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Aug 25 2005
Verizon to Buy MCI for US$6.6 Billion
In case you haven��t noticed, another round of consolidation in the U.S. telecom space is well underway. In one sense, it means less this time around to the directory business than it did the last. When SBC buys AT&T, or when Verizon buys MCI, there are no directory organizations to bolt together �� one party has a publishing business and the other doesn��t.

In another sense, the impact could be more profound that in the last wave back in the late 1990s. As SBC absorbs its acquisition of AT&T, and as Verizon does the same with MCI, the two companies may look to ��non-core�� assets as sources of cash. We believe SBC has resisted this temptation because it loves the cash flow of directories and hasn��t had a good reason to let go of the business. Until now, perhaps.

Verizon has certainly enjoyed the cash its directories unit provides, but the recent pattern of sell-offs in Europe and Canada suggests that corporate leaders are comfortable with disposing of directory assets if it makes sense for the business.

Add it all up, and the evidence is building of a possible fresh round of directories sell-offs, or more likely partial sell-offs.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  08:18 | permalink | comments [3] | trackbacks [0]

Aug 9 2005
Choice Comments from YPA Las Vegas
It was a full day here in Las Vegas �� the land of free drinks that can cost you every penny you have, and where the hotels invest very little in clocks and windows.

The YPA annual meeting was packed with industry luminaries answering (or trying to avoid answering) the basic questions that drive the future of this business �� where will growth come from, what will happen with spin-offs and consolidations, will publishers be the real winners in digital directories, and where is the true innovation in this industry coming from?

Here are some of my favorite comments from the day, with some effort to put them into context.

SEMPO President Barbara Coll, at the end of a tour through ��her world�� of Bay Area digeratti, asked a rhetorical question that cuts to the chase of all the questions being asked about when we will reach the tipping point where digital dominates usage and revenue, and print becomes a secondary product.

��How many years before there are computers in the kitchen?�� More to the point, how long before we all have computers in our kitchens that will initiate a local search by voice command while we are chopping onions?

On the financial guru panel, Morgan Stanley��s Adam Shepherd said that based on the numbers, the odds of another large U.S. telco selling its directory unit are about ��50/50.�� However, the fact that SBC and probably Verizon will be busy absorbing major mergers makes that eventuality much less likely, at least in the near term.

On an international publisher panel, Lyle Wolf (known as the father of the modern Chinese Yellow Pages industry even though he��s from New Jersey) calls China the ��last frontier�� of the global Yellow Pages industry, noting that directory revenues in China are growing at 50 percent to 100 percent per year.

On the same panel, R.H. Donnelley CEO Dave Swanson made it clear he understands what drives this business when he said, ��Growth in product usage is the number one metric that we focus on.��

From the Presidents�� Panel:

Dex Media CEO George Burnett was the only incumbent publisher to answer the question, ��What independent publisher presents the biggest challenge in both print and online over the next 18 months?��

Burnett��s answer was that ��There is no doubt that Yellow Book is our biggest and toughest competitor.�� He also said that independents in general are vulnerable on the digital front, because they have underinvested and lack the footprint in most cases to have much of an impact online.

Verizon President Kathy Harless, whose company engaged in a bitter lawsuit with Yellow Book, was nudged by her co-panelists to answer the following question, ��Are the independent publishers competing fairly?��

Her answer: ��Most independents do. The record stands for those who don��t.��

Many of the written questions appear to have been sent up to the podium by frustrated CMRs. One on directory extensions elicited a consistent response from the incumbent in publishers, which was that extensions have been driven by accounting issues lately, that the worst is over, but publishers will commit only to minimize but not eliminate the practice.

The lone independent on the panel, Gerry DiPippo, drew applause when he said that advertisers deserved to have books publish on the timetable that they are led to expect, every 12 months.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  09:36 | permalink | comments [0] | trackbacks [0]

Aug 1 2005
Aptas, ISX, YPsolutions Form Local Matters
Three technology firms serving different segments of the online directory and local search space have merged in the interest of broadening their collective base of customers and extending the range of services offered. Aptas, recognized for its work in extracting and organizing Yellow Pages ad content into a searchable database, has gotten together with YPsolutions, which offers both look and feel online publishing and a standard search-based IYP platform, and ISX, which enables data for delivery in a voice and wireless environment. The new firm, called Local Matters, made the rounds of recent industry conferences to "soft launch" the new technology brand.

Perry Evans, the Aptas founder who is leading the new venture, discussed the merger with The Kelsey Group at our recent Drilling Down conference in Santa Clara. He said the three companies offer complementary technologies and together create a complete solution for "local digital infrastructure." Evans believes this is a huge opportunity that requires a "well-funded leader" to execute.

Aptas and YPsolutions bring together different customer sets. Aptas counts among its customers Dex Media and the Australian publisher Sensis, while YPsolutions' clients include R.H. Donnelley and Phone Directories.

ISX is clearly part of the mix to create technologies for publishers to launch viable voice-enabled directory services. ISX powers the Sensis 1234 DA service in Australia, among other projects. Evans believes the shift from consumer pay (the current DA model) to more ad-supported services is coming soon. He expects to begin seeing some initial product rollouts in the "hybrid voice-Internet" space beginning in 2006, and he expects his new venture to be part of that progression.

