Yell Group PLC

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Yell Group PLC

Queens Walk
Oxford Rd.
Reading,
United Kingdom
Telephone: +44 01189 592111
Fax: +44 01189 509888
Web site: http://www.yellgroup.com

Public Company
Incorporated: 1999
Employees: 11,400
Sales: £1.29 billion ($2.4 billion) (2005)
Stock Exchanges: London
Ticker Symbol: YELL.L
NAIC: 511140 Database and Directory Publishers

Yell Group PLC is the United Kingdom's leading publisher of print and online telephone advertising directories and the leading independent publisher of directories in the United States. Yell Group focuses on four primary products: print directories, including Yellow Pages and Business Pages in the United Kingdom and Yellow Book in the United States; online directories and related services, including the United Kingdom's Yell.com and the United States' Yellowbook.com; and, in the United Kingdom, telephone-based directory assistance, through Yellow Pages 118 24 7. Altogether the company publishes nearly 900 directory editions, distributing some 200 million copies each year. The company's U.K. operations publish 111 editions, while its fast-growing U.S. unit numbers 790 editions, reaching nearly every state in the country. While the company's print directories operation in the United Kingdom, based on the former Yellow Pages unit of British Telecom, is relatively mature, the company has found new channels for expansion, including its online service, and rolling out mobile Internet and SMS-based directory services for cellular phone users. In the United States, Yell has become the fastest growing directories group through an aggressive acquisition drive. Between 2000 and 2006, the company completed more than 25 acquisitions, including its largest to date, of TransWestern Holdings L.P. for $1.58 billion in 2005. The acquisition helped boost the company's revenues to £1.29 billion ($2.4 billion) for the year. Yell is listed on the London Stock Exchange and is led by CEO John Condron.

U.K. YELLOW PAGES

The first telephone directories in the United Kingdom appeared soon after the installation of the country's first telephone exchanges in London. By the end of 1880, the initial directory counted more than 300 telephone numbers. In the United States, the development of telephone directories led to the creation of the "yellow pages," that is, directories specifically oriented toward providing the telephone numbers and addresses for businesses. As legend has it, the first yellow pages appeared as early as 1883, when a directory printer ran out of white paper and substituted yellow paper instead.

Later, researchers determined that the black type on yellow paper was easier for consumers to read, and the use of yellow paper for commercially oriented, classified directories became an industry standard, not only in the United States, but across the world. Yellow page directories became commonplace throughout the United States. That market was largely dominated by the country's telephone operators; however, a number of independent directory publishers appeared in the early part of the century. Among these was a directory published by the Merchants Advertising Service Inc. covering local businesses in Long Island, New York. That company began publishing in 1930; by 1949, the company had changed its directory's name to Yellow Book.

In the United Kingdom, where the country's telephone system was placed under a monopoly controlled by the General Post Office, the directory market developed more slowly and remained limited to white page directories into the 1960s. In 1966, however, the General Post Office decided to test its own classified directory. The first of these appeared in Brighton that year. The success of that initial directory led the Post Office to proceed with a general rollout of yellow page directories by 1973. While the initial yellow pages directory was geared toward the home customer, the Post Office soon rolled out a specifically business-to-business directory, the Commercial Classified, in 1969.

The new directories quickly represented a major source of new income for the Post Office through the 1970s. The success of the Yellow Pages brand in the country led the post office to change the name of the Commercial Classified directory as well, which became known as Industrial and Commercial Yellow Pages in 1979. The Yellow Pages also played a role in the launch of the United Kingdom's earliest dialup information service, Prestel, which debuted in 1980 and featured an online version of the Yellow Pages. The new service also provided an extra revenue stream for the Post Office, as it collected fees not only from advertisers, but also from customers consulting the directory.

In 1981, the General Post Office was split up into its separate parts, and the telecommunications wing was spun off as British Telecommunications. The Yellow Pages became a division of the new telephone company, which remained under government control into the early 1980s. In 1984, British Telecom was privatized, at which point the directories division was established as a separate subsidiary, Yellow Pages.

NEW TECHNOLOGIES

In that year, also, Yellow Pages launched a new directory product, called Business Pages. The first of these were produced for the Bristol and South Wales markets. The company then prepared to launch the Business Pages on a wider scale, releasing a London edition in 1985. By the end of 1986, Business Pages directories had appeared in seven major markets. Yellow Pages parlayed the success of the Business Pages into a new service, the Business Database, in 1986. This division provided direct marketing and related support services.

While Prestel had failed to capture the British consumer's interest, in part because customers were required to purchase the needed set-top box, the Yellow Pages had not lost interest in developing an online version of its directories. The spread of personal computers and the development of a new generation of dialup modems enabled the company to roll out a new online directory service in 1987. This time around, existing Yellow Pages advertisers received online listings as part of their subscription service, while consumers were charged only for the telephone connection.

Yellow Pages in the meantime had begun development of another delivery technology, providing extended directory information over the telephone. The new service debuted in 1988 as Talking Pages; among the features of the new system was the ability to obtain commercial directory assistance outside of one's local calling area. The Talking Pages service was first tested in the Brighton and Bristol markets, before launching on a national scale in 1992. By 1993, British Telecom had initiated a single, nationally available telephone number of the Talking Pages, which provided the service at local calling rates. Two years later the company added a number for users of the FreePhone cellular telephone service as well.

COMPANY PERSPECTIVES

Yell creates value by putting buyers in touch with sellers through an integrated portfolio of simple to use, cost-effective advertising products available as printed, online and telephone media.

We aim to be the best business information bridge between buyers and sellers, regardless of channel, time or location. Yell seeks to understand, anticipate and meet the changing demands of advertisers and users and to take advantage of new technologies and communication methods in the development of world class products and services.

