Directory Firm R.H. Donnelley Files For Bankruptcy
This story was written by Joseph Tartakoff.
It's a close call whether the newspaper industry or the yellow pages industry is more troubled. Faced with falling ad sales and heavy debt, R.H. Donnelley became the latest directory services company to file for bankruptcy Friday. The companywhich prints the Dex-branded yellow and white pages and also runs DexKnows.com among other sitesblamed the economy for its woes, although the move to online advertising certainly hasn't helped. "Our growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. economy and the local advertising market," said CEO David Swanson in a statement. The company has reached a deal with creditors under which the company's debt will be cut by $6 billion in exchange for 100 percent of its equity.
R.H. Donnelley's online business was dealt a blow last spring, with the sudden departure of interactive head Jake Winebaum. Winebaum had arrived at the company in 2007, via its $345 million purchase of Business.com.
Another directory services company, Idearc, also filed for chapter 11 bankruptcy protection last month. Charles Laughlin of analysis firm The Kelsey Group writes that R.H. Donnelley's filing was expected and "While bankruptcies are always painful, it appears to be the best way for both Idearc and RHD to get the fresh start they both need to build sustainable directional media businesses, something that was difficult to impossible with the debt loads the two companies are carrying."
By Joseph Tartakoff