Friday, October 29, 2004

Peter Zollman: Yellow pages cook up a recipe for disaster at newspapers

Peter Zollman: Yellow pages cook up a recipe for disaster at newspapers: ""

Peter Zollman has written a very interesting article showing how the online model spells trouble for the traditional newspapers.

Clearly, the ability to aggregate large quantities of locally relevant data is a huge boon to the local media and yellow pages companies.

Sensis has taken the lead in aggressively becoming the one major website in Australia. It helps that they effectively own the Yellow pages industry unchallenged down under. However, unwilling to rest on their position of dominance, they've set the stage where they are the key provider of local commerce and protected their domain.

It's highly unlikely that a US based telco would take such a grand move, but you never know. It wouldn't really take THAT much investment to have a business with massive upside potential.

Hearst had retained their ownership of Associated Publishing, a small publisher of Yellow Pages in west Texas. Associated runs a nice tight ship, but Hearst had kept them on a short leash.

A new CEO at Hearst, and the sleeping giant awakes. Most industry insiders I know were surprised when Hearst purchased White Directories. White is the third or fourth largest independent in the US operating under the brand "The Talking PhoneBoook". Like Associate, White is a top quality organization and Hearst is retaining management.

Over the coming year, several more YP companies will be in play because the market is hotter than it has ever been. The scare of losing the business to the internet is at bay, and investors can appreciate the huge and predictable cash flows.

Should Hearst wish to become a major player, they will have no problems finding companies of value. Their biggest issue will be outbidding the other companies who want a piece of the action.


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