North American Directories Market 2008

Publication Date	October 2007
Publisher	Heernet Ventures
Product Type	Report
Pages	152
ISBN Number	not applicable
Product Code	HVL00006

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Summary

The directories sector has traditionally been highly attractive to investors because of its predictable cash flows, relative immunity to downturns in the economic cycle and low capital expenditure. Structural changes in media consumption, largely driven by the emergence of digital platforms (Internet, mobile) are creating a more uncertain environment for directory publishers. Key challenges they need to address include managing the migration of their customers and users from print to online, dealing with an increasingly competitive print environment and developing an online offering that competes effectively with the pure online search companies.

Key observations
- The industry has undergone a significant degree of consolidation over the last 5 years. AT&T's acquisition of BellSouth, R H Donnelley's acquisition of Dex Media and Yellow Book's large number of acquisitions have led to the four largest players having over 80% market share.
- The incumbent print publishers have managed to maintain their profitability in the face of increasingly stiff competition from independent directories. However, margins are beginning to decline as it becomes more challenging to retain print advertising (advertiser numbers are falling and they are reducing their average spend).
- In the Canadian market, Yellow Pages Group continues to benefit from an extremely strong market position (+90% market share) and positive growth in print directory adspend.
- Growth in print has come from one of three strategies:
  - Independent directories. Through a strategy largely based on price competition (and, to a much lesser degree on product and coverage), independent directories have captured a fifth of the print market. The most successful player has been Yellow Book which is now the fourth largest publisher (overall).
  - Companion directories. These portable directory products have enabled publishers to capture some incremental revenues from advertisers and enhance usage. Companion products have been launched by most of the leading publishers.
  - Other local media. Among the large publishers, only one has adopted a strategy of transforming itself from a directory publisher into a broad, local classified advertising company. The Canadian group, Yellow Pages Group has made two substantial acquisitions
- In the online search market, the publishers face a set of competitors (Google, Microsoft, Yahoo! and AOL) who have invested substantially greater sums to built leadership in the online search space. In addition to this, these pure online players focus on providing a complete local search offering - and are not just focused on yellow pages content.
- Collaboration is an important element of the online search market. The search engines and portals benefit from access to the content provided by the publishers and in turn, the publishers resell advertising inventory on the search engines. It is too early to say if the online strategies of the directory publishers will be successful. Current evidence suggests that they will have mixed success; the reasons for this are that:
  - Publishers don't display the degree of product and commercial innovation evident among the search engines and portals.
  - Publishers have not used their substantial resources to make investments in promising start-up ventures in the local search space (newspaper groups have adopted this strategy).
  - As some of the publishers have realised that they will not be able to be able to build their online presence through purely organic growth, they have started to make acquisitions; whilst the rationale for Idearc's acquisition of assets from Infospace is clear (traffic), R H Donnelley's acquisition of Business.com is less obvious. Mobile search is a huge opportunity and there is no evidence that the directory publishers are investing in this area - at the same rate as the search engines. Positives
- Unlike newspaper classifieds, print directories are unlikely to suffer a precipitous, rapid decline in revenues. The decline will continue to be gradual as there will remain a need for print directories amongst both consumers (and therefore advertisers), but at a lower level than today. The rate of decline will also vary considerably by the advertiser's industry classification.
- Directory publishers can rely on their access to high quality, proprietary directory content and a large sales force to compete against the search engines. Risks and challenges
- The rate of migration of usage from print to online is likely to accelerate, especially among young people.
- In online local search, usage is likely to consolidate around the market leaders (current evidence suggests that the search engines will retain and enhance their leadership position in local search).
- Directory publishers are not investing sufficient resources in mobile search. This will become an extremely important part of the local search market in the next 5 years.

