Right now, about 17 companies and 400 newspapers have joined the deal with Yahoo. Partnering newspapers use Yahoo to post job classifieds, and their content and local ads can be found on the Yahoo network. In exchange, Yahoo provides newspapers with local event listings, maps, online technology and more.

"We believe the benefits from the Yahoo deal could move the revenue and EBITDA inflection points forward, positively surprising the market," wrote analysts.

As early as 2009, the analysts project a potential increase of 20 points in the current online revenue growth rate, from 20% to 40%.

Taking Lee Enterprises as an example, the publisher’s online revenues has soared 62% on average through July, compared to 49% from June 2006 through February 2007.

The Deutsche Bank predicts that the biggest benefits of the deal will relate to increased traffic, better behavioral targeting, and revenues from the HotJobs site.

This more than positive news could be hindered by the projected 6% decline in print ad revenue and 3% drop in circulation revenue for 2008.

But the Deutsche Bank analysts came up with three scenarios for newspapers that have entered the deal with Yahoo:

- Online revenue’s growth rate won’t significantly increase, and remain at about 25%. In that case, digital operations won’t offset the decline in print ads until 2012.
- Online revenues grow 40%, starting in the second half of 2008, and newspaper total revenue will rise starting in 2010.
- Online revenue grows 40% in 2008, and a whopping 50% in 2009 and 2010, before settling back to about 25%.

Last June, Hearst had already praised the deal and its profitability for newspapers.

"This is about a year to year and a half earlier than we previously expected" newspapers to reach the inflection point between online and print revenue, analysts wrote. "However if we are underestimating the traffic boost the newspapers will get from Yahoo" -- now projected at a 10% increase -- "this inflection point could be even closer than we think."

Source: Editor & Publisher