AT&T has finalized the sale of 53 percent of its Yellow Pages operation to the private equity firm Cerberus Capital, which has launched YP Holdings LLC. The new company will be led by newly appointed CEO David Krantz, who had been running AT&T Interactive, the digital arm of AT&T’s directories business.

The remainder of the leadership team was not announced but is said to include executives from the Directory Operations and Interactive wings of the business, as well as representatives of the buyer.

YP remains the world’s largest directory organization with revenues of $3.3 billion in 2011, about 30 percent of which come from digital.

The new company has a number of decisions to make, including whether to merge the Advertising Solutions and Interactive business units. The common branding YP suggests that decision may already have been made. Cerberus is likely to take its time with any big decisions on the organization, but it will probably move quickly to focus on costs.

More long term, the company needs to decide if it wants to continue investing in product development or focus more on establishing a “trusted advisor” relationship with its mainly small-business advertisers and help them acquire new customers and manage existing ones.

The deal’s completion follows AT&T’s Q1 earnings release, which showed some signs of improvement in the Yellow Pages revenue picture.

In the current environment, improvement comes in the form of a lower rate of decline. AT&T’s Q1 Yellow Pages results were revenues of $744 million, down from $868 million in Q1 2011. This works out to a 14.3 percent decline. In Q1 2011, the decline was 16.6 percent. In Q4 2011, AT&T shed from 15.7 percent from the Advertising Solutions business and 16.3 percent for the full year.

AT&T didn’t offer any color on the Q1 results nor did it disclose digital revenues, as it did in all quarters through 2011. We can expect much less transparency on the former AT&T directories business going forward.

The slowing of revenue loss seems to have come at the expense of margin. Q1 EBITDA for the directories business was $197 million, down a whopping 33.4 percent. The publisher’s EBITDA margin fell to 26.5 percent, from 34.1 percent in Q1 2011.

We’ve been following the adventures of AT&T pretty closely. Take a look at some of our recent posts on this topic:

For Better or Worse, AT&T Deal Sets Bar for Yellow Pages

Is It a Done Deal for AT&T’s YP Business?

AT&T Opens Door to YP Sale

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Bloomberg News is reporting today that AT&T is close to a deal to sell a majority stake in its Yellow Pages operation (AT&T Advertising Solutions, the world’s largest directory company, in a deal that prices the business at US$1.5 billion. This price works out to a multiple of 1.5X EBITDA. AT&T is expected to hang on to a large minority stake in the business.

In 2011, AT&T Advertising Solutions generated topline revenues of US$3.3 billion and EBITDA of US$1.0 billion, representing declines of 16 percent and 24 percent, respectively. AT&T indicated on its Q4 earnings call that it was open to selling its directories business, and since then there have been persistent rumors of an imminent deal.

To put matters in perspective, when a consortium of private equity players acquired Yellow Pages Group (new Zealand) in early 2007, the multiple was 14X EBITDA. That deal was considered the last hurrah of high-multiple directory deals. Had AT&T sold its directory business at the same time at just half of New Zealand’s gaudy 14X multiple, the take would have been US$13.6 billion.

Following the New Zealand deal (which was recently converted to equity), what had been manageable top-line declines accelerated to the point where leverage became burdensome. Bankruptcies and huge write downs soon followed, and many directory companies continue to struggle with too much debt.

With that history and the uncertain future of Yellow Pages revenues and margins, it’s no surprise that the multiple has been squeezed to such a modest level. Cerberus Capital is the reported suitor for AT&T’s Yellow Pages business. According to the private equity firm’s website, it focuses on investing in under-valued assets, emphasizing long-term value creation. At a sufficiently low multiple, AT&T should be cash generative enough to pay its buyers back in short order. The question is whether Cerberus will see an opportunity for long-term value creation or just choose to cash out quickly.

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Here’s what we’ve been waiting to announce: Google Offers’ head Nitin Mangtani will join our great list of keynoters at ILM East March 26-28 in Boston. We believe Mangtani’s appearance marks one of the first public debuts of Google Offers, which is playing a major role in Google’s vital local strategy, along with Google Places, Google Maps and Zagat ratings and reviews.

Previously announced ILM East keynoters include Groupon Vice Chair +++ Ted Leonsis; American Express SVP of Social Media Leslie Berland; CityGrid Media CEO Jay Herratti; New York Times Research Ops VP Michael Zimbalist; and New York Magazine Digital GM Michael Silberman.

