Last week, outgoing Yellow Media CEO Marc Tellier presided over his final earnings call and ended the call with a recitation of his accomplishments during his 12 years at the company’s helm. Tellier leaves his post this week, with no successor yet named. On the call Tellier said only that a search committee was in place and there would be more news “shortly.”

Yellow Media’s first half results were mixed, with fairly strong digital growth (10 percent in Q2) still failing to offset an eroding print business (down 23 percent in Q2). As of the end of first half, Yellow Media generated 40 percent of its revenue from digital advertising and services. Total revenue for the first half was C$496.5 million, down 13.7 percent over 1H 2012. Some of the declines were the result of one-time items such as eliminating duplicate directories from the company’s Canpages acquisition.

On the call, Tellier acknowledged the company cannot predict when digital revenue will be enough to offset the print declines.

“Digital growth is currently unable to offset print revenue declines,” Tellier said. “Therefore the timing of a successful digital transformation remains uncertain.”

In addition to shifting more revenue to digital, the company is making progress is shifting its customer’s onto its 360 bundle, which combines print and digital products. At this time last year 11 percent of customers were on the 360 bundle. That had climbed to 21 percent by the end of 1H 2013.

Yellow Media’s once gaudy EBITDA margins are showing signs of strain, the result of print losses combined with a shift to lower margin digital products like websites and SEM. For the first half of 2013, the EBITDA margin was 44.9 percent, down from 50.4 percent in 1H 2012. The second quarter EBIDTA margin was 44.1 percent.

CFO Ginette Maille said margins could further erode, as more revenue shifts to digital and the company invests in its transformation. Over time, Maille said margins may improve because of cost savings from greater automation.

Last December, Tellier led Yellow Media through a financial restructuring that reduced the company’s debt by roughly C$1.5 billion, avoiding bankruptcy and putting the company in a better position to invest in its transformation. Yellow Media announced in March that Tellier would be leaving no later than August 15 as the board searched for his replacement. Yellow Media board chair Robert McLellan explained the decision to replace Tellier in an April interview. He said the board was looking for “fresh eyes” to tackle the company’s transformation challenge.

At the end of the call before taking questions, Tellier noted some of the achievements he is most proud of from his tenure at Yellow Media. These include:

* Creating a media company with a national footprint, largely through consolidating Canada’s directory industry.
* Developing a suite of “cutting edge” digital products and services.
* Building digital to 40 percent of total revenue.
* Engaging in strategic mergers and acquisitions that expanded the company’s digital capabilities.

There is no word yet on what the 44-year-old Tellier will do next. His separation package reportedly totals C$4.5 million.

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Yellow Media‘s longtime CEO Marc Tellier is stepping down and the company is seeking a replacement who can lead it through a full transformation to digital. Tellier has been at Yellow Media’s helm since October 2001. He has agreed to stay on during the search for his replacement to effect a smooth transition.

Yellow Media like most directory publishers faces a challenge of building a strong digital foundation to offset the inevitable decline in print revenue. In 2012, Yellow Media generated 38 percent of its revenue from digital, up from 29 percent the previous year. Print declines have really kicked in at YPG, which had been performing better than many of its peers with print. In 2012 print fell by 21.2 percent on an adjusted basis in 2012, and the declines are expected to continue at similar levels.

Under Tellier, YPG has been a very aggressive acquirer, purchasing both rival publishers and digital companies that filled in gaps as YPG was building its online and mobile capabilities. Some of the deals worked out better than others. Notably, YPG’s 2006 acquisition of Trader Media ended with a sale to the private equity firm Apax for less than the original purchase price. Other notable acquisitions include Canpages, once its largest directory rival, as well as Canada411.com and RedFlagDeals.

Tellier’s departure comes soon after the company successfully completed a crucial recapitalization, which converted a sizable portion of debt into shares. The recap reduced YPGs debt by roughly C$1.5 billion. His departures comes at a time of great change and transition throughout the directory industry. In the United States, two of the largest players, SuperMedia and Dex One, are merging, while Hibu, operator of directory units in the United States, Latin America, the UK and Spain, and the Italian publisher Seat PG are grappling with monumental debt loads.

Two of the stronger global companies, France’s Solocal and Sweden’s Eniro, have gradually transformed themselves into majority digital businesses that are less reliant on print revenue. Tellier’s successor will have one overarching task — accelerate the transformation of YPG.

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Canpages, the leading competitive directory publisher in Canada, appears to be making a play for the CanWest media properties, which would greatly expand and diversify Canpages’ operations. According to a story this week in the Globe and Mail, Canpages is one of two companies bidding on 46 newspapers owned by the financially troubled CanWest Global Communications. The report values the assets at C$1 billion. Canpages would make the bid along with its owner, Hicks Capital, and Paul Godfrey, president of CanWest’s National Post.

If successful, the deal would leapfrog Canpages into a leadership role in Canada’s media landscape, and make it an even more formidable competitor to Canada’s leading directory player, Yellow Pages Group, which announced its year-end earnings yesterday.

Canpages also recently announced its first foray south of the U.S.-Canadian border via its relationship with U.S. independent Phone Directories Corp., where PDC will rebrand its PDC Pages IYP as Ziplocal.com (which is owned by Canpages) and rebrand itself as Ziplocal. This move is similar to Hearst’s decision to rebrand its independent directory property White Directory Publishers as LocalEdge Media. Ziplocal was a Canadian local search platform acquired by Canpages in 2009. This arrangement certainly begs the question of whether some deeper connection between Canpages and PDC looms in the future. PDC once owned Canpages’ predecessor company in Canada and the two are both Hicks Capital (formerly Hicks Muse) portfolio companies.

On the year-end earnings call, YPG CEO Marc Tellier said the company plans to make changes to its brand to keep pace with the changing media environment. ”We’re going to look at repositioning our brand, repositioning the logo to be more representative of this new digital universe,” Tellier said.

For the full year 2009, YPG’s directories division grew .9 percent to C$1.4 billion. Fourth-quarter revenues were down 2.6 percent to C$345 million. The company’s vertical media division had a very tough year, dropping 22.8 percent to C$248 million.

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