BUSINESS

Publisher of Yellow Pages looking for new CEO as company transitions to digital

03/21/2013 10:00 EDT | Updated 05/21/2013 05:12 EDT
MONTREAL - The CEO of Yellow Media, the company that owns the Yellow Pages directories, is leaving as it continues to struggle with weak print revenues in a digital world.

Yellow Media Ltd. (TSX:Y) is looking for a replacement for Marc Tellier, who has been president and chief executive of the company and its predecessors since October 2001.

"We thank Marc for his leadership and many years of devoted service to Yellow Pages Group and his agreement to remain in order to assist in effecting a smooth transition," board chairman Robert MacLellan said in a statement Thursday.

During Tellier's tenure, the company was hit with declining print revenues as consumers moved to using their personal computers, tablets and smartphones to search for information about local businesses.

He's been transitioning the company from a print directories publisher to an online publisher by expanding its services from business listings to digital services, including producing videos and building websites for small and medium-sized businesses.

In its most recent quarter, online revenues represented about 38 per cent of total revenues.

The transition to a digital company resulted in a major financial restructuring and Yellow Media so far has been able to cut its debt by about $1 billion. The company had stopped paying its shareholder dividend in 2011.

Tellier had also aggressively expanded the company, making a number of acquisitions some of which weren't successful.

Yellow Media sold Trader Corp., home of AutoTrader magazine, to London-based private equity firm Apax Partners for $745 million, much lower than its purchase price.

Trader was formed in June 2006 with the integration of Classified Media (Canada) Holdings Inc. and Trader Media Corporation and was purchased for a total of $1.2 billion.

Tellier also had to contend with search engine giant Google, which offers free business ads to connect with customers.

Yellow Pages discontinued duplicate directories published by Canpages, purchased in 2010, and also sold off LesPAC.com and the sale of Deal of the Day.

In addition, Tellier also bought Canada411.ca and RedFlagDeals.com.

The company created Mediative to serve the digital needs of national advertisers. To do that, Yellow Media spent $60 million to buy companies such as Enquiro, a search engine marketing company, as well as national retail advertising firm Ad Spalsh Media and Uptrend Media, an independent online ad firm.

McGill University associate professor Karl Moore said in hindsight Tellier probably bought up too much.

"But at the time, clearly the market thought it was brilliant, said Moore, who teaches at McGill's Desautels Faculty of Management.

Tellier moved the company to the Internet, but what must be asked is if he did it quickly enough, Moore said.

"It's with the opportunity of hindsight that you say, 'No.' But when you look at the industry around the world, he did one of the better jobs in an industry which is a dog."

RBC Capital Markets analyst Andrew Calder didn't put a lot of emphasis on Tellier's departure and his assistance in the transition to a new chief executive.

"In our view, this will not come as a surprise to the market and is consistent with the broader restructuring at the company," Calder said in a research note.

Yellow Media — a former subsidiary of the company that owns Bell Canada — was spun off as an independent publisher of phone listings and advertising directories.

Last fall, Yellow Media said it planned to create about 170 Montreal-based information and digital technology positions. But about 125 clerical positions would be moved to other company offices across Canada from Montreal.

Tellier will remain with Yellow Pages Group until the new chief executive officer is appointed, but no later than Aug. 15.

He said it has been an honour to lead the group.

"As a result of the recapitalization which was implemented in December 2012, I believe Yellow Pages Group is now well-positioned to successfully continue its digital transformation," Tellier said.

Shares in Yellow Media were down 27 cents or 2.58 per cent at $10.20 on the Toronto Stock Exchange on in mid-afternoon trading Thursday.