Papers Embrace Enemy

The deal will allow Yahoo! to reach local audiences tied to their hometown newspapers. Meanwhile, the group of publishers will access Yahoo!'s online portals to expand their reach and grab back some precious revenue that has migrated away in recent years as more consumers turn to the Web for their information needs.

"Essentially, we both have things to sell to generate new revenue that we didn't have before," said William Dean Singleton, the CEO of privately held MediaNews Group, on a conference call with analysts following the announcement. "I think today's announcement very loudly shouts that we can and we will [adjust to an online world]."

MediaNews, publisher of the San Jose Mercury-News, among other newspapers, teamed up with Belo (BLC Quote - Cramer on BLC - Stock Picks), Cox Newspapers, Hearst Newspapers, Journal Register, Lee Enterprises and E.W. Scripps (SSP Quote - Cramer on SSP - Stock Picks) in the partnership. Singleton said he expects more newspaper publishers to sign on soon.

The financial terms of the deal were kept under wraps, but the parties will share revenue streams resulting from the collaboration.

The partnership will start in December, when the newspaper companies will begin posting their employment ads on Yahoo!'s jobs site, HotJobs, and start using HotJobs technology to run their own online career ads. Ultimately, the relationship will be expanded so the content from the newspapers will be tagged and optimized for searching and indexing on Yahoo!'s Web sites.