AT&T Unwinds Yahoo Alliance

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 [e-mail] and Douglas MacMillan at [e-mail]

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)

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