An Industry in Constant Evolution

Over the past few years, we have witnessed profound changes in the arena of telcos and publishers. While the telcos have traditionally owned their telephone directories, many have sold this business.

In Canada, in 2001, Telus sold its directories to Verizon, the largest Yellow Pages supplier in the world, which markets them under the brand SuperPages; in 2002, Bell Canada sold its subsidiary Actimedia to Kolhberg Kravis Roberts (KKR) that became the Yellow Pages Group (YPG). Later, in 2004, KKR sold its shares and YPG became fully owned by Yellow Pages Income Fund. Also in 2004, Verizon sold its Canadian subsidiary, SuperPages, to Bain Capital of Boston.

In the USA, the pace of mergers and acquisitions has accelerated in recent years. In 1998, SBC acquired Ameritech. In 2000, Verizon integrated the Yellow Pages subsidiaries of Bell Atlantic and GTE, while Qwest Dex acquired US West. In September 2002, Yellow Book merged with McLeod and with National Directories in January 2003. Sprint’s Yellow Pages subsidiary was sold to R. H. Donnelley in early 2003. In 2004, RHD also purchased directories published by SBC in Illinois and North West Indiana.

Canada-USA, a Different Reality

A comparison of the publishers in Canada and the United States shows major differences: nearly 600 American publishers produce more than 7,000 directories while in Canada, about 10 publishers share approximately 450 directories.

In the state of Texas alone, there are 33 publishers producing 527 directories. That’s almost four times more publishers than in Canada for the same number of directories. At the opposite extreme, Rhode Island has only one publisher that produces only 10 directories.

Close to 20% of American publishers produce fewer than five directories each, while 2% of publishers produce about 75% of all directories. Verizon alone publishes approximately 20% of all directories and is present in 39 states.
In Canada, the phenomenon of multiple publishers in the same territory is more recent. In 1999, Bell Actimedia made an incursion into Alberta and British Columbia with the publication of Yellow Pages in large urban centres. In 2001, Bell Actimedia decided to withdraw from these markets to focus on their Web portal, www.yellowpages.ca.

Telus, already present in Eastern Quebec with its subsidiary Dominion Information Services, took on the Toronto market in 2001. With the sale of its Yellow Pages subsidiary to Verizon (SuperPages) in 2002, the competition increased in both Ontario and Quebec. All the major markets, including Toronto, Montreal, Quebec City, Hamilton, Kitchener and Ottawa, as well as several regional markets in Quebec and Ontario, now have a minimum of two directories each.

Web Publishers

Using the Internet to find a business has grown exponentially since 2001. Publishers of electronic directories – yellowpages.ca, Canada411 and superpages.ca in the lead – have multiplied partnerships with large consumer Web portals such as MSN, Yahoo, Sympatico, MyTelus.com, urban sites like TorontoPlus.ca, MontréalPlus.ca and VancouverPlus.ca and press sites (globeandmail.com, calgarysun.com, etc.) to create more traffic on their sites.

The result is that the volume of searches now reaches 20 million per month. The publishers of electronic directories offer take advantage of this volume by offering advertisers several products designed to improve the positioning of their listings in a given category, and provide monthly data on the number of page views and click-through rates.