The Yellow Pages Do the Walking (T)

AT&T Inc. (NYSE: T) announced this morning that it had sold its advertising solutions and interactive divisions to an affiliate of Cerberus Capital Management LLC for $750 million in cash, a $200 million note, and a 47% stake in a new company, YP Holdings LP, that will be majority-owned by Cerberus. The two divisions accounted for about $3.3 billion in AT&T’s revenues in 2011. AT&T’s revenues totaled about $126.7 billion last year.

YP Holdings will receive 1,200 Yellow Pages print directory titles, the YP.com website, the YP local ad network, and the YPmobile app. The new company has also agreed to “honor existing union contracts.”

The proliferation of yellow pages directories had put AT&T in a market where it couldn’t really be a leader, so getting rid of the division is a smart thing to do. Cerberus is likely to hive off the print directories to competitors — after all, AT&T took a $2.9 billion writedown on the business last year. That’s not the sign of a healthy business and Cerberus isn’t likely to invest more in a dying enterprise.

Paul Ausick