Yellow Media Inc. is accelerating its bid to stay relevant in the eyes of investors and advertisers.
The Dorval, Que.-based company slashed the number of phone books it publishes, closed offices across the country, and let go an undisclosed number of employees, the next steps in its ambitious plan to shift the bulk of its revenue-generating advertisements online.
The company spent $225-million to buy rival Canpages Inc. in 2010, but has continued to operate it as a separate business. In several Western markets the company has continued to publish two telephone directories and maintain separate offices, but Yellow Media said on Wednesday it was time to eliminate overlap between Canpages and Yellow Pages.
Yellow Media is under a great deal of pressure to boost online revenue as print advertising wanes. In the three months ended Sept. 30, its print revenue fell 15 per cent. And while online revenue continued to rise – it now accounts for more than 27 per cent of the company’s total revenue – it has not outpaced declines in the print business.
This week’s job cuts mark the latest in a series of steps taken in recent months by Yellow Media. The company, which has been gradually reducing the workforce at Canpages since it took over, underwent a dramatic shakeup of its top leadership in September, and last year sold its Trader Corp. unit for $708-million in an effort to pay down debt.
The company’s battle to survive highlights the years-long erosion of the print media’s dominance at the hands of digital competitors. While many publishers have faced challenges from online competitors, the company listings business has been particularly susceptible to nimble online competitors.
Yellow Media’s shares, meanwhile, are trading at 18 cents, 97 per cent lower than they were a year ago. The company also carried about $1.7-billion of debt at the end of its last quarter – enough to cause CIBC World Markets analyst Bob Bek to declare the shares worthless by slapping an incredibly rare $0 price target upon them.
“While lower-margin digital is growing at a healthy clip, it is far from sufficient at this stage to stave off the print declines,” Mr. Bek wrote in his report advising his clients sell the company’s shares.
Yellow Media treasuruer Anne-Sophie Roy would not say how many employees work for Canpages, although she said it was fewer than the 700 reported prior to the takeover.She also wouldn’t say how many people would lose their jobs, adding that the company is trying to find them positions at Yellow Pages “provided there is no duplication.”
“There will be some job losses, but we are trying to migrate a good portion,” she said.
Eight offices will be merged in British Columbia, Alberta and Ontario. Employees reached by The Globe and Mail said they had been dismissed and walked out of their offices Tuesday, and hadn’t yet been told about opportunities at the parent company. Canpages offices across the country were locked Wednesday; some had security guards watching the doors.
Customers are now being pushed toward what the company calls its “Yellow Pages 360 Platform,” which combines a traditional phone book listing with an online ad listing at Yellowpages.ca, search engine optimization packages to drive Web browsers toward the ad, and Web page creation.
The Canpages brand won’t be completely abandoned. Yellow Media will keep the existing site live and eventually relaunch it with “differentiating features” from the Yellow Pages site. Ms. Roy said the company wasn’t ready to announce further details of the plan.
It will also increase its spending on advertising, in an effort to raise awareness of its digital brands. Alan Middleton, a marketing professor at York University’s Schulich School of Business, said that if the company is to survive, it needs to capitalize on decades of brand association to drive traffic toward its sites.
“The problem with going online is that there is an awful lot of competition,” he said. “They are no longer the only game in town. They need to remind people to ‘Let their fingers do the talking’ and spend money to get people thinking about what they are doing online. If they are relying on the strength of the past, they will seem old-fashioned and out of date.”