The printing industry continues to progress through a critical juncture, through which printed materials are being integrated with other published media with greater fidelity and continuity. The printed page has been around since, well since that Chinese guy invented it back in the third century B.C.. It has survived many technology changes, many of which have been predicted to bring its demise. However, those who make such predictions fail to recognize that paper and printing have enjoyed their own rapid pace of technological development, right along with the rest. Integration between publishing technologies also continues at a break-neck pace, which brings new and exciting possibilities.
In this economy a lot of people have had to make some tough, future setting decisions. With each dollar counting more than ever, we at Liberty Press have observed the development of a serious dichotomy in the market place: cheap versus quality. Those that seem to be scrambling without a plan in the current market conditions consistently choose the cheapest solution available. The only consideration that seems to have any weight is price. If it costs, it’s out. Those that are calmly planning for the future are getting quality while it’s cheap and developing their brands when there is little or no competition. They’re buying better paper, putting more color in their books, and enhancing the cover with foil and embossing.
In the face of dwindling advertising, what is the logic behind paying more for a book? Shouldn’t a smart publisher cut costs and preserve cash on hand? Though fear would indicate that as the only choice, reason would suggest otherwise. Cash is king, is the idiom of choice in a recessive economy. The question is, king of what?
Because consumers are pinched just like everyone else, they’re stretching their dollars as far as they can. They are more careful where they spend and what they spend on. Under such conditions we are seeing more, not less use of the yellow pages. Why?, we’ve asked a few purchasers. To which they have responded with two primary reasons. First, they are pressed for time more than ever. There is less time to shop around and less money to do things over again. They need the most reliable solution so they turn to a proven resource – the printed page. Second, scams are popping up more than ever. The Internet is turning into the wild west where every choice to buy, especially for local services, could be a hoax. So again, they turn to a high quality printed book for protection. It worked in the past, and it still does.
It is an old adage, buy low, sell high. It has never been more affordable to buy a high quality book. However, many seem to be doing the same thing that most uneducated, reactionary investors do in tough market conditions – sell low and buy high. We laugh at those momentum mongers – even sometimes when it’s ourselves. Then we joke that we seem to control the market: when we buy it goes down and when we sell it goes up. It’s like magic!
Now is when those that know are buying! Mr. Warren Buffett recently made an offer to purchase a controlling interest in Burlington Northern Santa Fe Corp., a railroads company. His offer was hailed as unlikely to be contested by any other serious bidder, which most analysts pointed out as typical “Buffett”. Why? Because Mr. Buffett is well known for consistently buying low and selling high. What is more, when buying is low, it is usually low for a reason, which brings one other advantage: no other bidders to push the price up. Hence the reason that the price is low.
We are now facing exactly that same question in the publishing and printing industries. Those who are strategically investing in their futures are buying now, when prices are low. While all lemmings are busy running for the nearest cliff, those who know their investments are developing their brands and establishing their dominance in their respective marketplaces. And what may be most interesting, is that they seem to be doing so with little competition and great success.
In all fairness, I am a salesman for a great printing company, and of course, I would like to see printing pick up. But the facts are the facts. This separation is forming among the publishers in our industry. Our greatest concern is that those who are choosing to sell their reputation and futures for a few dollars today will force us to find new customers tomorrow. We are very aware that our future is directly tied to our customers’ futures. We believe that the seeds of our combined future are being sown today.
Below is a letter from one of my favorite customers on our recent training seminar. This training seminar was on graphics and design. It went great and everyone had a blast! Thanks so much Lisa! We loved hosting you and Corey! We had such a fun time showing you a little bit of Utah.
I just want to thank you, Matt, Lance, John, Morlin and the entire Liberty Press team. The LP training seminar was much more than I expected. After working with Liberty Press for over 7 years now, it was nice to finally see your state-of-the-art facility. I was so impressed with the efficiency of your operation.
The experience of the tour reassured that I am printing with the BEST! As far as the training….what can I say Matt is the MAN! (but I already knew this from all the phone help he has given me). It was impressive to learn from him all the tips and tricks to help make our Directories look their best.
I can not wait for future training seminars….sign me up; I am in!
I appreciate working with Liberty because they are honest, reliable, and I know I am getting the highest quality at a reasonable price. Thank You again Liberty Press!
Mountain Communities Telephone Directory
I thought this article was very interesting because we print Ziplocal.
Transactions To Accelerate Business Transformation To Digital Media
Montreal (Quebec), March 30, 2010 – Yellow Media Inc. (TSX: YLO.UN) (“YPG”) announced today that it has reached a definitive agreement to acquire Canadian Phone Directories Holdings Inc. (“Canpages”) from an investor group led by private equity firm HM Capital Partners for a purchase price consideration of approximately $225M. Canpages is a local search and directories publisher in Canada.
