AT&T has withdrawn a major contract to host its Internet and mobile portals from Yahoo in favor of Synacor, a move that analysts speculate could cost Yahoo about $100 million a year in revenue. Under the 15-year partnership, AT&T’s website defaulted to Yahoo’s content and search services for broadband subscribers, and the companies split ad revenues generated from the site.
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. Only AT&T-Yahoo email (which this author uses but dislikes) will be left in the web partnership.
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. Fortune says the AT&T deal brought in $100 Million a year for Yahoo.