Consumers keeping an eye out for CBS's (NYSE:CBS) local news can now find it streaming on Yahoo! (NASDAQ:YHOO). Sure, it's one more way Yahoo! can distinguish its video offerings from those of its formidable rivals -- but it's also an interesting look at how CBS is trying to expand digital distribution. In these changing, highly competitive times, will it be enough?

CBS will make news video content from 16 television stations available through Yahoo!, and Yahoo! users will have access to 10 to 20 related video stories per day, from 16 different regions, including New York, Los Angeles, Philadelphia, San Francisco, Boston, and Chicago. The companies will share ad revenues through the agreement.

Since Google's (NASDAQ:GOOG) high-profile agreement to buy YouTube, investors have been down on Yahoo! for a variety of reasons. They fear that it's losing ground in search and in video distribution, and still uneasy about its earnings warning several months ago. However, Yahoo!'s large user base makes it a no-brainer for the distribution of video online. It boasts that it is the Internet's "most popular destination for news and information" in its press release -- a popularity that should surprise no one.

The CBS deal may not make a huge difference for Yahoo!, though. Just last week, CBS made a significant agreement to distribute content and share ad revenue through rival YouTube as well.

I recently took a look at CBS for our "Fool on the Street" series. Digital distribution is one of the ways the company seeks to bolster its relevance, as digital video recorders and Internet video become increasingly common ways to "time shift" content. At the time of my last article, CBS head Les Moonves pointed to CBS's agreements with outlets like Yahoo!, Apple's (NASDAQ:AAPL) iTunes, and, of course, Google.

As I pointed out in that "Fool on the Street" piece, agreements like this one show CBS's awareness of the importance of digital distribution. Nonetheless, I wonder whether CBS is ready to put the time and effort into innovation it may need to excel -- in other words, drum up enough sales growth -- in these disruptive times. (Disney's (NYSE:DIS) ABC, in contrast, might finally "get it" when it comes to video online.)

CBS shares have increased 13% over the past six months. Still, investors might want to reserve some of that optimism until they've got more proof that CBS's digital strategies are working.

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Alyce Lomax does not own shares of any of the companies mentioned.