SBC and BellSouth to Create Net Yellow Pages Giant

SBC Communications and BellSouth have agreed to purchase online directory publisher YellowPages.com, in a bid to become a market leader in local search.

Financial terms weren’t disclosed, but a source familiar with the deal valued it at around $100 million.

While yellow pages players have long sought to capitalize on what’s seen as a lucrative local search opportunity, none has been able to attract the type of Web traffic enjoyed by pure play Internet companies like Yahoo or Google — both of which have local search ambitions. The telecom companies hope that they’ll be able to develop that traffic by combining their respective efforts — RealPages.com and SMARTPages.com — into a single entity, YellowPages.com, with its well-recognized brand.

“To be the leader in online yellow pages, you need two things — traffic and strong local advertising relationships,” said Dennis Payne, president and CEO of SBC Directory Operations. “This new venture gives us both — the strong consumer traffic from YellowPages.com, SBC’s SMARTpages.com and BellSouth’s RealPages.com Web sites, plus enhanced local advertising content.”

The companies said the combined YellowPages.com site would receive more than 50 million searches per month. A re-designed co-branded site, which will display advertising from both companies, will debut in early 2005.

The new entity, a joint venture between the directory affiliates of the telecom players, will be based in Pasadena, Calif. and have operations in Henderson, Nev. The two companies previously worked together to join their wireless divisions to form Cingular.

Charles Stubbs, a BellSouth executive, will become president and CEO of the new joint venture. Bill Clenney, of SBC’s yellow pages business, will take on the CFO job. Debby Slavin, also from SBC, will become senior vice president of operations.

The two companies will continue to manage their local online yellow pages relationships in their respective regions, but will also develop a joint sales force to handle national accounts. SBC operates in 13 states that cover about a third of the U.S. population — California, Nevada, Texas, Oklahoma, Kansas, Arkansas, Missouri, Michigan, Ohio, Illinois, Indiana, Wisconsin and Connecticut. BellSouth has a presence in 9 states, mostly in the Southeast. SBC spokesperson Walt Sharp said the two hadn’t ruled out partering with another yellow pages player, to be able to cover the whole nation.