overview
sell-offs
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selloffs, spin and acquisitions
This note considers churn and consolidation in the yellow
pages industry.
It covers -
introduction
As noted on the preceding page, investors and managers have
essentially adopted three approaches to the yellowpages
industry in recent years.
One is to cash out, either because yellowpages publishers
consider that an opportunity is too good to refuse or because
sale will allow the owner to pay down debt, invest in infrastructure
or acquire a competitor.
A second approach has been to seek economies of scale, with
large publishers taking advantage of ready access to capital
(whether through loans or from investors) in acquiring peers
and smaller competitors. As in other industries highlighted
elsewhere on this site, that acquisition activity has often
spurred a round of sales and takeovers as publishers and
their financiers embrace an 'eat or be eaten' model. Some
have also expanded into other regions, with several EU publishers
for example launching operations in Eastern Europe.
A third approach has been to leverage offline assets by
taking existing print directories online and by creating
new online-only directories on the basis that "all
search is local" (or merely that an online presence
will allow the publisher to address perceptions that future
revenue growth involves the web).
cashing out or catching up?
Some telecommunication companies have identified their directories
units as candidates for disposal: solid earners that are
unlikely to enjoy significant growth over the coming decade
and may indeed see sharply declining sales.
In late 2005 for example Verizon indicated that it might
sell or spin off its directories arm - Verizon Information
Services (VIS) - in 2006. Observers commented that VIS might
fetch US$17 billion (ten times its 2004 pretax profit of
US$1.7 billion on revenue of US$3.6 billion), useful in
paying down debt from acquisition of MCI. VIS employs 7,300
people, publishing 1,750 directories in 44 US states and
Washington DC, along with SuperPages.com, claimed as the
largest US online yellow pages. Sales fell 5.7% in 2004.
Competitor Qwest sold its print directories operations for
US$7 billion in 2002.Sweden's Telia spun off its directory
arm as Eniro in 2000. In the UK debt-hobbled BT sold its
Yell directories arm to Apax Partners and Hicks Muse Tate
& Furst (HMTF) for £2.14 billion in 2001, accompanying
disposal of its mobile phone operations.
Netherlands-based publishing conglomerate VNU, having progressively
exited from newspapers and magazines, unloaded its VNU World
Directories arm (with over 115 directories in Europe, South
Africa and Puerto Rico) to Apax Partners and Cinven for
€2.1 billion in 2004.
Other publishers have sought to catch up and consolidate,
rather than cashing out.
In 2005 for example Yell acquired TransWestern Holdings
from Thomas H Lee, CIVC and TransWestern executives for
US$1.5 billion. At that time Yell published 111 directories
in the UK and 565 in the US. TransWestern, a leading independent
yellow pages publisher in the US, boasted revenue of US$358
million and EBITDA of US$99.3 million from 332 directories
(24.7 million books) distributed in 25 states. It had 2,528
employees.
During the same year the Yellow Pages Group (YPG) through
its Yellow Pages Income Fund acquired Advertising Directory
Solutions (ADS), Canada's second largest directory publisher.
ADS was the incumbent directories publisher in Alberta and
British Columbia. It was purchased from an affiliate of
Bain Capital for C$2.55 billion (Bain having acquired ADS
for US$1.5 billion during the preceding year). The combined
business will be the leading directory publisher in most
major Canadian markets, with some 337 directories and around
28 million copies, along with leading online directories
such as YellowPages.ca and Canada411.ca.
RH Donnelly acquired Dex Media for US$9.5 billion in 2005.
Donnelly had been spun off from the Dun & Bradstreet
publishing conglomerate after an earlier bout of irrational
exuberance, going on to acquire some of its smaller directory
publishing competitors.