Content

Executive Summary
Investment Case
- Overview
- Historical Development
- Key Observations
- Sector Trends
- Increasing Print Competition
- Changes In Usage
- Online Search
- Directory Assistance Services
- Mobile Search
- Industry Consolidation & Non-Organic Growth
- Share Price Performance
- Company Analysis
- Growth Outlook
- Overview
- Overall Advertising Growth
- 'base Case' Scenario
Us Market Overview
- Market Size
- Market Structure And Growth
- Revenue Analysis
- Directory Analysis
- Usage Trends
- Online Market
- Overview
- Online Search
- Growth In Search
- Major Players In Search
- Online Yellow Pages
- Major Players
- Overview
- Directory Publishers
- Investment Activity
- Public Offerings
- Mergers And Acquisitions
- Venture Capital Investments
Canadian Market Overview
- Overview
- Market Size And Growth
- Major Players
- Investment Activity
- Growth Outlook
Company Profiles
- At&T
- Overview
- Activities
- Financials
- Management And Ownership
- Investment Activity
- Centurytel
- Overview
- Management
- Investment Activity
- Datanational
- Overview
- Financials
- Management
- Investment Activity
- Frontier Pages
- Overview
- Management
- Investment Activity
- Idearc Media
- Overview
- Activities
- Financials
- Management
- Ownership
- Investment Activity
- Local Insight Media
- Overview
- Management
- Investment Activity
- Names And Numbers
- Overview
- Financials
- Management
- Ogden Directories
- Overview
- Management
- Phone Directories
- Overview
- Management
- Investment Activity
- R H Donnelley
- Overview
- Activities
- Financials
- Management And Ownership
- Investment Activity
- The Local Pages
- Overview
- Management And Ownership
- User-Friendly Directories
- Overview
- Financials
- Management
- Investment Activity
- White Directory Publishers
- Overview
- Activities
- Financials
- Management And Ownership
- Investment Activity
- Yellow Pages Group
- Overview
- Activities
- Financials
- Management And Ownership
- Investment Activity
- Yellow Book Usa
- Overview
- Activities
- Financials
- Group Financials
- Yellow Book Financials
- Management
- Investment Activity
- Ypone Publishing
- Overview
- Activities
- Management
- Investment Activity
Table Of Figures
- Figure 1) Company Summary
- Figure 2) Market Overview
- Figure 3) Directory Landscape
- Figure 4) Directory Sector, Growth (3 Year Moving Average)
- Figure 5) Online Local Search Matrix - User Perspective
- Figure 6) Sector Trends Analysis
- Figure 7) Growth Analysis For Various Yp Segments
- Figure 8) Usage Trend For Print Directories
- Figure 9) Usage Trend For Online Yellow Pages
- Figure 10) Growth In Us Online Search Revenues
- Figure 11) Traditional Da Offerings
- Figure 12) Us Mobile Operators
- Figure 13) Us, Growth In Non-Sms Data Arpu
- Figure 14) The Mobile Landscape
- Figure 15) Market Shares Of Major Players
- Figure 16) Major Transactions
- Figure 17) Online Investments
- Figure 18) Share Price Performance
- Figure 19) Idearc, Relative Price Performance
- Figure 20) R H Donnelley, Relative Price Performance
- Figure 21) Yell Group, Relative Price Performance
- Figure 22) Yellow Pages Income Fund, Relative Price Performance
- Figure 23) Major Players Analysis
- Figure 24) Ebitda Margins
- Figure 25) Sales Productivity
- Figure 26) % Renewal Rates
- Figure 27) Change In Print Arpa
- Figure 28) Idearc, Change In No. Of Customers
- Figure 29) Trends In Economic Growth And Advertising
- Figure 30) R Squared Estimate
- Figure 31) Us Economy, Key Growth Forecasts
- Figure 32) Adspend Industry Forecasts
- Figure 33) Us Directories Market, Forecast (2007 - 2012)
