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Overture teams up with ESPN

The company reaches an exclusive two-year agreement with ESPN.com to offer its commercial search results throughout the sports Web site.

Overture Services said Tuesday it has struck an exclusive two-year agreement with ESPN.com to offer its commercial search results throughout the sports Web site.

ESPN will incorporate up to seven "sponsored" links from Overture that will be separately listed in search results pages. ESPN will also add Overture-powered search boxes throughout its Web pages.

The arrangement gives Overture yet another content partner. The company in December signed a similar deal to offer its results throughout the Web sites of AOL Time Warner's CNN division.

Over the past year, Overture has injected financial lifeblood into its Web partners, especially portals Yahoo and MSN. Yahoo in January reported its third consecutive profitable quarter, largely helped by payments from Overture.

Overture auctions off search-result placement to advertisers. When Web surfers visit sites that host Overture results and click on the links, advertisers pay the company a price per click, and the company in turn shares that revenue with its distribution partners.

However, some Wall Street analysts are concerned about Overture's reliance on its portal partners. As of October, money from the Yahoo and MSN deals accounted for 63 percent of Overture's revenue. In addition, Yahoo last week confirmed it had hired Tim Cadogan, Overture's vice president of search, to head its own search development efforts. The hiring raised speculation that Yahoo was stepping into Overture's business.

Overture, which reports its quarterly earnings Thursday, also faces competition domestically from search engine Google, which has its own pay-for-performance search business. Some analysts view Overture's dominance in the business as threatened.

"Increased competition will cause Overture to lose market share over time, and margin growth will be limited as the company is forced to pay higher traffic acquisition costs to its affiliate partners," SoundView Technology Group analyst Jordan Rohan wrote in an investor note Tuesday.