Yahoo News has launched local pages for metropolitan areas across the United States, aggregating local news from RSS feeds and via screen-scraping. Users of Yahoo's personalization tools will get a link that aggregates their hometown news by default, and a cluster of local headlines on the news.yahoo.com page.
The typical local page uses RSS feeds to pull in headlines and summaries from half a dozen sites, each linking back to the site (through a clickthrough counter) for story views. For each participating website, there's also a a site-specific RSS aggregation page on Yahoo.
All of this is separate from the personalized my.yahoo.com page, which is conceptually more of a Web-based RSS reader than a news portal system.
Sites with tight registration requirements or restrictive RSS usage policies are being left off the bus. This means that in some metro areas, the major local newspaper may be missing.
Yahoo has been negotiating registration changes for some major sites in order to include them, asking that Yahoo visitors be allowed to click through without having to register on the destination sites.
Threat or opportunity?
Probably not much of either. MSNBC has been doing local pages for years, working directly with local TV stations and newspapers long before RSS became a factor. It didn't seem to have a tremendous effect one way or the other. Yahoo's effort may be somewhat stronger, as it includes more sources, but I don't see it as radically different.
All of this is part of an inevitable pattern. The Internet makes it possible to disintegrate content and to reintegrate it in new ways. Screen-scrapers, RSS feeds, search engines, feed readers, and socially driven link aggregators (Slashdot, Digg) aren't going away.
My advice to local news sites: Get your own house in order.
Users will choose and use multiple jumping-off points. The choice will be driven by quality of experience.
If your homepage is ugly, cluttered and overloaded with hucksterism, you shouldn't be surprised if many users flee to the sterile organization of Yahoo Local. If your site offers poor opportunities for interaction, then you shouldn't be surprised if many users migrate to Topix or one of the many local discussion sites that are popping up all over the country. If you don't engage with local bloggers and photographers, don't be surprised to find a version of Greensboro101 in your own backyard, or a big locally focused Flickr pool.
Do a great job. Earn your way. Make your users fall in love with your site.