What’s Happening In Yellow Pages Land? Perhaps A Trifecta Merger Between AT&T, SuperMedia & Dex One

by Chris Silver Smith

Back in September I predicted a merger between SuperMedia and Dex One. However, there’ve since been other developments and rumors coming out of these yellow pages companies which lead me to suggest a possible “trifecta” — a three-way acquisition/merger could be in the works between AT&T’s Yellow Pages (NYSE:T), SuperMedia (NASDAQ:SPMD), and Dex One (NYSE:DEXO).

Trifecta Merger Between AT&T Interactive Yellow Pages, SuperMedia, and Dex One Corporation

These three companies operate some of the largest print and online yellow pages in the country, with AT&T Interactive operating YP.com, SuperMedia operating Superpages, and Dex One operating DexKnows. Read on for more speculation and observation on my part.

For some years now, I’ve expected that the Yellow Pages industry should expect some reduction in the number of players involved. As these companies have struggled with large debt loads, some decreases in print advertising sales, and competition with local search engines such as Google Place Search and Google Maps (not to mention competition with other local-oriented online services such as Yelp, CitySearch, Local.com, Facebook, etc), it would make sense for the competitors to pool resources. A merger/acquisition could reduce costs through synergies, combine client pools, and perhaps make a stronger contendor to compete with other local search players.

Back in September, I’d predicted a merger could happen between SuperMedia and Dex One, in part based upon their announced joint distribution agreement. However, I’ve since seen AT&T’s YP.com ads appearing in Superpages.com search results, and there are other interesting indicators, including changes in leadership and personnel.

In December, SuperMedia appointed Peter J. McDonald as CEO. McDonald was previously President and COO of RH Donnelley Corporation (now named Dex One), and was also previously President and CEO of SBC Directory Operations (which is now AT&T Directory Operations).

Before being renamed “Dex One”, RH Donneley acquired the directory publishing business of SBC Communications in Illinois and northwest Indiana. Since SBC merged with AT&T, and as part of the acquisition agreement for the directory publishing business, Dex gained a 50-year licensing agreement to publish directories for AT&T (I’m not sure if that’s for all of AT&T’s territory, or just for a few states). So, these companies have had close ties already for some time now.

Dex One has recently let go some top executives, with the departures of George Bednarz, executive vice president of enterprise sales and operations; Sean Greene, senior vice pesident of interactive; and Maggie Le Beau, senior vice president and chief marketing officer. Dex’s new CEO Alfred Mockett stated that they would be reorganizing the company’s leadership structure and making further announcements in here in the New Year. It’s quite possible that the removals now clear the way in preparation for merger, however.

While SuperMedia (formerly “Idearc Media”) and Dex One (formerly R.H. Donnelley) have emerged from Chapter 11 bankruptcy reorganization activities, they still are struggling with performance and their main stockholders or debt holders are likely motivated to take major actions to transform them. SuperMedia has been declared a bad stock by some analysts with yet others predicting continuing losses, and Dex One has been called a big loser by others. Since emerging from Chapter 11, their stocks just have not performed well:

SuperMedia Stock Performance

Dex One Corporation Stock Performance

I know from speaking to a number of past and current employees that SuperMedia has layed-off quite a lot of people during the past year as well, and have been working towards outsourcing of many functions overseas. Dex One has also reportedly been trying to trim annual expenses by 10%, which means some substantial layoffs have been under way there as well.

By contrast, AT&T’s yellow pages and interactive units have continued to operate strongly over the past few years, and are probably in a great position to be able to buy some companies. In this case, there could be some advantages to acquiring SuperMedia and/or Dex One. By doing this, AT&T gains greater market footprint in territories dominated more by these other directory publishers, while also removing some of their biggest competitors. They also would gain a few valuable online properties such as Superpages.com and DexKnows.com, instantly giving them greater online reach (more than the distribution agreement they apparently already have).

I’m hearing a lot of merger rumors surrounding what may be going on between these companies at the moment, and along with the speculative rumors there appears to be indications that increasing cooperation may be going on between them in terms of the distribution agreements. Along with possibly-preparatory changes in leadership, I think there’s maybe a good chance of a sort of “trifecta” merger in the works. We’ll have to see who may be given first seat, second and third in the structure if and when it happens.

It’s going to be interesting to see what unfolds this year in yellow pages and the local space!


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19 Responses to “What’s Happening In Yellow Pages Land? Perhaps A Trifecta Merger Between AT&T, SuperMedia & Dex One”

  1. […] Silver Smith offers a provocative post that argues there’s an impending merger afoot between one or more of the traditional YP […]

  2. B A says:

    I am wondering who this Silver Smith is and why people actually read his articles. Every prediction he makes about the Yellow pages industry proves completely opposite. In 2007 he wrote an article that “The Yellow pages are toast!” Here it is almost 4 years later and advertisers are still seeing a higher rate of return from the yellow pages than they are google search. If the internet guy would do what the yellowpage people do and track phone calls instead of clicks he would see that for the most part there are alot of “tire kickers” on the interent. When they want to make a phone call they still open up the original search engine, the yellow pages. Maybe you should do some side by side comparisons with proxy sites and tracking phone numbers before you say stupid stuff and make yourself look foolish!

