AT&T Inc. has announced an agreement made with Cerberus Capital, in which the telecommunications behemoth will unload a majority stake in its floundering yellow pages business unit. The sale is reported to be for $750,000,000 in cash and $200,000,000 in notes which represents a 53% share of their yellow pages business.
There was no mention of how this transaction may impact internet marketing advertisers. Personally, I believe that this abandonment of their previous cash-cow, and the glaringly rapid decline in usage (advertiser value) underscores the need for the remaining yellow page advertisers to seek alternative internet marketing services such as seo, local search marketing and ppc management.
The transaction is anticipated to directly affect less than 10,000 people. AT&T's statement did not clarify if "affect" meant job terminations, transfers or reassignments. The people to be affected are a mix of union and non-union personnel.
Industry rumors are that AT&T is working to strengthen its footprint in the wireless communications business sector, and decided to transition away from the dying yellow pages business. A recent article stated that the AT&T yellow pages business has shrunk by 30 percent in the past two years. AT&T, as with other yellow pages publishers, learned that the business community as a whole was eager to break free of the expensive print directories and embrace the many choices they had for internet advertising and internet marketing services.
Yellow pages generated approximately 3% of AT&T's 2011 revenue ($3.3 billion)so it's a certainty that stockholders will want to keep a close eye on how well AT&T does in replacing this revenue.
While some industry analysts see the sales price as very low, it is easy to read into this sale that Cerberus Capital expects the yellow pages revenue to continue to decline and priced their valuation accordingly. The assets being sold include 1,200 Yellow Pages print directories in over 20 states, and their coveted directory website Yellowpages.com.
The agreement still must pass a review by the U.S. Justice Department and could close as early as mid 2012. There are no rumors of any forseeable complications to the agreement's approval.
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