Yellow Pages continued to adapt to and adopt new technologies into the mid-1990s. In 1995, the company launched an extension of the Talking Pages service with the Nationwide Film & Cinema service, offering film and theater scheduling information. The following year, the Yellow Pages reached the Internet with the creation of a new online version, Yell.co.uk. That site was extended to include e-commerce capabilities, linking customers to advertiser products, with the creation of Shop Yell in 1997.

The company continued to broaden its print business as well. In 1998, for example, Yellow Pages published its first Business Pages for the Scottish market. The company also began developing a new design format for its directories, publishing its first "new look" directory in Northern Ireland in 1998. The successful test of the design led to a national revamp of the many Yellow Pages editions. By the end of the 1990s these reached more than 90, including the latest, in Gloucester and Swindon, added in 1999. In 2000, the company added new Business Pages for the Thames Valley and Central regions. Further growth of the Business Page brand continued into the mid-2000s, including the launches of editions for the eastern, southern and southwest, and South Wales regions in 2004. By then, the company's core Yellow Pages directory had completed its national coverage, with a launch of an edition in Hull. By the middle of the decade, the company counted more than 110 directory editions across the United Kingdom.

INDEPENDENT AND INTERNATIONAL FOR THE NEW CENTURY

Yellow Pages' success story had only just begun, however. In 1999, the company crossed the Atlantic and acquired Yellow Book USA for $655 million. The purchase instantly placed the U.K. company among the leaders in the U.S. independent directory publishers market. Yellow Book had grown into the country's largest independent directory publisher serving a largely eastern seaboard market. Acquisitions had formed a major part of Yellow Book's growth, especially in the 1990s, when it made a series of acquisitions in New York, New Jersey, and Pennsylvania, before landing RH Donnelley Proprietary East in 1997. That purchase raised Yellow Book's directory list to more than 250 editions covering seven states.

Yellow Book continued its acquisition spree, buying up several more directory publishers and boosting its total editions to nearly 300 by the time of its acquisition by Yellow Pages. The purchase also brought in Yellow Book's own online directory service, Yellowbook.com. The U.S. division continued to grow strongly into the 2000s, buying up Sprint Publishing, and its 55 directories, along with several other publishers in 2000. In 2001, Yellow Book made its first move west of the Mississippi region, acquiring CGC directories.

Yellow Pages changed its name to Yell Group in 2000 as it prepared to claim its independence in the new decade. This came in 2001, when British Telecom sold Yell in a management buyout backed by an investment partnership between Apax Partners & Co. and Hicks, Muse, Tate & Furst. That deal valued Yell at nearly $3 billion.

KEY DATES

1930:: Merchants Advertising Service, which becomes Yellow Book in 1949, is founded in the United States.
1966:: General Post Office (GPO) in Britain publishes first yellow pages in Brighton.
1969:: GPO publishes first Commercial Classified directory.
1973:: Yellow Pages is launched nationally.
1979:: Yellow Pages is added to Prestel service.
1984:: GPO's telecoms business becomes British Telecom (BT); Yellow Pages becomes subsidiary of BT.
1988:: Talking Pages telephone directory service debuts.
1996:: Yell.co.uk online directory service begins operation.
1999:: Yellow Pages acquires Yellow Book.
2000:: Company changes name to Yell Group.
2001:: Company is spun off in management buyout.
2002:: Yell Group acquires McCleod Directory Publishing in the United States.
2003:: Yell Group launches new telephone directory service, 118 24 7, to replace Talking Pages; Yell goes public on London stock exchange.
2004:: Company acquires Feist Publications in the United States.
2005:: Company pays $1.5 billion to acquire Trans-Western Holdings in the United States.

Under its new ownership, Yell quickly returned to the acquisition trail. The United States remained the company's key expansion target, and in 2002 the company struck big again, buying that market's second largest independent publisher, McCleod US Publishing. The deal, worth $600 million, firmly placed Yellow Book at the head of the fast-growing independent directory market in the United States. The McCleod purchase also enabled Yellow Book to double its national presence, to 38 states, as well as the Washington, D.C., market.

By the end of 2002, Yellow Book's acquisition drive had enabled it to reach the United States' West Coast, with the purchase of California's National Directory Company. More acquisitions followed in 2003 and 2004, including Dag Media, Directory Publishers Inc., Feist Publications, FYI Directories, as well as selected directories from CGC, Pioneer Telephone Directories, and Cannon Publishing, among others. Yellow Book also launched a number of entirely new directories, adding editions in New York, Florida, Virginia, North Carolina, Connecticut, and elsewhere. Yell's strong growth in the meantime encouraged its financial backers to cash in on their investment, and in 2003 Yell was listed on the London Stock Exchange.

The company continued making a stream of smaller, bolt-on acquisitions through 2005, even as it prepared its next large-scale acquisition. This came in July 2005, when the company agreed to pay more than $1.5 billion to acquire its chief rival in the United States, TransWestern. That purchase not only raised Yell's total number of directories, including its U.K. operations, to nearly 900, it also transformed Yellow Book into the United States' fifth largest, and Yell itself into the world's third largest, directory publisher. Yell appeared likely to remain a leading force in the fast-growing directory market for some time to come.

PRINCIPAL SUBSIDIARIES

Yellow Book USA.

PRINCIPAL COMPETITORS

AT&T Inc.; Microsoft Corporation; BellSouth Corporation; Mindscape; Telecommunications Inc.; R.R. Donnelley and Sons Co.; The First American Corporation; Verizon Information Services; Harte-Hanks Shoppers Inc.; SEAT Pagine Gialle S.p.A.