Have the Yellow Pages outlived their usefulness as a door-stopper, a child seat and, on increasingly rare occasions, a phone book? AT&T Inc. seems to think so, selling off much of its stake in the company to a private equity firm.
In a $950-million deal – $750 million in cash with a $200-million note – an affiliate of Cerebus Capital Management will take 53% ownership in the newly created YP Holdings. That leaves AT&T with 47% ownership of the new entity, which includes the YP.com website, the YP advertising network, a related mobile app as well as the hard-copy books.
The deal is expected to close mid-year, pending approval by the Justice Department. The Yellow Pages have struggled against online directories and search giants such as
Yellow Pages' revenue has slipped 30% in two years, falling to $3.3 billion last year.
"The transaction … enables AT&T to focus on its core strategy of leadership in wireless, IP, cloud- and application-based services," said Jose Gutierrez, chief executive of AT&T Advertising Solutions, in a statement.
But before we prophesize the inevitable demise of the tomes, consider this comparison by the Wall Street Journal: The AT&T-Cerberus deal values Yellow Pages at about $1.42 billion. Yelp, the much ballyhooed online review site that recently made its public debut, is currently valued at about $1.39 billion. Angie's List, another Internet listing service, comes in at around $870 million.
AT&T isn't the only producer of yellow- and white-page phone books. But according to a report last year, only 30% of Americans use such directories to look up telephone numbers and addresses and just 22% recycle them.