Surprise bid may be higher than Verizon’s
AT&T has made a bid for Yahoo’s Internet business, according to Bloomberg. The news comes as a surprise to Wall Street and the wireless industry, which has seen Verizon Communications as the carrier most likely to bid for the troubled Internet portal.
First-round bids for Yahoo are said to have been submitted, with Verizon not ranking among the highest bidders. One report last week said Verizon could end up bidding less than $3 billion for Yahoo’s core business. Yahoo’s market capitalization is currently more than $34 billion.
Like Verizon, AT&T could benefit from Yahoo’s digital advertising business. AT&T recently consolidated much of its growing media business into a unit called Ellation, which includes the Crunchyroll and Creativebug properties AT&T and The Chernin Group acquired through their Otter Media partnership. AT&T also announced plans to buy a company called Quickplay for multitenant IP distribution infrastructure, but so far the carrier does not have a “name brand” platform for ad sales and insertion.
AT&T and Verizon have both expanded into video content as a way to capture more revenue from the data traffic that their networks support. Advertising is a way to monetize this content, and it also gives the carriers a business that they can grow internationally, even if they do not own spectrum abroad. Verizon’s Go90 service is available on mobile networks operated by other carriers, and AT&T is developing a video-streaming service through its DirecTV unit that is also expected to be available on other networks.
AT&T and Yahoo have a history
Yahoo has provided Internet portal services to AT&T customers for years, but this month the carrier said it is moving that business to a New York company called Synacor. Synacor will host mobile and web portals for AT&T, and will provide the content that customers see when they access the Internet through AT&T mobile apps. Synacor also will sell advertising and paid search against that content.
Email for AT&T Internet customers continues to be hosted by Yahoo, so the two companies remain business partners. If AT&T ends up buying Yahoo, it is unclear how the carrier’s deal with Synacor will evolve.
AT&T also owns 47% of YP Holdings, the firm that publishes the Yellow Pages directories, which is one of the companies that evaluated a bid for all or part of Yahoo. YP Holdings has now dropped out of the bidding process, according to Bloomberg.
