AT&T to Sell Most of Yellow Pages to Cerberus

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AT&T to sell most of Yellow Pages to CerberusNEW YORK (AP) - AT&T Inc. (T) on Monday said it agreed to sell a majority stake in its Yellow Pages business to the private-equity firm Cerberus Capital for $950 million.

The sale is part of AT&T's strategy to jettison shrinking parts of its business so it can focus on segments that are growing, particularly its wireless business. Revenue from the Yellow Pages unit has shrunk 30 percent in two years, as consumers continue to shun phone books in favor of the Web.

Phone books were once a cash cow, generating reliable profits as businesses paid for ads that were right under consumer's finger tips as they were looking for local stores and services. Even with the steep revenue decline, AT&T's Yellow Pages unit has been profitable before impairment charges for the last three years.

Profitable but shrinking businesses generally sit poorly with public companies who want to show shareholders that they're growing. Private-equity firms don't have to please public shareholders and are happy to make money from dwindling assets.

AT&T, the country's largest phone company, is following in the footsteps of Verizon Communications Inc., the second-largest, in cutting its exposure in the phone book business. Verizon spun off its directory business to shareholders in 2006, only to see it file for bankruptcy three years later.

Cerberus is paying AT&T $750 million in cash and a $200 million note, plus a 47 percent stake in YP Holdings LLC which will oversee the business.


Sanford Bernstein analyst Craig Moffett said the sale price was low relative to Yellow Pages' earnings, but the deal is still a sensible one for AT&T, in terms of its strategy.

The sale affects 8,400 employees, and is expected to close mid-year. AT&T said it expects it to have a minimal effect on this year's earnings.

Shares of Dallas-based AT&T fell 30 cents, or 1 percent, to $30.64 in morning trading Monday, in line with a decline in the broader market.

The assets being sold include 1,200 printed Yellow Pages editions in 22 states, plus websites like Yellowpages.com and a mobile app. Together, they generated revenue of $3.3 billion last year, about 3 percent of AT&T's overall revenue.

The sale excludes the recently formed AT&T AdWorks, which sells advertising offerings across online, mobile and TV.


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beadswholesale

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April 22 2012 at 9:17 PM Report abuse rate up rate down Reply
Maine My Home Away

This is how Verizon screwed over Big Time the employees that were once part of their directory dept by transferring over to a company at the time that did not exist namely IDEARC which filed bankruptcy to then go under a new name Supermedia which is not doing good at all. For the sake of all employees that were illegally transfered over to Idearc may your lawsuit that was filed rule in your favor. Seidenberg CEO saw the writing on the wall regarding the directory business and decided to transfer that segment of the business into a seperate company there by screwing the employess of their original benefit package that Verizon offered.

April 11 2012 at 8:16 AM Report abuse rate up rate down Reply
Lucky Knight

Does anybody really use the Yellow Pages still? A decade ago I used to try to make a point of looking in the phone book for a number rather than online because It was actually quicker.
Now with smart phones and high speed internet it looks just plain silly to do that.

April 11 2012 at 5:29 AM Report abuse rate up rate down Reply
csemmes007

The Yellow pages have done it too themselves. The books were so thick and heavy at one point. The type face font got real small so you couldn't read it. They jacked the price up to the sky to advertise. They relay on Focus Group in put as too how the book should look so they say which I think is BS. They should have focused and listed to the advertisers. But no. I hated paying their monthly bill and not get a return on my spending. They always wanted to sell you larger ads which would cost you more money.
Big rip off.

April 10 2012 at 7:54 PM Report abuse rate up rate down Reply
mscellanus

Well if they wont be publishing them anymore, shouldn't they stop collecting $4-5 a month for having one's phone unlisted?

April 10 2012 at 7:02 PM Report abuse +1 rate up rate down Reply
1 reply to mscellanus's comment
Lucky Knight

Yes, spot on!

April 11 2012 at 5:29 AM Report abuse rate up rate down Reply
arenadood

The last time I used the yellow pages was when I was traveling across the US. It showed me all the Pizza places that delivered in any area hotel I was staying in. Note, this was pre computer days.

April 10 2012 at 4:40 PM Report abuse rate up rate down Reply
Richard

Another 8400 lose their jobs as the rich ***** get richer. Romney will be the next Fidel...

April 10 2012 at 2:46 PM Report abuse rate up rate down Reply
1 reply to Richard's comment
mscellanus

So Richard, if Romney is the next Fidel, then Obama will be the next Stalin!

April 10 2012 at 6:59 PM Report abuse +2 rate up rate down Reply
Sekinu2

I havent used a phone book since late 90's. I know DEX tosses one a year on my porch which I then toss in the recyle bin since more businesses can be found with a simple google search in the area.

April 10 2012 at 1:20 PM Report abuse rate up rate down Reply
jshedl10411

Goodbye Yellowbook employees. Cerebus will butcher that company the way they have so many others including Chrysler.

April 10 2012 at 12:42 PM Report abuse +2 rate up rate down Reply
merrialber

what about all the people who still can't use the computer? And Ma Bell charges TWO DOLLARS today to look up a number for you... the last itme I asked for a number out of town it cost me FOUR dollars because the first time they gave me the wrong number! They had the name right but not the town, so I knew I hadn't misdialed! Blame outsourcing too on that one... Arizona is NOT the same as Arkansas.

April 10 2012 at 12:38 PM Report abuse +2 rate up rate down Reply
1 reply to merrialber's comment
Sekinu2

No cell phone either?Any wifi device since you can get wifi free at pretty much anyplace..McDondals, BurgerKing,Star Bucks, Library,rest stops??

April 10 2012 at 1:22 PM Report abuse rate up rate down Reply