Supermedia and Dex One have merged. So what does this marriage mean? One thing is certain: the more things change, the more they remain the same.
Some say this deal was in the works for over a year. Not true. The deal was being orchestrated decades before, although the two players involved didn’t realize at the time they would soon dance together. A walk down memory lane puts it all into perspective.
The Dex we know today was once Reuben H. Donnelley, at one time the Cadillac of the yellow pages publishers. RHD was the darling of the Bell affiliates prior to divestiture of AT&T, acting as its designated sales agent in many major and secondary markets across the nation. Unlike today when yellow pages sales careers are made and broken in as little as one week’s time, the word on the street was if you went to work for RHD, you would retire from the company. The company, its people and the business it conducted was that good. You are hard pressed to find YP sales reps today with three years experience. When RHD ruled the roost, finding reps with three decades worth was commonplace.
The alliance between RHD and Ma Bell was highly profitable for each, although RHD always felt Ma Bell dealt from the bottom of the deck when periodic sales agreements were reviewed and renewed. RHD took home about 25-cents on the advertiser dollar while doing most of the work and Ma Bell pocketed the rest for being, simply, Ma Bell. RHD was so profitable despite getting the smaller percentage that Dun & Bradstreet purchased them, making them a wholly owned subsidiary. Life was good in the world of yellow pages.
Suddenly, a funny thing happened on the way to the Bank for RHD and Ma Bell. Federal Judge Harold Greene slammed his gavel and the AT&T mothership exploded, leaving a bunch of bastard Bell children in its wake. RHD saw the demise of AT&T as an opportunity to what it wanted to do from day one when Reuben H. Donnelley himself ran the company – publish a phone directory without Ma Bell. The divestiture of Ma Bell made it possible. The once proprietary data base Ma Bell protected for over a century was now public information, available to anyone with the money and wherewithal to purchase it. Voila! The Donnelley Directory was born.
RHD had an excellent selling strategy. It had done most of the work, save for actually printing and distributing the directory which was Ma Bell’s prior responsibility. The way RHD saw it, if they published the directory themselves, they could sell half as much as they did as a Bell agent and still increase their profits, insofar as they no longer had to pay Bell a bounty. Moreover, RHD could do what Bell was keeping them from doing for too long: modernize the directory, adding things like color, community pages and consumer information. Their marketing plan was simple: offer a better directory with new coverage maps, more colorful graphics and other bells and whistles and the end users would make their directory the chosen one in the business. This was the theory and for one year, it actually worked.
RHD had a great year one. It launched the first major independent directory to great pomp and circumstance, fortified by a national advertising campaign that featured no less than Wyle E. Coyote and The Roadrunner. The only problem was rain was on the horizon and RHD’s profit parade would soon get wet.
Ma Bell was not a defenseless company and did not take well to RHD going their own way. They bid out their directory business to another vendor and the era of the directory wars commenced. There were many casualties, none harmed more than the small business person.
Small business back then relied heavily on the YP for new business. This was pre-internet and although the phone directory business was no longer a monopoly, it was a very necessary evil if you wanted to be in business. Many companies if not most did the only thing logical to them: they bought into both the RHD and phone company books. Why? They couldn’t afford to make a mistake, so they doubled up on their directory advertising expenditures. The smarter ones tested the effectiveness of each, using key numbers and other tracking mechanisms to evaluate the strength and weakness of each major player. In short time, the eventual winner was obvious: Ma Bell.
RHD’s grandiose scheme to rule the yellow pages world came to a premature end. It’s fall from grace was quick in corporate time. It morphed into various corporate identities and permutations along the way, finally falling into bankruptcy proceedings when their debt load became too heavy to handle. Ma Bell, meanwhile, had a better idea.
Ma Bell knew the YP business was declining. It also had a thirst for quick cash to fund their planned expansion into fiber optic communications and all that entailed. Ma Bell decided to sell off its directory business which had fallen flat in revenues and move into more profitable areas. Presto changeo, along comes Idearc.
Idearc was a business designed to fail from the beginning. It had zero chance of survival. The business it was in was on borrowed time courtesy of Google. The debt load it assumed was overbearing thanks to Ma Bell. Before it could tred water, the weight of its own design drowned it.
Enter Supermedia. When one company stumbles, another comes along, slaps some lipstick on the pig and its off to the races. While the name changed, things remained the same. The YP business was at best stagnant if not on life support. Management put the profit defibrillator on print instead of internet, sealing its fate. Because no one learned from history, the same mistakes were repeated. Next stop: bankruptcy.
RHD and Ma Bell went from being best friends to worst enemies back to best friends. They have gone the full cycle between love, hate and again, love. Bankruptcy does indeed make strange bedfellows. Even the management that intertwines the companies is incestuous, executives shuffling back-and-forth along the yellow pages road trying in earnest to keep drawing a paycheck from a sickly industry. Today, they are back together again, an unholy reunion marrying two troubled companies with the hope the union will produce more return on investment dollars. In theory, it might work in the short term. In the long run, history has shown it is doomed.
The name has changed. Things, rest assured, will remain the same. Work force cutbacks will continue to escalate and be outsourced. Sales reps will be going into the offices with the feeling they are visiting a concentration camp, not knowing if the next day will be their last. Managers will step on anyone, anywhere to protect their turf because they know deep down, it’s all they know how to do – work as directory managers where skills are not transferrable into other enterprises. Eat or be eaten. This is the mantra of the moment.
Once upon a time there was a window of opportunity when the directory publishing companies could have looked at the opportunities the internet presented and used their experience and assets to be the powerhouse of the digital world. Instead, they turned their backs and looked behind at the trail of money print advertising was leaving and their instant greed clouded their vision of the inevitable future. They defined being penny-wise and pound foolish with the same foolish acumen Kodak’s management made famous.
Let the Wall Street speculators play their money games and herald this merger for the opportunity for them to make a fast buck. That’s what they do. For the rest of us, all we can do is sit back, watch the names change while everything else remains the same.