AT&T Unwinds 15-Year Web Alliance With Yahoo

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 Briley & 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]

(END) Dow Jones Newswires

May 04, 2016 17:03 ET (21:03 GMT)

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