Mangtani joins Google Channel Sales BizDev Head Christine Merritt at ILM East. Merritt will provide Google’s perspective on its emergence in the local ecosystem, and the most effective way to work with Google as a partner.

The next wave of Deals is, in general, a key focus for us at ILM East, along with mobile local media, social local media, video local media, hyperlocal and locally targeted national advertising.

In addition to the keynotes from Google Offers and Groupon, we have a special Day 1 session dedicated to the next wave of deals, featuring EverSave’s Jere Doyle; Find n Save’s Christopher Tippie; Closely’s Perry Evans; and Boomtime’s Bill Bice. That session will be followed by a broader view of deals and ecommerce, which featured NextJump’s Charlie Kim; Cartera’s Jim Douglass; and Bundle.com’s Jaidev Shergill.

Other recent adds to the program include The Boston Globe’s Lisa DeSisto, who joins Boston.com VP of Digital Products Jeff Moriarty as a presenter; and MIT Sloan Associate Professor Catherine Tucker, who gives the low down on the effectiveness of local social media.

Before the show, we’re making a special trip to The Boston Globe’s R&D Lab (Limited Space, RSVP required). Or come to Andrew Shotland’s SEO for the Enterprise session, which also features SEO Expert Will Scott and Advance Digital Media VP John Denny. We’re looking forward to a great show.

Venture Capital
•David Hornik, Principal, August Capital
•Scott Maxwell, Senior Managing Director, OpenView

Mobile Local Media
• Walt Doyle, CEO, Where
• Doug McDonald, Director, dotMobi
• John Valentine, VP, East Coast, SCVNGR/LevelUp

Hyperlocal
• Merrill Brown, Principal, MMB Media
• Josh Fenton, CEO, GoLocal24
• Zohar Yardeni, CEO, Main Street Connect

Social Local Media
• Geoff Cramer, CEO, Social Made Simple
• Adam Japko, President, Digital Sherpa
• Jeff Moriarty, VP, Digital Products, Boston.com
• Mark Schmulen, GM, Social Media, Constant Contact

Video
• Juan Delgado, Managing Director, Americas, Perform
• John McIntyre, CEO, Pixelfish
• Randa Minkarah, SVP, Revenue, Fisher Communications

Deals and Promotional Ecosystem
• Bill Bice, CEO, BoomTime
• Jere Doyle, President and CEO, EverSave
• Perry Evans, CEO, Closely
• Christopher Tippie, CEO, FindNSave

Transactions
• Charlie Kim, CEO, NextJump
• Jim Douglass, EVP, Retail Advertising, Cartera Commerce
• Jaidev Shergill, CEO, Bundle

National/Brands
•Adam Epstein, President, AdMarketplace
•Pete Gombert,CEO, Balihoo
• Steve Sherfy, Local & Mobile Search, GroupMSearch
• Karl Siebrecht, President and CEO, AdReady

Elections 2012
• Andy Slater, VP, Digital Agency Sales, Katz 360

SMB Marketing
• Dave Galvan, President, Schedulicity
• Maria Kermath, Director, AT&T Ad Solutions
• Randy Parker, President, SMBApps
• Darren Waddell, EVP, Reply.com

Sign up now (and hint: reserve your room earlier rather than later).

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ILM East is coming back to Boston March 26-28 with a lineup of doers and innovators who are transforming and redefining the local space. Highlights include a featured keynote from industry legend Ted Leonsis (Groupon vice chair/AmEx board member/sports team owner/AOL mastermind), along with keynotes/interviews from Jason Calacanis, Leslie Berland, Jay Herratti, Michael Zimbalist and Michael Silberman.

Other highlights of the two-day event includes a preconference rundown on local search run by Andrew Shotland of Local SEO Guide; a full plate of top BIA/Kelsey research and forecasts; a special venture capital panel; and innovator panels on social, mobile, deals, video and hyperlocal (the latter co-moderated by Merrill Brown).

