Publishers say yellow pages still relevant

/ Source: The Associated Press

Yellow pages in America can't get any respect. That's the sentiment of those behind this multibillion-dollar business who have seen revenue head south amid a declining economy and the advent of Internet search engines.

Industry leaders assert that consumers use yellow pages at a higher rate than newspapers and radio for local business information. Shoppers who open yellow books intend to spend cash, they say, and businesses advertising in the national print yellow pages can expect a return of about 13-to-1, according to statistics from the nonprofit trade group Yellow Pages Association.

Yet even with some numbers in their favor, publishers acknowledge that often perception clouds reality, and many believe yellow books are going the way of newspapers. Their mission, publishers say, is to change that point of view.

"We have all diversified our business models to not be product-centric, but rather to be involved in all aspects of local commercial search," said Dave Swanson, chairman and chief executive of R.H. Donnelley Corp., a large yellow book publisher. "Whether it be on print or online, we don't think of the business that we're in as selling yellow pages ... the business that we're in is providing a service."

"Where the misunderstanding is, really, is with Wall Street right now," Swanson adds.

Goldman Sachs analyst Peter M. Salkowski has suggested investors avoid shares of R.H. Donnelly and fellow publisher Idearc Inc. _ which have declined sharply over the past year _ due in part to the subprime crisis' effect on Main Street advertisers. R.H. Donnelly's stock has lost 91 percent, while Idearc fell 85 percent in the past 52 weeks.

Robert W. Baird analyst Mark Bacurin is more upbeat, but remains cautious. Currently, R.H. Donnelly can meet its $10.7 billion debt load, he said, but if credit markets clamp shut the company may have trouble refinancing loans, some of which are at variable interest rates. That, combined with the industry's reputation, has created a "perfect storm" for the stock, he said.

Beyond economic issues, however, is the Internet's effect on the industry, especially for younger generations growing up with the ease of search engines such as Google and Yahoo.

Neg Norton, president of the Yellow Pages Association, believes yellow books help all ages, from the hipster looking for his next tattoo to a grandmother shopping for a wheelchair. After all, Norton said, if your boiler breaks on a frigid January morning, would you rather cull through millions of Google links or quickly scan the "P" page for a plumber?

But consumers like Hannah Woodbury, a 23-year-old married mother of one from Augusta, Ga., say the yellow pages just don't work.

"I use the Internet for absolutely everything," said Woodbury. "It's fast and it gives instant results."

She did use a yellow book when she moved from Utah in 2006 to find basic services including, ironically, an Internet connection. But since then, her phone book has collected dust. Even AT&T's doesn't appeal to Woodbury; she only visits when Google sends her there.

Yet, she admitted, were her boiler to suddenly implode at 3 a.m., she'd find that yellow book in a heartbeat.