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Newspaper publishers regroup to go online

Facing a host of new online competitors with incredible market valuations and expanding readership, newspapers are coming down with an outbreak of portal envy.

    Facing a host of new online competitors with incredible market valuations and expanding readership, newspapers are coming down with an outbreak of portal envy.

    This week the New York Times, the Washington Post, and Knight Ridder all announced plans to consolidate their content into Internet portals that will blend news with regional business directories, entertainment listings, and other local information.

    The media companies are forging ahead despite mixed success by predecessors that have tried to extend their print operations to the Web. For example, New Century Network, a cooperative of more than 100 newspapers, was shuttered last year, and other joint efforts such as the CareerPath job listings site have yet to take off.

    Still, industry observers say newspapers must develop an Internet presence or risk losing readership to online rivals.

    The moves "indicate to me that what they've been doing hasn't been working well enough and fast enough and they're going to Plan B and in some cases Plan C," said Lisa Allen, an analyst at Forrester Research. "The big dark cloud [for newspapers] is the Internet and [traditional media companies with] no viable business models."

    For their part, the newspapers tend to agree that they need to do more online.

    "It's fair to say that nobody has gotten to the optimum yet," Washington Post chief financial officer Jay Morse said in an interview, though he added that the paper has been "extremely satisfied" with its Web site to date.

    Added Kathy Yates, acting president of Knight Ridder New Media: "The Web is wonderful for a lot of things beyond news. The portal sites will allow us to bring a lot of this information forward and make it more accessible to users."

    Newspapers also are keenly aware of the meteoric rise of companies such as Yahoo and Excite, said Charles Conn, chief executive of CitySearch, a site that offers local content in regions throughout the country.

    "To compete against those kinds of entrants you need to be set up separately from the cumbersome decision-making structures," he said. "They need to have the same flexibility to compete with what the new entrants have."

    The Times last month aggregated all its Internet holdings into a single business unit to "sharpen our strategic focus and gain the flexibility," Russell Lewis, the paper's president, said Monday.

    Knight Ridder, which already holds its new media properties in a separate subsidiary, may spin off the Internet investments, the company said. Such a move, if popular among investors on the market, could raise money to attract new employees and carry out acquisitions.

    But to be truly successful, Forrester's Allen said, newspapers will have to do much more. For example, adding e-commerce features and tailoring their content for online readers will be essential.

    "They have to get over the idea that they're simply publishing a newspaper online," Allen said. "They're creating a completely different animal."