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economy), and his clients (the local advertisers), and not on R.H. Swanson’s final statement and legacy was to put the blame on all of us (the entire U.S. economy and the local advertising market.” It seems that Mr. In the his last quote as Chairman & CEO, David Swanson stated that the company’s “growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. Looking back at it today, it would seem rather crazy for a yellow pages company to spend all their time and money buying other yellow pages directories and not investing in their own technology, continue to operate its legacy business model, and do nothing meaningful in regards to digital innovation. deal trophy) from the successful closing of this deal. Donnelley’s stock of two of its largest shareholders, Carlyle Group and Welsh, Carson, Anderson, & Stowe. Donnelley acquiring one of its main competitors, Dex Media, in a $9 billion dollar deal, and the year thereafter, in 2006, I then worked on a $1.1 billion secondary equity offering of R.H. Donnelley’s debt grew from $2 billion in 2002 to a whopping $10 billion by 2007 (yes, that’s a ton of advertisements that would need to be sold just to cover debt).Īs an investment banking analyst at Lehman Brothers, in 2005, I worked on R.H. As a result, from 2002 through 2007, R.H. Donnelley had over 600 different directories across the U.S and a massive sales staff of 2,000 people).

Donnelley continued to double down on buying more and more yellow page directories, increasing its physical footprint, but not spending any money investing in its digital footprint or offering new products and services (at the time of its collapse, R.H. the yellow pages in Cincinnati, OH were different than the yellow pages in Washington, D.C., and each had their own print production, market distribution, advertising clients, and sales staff). Since the company had historically stable revenue with large profit margins (all you had to do a print a large book with the names of all the people that paid you each year and mail it out to everyone which also served to reinforce the marketing of the yellow pages), the company was able to take on billions of dollars of debt to purchase other yellow pages companies and increase its physical footprint as each yellow page directory served a specific, localized market (i.e. Even though the book was very large and heavy, they never would throw it away as it served as an important resource.

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If the advertiser ever stopped paying, it could mean that they lose these benefits to their competitor.įor the consumer, when they received their free yellow page directory, they kept it in their home in a safe place, as the yellow pages served as a valuable reference for every possible service that someone may need. For those loyal advertisers who continued to feature themselves year after year, they would get added benefits like being listed above their competitors or even have larger sections in the directory. If you missed out in being printed in the annual yellow page directory, it was as if you didn’t exist for the entire year. If you had a business, you just had to list yourself in the yellow pages, it was the single and most basic and important way to advertise yourself. They were the company’s online website,, ,, ,, and every other. As the telephone served as the only technology that can be used to contact anyone in the world in real-time, the telephone number listing and organization of all the services in the world were only accessible through the yellow pages. Donnelley worth billions of dollars?įrom the time of the invention of the telephone, over a century ago, yellow page directories were virtually a monopoly. But first, why were yellow page directories like R.H.

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