Yellow Media Freezes Dividend, Market Freezes Share Price

Over the last year and a half, Yellow Media has made a number of strategic acquisitions as it looks to carve its own piece of the online advertising pie.  They have moved away from the “old school” Yellow Pages directory  that we’d get delivered to our homes and become a serious online player with a number of online properties, and mobile solutions.  Some of Marc P. Tellier, President and CEO of Yellow Media handy work as been the purchase 411.ca, and RedFlagDeals.ca, and launch of Mediative is a combination of a number of other acquisitions Yellow Media in late 2010.  One recent deal that didn’t make sense to us was the sale of TRADER, but we soon learned it was an attempt to shed off some of its debt, as the sale helped to bring in $745 million in cash.  However, based on report by the company last week where they stated a $2.9-billion goodwill impairment charge on its assets effective at the end of the quarter.  This sent the stock market in an instant panic as shares of Yellow Media took an immediate dive, down over 39% per share on the Toronto Stock Exchange as investors fled for the exits.

“We are decisively taking action to reduce our debt. The Board, the management team and all our employees are focused on the successful transformation of Yellow Media toward a digital media company through the execution of our 360 Solution strategy,” said Marc P. Tellier, President and CEO of Yellow Media.

The company has also taken a beating from decreased online advertising spending, but to be fair every company across Canada who relied upon advertising saw decreased revenues as Canada was hit by the recent recession.   Another major challenge has been Google, the “online gorilla” who continues to disrupt business models at a whim,  Google has made significant string into the local search area which will continue to prove a problem for Yellow Pages (owned by Yellow Media) and its over 350,00 business listings across Canada.

We can expect increased pressure put on all divisions within the company, but we suspect that Mediative will be the knight in shining armor within the Yellow Media to generate some serious needed revenues as they offer solutions that can be uses to companies who publish on Yellow Pages properties, but as well they can sell direct to third party companies. What ever the do, hopefully it is better than this campaign, we’re still scratching our heads trying to understand the logic.