San Francisco — Internet Company Yahoo! Inc. has renewed its marquee subscription revenue deal with the largest US communications holding company AT&T Inc., one of three major broadband providers with which Yahoo has joint ventures, to scoop up more advertising dollars from search and display on wireless mobile devices and the personal computers of AT&T broadband users.
“The alliance will reportedly provide search and advertising capabilities on wireless and PC screens.”
Under the alliance, AT&T’s att.net portal powered by Yahoo will get a new look beginning in the second quarter. At first, only new customers will see it. Later in the year, existing customers will be able to get the new platform…
In a joint statement on Tuesday, AT&T and Yahoo said they had replaced a 2001 broadband access deal in which Yahoo takes a share of AT&T Internet subscriber fees with new efforts to deliver ads to AT&T users on both their computers and phones.
However, terms of the deal, which involves revenue sharing, were not disclosed. The new multiyear partnership agreement covers both display ads preferred by corporate brand advertisers and pay-per-click Web-search ads.
A Yahoo executive said in a phone interview the new deal brings its services to up to 70 million AT&T mobile customers. Yahoo will provide Web search on the customer portal for AT&T Mobility customers and deliver ads to AT&T customers who use the Internet on their mobile phones, he said.
“We are actually gaining more subscribers; we are going to gain more search traffic,” said Marco Boerries, executive vice president of Yahoo’s Connected Life division, who oversees the Internet media company’s broadband and mobile phone business.
AT&T’s 14.2 million broadband customers will have access to co-branded versions of Yahoo mobile Web properties and the Yahoo Go application, the companies said.
Jerry Yang, co-founder and CEO of Yahoo, said that the new agreement “once again raises the bar” for the industry.
“Subsequently, the att.net portal, which will run on the My Yahoo! and Yahoo! Mail platforms, will be available to existing AT&T Yahoo! customers, as well as those AT&T Internet customers in the former BellSouth service area and those with the legacy AT&T WorldNet service.”
Also, AT&T’s YELLOWPAGES.COM will become the lead local search experience on both wireless and PC screens for AT&T customers.
AT&T U-verse TV customers will continue to have access to Yahoo content through the television services’ interactive AT&T U-bar feature, where available. U-verse was launched in the East Bay in December 2006, initially in San Ramon and Danville.
“This new agreement with Yahoo reinforces AT&T’s leadership in wireless and broadband and enables both companies to bring their respective strengths to the table to benefit AT&T’s customers,” AT&T Chairman and CEO Randall Stephenson, said in a statement. “It also reflects the benefits of establishing strong alliances in business today.”
“Our goal is to connect our customers to their worlds, wherever they live and work,” said Stephenson.
The new AT&T mobile phone advertising relationship is more similar in its terms to more recent deals Yahoo has arranged with Vodafone and T-Mobile in Britain than it is with the preexisting AT&T deal, Boerries said.
“We are now the search engine and the advertising engine behind all of (AT&T Mobility) customers,” Boerries said.
Key priorities include making Yahoo a “must buy” for advertisers and a primary “starting point” for more users. The company attracts more than 500 million users to its site each month, executives said.
Wall Street analysts have speculated for the past year that a new deal would see AT&T slash the chunk of subscription fees it shares with Yahoo. The expanded deal would bring in cyclical ad revenue, not regular subscription fees, whereas the prior AT&T deal represented highly profitable sales for Yahoo.
Jeffries & Co analyst Youssef Squali estimated last week that Yahoo would effectively be giving up somewhere around $200 million to $250 million in highly profitable annual access fees from AT&T, in favor of sharing ad revenues from AT&T traffic.
The AT&T deal, along with recently renewed broadband deals with Britain’s BT Group Plc and Canada’s Rogers Communications Inc., grew out of Yahoo’s strategy earlier this decade to reduce reliance on cyclical ad sales.