Cowles shut down KCOY's news department a few years ago (turning the Santa Maria studio/newsroom into a bureau) and the station now simulcasts "Central Coast News" from KION in Salinas (a different market). So yes, KION-KCBA and KCOY-KKFX are joined at the hip—they also both used the same graphics package and "Central Coast News" brand before KCOY's news operation folded. Merging KCOY with KEYT might actually be a net positive for the market, since at least they'll be seeing a newscast from the actual market and not piped in from a neighboring one.
Up in the Monterey/Salinas market, Cowles also pared down the news offering on KION considerably since the Ackerley/Clear Channel/Newport days to just 30 minutes at 5:00pm, 6:00pm and 11:00pm. I'd be interested to see if NPG decides to bump that up in order to better compete with KSBW.