• by Mark Walsh  @markfwal, November 12, 2007

Yahoo has bolstered its year-old newspaper alliance by adding the New York Daily News, the nation's fifth-largest newspaper, and the biggest to join the consortium so far.

Through the partnership, Yahoo's HotJobs unit will help power the newspaper's career site and extend the local job ads to a national audience. Yahoo, in turn, can sell ads on the site as part of the national network of newspaper sites it has built through the pact.

Since launching last November, the Yahoo alliance has tripled to 21 newspaper groups encompassing nearly 400 newspapers including The San Francisco Chronicle, The Dallas Morning News, and The Atlanta Journal-Constitution. Belo, Cox Newspapers and Hearst Newspapers were among the initial companies to sign on.

For newspapers, the Yahoo partnership represents a comprehensive strategy for tackling the Web after years of losing circulation and classified ads to the Internet portals and free listings sites such as Craigslist. But the industry continues to suffer steep declines in readership.

Circulation figures for the six-month period from March to September were so bad that the Newspaper Association of America didn't tally the numbers for an overall circulation figure. But circulation slid at large and mid-sized papers across the board, anywhere from 1% to 8%. Circulation at The Daily News dropped 2% on weekdays and 7% on Sunday to 726,305. But the paper, owned by publisher Mort Zuckerman, says it has an average weekly print and online readership of 4.5 million.

Newspapers have enjoyed ad revenue gains through the Yahoo alliance, say industry analysts. "Participating newspapers have gotten a nice bump in online revenues as a result," says Gordon Borrell, president of consultancy Borrell Associates, which specializes in local advertising. Online ad sales for some alliance publishers such as Lee Enterprises have increased as much as about 50% year-to-date.

For the first half of the year, print classified ad revenue fell 16.5% to $1.97 billion, according to the NAA. Total newspaper online revenue increased 20.3% during the same period.

But Borrell and other analysts warn that it will be hard for newspapers teaming with Yahoo to sustain high growth rates over time. "They've basically relinquished ownership of the help-wanted advertising franchise," Borrell says. "HotJobs now owns it in those markets because it's merely using the newspapers to build up the HotJobs brand."

Expectations of a slowing economy may also contribute to declining growth for newspaper job sites in the upcoming months.

Meanwhile, five of the biggest newspaper companies are reportedly in talks to form another partnership that would compete and overlap with the Yahoo group. It would have Gannett Co., Tribune Co., Hearst, Media News Group and Cox joining to form a shared ad sales force that would provide "one-stop shopping" for ad placement on the Web sites of large-market newspapers.

Gannett and Tribune, not part of the Yahoo alliance, co-own CareerBuilder.com, the largest U.S. job site and a competitor to HotJobs and Monster. Their prospective newspaper alliance is hoping to attract other companies such as the Washington Post Co. and McClatchy Co.