McClatchy Jilts Tribune and Gannett for Yahoo

McClatchy Newspapers and Yahoo recently entered an agreement where foreign correspondents for the chain of 31 newspapers would provide reporting and blogs for the online search and content giant. Anyone reading tea-leaves might've wondered about the timing of the deal given that both companies seemed to covet each other's goods: Yahoo the newspaper website's eyeballs and traffic, and the McClatchy the almighty and not-shrinking online advertising dollar.

Yahoo, meanwhile, had been signing up newspapers chains across the country to its online advertising network, providing search and advertising services to over 250 newspapers. McClatchy, meanwhile, had declared its intent in January to build a competing network with partners and fellow heavyweights Gannett and Tribune.

But less than three weeks after Yahoo and McClatchy signed their content deal, the Los Angeles Times and Wall Street Journal are reporting that the relationship between the two companies is about to get even cozier. McClatchy is abandoning its effort with Gannett and Tribune in order to join Yahoo's network, which is also set to expand the advertising space it can offer from its current newspaper partners.

It's hard to tell whether Sam Zell's acquisition of Tribune played a role in the sudden reversal, but with uncertainty all over the industry, McClatchy seems to have turned to Yahoo's sure thing rather than strike out on its own.

And Yahoo's own foray into newspapers continues to build intrigue in the industry. What started as a deal to build traffic on its HotJobs employment advertising website has slowly morphed into a full-fledged content and advertising partnership. And it's starting to look a lot like a well-monetized (and fully licensed) competitor to Google's News offering.

With Zell on the record as saying that Google is "stealing" Tribune's content, it's at least a possibility that his nine newspapers will be the next in Yahoo's online stable.

And for Yahoo -- as the trend of hyper local websites continues to take hold, the flashy McClatchy foreign service deal could be the least relevant to the balance book. Most of the 250 newspapers they are working with, like the Dayton Daily News, are specialists in the "Area Man Bites Dog" content that helps local websites build traffic.

Yahoo could be positioning itself to be the one web-ring of online content to rule them all, and McClatchy could be blazing a trail around the necessary evil of Google's traffic-building but less-lucrative structure.

by Paul Smalera