Yellow Pages Group, Canada's largest telephone-directories
publisher, announced a strategic alliance with Google in
2005 and agreed to pay US$436 million for Trader Media,
which has 65 print publications including AutoTrader. Trader
specialises in auto and real-estate advertising; it describes
itself as Ontario's largest publisher of classified advertising
publications and websites.
landmarks
2005 Yellow Pages Group agrees to pay US$436m for Trader
Media
2005 Yellow Pages Group announces alliance with Google,
with information available on new Google Local service
2005 Sensis expands into online recruitment
2005 Yell Group buys TransWestern Holdings (US) from Thomas
H Lee, CIVC and TransWestern Maagement for US$1.5bn
2005 RH Donnelly buys Dex Media (US) for US$9.5bn
2005 Bain Capital sells Advertising Directory Solutions
(Can) to Yellow Pages Group for C$2.55bn
2004 VNU sells
World Directories arm for €2.1bn to Apax Partners and
Cinven
2004 Sensis acquires Universal Publishers (UBD and Gregory's
Directories)
2004 Yell buys Feist
2004 RH Donnelley Corporation pays US$1.4bn for SBC directory
publishing business in Illinois and Northwest Indiana
2004 Bain Capital buys Canadian yellow pages for US$1.5bn
2004 Telstra buys 'Trading Post' classifieds publications
for $636m
2004 Hearst buys White Pages Directory Publishers (US) for
US$300m
2003 VNU increases stake in Pagini Aurii in Romania to 85%
2002 Qwest (US) sells directories arm for US$7bn
2002 VNU buys remaining 65% of Golden Pages directories
business in Eire for €185m and 28% of Romanian directory
publisher Pagini Aurii for €6.5m
2002 Australian High Court decision in Desktop Marketing
Systems Pty Ltd v Telstra Corporation
2002 Yell buys McLeod (US) and National Directory Company
(US)
2002 Pacific Access becomes Sensis, pays $20m for Fairfax's
CitySearch
2001 BT Group (UK) sells Yell directories arm to Apax Partners
and HMTF for £2.14bn
2001 Eniro buys Panorama Polska
2001 Yellow Book USA buys CGC directories in Louisiana and
Key West, Florida
2000 Yellow Book USA acquires Sprint Publishing & Advertising's
Midwest operations (55 directories) for US$2.23bn
2000 Eniro buys Yellow Pages Moscow (Russia) and Wer
liefert was? (Germany)
2000 Telia (Sweden) transfers most directory operations
to Eniro, then floats Eniro
1999 BT buys Yellow Book USA
1998 Yellow Book USA acquires Southern Directory Company
(29 directories in Mississippi, Alabama, Georgia, Tennessee
and North Carolina)
1998 Dun &
Bradstreet spins off RH Donnelley
1997 VNU (Netherlands) buys ITT Directories (US)
1997 Yellow Book USA acquires R H Donnelley East directory
business (inc 43 yellow pages directories in Delaware, Maryland,
New Jersey, Pennsylvania, Virginia and Washington DC)
1996 Yellow Book USA buys Gannett
Community Directories (40 local markets in New Jersey and
New York)
1994 Dun & Bradstreet sells stake in Thomson Directory
to US West
1994 Hearst
(US) buys Associated Publishing Company, publisher of yellow
pages directories
1991 Dun & Bradstreet sells Donnelley Marketing (85-million-household
consumer information database)
1991 Telstra reorganises White Pages and Yellow Pages directory
publishing arm as Pacific Access
1990 Dun & Bradstreet forms Don-Tech directory partnership
with Ameritech
1988 Dun & Bradstreet forms Venture One directories
partnership with Southwestern Bell
1988 US Supreme Court decision in Feist v Rural Telephone
1988 Dun & Bradstreet forms Cen-Don directory services
partnership with Centel Directory Company
1987 Times
Mirror (US) sells Times Mirror Press telephone directory
printing arm to GTE Directories
1986 Dun & Bradstreet buys Southern New Jersey Community
Directories
1980 Thomson
(Canada) sells Thomson Yellow Pages (UK), forms Thomson
Directories as joint venture with Dun & Bradstreet's
RH Donnelley
1975 Australian Yellow Pages directory launched
1975 Telecom in Australia
establishes National Directory Service to manage directory
publication and distribution
1961 Dun & Bradstreet buys Reuben H Donnelly Corporation
1935 'classified' section of PMG phone directory in Australia
printed on pink paper stock, later becomes known as Pink
Pages
1886 Reuben Donnelley introduces first telephone directory
in Chicago
1882 father Richard R. Donnelly founds R.R. Donnelley &
Sons
1880 Richard Donnelley establishes The Chicago Directory
Company
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