In June, the former Dex Mediaannounced they acquired YP Holdings (Yellow Pages). While the company’s statement didn’t disclose any financial details, the Wall street Journal reported that it was a $600 million deal, and YP owners would retain a 3 percent stake in the combined company. The acquisition transitions Dex Media into DexYP
Joe Walsh, DexYP CEO, says the acquisition will help expand the company’s offerings and better promote their marketing platform (currently being used by almost 30,000 customers), Thryv. And according to the newly-created DexYP website:
“This transaction provides us with a greatly expanded client base and revenue profile, all with the national scale and infrastructure we need to continue to serve our clients and grow our business. Additionally, we now have an enhanced platform on which we can manage our print directories business profitably.”
On the surface, it seems to make sense. The two companies, both phone book publishers, were formerly competitors and that focused on offering directory resources and marketing solutions to small, local businesses. And as the age-old saying goes, “if you can’t beat em’, join em’.”
And yet, the acquisition is slightly confusing, given DexYP Media’s recent bankruptcy filing. Just over a year ago, the company filed for Chapter 11 protection. This was a part of a prepackaged bankruptcy-protected merger between Dex Media and SuperMedia. The bankruptcy isn’t the only warning sign: in fact, the company has had a turbulent history that goes back nearly a decade.
The 2016 Chapter 11 accounts for the third bankruptcy filing in just seven years. R.H. Donnelley, who owned R.H. Donnelley Corporation, acquired Dex Media in 2006. He was suspended in 2008 by the New York Stock Exchange after their stock plummeted from $46.92 to under $1 within one year and they failed to meet market capitalization standards. This forced the company to begin trading common stocks on Pink Sheets, and they filed for bankruptcy the following year. They emerged from that bankruptcy with a new name: Dex One. In 2012, Dex One and SuperMedia merged. The merge renamed the company as Dex Media — not to be confused with the original Dex Media acquired by the R.H. Donnelley Corporation in 2006.
The company cited economic and social change as one of the primary reasons for its most recent bankruptcy. In the disclosure, the company revealed that use of yellow page directories had declined from 14.5 billion references in 2005 to 4.7 billion in 2013. They also failed to receive support from secured lenders following the SuperMedia merger. Coincidentally, as a part of the restructuring, the company’s$2.2 billion of claims were exchanged for a $600 million first-lien term loan. — the exact amount it took to acquire YP Holdings.
If stability weren’t enough to question executive decision-making, the company’s reputation isn’t doing so well, either. Common complaints include poor and hidden marketing strategies, frequent unfair billing practices that make it impossible for customers to cancel services, and unorganized contracts.
One article titled, “Why Dex Media is Horrible at Best, Scam at Worst,” referred to Dex Media as a “joke” among industry insiders and professionals; essentially, a company that preys on the ignorance of local business owners trying to hop on the digital wave. The author says, “At the very least, they are just an extremely large company that works in volume (not quality) and they put sales revenue above the care and service of their clients.”
Furthermore, in 2016, the Better Business Bureau revoked their BBB Accreditation due to a large volume and pattern of complaints. Dex Media failed to rectify the situation, and after just over a year, the BBB was forced to take action after the same complaints continued to occur with no resolution in sight.
Rather than use their marketing prowess to focus on reputation management, once again, Dex Media is crying wolf and changing their name. It remains to be seen whether the company will begin to focus on bringing more talent and transparency to their customer relationships, or if this is just another plan to continue milking small businesses until the ship sinks.