AT&T Unwinds 15-Year Web Alliance With Yahoo--Update
May 04 2016 - 5:39PM
Dow Jones News
By Shalini Ramachandran and Douglas MacMillan
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
(END) Dow Jones Newswires
May 04, 2016 17:24 ET (21:24 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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