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Phone Books Are Bad For Economy

Phone books continue to go out of business or sell-out because they are no longer self-sustaining. Former employes of the local community phone book have informed us that they have closed their doors. We wish them luck in these difficult economic times and we continue to stress to business owners how important it is not to get locked into the same outdated forms of advertising. We heard, there was a failed attempt from LocalTel to purchase Community Phonebook but now it seems Community Connection will be publishing Community Phonebooks. Shamrock Yellow Pages was also looking for a buyer and finally sold out in February 2009.

We at Marketing Media Mix, LLC would never recommend for a business to stop any form of advertising or marketing that is working, and urge you to continue to use phone books if they are making your business money. Its too bad that many of the independent Yellow Pages companies have became unprofitable and could no longer stay in business on their own, our opinion is that its not hard to see that the directional advertising industry has left them behind.

The effect of declining revenues on the top YP companies over the last four years has been massive. Idearc, the company spun off when Verizon divested itself of its yellow pages division, filed for Chapter 11 bankruptcy in 2009, along with R.H. Donnelley and Ambassador Media Group the same year...

Most recently, AT&T signaled in January that they were looking to offload their directory division, and they are now in talks to sell a stake in the YP unit to the Cerberus Capital Management LP private equity firm. Very tellingly, AT&T’s relative valuation of their YP is sharply lower than Verizon’s YP spinoff valuation back in 2006 (1.5 times EBITDA now versus 8 times EBITDA back then) — and, the lower valuation indicates that financial analysts foresee reduced profitability over time.

As Bernstein analyst Craig Moffett stated about the AT&T selling off of YP: “The window has already closed for selling Yellow Pages businesses at a meaningful price.”

However, the decline of print income is still impacting them each year, and there were continued layoffs of employees from both SuperMedia (the post-Chapt 11 name of Verizon’s YP) and Dex One (the post-Chapt 11 name of R.H. Donnelley) after they emerged from Chapter 11. Dex One is planning to continue cost-cutting into 2012 as well...

-Are Yellow Pages Toast? Four Years Later We Review Ad Value