Idearc Results Follow In Line with RHD's - What's Next?

Idearc has reported their results just days after RHD's, and the reports are very similar. They are both shrinking in revenues and profits (but both still with significant Operating Profits), but both have debt that will never be paid off at the current revenue and profit levels. As their businesses move online more and more, their Internet revenues are not making up for print revenue losses. They're both trapped in the space where they don't want to cannibalize their print revenue too much while they still have it, but are lagging on the Internet side for the same reason?

So what happens next? They have both mentioned bankruptcy, which is a realistic discussion because of the size of their debt and the current market for debt restructuring. The real question is will they really go bankrupt or is this a negotiating ploy? Or does it make a difference? In reality, neither of these companies is going to close the doors. The operating profits are still healthy and selling their assets will bring much less money to the debtholders than continued operation will. So, whether they go bankrupt or not, the only option seems to be for the debtholders to agree to forgive some of their debt, to allow the companies to continue to operate, and to be thankful they're getting paid whatever they get. Whether that happens in bankruptcy or not may be moot.

Of course, there's one more option too: Consolidation. YPC seems to be fairly healthy and could make an aggressive move to take an even larger lead, get national coverage, and try to take the dominant position in local, both on and offline. They already have a deal with Idearc to exchange listings. Could that be the first step?

Kelsey Group Blogs » Idearc Results Are Predictably Grim; Bankruptcy an Option

Financial Discussion of YP Companies

Interesting summary of a financial article on the state of the Yellow Pages business...

Dense ‘Deal’ Piece on YP « Screenwerk

Newspaper Ad Revenues Dropping Fast

I don't post too much about newspapers here, but they are a large (though shrinking) and important part of the local advertising ecosystem. I've argued for a while that, while yellow pages companies are in a tough position, newspapers are even worse off. Why is that? Because they face a lot more competition and on different factors compared to YPs. Any local blogger can cover local news (sometimes better than the big papers, especially when you're talking about a neighborhood or smaller area). They can go deeper on topics, have a better understanding of the day-to-day life in an area and, most importantly, they can be more timely with their news delivery. While newspapers publish once a day (and their online schedules are not that much more frequent), bloggers publish anytime. And via blog readers and other notification channels, interested people can know the news as soon as it happens. While this will impact other local players, like radio and TV, the biggest impact is in the newspaper industry. Yellow Pages obviously face significantly new media competition as well, but it's not as likely that one person in their house will provide the same competition for YPs that they provide for newspapers.

So what's the point of all this? According to the Newspaper Association of America (via Techcrunch), newspaper advertising revenues have been dropping off a cliff. Not only that, but their Internet revenues are decreasing as well. Most people I know think we're in a recession and advertising is bound to drop off as a whole. But it definitely looks like newspapers are taking the brunt of it (though the YPs are not exactly feeling good either). Classified ads, one of the big revenue areas for newspapers, have been eaten away for a while now, by Craigslist and vertical sites like Rent.com, Realtor.com, Monster.com and the like. But now it seems like display is following, and it's just going to keep going down from here.

Negative Momentum: Newspaper Ad Revenues Gaining Downhill Speed (Even Online Is Declining)

What does a New Zealand YP Company have to do with us?

Kelsey group had an interesting writeup today of Yellow Pages Group New Zealand's acquisition of a majority stake in a couple sites targeted at people over 50. On it's face, seems like it's not a big deal, but thinking about it further, I tend to think this is a really astute move and something we should think about when looking to expand our local (and YP specifically) businesses in the US.

The core Internet demographic (teen-40 years old) are getting pretty locked in to going to Google or Yahoo or other Internet pure-play sites to get their information. It's that activity that's hurting YP revenues with those types of users. However, print Yellow Pages still experience strong usage among people 40 and over, and haven't slowed too much in that age group. However, that slowdown is likely to come, and before it does, Yellow Pages companies should be looking to expand their brand equity with that demographic by providing them with Internet destinations and experiences that suit their needs and wants. Similar to the posting I wrote about women being a core demo of YP sites online, I'm going to argue that we need to focus our experiences towards those customers who still provide us good usage, that we have not yet lost to the Internet pure-play companies.

YPGNZ has shown us an example of that kind of forward thinking, and we need to start thinking that way here as well.

Kelsey Group Blogs » Yellow Pages Group New Zealand’s Boomer Acquisition

IYP Reach in the US (according to Google)

Via TechSoapBox:



IYP Reach in the US (according to Google) - Tech Soapbox

Should consumers be able to opt out of phone book deliveries?

Don't know how I missed this yesterday and is was on one of my favorite blogs, The Consumerist. It discusses attempts by some local governments to allow their residents to opt out of receiving phone books and the difficulties that previous governments have had in passing such laws.

It really seems like allowing people to opt out shouldnt negatively impact business much if advertisers are looking at their ads based on performance instead of on circulation. In fact, it could reduce costs for yellow pages companies (though it would require them to keep a database of who has opted in/out). However, there may be more impact than we would think.

Are there a lot of people who would opt out but end up keeping the phone books they are delivered and using them? I have heard the argument that phone books have the benefit of being able to find things faster than you can online and perhaps, if a pipe has burst or you have to do something really quickly, where you aren't familiar with a vendor, people still grab for Old Faithful. In any case, if you look at the comments on this article (which is read by some of the more tech-savvy people around) there is still a fair amount of support for the books, and people still see value in them.

Phone Books: Should Consumers Be Able To Opt-Out Of Phone Book Deliveries?

Self-Storage Reports Strong Profits

This one may be a bit off-topic, but relevant. As we move forward on this blog, we are going to talk a bit more about big local (Print, IYP and Search) categories, as it is relevant.

Storage and Moving and two big categories for us, and they're categories that are undergoing some growth right now, if this story is any indication. In this case, Public Storage has had their profits increase by 500% this quarter (vs last year), mostly due to the housing market. Realtors and Loans are two other big categories for the local space, and ones that are undergoing drastic shifts with the changes in the housing markets. We can probably all look for their investments in advertising to decrease a bit (at least temporarily). However, it looks like storage (and likely moving as well) may pick up some of the slack. Time for local sites to shift focus a bit?

Amid 91201 Foreclosures, Public Storage Inc. Reports Strong Gains | Redfin Los Angeles Sweet Digs