- Figure 34) Us Directories Market, 2007 Estimate
- Figure 35) Us Directories Market, Analysis Of Growth To 2012
- Figure 36) Market Growth (1980 - 2006)
- Figure 37) Share Of Total Advertising Market
- Figure 38) Market Size Analysis
- Figure 39) Market By Advertising Type
- Figure 40) Market By Publisher Type
- Figure 41) Analysis By Advertiser Type
- Figure 42) Revenue By Publisher Type
- Figure 43) Copies Distributed By State For Leading Players (2007/08)
- Figure 44) No. Of Titles Published By State For Leading Players (2007/08)
- Figure 45) Print And Online Usage Trends
- Figure 46) Growth In Us Online Adspend
- Figure 47) Growth In Us Online Usage
- Figure 48) Us Online Revenues (2000-09)
- Figure 49) Leading Us Online Properties
- Figure 50) Growth In Search Queries (2004-07)
- Figure 51) Growth In Search Revenues (2001-06)
- Figure 52) Market Share Of Major Players
- Figure 53) Local Search Offerings Of Major Online Companies
- Figure 54) % Change In Search Queries For Leading Sites
- Figure 55) Search And Click Through Analysis (April - June 2007)
- Figure 56) Online Yellow Pages, Revenues (2001-2005)
- Figure 57) Online Yellow Pages, Market Share (2006)
- Figure 58) Online Yellow Pages, Revenues (2006 - 2012)
- Figure 59) Internet Yellow Pages (Searches, Q1 06 - Q1 07)
- Figure 60) Market Shares Of Leading Iyp Players
- Figure 61) Internet Yellow Pages (Unique Visitors, 2006/07)
- Figure 62) Search And Click Through Analysis (April - June 2007)
- Figure 63) Analysis Of Leading Yellow Pages Websites
- Figure 64) Yahoo! Local Website
- Figure 65) Yellow Book Website
- Figure 66) Yelp Website
- Figure 67) Major Players In The Directory Space
- Figure 68) Major Print Players, Key Data
- Figure 69) Idearc, Share Price Relative Performance
- Figure 70) Major Transactions
- Figure 71) Selected Venture Capital Investments
- Figure 72) Canada, Directory Revenues
- Figure 73) Canada, Directory Market Growth Rates (Since 1990)
- Figure 74) Canada, Online Advertising Market
- Figure 75) Canada, Online Advertising Market
- Figure 76) Major Players In The Directory Space
- Figure 77) Canada, Major Transactions
- Figure 78) Canada, Adspend Per Capita Analysis
- Figure 79) Canada, Directory Adspend Per Capita Analysis
- Figure 80) At&T, Summary Financials
- Figure 81) At&T Directories, Historical Development
- Figure 82) At&T, Print Directories (2007/08)
- Figure 83) At&T, Contribution Of Bellsouth
- Figure 84) At&T Directories, Summary Financials
- Figure 85) At&T Directories, Quarterly Financials
- Figure 86) At&T, Key Management
- Figure 87) At&T, Largest Shareholders
- Figure 88) At&T, Key Transactions
- Figure 89) Centurytel, Print Publications
- Figure 90) Centurytel, Key Management
- Figure 91) Datanational, Print Publications
- Figure 92) Volt Information, Other Offerings
- Figure 93) Datanational, Detailed Financials
- Figure 94) Datanational, Key Management
- Figure 95) Datanational, Key Transactions
- Figure 96) Frontier Pages, Print Publications
- Figure 97) Frontier Pages, Historical Development
- Figure 98) Frontier Pages, Summary Financials
- Figure 99) Frontier Pages, Key Management
- Figure 100) Idearc, Summary Financials
- Figure 101) Idearc, Historical Development
- Figure 102) Idearc, Print Directories (2007/08)
- Figure 103) Superpages.Com, Homepage
- Figure 104) Superpages.Com, Results Page
- Figure 105) Idearc, Key Online Products
- Figure 106) Superpages.Com, Advertising Network
- Figure 107) Idearc, Financials
- Figure 108) Idearc, Interim Financials
- Figure 109) Idearc, Growth Rates For Key Kpis
- Figure 110) Idearc, Print Arpa And Advertiser Trends