“The acquisition of Canpages will accelerate our business transformation to the digital world,” said Marc P. Tellier, Chief Executive Officer, Yellow Pages Group. “Canpages has built a strong local search business and we are pleased with the prospects of joining forces. It will give us the opportunity to expand our sales force, online capabilities and customer offerings.”
Headquartered in Vancouver, Canpages publishes 84 directories for a total circulation of approximately 8 million copies. The company’s website, Canpages.ca, attracts more than 3.5 million unique visitors each month. Canpages generates annualized revenues of $110M with an online contribution of approximately 23%. The Company employs about 700 people in Canada of which more than 450 are sales consultants.
“Combining with Yellow Pages Group will enable Canpages to provide a stronger digital value proposition to advertisers” said Oliver Vincent, Chief Executive Officer, Canpages. “I am confident that bringing together two experienced players in the local search industry will benefit both consumers and Canadian businesses.”
Following the close of the transaction, YPG will continue to publish the Canpages print directories in the normal course of business. Advertisers can be confident in maintaining their current advertising program with Canpages.
In addition to the Canpages acquisition, YPG announced the contribution of its U.S. directory operations, YPG Directories, LLC, publisher of Your Community Phone Book (“YCB”), to Ziplocal, LP. YCB is the publisher of independent directories in selected Mid-Atlantic and Southeast American markets and was acquired from Volt Information Sciences, Inc. in September 2008. Ziplocal is a leader in providing an innovative source of information for the businesses and communities it serves. The company operates ziplocal.com, and once the two entities merge, Ziplocal will reach over 300 markets across the United States.
“We are excited about acquiring YCB, a company that provides top-quality local search services,” added Vincent, who is currently and will remain the Chief Executive Officer of Ziplocal. “We welcome YCB’s outstanding team to the Ziplocal family and look forward to working with them to provide their customers the full breadth of local search options – print, online and mobile.”
“We want to thank the team at YCB for their commitment to delivering solid results,” added Tellier. We have found a great platform and partner for them to grow within the U.S. directory industry. The combined business will have increased scale to meaningfully invest in digital product innovation.”
Peter Brodsky, a Partner at HM Capital Partners, said: “Canpages has been a successful investment for our firm and the business is well positioned for significant future growth as part of YPG’s platform. We are excited about our new partnership in the U.S. with YPG in Ziplocal.”
YPG will continue to fully own and operate its information technology platform and centers of excellence located in Blue Bell, Pennsylvania and Indianapolis, Indiana.
The purchase price consideration of $225M for the acquisition of Canpages, subject to working capital and other adjustments, will be comprised of $75M payable in cash at closing to settle third party debt obligations and the issuance of $150M of Mandatory Exchangeable Promissory Notes (“Exchangeable Notes”) of Yellow Media Inc.
The Exchangeable Notes will rank subordinate to the senior debt of Yellow Media Inc. and bear interest at a fixed initial rate of 5%, payable quarterly in cash, subject to step up provisions over time.
Starting in the first quarter of 2011, the Exchangeable Notes will be exchangeable into common shares of Yellow Media Inc., the surviving entity following the conversion to a traditional corporate structure. Each quarter, HM Capital Partners will have the right to exchange $37.5M of the Exchangeable Notes, representing 25% of the principal amount. At any time following closing and until December 31, 2014, YPG may redeem all or a portion of the Exchangeable Notes for cash together with accrued and unpaid interest.
The Exchangeable Notes will have a final maturity of December 31, 2014. Any remaining Exchangeable Notes will be automatically exchanged into common shares of Yellow Media Inc. on December 31, 2014. The acquisition of Canpages is subject to the satisfaction of regulatory conditions to closing.
The announced contribution of YPG’s U.S. directory operations to Ziplocal will take the form of an equity-for-equity swap. YPG will own a 35% minority ownership in the new entity resulting from the business combination of YPG Directories LLC and Ziplocal, LP. This business combination will be executed under an accelerated timeline and is expected to close on or about April 15, 2010. The new entity is expected to generate approximately US$120M in revenues.
YPG and Ziplocal will explore potential long-term outsourcing agreements post-closing.
Scotia Capital and TD Securities acted as financial advisors to YPG for the proposed transaction. SignalHill acted as advisor to Canpages and Ziplocal.
For more information on the Canpages acquisition, consult the fact sheet.
Source: Canpages Inc.