Just when you thought Yahoo couldn’t sink any lower, AT&T on Wednesday confirmed it is ending its 15-year web hosting partnership with the troubled Internet giant.
A three-year hosting contract, which carries an estimated worth of $100 million per year, has instead been handed to Buffalo, N.Y.-based company Synacor, Inc. AT&T said the transition will occur over the next year or two and is aimed at further integrating the entertainment and services its customers want.
“We have agreed to have Synacor manage our next-generation att.net portal, AT&T-branded applications, and search,” the carrier said in a statement. “Our customers will not have to take any actions during this transition. This deal does not impact email addresses. The deal pertains to other web functions.”
Synacor said it will offer AT&T desktop and mobile portal services designed to drive user engagement and provide “rich content sourced from popular brands.” Synacor said it will also help AT&T monetize customer experiences through search and advertising.
Synacor said it is planning to launch initial services for AT&T in the second half of this year, and is aiming to deploy a “next-gen product” in 2017.
Synacor CEO Himesh Bhise said the company was “honored” and “thrilled” AT&T has chosen to employ its services.
Investors were also pleased. Synacor stock saw massive gains in premarket trading Thursday morning, skyrocketing more than 145 percent on the news.
Synacor said it provides a number of multiplatform services, including portal hosting, search, advertising, email, video and cloud ID. The company said it has been contracted by 120 service providers for its end-to-end video solutions and next-generation portal services. Synacor said it also serves more than 1,000 web publishers through its acquisition of Technorati, and offers syndicated ad-supported video content modules to web publishers.
The company currently operates 50 portals serving 120 million monthly visitors. Synacor’s reach also includes 75 million pay TV subscribers and 500 million mailboxes.
AT&T’s leap away from Yahoo comes amid the former Internet giant’s attempts to sell off its core web business in a desperate bid to stay afloat.
The move also comes as AT&T looks to further integrate its DirecTV and mobile assets and develop new service packages that will appeal to consumers.
Already, the carrier has seen success with a package offering an unlimited mobile plan to DirecTV and U-verse video subscribers. That offer raked in more than two million subscribers in just two months.
Given Synacor’s portfolio, it will be interesting to see what new capabilities the company can unleash for AT&T.