KEYNOTES/KEYNOTE DISCUSSIONS
� Ted Leonsis: Owner, Monumental Sports (Washington Capitals, Washington Wizards); Vice Chair of Groupon; board member of AmEx, former vice chair of AOL; author, “The Business of Happiness”
� Jason Calacanis: CEO, Mahalo; investor. Calacanis’ career has been at the cutting edge of local and social media and reflects all the big trends, from his development of The Silicon Alley Reporter to Weblogs (AOL), Mahalo and the creation of TechCrunch50 and Launch.
� Leslie Berland, vice president, social strategy, American Express. Berland’s a major deal maker deeply involved in AmEx’ss mega Foursquare and Facebook deals.
� Jay Herratti, CEO, CityGrid Media. Herratti always gets top rankings at our events. He runs IAC’s super quad of the CityGrid Media Network, Citysearch, Urbanspoon and Insider Pages.
� Michael Zimbalist, VP, research operations, New York Times Co. Zimbalist leads the NYT’s 12 person-research unit. He’s deeply immersed in cutting-edge social, mobile, tablet and video efforts.
� Michael Silberman, GM, New York Magazine Silberman is the mastermind of NYMag’s development of a super set of verticals catering to the “New York state of mind.”

FEATURED SPEAKERS
� Bill Bice, CEO, SpaBoom
� Merrill Brown, Cofounder, MSNBC.com, Court TV
� Jim Douglass, EVP, Cartera Commerce
� Jere Doyle, CEO, EverSave
� Walt Doyle, CEO, Where
� Adam Japko, CEO, Digital Sherpa
� Maria Kermath, Director, New Tech & Sales Apps, AT&T Advertising Sales
� Mark Josephson, SVP, AOL Local
� Charlie Kim, CEO, Next Jump
� John McIntyre, CEO, Pixelfish
� Randa Minkarah, SVP, Revenue, Fisher Communications
� Randy Parker, President, SMB Apps
� Mark Schmulen, GM, Social Media, Constant Contact
� Andy Slater, VP, Digital Agency Sales, Katz 360
� Andrew Shotland, Publisher, Local SEO Guide
� Christopher Tippie, CEO, FindNSave
� Darren Waddell, EVP, Product and Corporate Marketing, Reply.com

Join hundreds of senior level local executives at ILM East for the local community’s best networking and insights. You can register here for earlier bird rates.

Internet Pioneer Ted Leonsis

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In particular, AT&T underestimated call duration guidelines that led to customer-service issues. In other words, some customers were upset that they were being charged for calls that they did not think had any value. Secondly, and adding gas to the customer-service issue fire, was related to the number of non-relevant or “nuisance” calls.

Read reported that two of the changes AT&T made to better manage the expectations of its advertisers was to implement a better call management tool and also updating its program to offer a fixed fee plan in addition to its original pay-per-call plan. The fixed fee option was launched in April 2011. Additionally, AT&T has looked at this as an outcome-based selling initiative, which is more focused on selling the outcome than on traditional selling of features and benefits.

Right now the clients involved in pay-per-call are primarily print customers — around 65 percent to 70 percent. At this point, AT&T is seeing an approximate 50-50 breakdown between calls generated from organic traffic and distribution partner calls.

The post DMS ’11: Pay-Per-Call Not Without Its Challenges appeared first on BIA/Kelsey - Local Media Watch.

For AT&Ti, deals represent “an offensive opportunity,” added Rose. “The product gets into a customer segment we haven’t historically served very well.” At the same time, AT&Ti has an unexpected advantage: a customer-centric approach. Pure plays such as Groupon need to max out the opportunity with every deal, whether or not it meets the needs of merchants or users, he suggested.

While the deals are currently focused on customer acquisition, like most deals providers, Rose said the company’s DNA is to help local customers both acquire and retain customers. As time goes on, the focus will be more about retention,” he said.

Rose also noted that AT&Ti is currently discussing a range of partnerships with major brands on the Web, as well as with location-based services. “They may not have the appetite or resources to build up a local sales force,” he said. “It is a perfect time to engage with them.”

The post DMS ’11: AT&T Interactive Deals Set for 10 Markets by Q4 appeared first on BIA/Kelsey - Local Media Watch.

David Krantz, president and CEO of AT&T Interactive, announced the launch of AT&T’s “Deal of the Day” program this afternoon at the BIA/Kelsey Deals 3D conference. The program is being offered initially in three markets: Atlanta, Dallas-Ft. Worth and Los Angeles.

