YPG Sells Trader Business
Canada’s Yellow Media announced today that it has sold its Trader Corp. vertical media business to the private equity firm Apax Partners for C$745 million. The deal lets YPG focus on transforming its core directories business and the cash helps improve the company’s balance sheet. YPG is not completely getting out of the vertical media business, at least for now. It will retain its real estate and employment operations and the online classified site LesPac.com.
Trader Corp. is particularly strong in the automotive category.
In 2010, YPG generated C$315 million from its vertical media business, compared with C$1,365 million from its directories business. The EBITDA margin for vertical media last year was C$91 million, suggesting sale multiple of more than 8 times trailing EBITDA.
Here is how BIA/Kelsey described the deal when it was announced in December 2005:
With its announcement this week that it will acquire Trader Media Corp., Canada’s Yellow Pages Group (YPG) has joined a small but growing community of Yellow Pages publishers that see classifieds not only as a new revenue source but also as a key element of their long-term content strategies.
Apparently long term amounted to roughly five years. BIA/Kelsey reported at the time that the sale price was C$435 million, which represented a multiple of 10.1 times EBITDA.
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I think all “traditional” media companies will transition to digital in some respects but their revenue will be significantly reduced. The best they can hope for is that the Print side is not totally dead and still have some base line amount of usage. There are just too many options for users and advertisers on-line and the margins are much thinner. YPG will do better because they have a bit of a monopoly position. A better solution at least for yellowpages companies is to dramatically change the nature of their books to something else like more focused on coupons and higher quality content. Make the book more visually appealing and not put every categories in it. Does it make sense to have a garage door category for people living in apartments or condos.
I think the notion of changing print dramatically to reflect the times is interesting, and we are already seeing examples, with smaller emergency guides for large cities, editions designed for apartment dwellers and so on. I don’t think that alone is a core strategy, more a secondary strategy for securing more longevity from print. Selling media packages, mixing tradition and digital, is still their best shot in my view.