with “old media” companies.

The newspaper industry has been trying for more than a decade to form a single consortium to increase the reach of online advertising and content.

The most concerted effort came in the mid-1990s. A $25-million investment by nine newspaper companies in the New Century Network produced very little ad revenue, and the initiative was scuttled amid considerable squabbling.

The sense of urgency has grown considerably, with newspapers in 2006 losing revenue for the first time during a period of economic growth. The advertising losses seemed to accelerate for many companies in the first quarter of 2007.

The newspapers will use advertising service technology developed by Yahoo that will allow airlines, phone companies, investment firms and other large national advertisers to make a single buy to reach multiple markets.

The Internet portal has agreed to place prominent links -- including on section fronts for Yahoo Sports and Yahoo Finance -- that will drive readers back to local newspaper websites, one of the newspaper executives said.

The newspapers will, in turn, integrate Yahoo’s Web search engine into their Internet sites.

The consortium is notable for companies it doesn’t include: Gannett Inc., which publishes 90 dailies including USA Today, and Tribune Co., the third-largest publisher by circulation, which produces the Los Angeles Times and Chicago Tribune.

A Gannett spokeswoman said the company was engaged in continuing conversations on the subject of partnering with a Web portal. Tim Landon, president of Tribune Interactive, said the company was continuing “an active dialogue with key players in the publishing industry and large online players.”

Although industry experts held out hope that the two newspaper giants someday might join Yahoo, the companies have been investigating other alternatives. Past animosities could also prevent a unified effort.

Gannett and Tribune executives late last year were reported to be planning their own online consortium, one that McClatchy also considered joining. That would have put the three biggest newspaper companies in an alliance and offered a one-stop solution for national advertisers.

But McClatchy and other newspaper companies had privately expressed unhappiness with Gannett and Tribune. The disagreement originated with the job search site CareerBuilder.com.

Gannett and Tribune own 85% of CareerBuilder. Other newspaper companies wanted to sell ads through the company. But executives at several of the news outfits complained that Tribune and Gannett demanded too big a cut of ad revenue.

The papers that would eventually ally with Yahoo considered Gannett and Tribune too centrally controlled and less collaborative.

Some of the executives not signing on with Yahoo, meanwhile, accused their peers in the new consortium of giving away their news and advertising franchises in their haste to expand on the Internet.

james.rainey@latimes.com