Sami Kassab, analyst on the European Media Research Team at Exane BNP Paribas, gave a data-laden, insightful perspective on the many of the world’s largest Yellow Pages publishers in “The Financial View” panel at Directional Media Strategies 2008.

Highlights of Kassab’s remarks (presented ticker style):

… Directory publishers have underperformed the broader media sector in both absolute and relative terms … exceptions are PagesJaunes and YPG Canada … The recent decline in print revenues is a little bit both structural and cyclical … The declines in print usage and revenues will accelerate … In valuing publishing companies, the growth in EBITDA is more important than the EBITDA margin per se … The economics of a large publisher selling search products for others (e.g., Google) are questionable (it’s probably cheaper for them to generate their own traffic) …

Kassab delivered this sobering assessment with such cosmopolitan savoir faire that not a ripple of frisson was heard in the audience.

He went on to answer a number of tough questions with a diplomatic aplomb. Example: Are some publishers overleveraged? Response: “We’ve seen the damage that over-leverage can do.”

Kassab said the imperatives for restoring financial health include:

• Repairing balance sheets (typically accomplished through downsizing)
• Selling assets (e.g., non-core publishing properties)
• Defending print revenues. For example, PagesJaunes lowered its rate card prices in selected highly competitive markets, which added credibility to its pricing structure and stemmed further erosion.
• Growing Internet revenues. Example of Eniro’s introduction of an online price comparison service.

All in all, a formidable challenge even for the mightiest.

On Thursday’s second-quarter and first-half earnings call, Yellow Pages Group CEO Marc Tellier made it abundantly clear that his company’s acquisition of Volt Information Sciences was driven by the need to secure strategic technologies and not to gain a toehold in the U.S. Yellow Pages market.

The fact that the U.S. independent publisher DataNational came with the Volt deal was secondary, Tellier told analysts on the earnings call. YPG is the largest directory publisher in Canada, and it also is a leader in verticals through its Trader division. YPG has expanded its directory footprint aggressively throughout Canada through a series of acquisitions.

Tellier will be among the featured speakers at The Kelsey Group’s Directional Media Strategies conference, Sept. 15-17, in Atlanta.

While he praised DataNational and its managers, noting the company is still growing, Tellier said, “We have no ambitions to grow it further.” This is consistent with statements he made in February that his company had no Yellow Pages ambitions south of the U.S.-Canadian border.

Another interesting revelation from yesterday’s call was YPG’s plan to increase the amount of cash it distributes to unit holders of the Yellow Pages Income Fund. This decision stands in contrast to recent cutbacks in dividends at leading publicly traded directory publishing companies. YPG clearly wanted to send a signal that all is well and there is no need to stockpile cash. “This underpins our confidence in our outlook for 2009,” Tellier said. The company will increase the amount of cash distributed per unit by 3.5 percent, from C$1.13 to C$1.17.

YPG is sticking with its guidance for 2009 despite some signs of softness in the Canadian economy. The company expects total directory revenues to grow between 4 percent and 5 percent, with EBITDA growing between 4 percent and 7 percent. In the first half, YPG posted a 59.9 percent EBITDA margin for its directories business.

The Kelsey Report will have a more detailed rundown of the YPG first-half results in an upcoming Client Inquiry Brief.

New CEO Scott Klein presented Idearc Media’s first-half results and previewed his plans for reorganizing and reenergizing the company. The main theme of the presentation was a “Journey of Transformation,” which is truly what Idearc needs based on the results of Klein’s eight-week evaluation of the organization and its second-quarter results released today.

Financially, the organization continued its decline in revenues, reporting multi-product revenues of $1.53 billion for the first six months of 2008, a 5.1 percent decrease compared with the same period in 2007. Year-to-date Internet revenues reached $148 million, a 5 percent increase. While online revenues increased, one analyst pointed out that the 2008 goal was pegged at 20 percent, making the 5 percent gain less than optimal — especially compared with AT&T’s second-quarter online gain of 40.2 percent. Other peers also posted strong online results, including Yell Group, which saw a 27.1 percent first-quarter 2009 growth rate for Yell.com, and PagesJaunes, which reported growth of 21.6 percent for its Internet business during the first half of the year.

Klein’s plan of action calls for streamlining the Idearc organization, which will include reorganizing the sales force for better span of control, improving sales training, streamlining pricing approaches, centralizing operations and reducing the workforce (excluding sales reps) by 20 percent. Some announced moves include closing sales offices, walking away from selected expansion markets and abandoning the Solutions At Home magazine product.

According to Klein, as quoted in Idearc’s press release:

“It is clear that we have not made the leap from operating as a division of Verizon to being a stand alone public company. You will see us catch up quickly. … We are also changing Idearc’s management structure and focus. By centralizing and restructuring, we can eliminate complexity, maximize efficiency, and become easier to do business with. While the changes we have made, and will continue to make, will take some time to be fully realized, I am confident we will succeed.”