- Figure 111) Idearc, Kpi Analysis (Historical)
- Figure 112) Idearc, Key Management
- Figure 113) Idearc, Largest Shareholders
- Figure 114) Idearc, Key Transactions
- Figure 115) Local Insight Media, Directory Analysis
- Figure 116) Local Insight Media, Key Management
- Figure 117) Local Insight Media, Key Transactions
- Figure 118) Names And Numbers, Print Publications
- Figure 119) Names And Numbers, Historical Development
- Figure 120) Names And Numbers, Revenue Estimate
- Figure 121) Names And Numbers, Key Management
- Figure 122) Ogden Directories, Print Publications
- Figure 123) Ogden Directories, Key Management
- Figure 124) Phone Directories Company, Print Publications
- Figure 125) Phone Directories Company, Historical Development
- Figure 126) Phone Directories Company, Key Management
- Figure 127) Phone Directories Company, Key Transactions
- Figure 128) R H Donnelley, Summary Financials
- Figure 129) R H Donnelley, Key Acquisitions
- Figure 130) R H Donnelley, Historical Development
- Figure 131) R H Donnelley, Print Directories (2007/08)
- Figure 132) R H Donnelley, Telecom Affiliations
- Figure 133) Dexknows.Com, Business Profile Product
- Figure 134) R H Donnelley, Detailed Financials
- Figure 135) R H Donnelley, Interim Financials
- Figure 136) R H Donnelley, Key Management
- Figure 137) R H Donnelley, Largest Shareholders
- Figure 138) R H Donnelley, Key Transactions
- Figure 139) The Local Pages, Print Publications
- Figure 140) The Local Pages, Historical Development
- Figure 141) The Local Pages, Key Management
- Figure 142) User-Friendly Phone Book, Print Publications
- Figure 143) User-Friendly Phone Book, Historical Development
- Figure 144) User-Friendly Phone Book, Summary Financials
- Figure 145) User-Friendly Phone Book, Key Management
- Figure 146) User-Friendly Phone Book, Key Transactions
- Figure 147) White Directory Publishers, Historical Development
- Figure 148) White Directory Publishers, Print Publications
- Figure 149) White Directory Publishers, Website
- Figure 150) White Directory Publishers, Summary Financials
- Figure 151) White Directory Publishers, Key Management
- Figure 152) White Directory Publishers, Key Transactions
- Figure 153) Yellow Pages Group, Summary Financials
- Figure 154) Yellow Pages Group, Historical Development
- Figure 155) Yellow Pages Group, Print Directories
- Figure 156) Yellow Pages Group, Online Services
- Figure 157) Ypg, % Revenue By Type For Vertical Media 920060
- Figure 158) Yellow Pages Group, Detailed Financials
- Figure 159) Yellow Pages Group, Interim Financials
- Figure 160) Yellow Pages Group, Key Management
- Figure 161) Yellow Pages Group, Key Transactions
- Figure 162) Yell, Summary Financials
- Figure 163) Yell, Key Events
- Figure 164) Yell, Activity Map
- Figure 165) Yell, Major Us Acquisitions
- Figure 166) Usage Share Of Yellow Book In Various Distribution Areas
- Figure 167) Yellow Book, Print Directories (2007/08)
- Figure 168) Yellow Book, Website
- Figure 169) Yell Group, Financials
- Figure 170) Yell, United States- Key Financials
- Figure 171) Yell, United States- Revenue By Type (2007)
- Figure 172) Yellow Book, % Contribution To Revenue By Origin
- Figure 173) Yell, United States - Key Operational Metrics
- Figure 174) Yellow Book, Historical Revenue Growth
- Figure 175) Yell Group, Key Management
- Figure 176) Yell, Transactions
- Figure 177) Ypone Publishing, Historical Development
- Figure 178) Ypone Publishing, Print Publications
- Figure 179) Ypone Publishing, Key Management
- Figure 180) Ypone Publishing, Key Acquisitions