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The Kelsey Report® Advisory

BellSouth and SBC Team Up to Acquire
Charles Laughlin , 11/8/2004

SUMMARY: SBC and BellSouth, two of the largest telecoms and owners of two of the largest directory publishers in the United States, have joined together to acquire, long coveted as the best URL in the online directories business. The two companies have made the strategic calculation that their long-term success in the online directories business, or the directories business overall, was to join forces to achieve greater scale while sharing resources to reduce the cost of developing and maintaining a competitive technology platform. One of the greatest newfound efficiencies will come from owning a URL that is a natural traffic engine. Terms of the deal were not disclosed, but a number of sources have estimated the value of the deal to be in the neighborhood of US$100 million.

In a separate deal that nonetheless suggests the possibilities this acquisition creates, BellSouth last week announced it has an agreement with the search engine Google to resell its AdWords product to advertisers in BellSouths nine-state territory, as well as those served by its Berry Co. subsidiary. The deal is a strong example of the growing realization that, at least for now, publishers and search engines are more suitable as partners than direct competitors.

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