  3. Silver says:

    Um, yeah. I am indeed the guy who wrote the article about how Google Trends indicated the “Yellow Pages Will Be Toast In Four Years“, but if you’d actually read that article you’d know that the editor-supplied title was merely attention-grabbing, and that I’d qualified by saying that I was not predicting the demise of the Yellow Pages, and summed it up with this sentence:

    “I think that classic Yellow Pages sites are going to decline, but the companies behind those sites may evolve and merge with other players so that they will survive in new incarnations.”

    Yet, even if I had not qualified it, you’d be on shaky ground if you were trying to criticise me for predicting serious problems in the YP industry. I mean, we’re talking about two of the major companies which filed for Chapter 11 bankruptcy protection within that timeframe, and other YP CEOs stating that print would likely be discontinued in many major metro areas along both coasts, and I could go on.

    Indeed I have stated and agreed that in online and offline, yellow pages often have a higher percentage conversion rate. And, it’s established that users frequently research online and buy offline. The big issue is at the root of the tree, however, and not in the quality of the fruit: if you have lesser usage, then ad costs must reduce and you can expect fewer sales. With usage of print demonstrably declining in many markets, it doesn’t require a PhD to figure out that the lifespan for many print directories — and corporations who do not effectively transition more to online — will be sharply limited.

    My four-year-old prediction was pretty accurate, and it does appear that some of these players will be merging. I might be a little off in terms of the ultimate configuration of partners, though.
    Since your IP address indicates AT&T, I think it’s entirely possible you work within that company. Do you have more direct information you’d like to share on whether AT&T is indeed involved with them?

  4. Ad Man says:

    Your article is interesting. I could see a merger of AT&T, Supermedia and Dex. AT&T of course will be the beast that swallows up the other two, as this is their corporate mindset. I think this will happen later than sooner. It makes sense for the reasons you speculated and more, but AT&T will wait until the prices of the two companies nosedive again which will inevitably happen. Why pay more when you can wait and buy for less?

  5. Formely ATT says:

    I retired two years ago from one of AT&T’s flagship branches on the west coast. In 2007 revenues were down 20%, in 2008 down 25%, 2009 down 30% and the expectation when 2010 numbers are in is that they’ll follow the same trend. Both dollars and number of customers are in serious decline.

  6. […] Chapter 11 bankruptcy reorganization, and subsequent cost-cutting (possibly paving the way for a three-way merger between SuperMedia, AT&T and Dex One). So, “corporate restructure” is an accurate term for what SuperMedia employees have […]

  7. BA is comical says:

    B A….your tact and ignorant statements make obvious that you are probably affiliated with a Yellow Pages sales organization and are not liking the predictions laid out by Chris Smith. I find it laughable that because you have had a couple of shoddy run SEM campaigns that have inevitably ended in cancellations that you believe the internet not to work. While SEM is not rocket science…do not believe that your company’s SEM program is anything but a cookie cutter operation with very little expertise in the building and optimization of a true SEM program. It is persons who dismiss these warnings as rubbish that often find themselves on the unemployment line with no true skill (outside of hard sales) in their basket. The people who read Silver’s blogs are leaders and innovators in the SEM/SEO industry and the respect given to him as a valuable source of information in the industry qualifies the fact that he is a leading expert. Chris…keep up the good work.

  8. […] While it’s not surprising that either company would be doing cost-cutting activities, I continue to believe that the silver lining may be that these actions still look like possible advanced reorganization plans prior to merger of the yellow pages companies. […]

  9. […] I’ve also heard AT&T’s name floated about as potentially interested in Yellowbook — they keep getting whispered about as a possible suitor for buying some of the big YPs. As I reported earlier, AT&T might acquire Dex One and/or SuperMedia. […]

  10. […] If you’re in a speculative mood, and we always are here at Nodal Bits, then you might also consider that this sets up their Dallas/Plano locations to increase their interactive development here, and with SuperMedia located in DFW as well, the facility could become part of the headquarters for a potential merged yellow pages company. […]

  11. Brian says:

    I thin something big is going down with Dex One
    Loaded all I can at this level in anticipation

