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Dec 8 2005
Verizon Deal Raising Qs About YP Future
When a company as large as Verizon decides to shed its directory business, a reliable source of cash for so many years, questions inevitably arise over what such a move says about the future of Yellow Pages. I've been scanning the news coverage over the past few days, and we've been in the thick of it ourselves, fielding numerous press calls. Much of the coverage raises doubts about how many years the Yellow Pages product has left.

We are currently working on an advisory that will offer our take on Verizon, the decision to sell, who the buyers might be and how the deal might change the industry.

Our essential view of Yellow Pages isn't changed much by the announcement that Verizon plans to sell Verizon Information Services, its YP unit. Verizon has made a rational decision, in our view. Clearly, directories are not a core strategic asset. And when Ivan Seidenberg talks about "unlocking value," what he really seems to be suggesting is: Let's sell now while we can get a lot of money for this asset. The logical extension of this reasoning is that the asset could be worth less in a few years.

This is the point the press has seized on, suggesting Verizon must know something the rest of us do not. Maybe so. However, I think the rationale for selling is pretty simple and straightforward. And while it is not a ringing endorsement of the future of Yellow Pages, nor is it as damning as some would suggest. Print Yellow Pages has a future, but a limited one. A blended directional media product set (directories, classifieds, print, Internet, voice and mobile) offers a very good opportunity to those able to execute. There is still time to get it right, but, to state the obvious, not as much time as there used to be. VIS has a better shot at getting it right as an independent company.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  17:08 | permalink | comments [3] | trackbacks [0]

Dec 7 2005
Nice Work if You Can Get It
This from an article yesterday in a Norwegian newspaper: Cornel Riklin, who has been CEO of the Norwegian directory publisher Findexa for the past 11 months, is leaving his post now that the company is part of Eniro AB, which already has a CEO. Riklin's good-bye package totals 47.2 million Norwegian crowns, which works out to about US$7 million. That kind of money will dry up a lot of good-bye tears.

Riklin is a respected executive, and my colleague Neal Polachek was very impressed by his presentation at the Yellow Pages Today conference last month in Vienna. But US$7 million for 11 months' work is an impressive payout, to say the least.

Eniro, the leading directory publisher in neighboring Sweden, has named longtime Findexa executive Wenche Holen to the post of managing director of Eniro's Norway operations, which include the former Findexa plus Eniro's existing online-only properties. With her elevation, Holen becomes one of the most prominent female directory publishing executives in the world.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  14:27 | permalink | comments [0] | trackbacks [0]

Dec 5 2005
Verizon Info Services on Block
As noted in Greg's post, last night, Verizon Corp. posted an announcement on its Web site that it is "reviewing strategic alternatives for the domestic operations of the company's wholly owned directories publishing business, Verizon Information Services." You can review the original announcement here.

VIS had 2004 revenues of US$3.6 billion and EBITDA of US$1.7 billion. It also had a negative growth rate of 5.6 percent. VIS is reported to be commanding a price in the range of US$17 billion. This would be a blockbuster deal, and a challenging one for any single buyer to handle. All of which suggests a spin-off, which is one of the options Verizon presented in its announcement yesterday. TKG will provide more detailed coverage and analysis in the coming days, as more facts emerge.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  18:13 | permalink | comments [1] | trackbacks [0]

Nov 30 2005
Sensis Seen as Telstra Growth Engine
An interesting story just appeared on Bloomberg that reports Australian publisher Sensis, a unit of telecom Telstra, will be spared from a massive job-cutting program because it represents a critical component of Telstra's growth plans. Telstra CEO Sol Trujillo has announced plans to cut 12,000 jobs over the next five years. Sensis is committing to double its revenues by 2010, a tall order for any directory company. However, print Yellow Pages does not appear to be central to these growth objectives. Rather, the company will rely on Internet advertising and initiatives like Platefood, a London-based enterprise that will license Sensis' online search and directory platform to other European and Asian publishers. You can read the story here.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  14:53 | permalink | comments [1] | trackbacks [0]

Nov 29 2005
Canada Lets YPG's Golden Goose Continue Laying Eggs
The Canadian Finance Minster issued a ruling yesterday on the taxation of income trusts that has left Yellow Pages Group President and CEO Marc Tellier breathing a sigh of relief. The government decided to reduce the tax on dividend income, making the trusts more attractive to individual investors. There had been fears that the government would increase taxes on the trusts to raise revenue and to put cold water on the trusts. YPG's reaction can be read here.

The trusts were once seen as a highly specialized asset class but are now increasingly popular, with many prominent Canadian companies looking for ways to convert to tax-advantaged income trusts. One of the trust model's main popularizers has been YPG. The company has shown it can both grow and invest in the business within the trust structure, which essentially delivers all free cash back to trust unit-holders. Had the government made a different decision, YPG might have been left scrambling. And while business would have continued regardless, its valuation would likely have suffered.

Here is a comment from Tellier: "We believe the decision to cut the taxation on dividends will make Canada more competitive. The threat to productivity is not the income trust structure but the relatively high levels of taxation on corporations and individuals, and we are satisfied that the government understands this concern. Clearly they have responded to the input of Canadians from across Canada as part of this consultation process."
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  20:43 | permalink | comments [0] | trackbacks [0]

Nov 16 2005
Major Market Meltdown?
It's nothing new to observe that big markets are disproportionately important to Yellow Pages publishers and that they are often the most in distress. The recent spate of nine-month conference calls among European directory publishers has reinforced this point and raised the question of how publishers can stanch the bleeding in their biggest and most profitable markets.

Notably, Eniro, Seat and TPI each revealed that one way or another they are having trouble generating growth in top markets. In fact, most of their biggest markets are in the red, and one of the key culprits is higher churn rates among large accounts.

Our question is: Is this the canary in the coal mine? Or can publishers address these issues through product tweaks and adjustments to how sales are segmented, etc.? My sense is that with a lot of work, publishers can soften the blow and minimize the declines. But major markets all over the world are now battlegrounds for so many competitive media, digital and traditional, that publishers need to develop a realistic set of expectations going forward.

We will offer some details of this topic later this week in Local Media Journal.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  13:47 | permalink | comments [0] | trackbacks [0]

Nov 16 2005
SBC CFO on Yellow Pages and IPTV
Interesting Q&A with SBC CFO Richard Linder in the latest issue of BusinessWeek. He discusses the possibilities for selling advertising on IPTV using the directory sales force. It's an indication of the strategic importance SBC is placing on its Yellow Pages business, and in particular. You can read the interview here.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  11:09 | permalink | comments [0] | trackbacks [0]

Nov 10 2005
What Is Dex��s Approach to Monetizing Search?
Here is one item of interest from our notes of Dex Media's recent third-quarter earnings conference call. Dex President and CEO George Burnett was asked how the publisher planned to monetize the traffic it is buying for its Dex Online IYP.

His response:

��We are looking at a few different monetization strategies. �� One is to charge for the incremental usage we get from Google Local, Yahoo! Local and Yahoo! Yellow Pages in the aggregate pricing of our bundle. The 1A version of that is to not really charge directly within the bundle but to improve the value proposition and therefore incremental revenue from retention. Another option we are testing is to charge specifically incrementally for the preferred placement where we are paying cash.��

Burnett says all three models are being tested. He promised to share results once they have them. We will provide more details of Dex's year-to-date results in Local Media Journal and in an upcoming Advisory summarizing the year to date in the global Yellow Pages industry.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  11:10 | permalink | comments [1] | trackbacks [0]

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