Voice remains a longer-term opportunity -- maybe three to five years before the big payoff. The near-term benefits of the merger include collective stability from sharing infrastructure and funding sources. YPsolutions and ISX will certainly see a boost in R&D exposure, since Evans notes Aptas was spending between US$8 million and US$10 million on R&D. Cross-selling is another clear opportunity. Aptas now has a established base of customers in the independent segment that it could conceivably upsell with a broader mix of technology products. Evans notes that YPsolutions has developed technologies that are well targeted to smaller publishers, including the ability to take a PDF file and transform it into searchable content.

Broadly speaking, the opportunity comes from offering a full range of solutions for publishers looking to enable their business to complete in the local directional media space -- offering searchable data, performance-based pricing and a seamless multi-platform delivery of advertising content.

Local Matters combines into a company of some substance, with 40 customers and installations in about 18 countries, with 150 employees, Evans tells us. The new company will maintain current staffing and independent organizations through 2005, but a long-term reorganziation is inevitable, and no doubt necessary to extract all available synergies.

The Aptas board will become the Local Matters board, which includes former BellSouth A&P President Don Perozzi and former R.R. Donnelley CEO John Walter.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  10:36 | permalink | comments [0] | trackbacks [0]

Jul 29 2005
UK Regulator Seeks Investigation into Directories Market
Britain��s Office of Fair Trading issued a statement on April 5 that it would request that the nation��s Competition Commission begin an investigation into the UK classified directories market. The OFT made the recommendation based on its conclusion that the competition that has emerged recently in the UK directories market has not produced results that satisfy the agency.

The agency appears to want highly distributed market share, less profitable market leaders and less expensive advertising choices for small businesses. The OFT has since 2001 placed Yell, the market leader, under a strict rate cap, equal to the rate of inflation (retail price index) less 6 percent. From 1996 to 2001 the rate cap was RPI minus 2 percent. The OFT��s announcement does not guarantee a renewal of the rate cap, nor does it suggest that a rollback is very likely.

The Kelsey Report will cover this issue in greater detail this week in the Local Media Journal as well as in an upcoming Advisory.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  19:27 | permalink | comments [2] | trackbacks [0]

Jul 28 2005
Eniro Digs Itself Slowly Out of Core Product Hole
The Swedish publisher Eniro AB has pledged to reduce the decline of its Swedish print business at a faster pace than earlier promised. The publisher saw its print directory revenues in its flagship Swedish market decline by almost 11 percent last year. It originally pledged to cut that figure to minus 5.5 percent and 0 percent in 2006. In its first-half results issued this week, the publisher said it expected print in Sweden to decline by 3 percent this year, and reach neutrality next year.

It appears that some of the measures the publisher has taken to stem the decline, including a product overhaul, process improvements, pricing changes and a sales reorganization, are starting to take effect.

The Kelsey Group will produce a detailed Advisory in August that takes a look at half-year results and analyzes what they say about the direction of the global Yellow Pages industry in 2005.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  09:11 | permalink | comments [0] | trackbacks [0]

Jul 18 2005
Swedish Businesses Following Consumers Online
A survey from eMarketer reveals some interesting data on the Swedish online advertising market. Swedish advertisers are moving full force into online advertising in Europe's most wired country. But there is fairly widespread dissatisfaction with online advertising among Swedish Internet users.

This item has both good and bad news for Sweden's directory industry, which has already gone multi-platform. In 2004, market leader Eniro generated almost 33 percent of its revenues in Sweden from online and voice services (including DA).

One possible inference from the apparent disconnect between advertisers and consumers is that advertisers are ahead of consumers in terms of adopting online advertising. Another is that online advertising has done a better job of alienating than persuading consumers.

However, when 72 percent of Swedish advertisers (a number derived from a sample of just 89) say they use online advertising, it can't just be based on following the fad. Swedish consumers are online and advertisers know they need to be there. The key perhaps is to be there when consumers look for them, rather than trying to force themselves into the consumer's field of vision. This speaks to the power of online directional media.
Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  00:59 | permalink | comments [0] | trackbacks [0]

Jul 5 2005
TransWestern to 'Explore Strategic Options'
TransWestern Publishing issued a brief press release today announcing that it has engaged Goldman Sachs to "explore strategic alternatives." Generally, this language translates into, "We are for sale."

One question of course is, who is the likely buyer? Yellow Book always comes to mind whenever the sale of any major independent comes up (or any independent for that matter). Another private equity transaction is always a possibility. Or what about another media player? Hearst bought White in order to broaden its customer and content base, not to mention its cash flow and revenue stream. Who's to say another media player won't show an interest in a company that has revenues of close to US$400 million and an EBITDA margins of around 30 percent?

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  11:21 | permalink | comments [3] | trackbacks [0]

Jul 5 2005
YBR Sale Gets Green Light
An article yesterday on reported that European antitrust regulators have given the nod to the acquisition of Yellow Brick Road by an international private equity consortium. YBR is a holding comany that includes Fonecta (Finland), Mediatel (Austria and Czech Republic) and the Netherlands (Telefoongids). The buyers, led by Australia's Macquarie Bank Ltd., bought the publishing group from the private equities 3i Group and Veronis Suhler Stevenson in May for 1.8 billion euros.

Blog: Global Yellow Pages Blog
posted by  Charles Laughlin at  09:07 | permalink | comments [0] | trackbacks [0]

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