AT&T Bids for Yahoo, Countering Verizon Offer (Report)

The two biggest U.S. telecom providers look to be facing off in a fight to own Yahoo.

AT&T has submitted an offer to acquire Yahoo’s Internet business, after initially staying on the sidelines, Bloomberg reported Wednesday, citing anonymous sources.

Verizon has been widely considered by Wall Street as the leading candidate to acquire Yahoo. Verizon execs have expressed interest in combining Yahoo’s huge online audience with AOL, which it acquired last year for $4.4 billion. “We can’t talk about Yahoo… but that’s a possibility to gain greater scale,” Verizon CEO Lowell McAdam said Tuesday, speaking at JP Morgan’s Global Technology, Media and Telecom Conference.

However, Verizon did not submit the highest offer in the first round of bidding, which included offers ranging between $4 billion and $8 billion, according to the Bloomberg report.

AT&T’s play for Yahoo is likely fueled in part by a desire to keep the online company out of the hands of its chief rival. Yahoo also could serve as an anchor for AT&T’s ambitions to build up a bigger push into digital-media and streaming video: The telco is planning to launch three new DirecTV over-the-top video services in the U.S. later this year. In addition, it’s trying to reach millennial video viewers through Otter Media, a joint venture with Chernin Group whose holdings include Fullscreen.

Reps for Yahoo, AT&T and Verizon have declined to comment.

Yahoo remains an attractive prize, given its large global audience of around 1 billion monthly users. But the company’s finances have continued to deteriorate, with Yahoo forecasting declines in revenue and earnings for 2016 as its search and display advertising businesses shrink.

Other bidders reported to be vying for Yahoo include private-equity firm TPG and a consortium that includes Bain Capital, Vista Equity Partners and former Yahoo interim CEO Ross Levinsohn. Last week, Warren Buffett said Berkshire Hathaway would be a potential financing partner for a bid by Quicken Loans founder Dan Gilbert.

Digital marketing firm YP — in which AT&T owns a 47% equity stake — had been looking at a deal with Yahoo but has since abandoned that, according to Bloomberg’s report. YP was formed in 2012 by the combination of AT&T Interactive and AT&T Advertising Solutions.

Separately, earlier this month AT&T ended its 15-year pact with Yahoo to operate the telco’s web and mobile portal sites and branded apps, inking a deal instead with Synacor. Yahoo continues to host email for AT&T customers.

Yahoo officially announced that it would explore a sale of the company in February, bowing to pressure from investors, and also said it would cut 15% of its workforce as part of refocusing on key product and content areas while shutting down others.

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