Deal Between AT&T And Yahoo May Be Nearing Its End

from the looking-back dept

Portal deals, like the longstanding partnership between SBC (now AT&T) and Yahoo, have never made much sense to us. Other than the brand name, Yahoo didn't bring much substantial to the table, and it's not clear that the Yahoo brand name really meant very much to customers that were in the market for broadband. So it's no surprise that when the agreement expires in April 2008, things may be scaled back dramatically. According to the Wall Street Journal the two parties are currently in negotiations to figure out what, if anything, the future holds for the partnership. AT&T's reluctance to fork over a reported $200 to $250 million on an annual basis for the use of Yahoo's brand name makes a lot of sense, particularly since the company seems perfectly capable of signing up DSL customers on its own. While the Journal article gets all of the above correct, it offers some other strange reasons why AT&T might want a change. It notes, for example, that Google has been making big payments to partners like Dell, MySpace and the music labels, whose videos appear on YouTube, and that AT&T would rather be on the receiving end of a deal like that, rather than paying off Yahoo. But Google's deals are of an entirely different nature than AT&T's deal with Yahoo, so the comparison is useless. In each of Google's deals, it's paying for something that it needs, or finds valuable, whether it's content, eyeballs or users (as in the Dell deal). What kind of deal would have Google make payments to AT&T? Perhaps AT&T thinks Google would pay to be the official home page of AT&T customers -- actually, we already know that CEO Ed Whitcare thinks every company should pay up to get in front of AT&T users. When the Yahoo agreement does finally conclude, AT&T's best strategy would probably be to walk away from it, and save itself some money. Any hope that it'll be able to sign a directly lucrative deal is just wishful thinking.