In an interview with Reuters yesterday, AT&T Yellow Pages CEO Dennis Payne predicted that revenues from its directory business will start to rise this year. He predicts that the growth will most likely come from delivering advertising on electronic platforms. Specifically, Payne anticipates that the largest increase in sales will come from its Internet joint venture with BellSouth, YellowPages.com.
Two other avenues for new revenues are Cingular Wireless, which is upgrading its site and user interface to facilitate accessing YellowPages.com, and AT&T's video service that will allow directory access on televisions.
It isn't often that a Yellow Pages executive is interviewed by a major news outlet. The fact that AT&T (formerly SBC) supported Payne's media participation suggests it wants the world to know it believes in its directory business. According to the article, AT&T Yellow Pages contributed less than six percent of first-quarter operating revenues, but 30 percent to AT&T's profits.
About 10 years ago, before telco consolidation, the rule of thumb was that an RBOC's directory unit accounted for 10 percent of revenues and 20 percent of profits. The current numbers say that even if Yellow Pages is not necessarily an integral part of the core business of AT&T, it is a critical vehicle to fund growth in other areas. This runs counter to the thinking of virtually every other telephone company that still has a directory business. For instance, both Verizon and France Telecom have said they will sell their directory businesses. But Reuters quoted Payne as saying, "I believe we are more relevant to AT&T now than ever."
AT&T is the largest Yellow Pages publisher in the world with 2005 revenues of $3.714B. With the merger of BellSouth, AT&T will increase its Yellow Pages revenues by more than $2 billion, widening the gap between AT&T and No. 2 publisher Verizon. The corporate support for AT&T Yellow Pages comes at an important time for the industry. AT&T YP revenues have been declining since 2002 and Payne's positive outlook, in a time when the press is full of negative stories about other media, is a welcome shot in the arm.
Update: Payne will give a keynote address at The Kelsey Group’s upcoming Directory Driven Commerce conference in Los Angeles.