  12. E. Wendell says:

    I have just been made aware of the “fodder” surrounding this YP industry decline…sell-off, merger and back to the AT&T Giant demonstring their market share dominance. I too think Chris is on target and anyone w/o a Ph.D or who is blind should see that the “print” market is dwendling fast! However with AT&T continuing to show dominance in a declining market is evdent of the sales force to which it owes its success. Now that being said, when AT&T bought back its BellSouth operations, it did so because BellSouth was doing “yellowpages” better than everyone else! They were at the top of their game and AT&T thought they could take it and do more. Besides not being completely ready for the new and “quickly” emerging interactive platforms, AT&T took the brightest and the best BellSouth had to offer and systematically and uncerimoniously destroyed the the “heart” of what made Yellowpages so great…its people! Its way of doing business! Its celebration of its “grunt workers” successes. AT&T known for its “bean counting” and lack of personality; its arrogance in thinking they could do it better than the BellSouth way, is more than partly to blame. No company is succeful in the long run if the people it hires are not happy working for the company. I guarantee you, if you poll those still around from the BellSouth days they will tell you that they are unhappy with the way AT&T handles the people and the business of yellowpages. Now known as AD Solutions; AT&T would do well to recognize that their product sales/delivery would have much better success if they went back to the BellSouth way and do it that way, for the right solution to hold on to and/or increase its market share before its to late. And yes, my e-mail ends in ATT.net. I’m a proud user of its products. AT&T and everyone else knows its a great prouduct. I also know much of its success is due to its people. AT&T doesn’t seem to recognize where their strength lie.

  13. Paul Stone says:

    I agree with E. Wendell with one exception. The BellSouth way was actually the L.M. Berry way. Former Berry CEO Elmer Smith had risen to the top leadership role at BAPCO. Since their aquisition of L.M. Berry in the 80’s their culture was was linked to BellSouth. The BAPCO marketing department worked one on one with Berry Leadership and the “people first” culture of Berry spilled over. Since Smith’s retirement and the subsequent sale of Berry AT&T has done a great job of destroying all culture. In the end small business was the big loser. I left newspapers in the late 80’s when subscriptions were falling and ad rates were continuing to rise. I am done with directories for the same reason.

  14. Lisa says:

    Hi there, any new news on the potential “trifecta”?

  15. Laura says:

    Chris, What are your thoughts of Randall Stephenson’s comments about AT&T’s possible sell off of their yellow page division? (Quote Referenced Below)

    And then second, in this environment, we’ll accelerate our efforts to improve our overall growth profile. We’ll do that by looking at opportunities to either divest or restructure low-performing and nonstrategic assets. You’ve seen us do this in the last year or two with our Sterling Commerce sale and the restructure of our Telmex holdings. And you’ll see more of these actions over the next 24 months. -Randall Stephenson Jan 26, 2012

  16. […] last year it had seemed possible that they might have toyed with the idea of performing a massive three-way merger of yellow pages companies by acquiring both SuperMedia and Dex One. I’d heard some convincing rumors, noted their […]

  17. Laura, I think they’ll likely try to sell or spin-off their Yellow Pages division — I just wrote up some opinions about this at:


  18. Brian says:

    ALLTEL Publishing Corp. (APC) in Hudson, OH was very successful producing small & medium-sized directories until the demise of ALLTEL. In 1993, ALLTEL acquired 320,000 lines & the directory business in Georgia from GTE. Directory conversions & production got underway in 1994. APC didn’t have its own Directory Management (DM), sales force, or printing plants like GTE, so they entered into a 10-yr. contract with GTE for those services. Years later, after GTE became Verizon, APC began using Quebecor World for print too because of steady growth. APC had its own Listing Management (LM) in Erie, PA. APC Marketing coordinated canvass activity for GTE/Verizon Sales. Relations between ALLTEL/APC & GTE/Verizon were often strained because there were so many people on both sides involved in the process. GTE/Verizon often tried to leave APC “flapping in the wind” on errors related to service order activity (or lack of), customer complaints, & adjustments. Keep in mind the fact that APC was using AMDOCS software because that’s what GTE used. Basically, APC inherited GTE’s operational struggles & shortcomings – they had to sit back & take it because GTE/Verizon had the size & more leverage in directories. As far as putting unique, quality books on the streets, APC got high marks. APC took a lot of the independent business away from L.M. Berry & Consolidated. Around 1999 or 2000 they were producing over 450 titles, which included the ALLTEL system books. They produced many books for Century Telephone (Monroe, LA) which later renamed itself CenturyTel (present-day CenturyLink) as well as numerous ones for TDS Telecom & independents in Alaska. ALLTEL/APC eventually started its own directory sales force, but that was short-lived. ALLTEL’s landline business was spun-off & merged with VALOR Communications to create Windstream in 2005/2006. Windstream then split off its directory publishing business (Windstream Yellow Pages) in 2007 to private equity firm Welsh, Carson, Anderson, & Stowe & it was renamed Local Insight Yellow Pages. Then in 2009, Local Insight merged into The Berry Company. The final piece of what was once a $6.5+ billion corporation was ALLTEL Wireless – it was absorbed by the beast Verizon Wireless. I never did trust Joe Ford or his son Scott at HQ in Little Rock, AR! Ken Beach, former ALLTEL Publishing President, was a nice guy & great leader. I’ll always have fond memories of Faith Hill too!

