This is the third in a series of stories about how some of the North Shore's largest employers are weathering the recession.
MIDDLETON — Idearc Media publishes more than 130 million phone books a year that let your fingers do the walking, but lately, things have not been a snap for the company.
On March 31, the publisher of Verizon White and Yellow Pages phone books — and one of the North Shore's larger employers — filed for bankruptcy in an effort to reduce its debt. The company said it reached an agreement in principle with its agent bank and a group of secured lenders to reduce its debt from $9 billion to $3 billion.
"Essentially we have a company with a good potential being held back by a terminally ill balance sheet," Scott Klein, the company's chief executive officer, said in a written statement.
"Everything we are doing from an operational standpoint is still going on," said Idearc Media spokesman Andrew Shane.
The company employs 6,100 people nationwide. At 35 Village Road, the company employs 312 people in a modern office building with golf-course views adjacent to the Sheraton Ferncroft Resort. That head count is down 13 percent in the past year, from 359 in March 2008, Shane said.
In a statement, the company said it expects to file a plan of reorganization in about 30 days and that it has "substantial cash balances and continues to generate positive cash flow."
Idearc Media publishes 127 million Verizon phone books in 32 states and Washington, D.C., and 3 million FairPoint Communications print directories in New Hampshire, Maine and Vermont.
It had revenues of $2.97 billion in 2008, down 6.8 percent from the year before.
Burdened by debt
The Dallas-based company spun out of Verizon Communications in 2006, and that is a big reason for the "recapitalization," said Neal Polachek, CEO of The Kelsey Group, a Princeton, N.J., research and consulting firm that follows Yellow Pages, electronic directories and local media.
"They were encumbered by a lot of debt, $9 billion or so, from the spinoff from Verizon, so they were heavily debt-laden."
While Yellow Pages are not as dominant as they were 10 years ago, advertisers such as sewer clean-out services still see the need for phone books to drive calls.
"When the basement is full of water and you need someone to empty it, are you going to go to your computer?" asked Polachek, who said people are using both online and print directories.
"They should be able to weather the economic conditions," Polachek said as Idearc moves business online, something it has been doing.
At Idearc, Shane said the company is promoting its business with TV ads featuring tow truck drivers and landscapers wearing yellow capes and claiming to be "the good guys." It is part of the company's new "SuperGuarantee" program, which allows people to register free online when they choose a landscaper, plumber, painter, auto repair service or other business.
"If a problem arises, we will take care of it as one of our own," Shane said. If the company can't resolve the issue between the consumer and the advertiser, the consumer would be eligible for $500.
The company is also tapping into a demand for barter transactions in this economy by starting Super Trade Exchange, offering an online network allowing advertisers to barter their excess inventory or services. It would allow a dentist, for example, to find someone to trade dental work for printing services.
Idearc Media is a tenant in the office building once owned by Verizon Information Services — a property that turns out to be Middleton's largest taxpayer, contributing $292,238 to the town's coffers, said Middleton Assistant Assessor Brad Swanson.
The building has been sold twice since 2004, and it now sports tenants such as computer software maker SAS and financial services giant Morgan Stanley.
Staff writer Ethan Forman can be reached at 978-338-2673 or eforman@salemnews.com.
Idearc Media
CEO: Scott Klein
Founded: Dallas-based company was spun out of Verizon Communications Inc. in 2006
Business: Phone book publisher and provider of online directories and search advertising
Recession measures: Voluntary Chapter 11 bankruptcy filing on March 31 designed to restructure debt
No. of employees locally: 312 as of March 20, down from 359 a year ago
Hiring: Not on the North Shore
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