Krantz emphasized that deals are a natural extension of local advertising. Ergo, a full-line local advertising company needs to be a player in the deals space. (“We think of deals as just another type of advertising.”)

The new AT&T offering appears to be well thought-out, incorporating “best of breed” features and capabilities seen elsewhere in the deals space.

AT&T finds itself well-positioned in terms of the key elements that are needed to succeed in this space, with:

� A strong local sales force (AT&T Interactive has some 5,000 salespeople in the U.S.)
� Access to consumers (through owned and operated sites, as well as partner sites). Here, AT&T has YP.com, which ranks as the No. 35 most visited website with some 74 million monthly uniques. AT&T has 300+ partners online and mobile publisher sites and applications (it just added Foursquare, for instance).

But Krantz doesn’t foresee deals dominating advertising by SMBs (no “dealmageddon”). He explained there are four elements a business needs to advertise (of which deals is just one):

� Awareness (contextually placed ads)
� Directional (online profiles in directories and search engines)
� Presence & Social (an established online presence)
� Promotions (includes several elements, including everyday savings, loyalty programs and daily deals)

The post Deals 3D: AT&T Interactive Enters Daily Deal Space appeared first on BIA/Kelsey - Local Media Watch.

AT&T Interactive announced this week the launch of in-app ads on its mobile ad network, an extension of YP Local Ad Network. In-app local ads are served within mobile apps based on a user’s location. Earlier this year, AT&T Interactive piloted in-app advertising and reported generating more than 750 million local ad impressions in three months. The goal of in-app local ads is two-fold: offer participating mobile publishers an enhanced way to generate revenues and help advertisers increase potential reach.

“We’re taking advantage of the power of local advertising and the proliferation of location-aware mobile handsets,” said AT&T Interactive President and CEO David Krantz in a statement. Krantz briefed BIA/Kelsey that mobile now makes up a third of AT&T’s local search.

Last month we predicted in our mobile local forecast that local mobile advertising will grow from 51 percent of total mobile advertising to 70 percent by 2015.

Mobile ad networks will be in the spotlight at BIA/Kelsey’s DMS ’11: The Summit for Small-Business Advertising Solutions, Sept. 21-23, in Denver. We’ve got the following session on deck, with BIA/Kelsey’s Mike Boland moderating:

Mobile Ad Networks: The Stakes for SMBs
Mobile brings new customers in different parts of the purchase funnel. How should SMBs engage? The emergence of local mobile ad networks is a major step in bringing volume and engagement to SMBs. We’ll hear from industry leaders.

Dan Gilmartin, VP Marketing, Where
Craig Hagopian, COO, xAd
Greg Hallinan, CMO, Verve Wireless

The post AT&T Interactive Launches New In-App Local Ads appeared first on BIA/Kelsey - Local Media Watch.

Maybe it’s not my glasses. In fact, all those straight lines with hard edges are quickly disappearing. Technology is making everything that was simple much more confusing. Luckily, for all the analysts at BIA/Kelsey, we have the privilege of spending our entire work days bringing sense and clarity to this rapidly changing local commerce space.

For instance, a couple of years ago I went out and suggested the notion of the three Ps — “Presence,” “Performance” and “Permanence.” I spoke of these three buckets at the YPA (now LSA) annual convention in San Diego in 2009.

We’ve now evolved this construct to “Media,” “Commerce” and “Engagement” — the three pillars of local commerce. Media is what you’d expect — advertising and promotional messages necessary to drive both awareness and action. Commerce is the conversion of those messages into customers, clients and patients (if you are a medically oriented SMB). And Engagement is the process of retaining and engaging those customers as they move from one-time customers to long-time fans.

These buckets of activity are becoming more and more solved by cloud-based solutions — nearly anyone and everyone figures he or she can get a piece of the action. Consequently, it is not surprising to watch transactional companies such as American Express nibble around the edges of advertising and marketing solutions. Nor will we be surprised when companies such as AT&T Interactive begin to solve the riddle of social media, marketing and engagement by offering easy-to-use solutions for the millions of U.S. merchants struggling to make sense of — and money in — the new marketplace.