  19. Brian says:

    ALLTEL Publishing Corp. CONT. – Where might this “tiny” yet profitable operation be today if ALLTEL, Inc. hadn’t been systematically dismantled? I say “tiny” because that’s how corporate viewed & treated the publishing branch. APC was still on the upswing in the early 2000’s & I don’t believe it had peaked yet by mid-decade. Besides acquiring GTE/Verizon properties & resources beginning in 1993, corporate was purchasing other companies/interests, forming strategic partnerships, & aggressively expanding local access, long distance, cellular, bundled services/billing, call center, & IT/banking applications (the later heavily overseas). CenturyTel had doubled in size with the 1997 acquisition of Pacific Telecom, Inc. (PTI). ALLTEL, Inc. attempted a take-over of CenturyTel in 2001 but was defeated. In the years following its inception, ALLTEL Publishing was securing multi-year contracts & steadily building a reputation for eye-catching, interesting, quality directories that were a good ROI (especially for smaller, rural telcos since there was less market competition). Looking back on the many telcos & publishers that were big players, I can’t help but wonder (& maybe others have too) where APC might be in the pecking order today? ALLTEL/APC were trying to position themselves favorably among the likes of: Bell Atlantic first acquired NYNEX, then General Telephone & Electronics Corp. or GTE (& was renamed Verizon Communications Inc. after the GTE merger), Southern Bell/South Central Bell (formed BellSouth, then AT&T acquired BellSouth to form AT&T South & AT&T Southeast), Southwestern Bell Corp. renamed itself SBC Communications Inc. (then it purchased its former parent company AT&T Corp. & renamed itself AT&T Inc.), Ameritech was acquired by SBC Communications Inc. (which later became AT&T, Inc.), Century Telephone renamed itself CenturyTel, then renamed itself again to CenturyLink, US West was acquired by Qwest Communications & called Qwest Corp. (then it was acquired by CenturyLink), Pacific Bell (PacBell) was acquired by Pacific Telesis, then it was acquired by SBC Communications Inc. which ultimately became AT&T Inc. (so it operates as AT&T California), Sprint spun-off former United Telephone companies & Centel as Embarq (which was subsequently acquired by CenturyTel now CenturyLink), Sprint Directory Publishing (including Centel Directories & the Embarq name/logo) was acquired by R.H. Donnelley Corp. (now Dex One Corp.), Ameritech Publishing was acquired by SBC (subsequently it became AT&T Advertising Solutions’ The Real Yellow Pages). UPDATE: Cerberus Capital Management has agreed to buy a majority stake in AT&T’s directory business – it will own 53% of YP Holdings LLC by mid-2012. GTE Directories became Verizon Communications which became Idearc Media then finally SuperMedia (SuperPages), Yell (UK) purchased Yellowbook (US) then McLeodUSA then TransWestern Publishing, L.M. Berry was acquired by BellSouth, then BellSouth by AT&T, then AT&T by Local Insight Media with the former APC/Windstream directories in the mix (currently named The Berry Co. LLC after Local Insight Media Holdings Inc. emerged from Chapter 11 bankruptcy protection), Consolidated Communications, Qwest Communications sold off QwestDex directory services to R.H. Donnelley (later it became Dex Media), Ogden Directories, The Local Pages, etc. Of course there were/are many more telcos & publishers scattered around the country – I tried to list the larger ones while still keeping it balanced. The original purpose of all this commentary was to paint a picture of the climate & competition ALLTEL faced back then. As you read, things were pretty volatile & cutthroat. Maybe APC would be in the same boat taking on water with AT&T, SuperMedia, & Dex One, maybe not. Obviously APC wasn’t near the size of those three, and that may have worked to their advantage. I/we can only speculate about how healthy they would be if they were still around. AT&T (re: print directories) is in the process of climbing into the life raft, so I don’t see a three-way merger taking shape. Verizon already played the shell game with its investors & shareholders when it turned its ailing directory business into Idearc. A judge already decided they had motive & opportunity to deceive, and they did. RHD has exited bankruptcy as Dex One, but I’m not sure they’re prepared to walk the road that lies ahead. Same for Berry. I don’t have any data but Yellowbook seems the most prepared for the next few years. The lingering & painful question is how much of a role printed telephone books will play in advertising & information services in coming years. Sadly, traditional home phone service, print newspapers, & print phone books are steadily fading as internet & mobile technology drives the economy & feeds the sustained craze for the newest, sleek object you carry with you everywhere.