Dex and Supermedia Back in Bankruptcy in Preparation for Merger

Dex + Super logoBoth Dex and Supermedia are in Chapter 11 in preparation for their merger. Previously the majority of creditors signed off on the deal.

The companies said that they’ll save $175 million per year as a combined entity. Jobs will undoubtedly be shed but as it stands the new company would have almost 6,000 employees.

Prior to the bankruptcy Dex and Supermedia had a combined $4.69 billion in debt. The companies said that they expect to emerge from bankruptcy in 45 to 60 days.

The following are excerpts from the Supermedia results and earnings call this week:

  • Q4 2012 revenue of $312 million, an 18.8% decline YoY
  • Full year 2012 revenue was $1.354 billion, a 17.5% decline, compared to 2011.
  • [Combined print and digital ad] sales for the fourth quarter declined 19.1% and full year declined 18.9% compared to 15.9% and 16.5% for the same periods last year.
  • 2012 full year cash flow was $275 million
  • Cash on hand at the end of 2012 was $105 million
  • 15% decline in [advertisers] in 2012

The following are excerpts from the Dex results and earnings call this week:

  • Digital is 34% of revenue (see correction below)
  • Adjusted free cash flow of $88 million for Q4 and $335 million for 2012
  • In 2012 print was down 23%
  • CEO Alfred Mockett: We are looking to bundles to help mitigate the rate of decline in print. Overall, bookings declined 13% in the quarter and for the year. Ad sales were down 14% in the quarter and for the full year.
  • Mockett: We’ve seen the greatest decline in the metro — major metros, and now we’re beginning to see that trend spread through Tier 1, Tier 2 and Tier 3 cities.

Dex 2012 results

What do you think about the outlook for the combined entity?

Correction: Yesterday I said that digital sales were generating 30% of revenue. I was corrected. Here’s the accurate statement:

In 2012, Dex One’s digital sales exceeded projections and generated 34% of total bookings from digital sales.  The digital business is an increasingly important source of the company’s profit, with contribution margins nearing 30% of revenue and continuing to improve as the business scales.

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7 Responses to “Dex and Supermedia Back in Bankruptcy in Preparation for Merger”

  1. Abid Chaudhry says at

    I think the outlook will remain to be be murky post-merger.  Completing the ‘digital transformation’ for companies like Dex/Supermedia, YP, Hibu, etc etc. is a challenge enough given the super saturation that exists in the SMB marketplace. Even if there was a mega-merger of the last remaining dinosaurs of PYP, the debt-to-revenue ratio is always going to be heavily imbalanced.  YP has been able to successfully enter into new product spaces (360, mobile network) but being able to add new SMB revenue sources at the scale that’s required to keep these giants afloat is going to require truly (yes I’m going to say it) ‘disruptive’ innovation – in both product offering/sales strategy, as well as how SMB’s are approached in general.  Interesting time for the industry to say the least.

  2. Chris Schweppe | Yellow Page Directories Are Obsolete » Customwave Internet Marketing Blog says at

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  3. Steven says at

    Greg – Dex discloses (and you call out) the digital vs. print performance – nearly opposite with Digital up 34% in spite of account attrition and Print down 23% for 2012.  I’m having trouble finding the same detail in the Supermedia filings – do you know if the legacy vs. digital performance is as pronounced for them as it is for Dex?

  4. Greg Sterling says at

    I didn’t see those numbers but I think the % of revenues that are digital are less for Supermedia. It’s probably somewhere in one of the earnings call transcripts. One of the financial analysts would have asked it. 

  5. Abid Chaudhry says at

    I looked over the call transcripts and only found combined ad sales reduction figures – – 18.9% reduction YoY in total published print + digital ad sales.  Interestingly I don’t think the question of digital vs. print split out was even asked.

  6. Mike Stewart says at

    SuperMedia does not share what % of revenue is digital vs print. This began as a policy by Dee Jones early on. Although the CEO changed, the money boss is the same.

    Do you think customer growth is a struggle for both brands due to the branding changes, perception of the company pocketing the profits and subsidizing the losses, and the lack of digital knowledge of the sales consultants?

    I predicted a merger of these companies in 2010, after the major shareholders were hedge fund institutions (Paulson.) Middle management is thicker than old ticks on a wild dog. Regardless of what these two companies do, the year over year double digit decline of print will continue and management will ride the gravy train until the wheels fall off. You can bet on that!

  7. Annual Print YP Death Watch | Understanding Google Places & Local Search says at

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  8. Running Man says at

    Dex and Super Media have a union (or Dex surely does) to deal with so they many be cutting the fat if they want to survive! They cannot just cut the lower end employees who are protected by the Union.

  9. Greg Sterling says at

    Don’t know the status of the unions or how the Chapter 11 impacts their rights. 

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