Which brings me to the “rimshot” of the day. BlackBerry maker Research in Motion, the longtime mobile business phone leader, suffered a 20 percent decline in its market valuation Friday. In just three years, the company has plummeted from a lofty $150 a share and a $90B market valuation to a skimpy $30 a share and a $18B market valuation. It makes one think — as one of RIM’s largest investors has suggested — that RIM cannot adopt and adapt fast enough to keep pace with the relentlessly aggressive product initiatives driving consumers to the iPhone and to Android devices. At this point, it appears that RIM missed the boat, like Palm did, when it tried to milk its way to success while Apple and Google chose to break the existing model.

As companies in the local commerce space ponder their strategic direction in the coming months and years, the fate of their company and their competitors will ride heavily on the ability to transform — not just evolve and nibble on the edges. It likely won’t be enough to dabble in adjacent markets or products or service. It won’t be enough to tinker with the business model. It won’t be enough to hope that the marketplace stands still just long enough to get out and with a hefty retirement in place. Indeed, technology is altering the competitive landscape and the dimensions of the marketplace like never before.

The post Blurring Lines: The New Pillars of Local Commerce appeared first on BIA/Kelsey - Local Media Watch.

The Deals space is so hot, yet there are many unanswered questions about it. We know it will be big, but who really knows what it is going to look like 18 months from now?

With that in mind, we have developed a brand-new addition to our regular conference schedule: Deals 3D, a day-and-a-half event taking place in the afternoon of July 18 and all of July 19 at the contemporary Mission Bay Conference Center at UC San Francisco. The event will feature 40+ top level executives and entrepreneurs; a lot of cool demos; and, well – our typically great BIA/Kelsey networking.

Keynotes include MasterCard’s Gary Kearns; AT&T Interactive’s David Krantz and Facebook Local’s Lexi Reese. Featured speakers include such leaders as Microsoft’s Charles Dyer; Foursquare’s Tristan Walker; Loopt’s Sam Altman; BuyWithMe’s Andrew Moss; Shopkick’s Evan Tana; and Savings.com CEO Loren Bendele.

Old friends like Greg Sterling are on the agenda, too, and the event is being cochaired by The Dealmap’s Jon Sofield. You can register here.

SPEAKERS: DEALS 3D (As of June 9)
Samy Aboel-Nil, President and COO, Tippr
Sam Altman, CEO, Loopt
Derek Beckmann, CEO, Descuentro Libre
Loren Bendele, CEO, Savings.com
Robert Boniface, COO, iCoupon
Lilia Martinez-Coburn, VP, TownHog
Matt Coen, CEO, Second Street Media
Kimberly Cook, VP, GreenLink Networks
Charles Dyer, Director, Mobile, Local and Commerce, Microsoft
Jonathan Dyke, COO, Edo Interactive
Perry Evans, Founder and CEO, Closely
Paul Gain, CEO, Monster Offers
Dave Galvan, VP, Schedulicity
Andrea Gilman, VP, MasterCard
David Goldfarb, President, YourBestDeals.com
Alistair Goodman, CEO, Placecast
Oliver Gratry, CFO, Analog Analytics
Jimmy Hendricks, CEO, DealCurrent
Gary Kearns, Group Executive, Information Services, MasterCard
Jonty Kelt, CEO, Group Commerce
Jim Kerr, VP, Triton Media
Jared Kopf, Founder, Homerun
David Krantz, President and CEO, AT&T Interactive
Terry Kukle, VP, Metroland
Bill Lange, CEO, Full Slate
Malcolm Lewis, Senior VP and GM, Local.com/SpreeBird
James Moran, Founder, Yipit
Andrew Moss, Chief Strategy Officer, BuyWithMe
Darin Myman, President and CEO, PeopleString
Florent Peyre, VP, Gilt City
Prashant Nedungadi, CEO, Nimble Commerce
Rich Razgaitis, GM, ReachLocal Deals, ReachLocal
Lexi Reese, Director, Local Sales, Facebook
Jon Sofield, VP, Business Development, The Dealmap
Greg Sterling, Senior Analyst, Opus Research
David Strebinger, CEO, Wantsa
Evan Tana, VP, Product Management, Shopkick
Vinicius Vacanti, Cofounder and CEO, Yipit
Dan Visnick, VP of Marketing, The Dealmap
Darren Waddell, VP, MerchantCircle
Josh Walker, CEO, CityVoter
Tristan Walker, Director, Foursquare
Stuart Wall, CEO, SignPost
Rebecca Watson, VP, RadiumOne

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