SBC And BellSouth Jointly Acquire YellowPages.com

In a sign of continued consolidation in the Internet Yellow Pages and local search market, regional phone companies SBC Communications Inc. and BellSouth Corp. announced Thursday that they had jointly acquired the assets of YellowPages.com, perhaps the most recognizable of the online business directories. The terms of the deal were undisclosed; it is expected to close at the beginning of next week.

The combined SBC, BellSouth, and YellowPages.com's online publishing divisions will create an online business directory conglomerate reaching 50 million unique users per month. Charles Stubbs, former president of BellSouth online unit Intelliventures, has been named YellowPages.com chief executive.

The directory initially launches as a co-branded site in early 2005, but will officially adopt the YellowPages.com brand name by the fourth quarter next year, according to SBC and BellSouth executives, speaking at The Kelsey Group's interactive local media conference in Jersey City, N.J. Thursday. "I see this as a significant part of growth strategy for our Yellow Pages business," said Elmer Smith, President of BellSouth Advertising and Publishing Corp. Smith noted that both companies had regional online Yellow Pages portals, but, "to play in the game," he said, "we needed to be national."

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"Organic traffic will not be sufficient," said Dennis M. Payne, president and CEO of SBC directory operations. He stressed that the partnership marks the beginning of an aggressive effort to corner the national online business directory and local search markets through additional distribution partner deals. He also noted that YellowPages.com gives the co-venture a nationally recognized brand name.

SBC's SmartPages.com and BellSouth's RealPages.com will continue to service local advertisers in their respective markets. The new company will open a national advertising sales unit that will split sales on a revenue share. Both companies will sell YellowPages.com as a package or bundle with their respective print editions. Combined, YellowPages.com will have a sales force of 6,500.

JupiterResearch analyst Niki Scevak said that traffic-boosting deals are where online directories should concentrate their efforts. He predicted that both SBC and BellSouth will soon have more distribution/partnership plans. Scevak added that from an advertiser-value perspective, "trying to cultivate consumer usage is better than trying to up-sell their ad products to local advertisers." He said that Google's recent partnership with BellSouth, while certainly a win for the search giant, will most likely only have a "marginal effect" on local advertiser adoption. "Consumer usage is really where the prize is," he said.

The new venture will be headquartered in Pasadena, Calif., with operations in Henderson, Nevada. Bill Clenney, an executive with SBC's online Yellow Pages business, has been named YellowPages.com chief financial officer. Debbie Slavin, also an SBC online Yellow Pages executive, was named senior vice president, operations.

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