AT&T Unwinds Yahoo Alliance
May 04 2016 - 5:50PM
Dow Jones News
AT&T Inc. is unwinding a 15-year partnership with Yahoo Inc.
that has spanned the evolution of the Internet, from competing
against AOL dial-up service to jockeying against cable companies to
selling high-speed broadband.
AT&T said Wednesday that it has awarded the contract to host
its Web and mobile portals to Synacor Inc., a company little-known
outside of telecom circles. The deal effectively moves a major
chunk of AT&T's business away from Yahoo.
"We have agreed to have Synacor manage our next-generation
att.net portal, AT&T-branded applications, and search,"
AT&T said in a statement. Yahoo will continue to host email for
AT&T customers, though a person familiar with the deal said
that is a fraction of its prior business with the telecom
giant.
A Yahoo spokeswoman said AT&T is still a "valued partner"
but declined to comment further.
The revenue-sharing alliance between a telecom giant and an
Internet pioneer had lost much of its cachet over the years amid a
shifting Web landscape. But the partnership's demise is ill-timed
for Yahoo, which is in talks to sell itself to bidders including
AT&T's fiercest rival, Verizon Communications Inc.
Sameet Sinha, an analyst at B. Riley & Co., estimates the
AT&T partnership generated about $100 million in annual revenue
for Yahoo.
The deal had given AT&T broadband customers access to
Yahoo's search engine and other media services on the default
AT&T website. AT&T and Yahoo had been splitting the search
and display ad revenue from the site.
For Yahoo, the partnership brought in hundreds of millions of
dollars in revenue over its life, a significant portion of which
went straight to the bottom line. That is because the arrangement
required minimal resources from Yahoo, leading to strong profit
margins.
Thomas Gryta contributed to this article.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com
and Douglas MacMillan at douglas.macmillan@wsj.com
Corrections & Amplifications: Sameet Sinha is an analyst at
B. Riley & Co. An earlier version of this article incorrectly
stated the name of the firm as Briley & Co.
(END) Dow Jones Newswires
May 04, 2016 17:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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