The View (the Financial View, That Is)

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.