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Idearc Exits Bankruptcy, Changes Name

By: 4 January 2010

Idearc Media, which exited bankruptcy on Dec. 31, has changed its name to SuperMedia LLC, as part of an effort to start on a fresh course post-bankruptcy. The restructured company now trades on the NASDAQ Global Market under the symbol SPMD.

In a recent briefing with BIA/Kelsey analysts, SuperMedia CEO Scott Klein talked about how the business has changed over the past 12 to 18 months and how the company plans to use the opportunity bankruptcy has provided — it has US$7 billion less debt than before it filed — to build a sustainable local media business.

Here are some highlights from our call with Klein, which we will address in greater detail this week in a Kelsey Report Advisory:

  • Shifting to a consumer-orientation has been key to the turnaround strategy. By doing so, Klein believes SuperMedia will drive more advertiser value.
  • Klein believes there is a strong foundation for print usage. He concedes a shift to online, but believes it is mostly new users, while existing traditional users remain loyal to the book.
  • The Super Guarantee has been successful in driving consumer engagement with the SuperPages brand. How that translates into sales will not be known until this year.
  • In order to improve online sales results, SuperMedia has shifted to a fixed fee plus guaranteed results pricing model. The previous approach, which emphasized pay for performance, did not work. Klein says pay for performance is appropriate only for  about 15 percent to 20 percent of the customer base.
  • When asked about ReachLocal in light of that company’s recent IPO announcement, Klein said his view has changed. “If you asked me that 18 months ago, I would have said they were a competitor.” Now, Klein believes ReachLocal is a strong potential partner to resell SuperMedia products.
  • SuperMedia has high hopes that its EveryCarListed auto vertical will help it re-engage with the auto category, which Klein concedes has “all but abandoned the Yellow Pages.”
  • Print direct marketing is a core focus of SuperMedia’s business. However, Klein said there is a limit to the number of products the company will put into its sales reps’ bag. For this reason, he was lukewarm at best on e-mail marketing as a product extension.



4 Comments

4 Comments »

  • Mike Stewart said:

    Hi Charles! Happy New Year. Looking forward to seeing/meeting folks at PubCon in Dallas this year! April 13-15th. You going to attend?

    Looking forward to more detailed responses and a better understanding of the direction and accomplishments over the “past 18 months.” Specifically regarding the role of sales going forward, the implications of outsourcing and any true changes in direction of the sales organization beyond the number of appointments and expectations? Beyond the very limited product offering of antiquated and declining print, a fragmented search marketing business that is heavily dependent on unpredictable Google rankings vs other IYPs, and a 12-month contract PPC offering that is not consistent with what local boutique search marketing firms offer….

    Has Klein commented on training for sales consultants, sales involvement in product management (link between client & fulfillment, the client feedback) measurement and benchmarking etc……

    BTW, Didn’t Klein make the decision to cease the distribution agreement with ReachLocal on the SP.com Network? Or was this Brian or Briggs?

    What is the status with his “President of Internet”? Who is now leading Idearc’s Internet Team? Was this outsourced? (my suggestions….. Mihm, Smith, etc…)

    What has he really accomplished since Feb. of 2009 during the big national sales meeting…. other than questionable Verizon culpability in the bankruptcy and new ideas that are poorly implemented such as SuperLeads MultiProduct, SuperVideo, and SuperYellowPages.com? I have agree with most in saying that the new SuperGuarantee gimmick will help him compete against other print publishers…… but should he focus on the bigger picture?

    Google | Mobile | Content | SEO | Web2.0 | Reviews | Video | Mergers | Consultants :) vs Sales :( | Apps etc…..?

    Seems to me that spending all your efforts on changing brand perception and making a declining product better vs getting out of the box and back to a real clean drawing board?

    Consumers seem to be easily convinced, yet hard to win back when you damage that relationship. Same thing with advertisers. Screw up a few years due to accountability, convenience, value, etc….. hard to win them back too!

    Let’s hope for the sake of my former co-workers over the last 9+ years they have success “reinventing” the organization. Let’s hope it is not “political campaign” style lip service!

    Cheers!
    Mike Stewart

  • Charles Laughlin (author) said:

    Thanks for weighing in Mike. Not sure I will be a PubCon but our Directional Media Strategies event will be in Dallas this year. Thanks for your questions. All are valid and we hope to get more color on these and others as the weeks and months progress.

  • Fitzgerald Q. McAuliffe said:

    It’s an important step in the future of the company,” the company’s chief executive, Scott Klein, said in an interview with Reuters. ” But it’s not just about restructuring a balance sheet and changing the name, it’s really about having spent the last 18 months literally building a new company.

    Idearc, which was spun off from Verizon (VZ.N) in 2006, filed for protection from creditors in March, as revenue for its printed directories business dwindled due to a shift to online search and advertising.
    While under BANKRUPTCY protection, the company slashed debt to $2.75 billion from about $9 billion. In December, the company said hedge fund Paulson & Co would own almost half the company’s new stock. SuperMedia also has arranged a new $2.75 billion credit facility. Going forward, Klein said the company would continue to build on its financial restructuring.

    We’ve adjusted our product line to make it easier and more sensible for advertisers and potential advertisers to decide to do business with us,” Klein said, saying the company decided on the name change after research showing consumers most strongly recognized its Superpages brand.
    The company continues to see strong registration by consumers for its SuperGuarantee program, which can refund customers up to $500 for using their local advertisers if a job is not done correctly, Klein said. It is also planning new initiatives to improve customer searches on its websites.

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