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Major Yellow Page Publisher Files Chap 11



yellow-pagesTraditional marketing avenues continue to take punishment in ways never seen before. Of course, we all know about newspapers and the trouble they are having. Now, it’s time for another stalwart of traditional small and medium business advertising, the Yellow Pages, to take more of a beating.

Amidst news stories about Microsoft actually making search inroads and the “Tastes Great / Less Filling!” wars between Facebook and Twitter is the reality that the old guard is struggling to hold on. Late last week, R.H. Donnelly Corp., a major yellow pages publisher, filed for Chapter 11 bankruptcy protection so it can get out from under a $10 billion (that’s right, with a B) debt load. The Wall Street Journal reports

The Cary, N.C., company sought protection from its creditors in the U.S. Bankruptcy Court in Wilmington, Del., after reaching a deal with a majority in dollar amount of its bondholders to exchange $6 billion in debt for 100% of the equity in the reorganized company and to exchange a $400 million note for a new $300 million note. Holders of most of the company’s $3.5 billion in bank debt have agreed to extend the maturity on the loans to 2014.

Most Internet marketers have been putting the Yellow Pages in the grave for quite some time now. The sales tactics and question of ROI is something that can no longer be swept under the rug in the age of the Internet and social media. While there is arguably a place for Yellow Page products they are no longer viewed as necessities to small businesses. Even the online versions of these offerings are wrought with confusion over their true value. Add to that the continuing murkiness of online yellow page “products” (i.e. buy x amount of clicks per month) and the future seems kind of cloudy as well.

The following three quotes tells the tale very well of R.H. Donnelly and its current state of affairs

In an interview Thursday, R.H. Donnelley Chief Executive David Swanson said the downturn in the U.S. economy and housing market hit the company’s advertising sales, which in turn caused it to run into problems keeping in line with its debt covenants.

R.H. Donnelley racked up billions in debt over the past several years through a series of acquisitions. The company bought Sprint’s directory business for more than $2 billion in 2003 and three years later acquired Dex Media Inc. in a deal worth about $9.5 billion.

Mr. Swanson said R.H. Donnelley entered Chapter 11 to fix its “unhealthy balance sheet” but doesn’t need to address any operational issues while in bankruptcy. “It’s business as usual here,” he said.

For me, the last line says it all. The CEO of a business that has seen shareholder value go to near nothing still says that it’s business as usual. If you were a stockholder in this company that was holding shares in its current state you would be a little ticked at that kind of statement. It’s hard to feel confident that this filing will change anything if the attitude still remains. Oh, as an aside, Mr. Swanson has enjoyed some nice personal compensation over the past few years despite engineering this train right into Bankrupt Station. No wonder it’s business as usual.

Donnelly joins Idearc, who publishes the Verizon Yellow Pages, in Chapter 11. Idearc did so in March of this year.

So are the yellow pages dead? Is the online version still an option if you are an SMB who has been buying from them for years? Which Yellow Pages is the actual real one anyway? While we make this transition from traditional to new media options will this model have a place?

We’ll be looking for your opinions under the Comment heading. No charge here!

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  • http://www.superpages.com Andrew Shane

    Frank –

    I work at Idearc and wanted to share with you and your readers links to two initiatives that are, well, pretty super:

    – The SuperGuarantee program found on http://www.superpages.com and your local Verizon Yellow Pages

    – Our SuperTradeExchange found on http://www.supertradeexhange.com

    The SuperGuarantee program, a national consumer guarantee initiative launched in February is designed to increase spending in local economies by lowering the risk associated with hiring contractors, plumbers, auto body repair shops and thousands of other eligible service provider category-based businesses.

    The SuperTradeExchange program, which became available for eligible Idearc Media clients in March, works like a barter system, but instead of trading one-to-one, clients can trade their excess inventory or capacity for SuperBucks which can then be used to purchase products and services from any other member in SuperTradeExchange.

    Both programs are doing well as we head down the road of emerging from Chapter 11.

    Thanks for the opportunity to post,
    Andrew Shane

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  • http://www.wolf21.com Barry Byers

    Andy, I think you hit it right on the head with the “Business as usual” comment. I work with National YP publishers on a daily basis and most just don’t get it. In fact, when I asked how YP compared to local search for a couple of measurements at a recent seminar on selling YP, an expert in the field replied, “We don’t track those parameters for local search.”

    I couldn’t believe the answer and neither could the audience of about 50 YP salespeople desperately looking for ammunition to address advertiser comparisons of YP to Local Search. Instead, the speaker droned on and on about the value of YPs on it own. Incredible.

    Another example. I have a client paying for a National ad on YellowPages.com. The ad appears at the top of the listing online. However, if you search on your Iphone, none of the advertisers paying 100K or more appear!

    I

  • http://www.JoeMescher.com Joe Mescher

    It’s a packed room and the audience is howling, literally pumping their fists in the air.

    This was my first “All Hands” meeting as an RHD employee (2007).

    The company stock just hit $80.

    Although no longer an employee, I have been shocked to watch the downward spiral from $80…to $40…to $0.15, and now this…

    Joe Mescher’s last blog post..Bankrupt Brands: Who’s Minding the Store?

  • http://AdzeUp.com Tony Bacon

    Hail hail the king is dead. God HAVE the king. For twenty years I have looked upon the Yellow Pages with a leary eye. It seemed as though the sales department was nothing more than a boiler room, squeezing as much money out of the hapless new advertisers and taking what they can get from the wary veterans of business battle. I was talking to a guy just last week who was waiting for his YP ad to come out in mid June. He paid for the full year in March. $13,000 gone. He was a nervous wreck because of it. The article informs that a large part of the collapse of print directories is local online advertising and the internet in general. Duh! I would like to invite the YP salesforce to take a look at programoverview.info – LocalAdLink.com and then come on board with me, Tony Bacon at AdzeUp.com. It’s only info. Call me at 916-501-7011 with any questions you might have. Its the hottest thing going and without that guilty aftertaste.