Meet the man who wants to be Yellow CEO

Scott Pomeroy, the American who has led Yellow Pages Group since its dramatic debt restructure in February, wants to stay.

Last night, the interim CEO told NBR he wants to lose the “interim” part of his title, and stay beyond his 12-month contract.

Yellow’s board – which includes ex-MediaWorks boss Brent Impey – is scheduled to meet this morning.

It has already approved a three-year plan put forward by Mr Pomeroy, adding impetus to his bid to stay long term.

The interim CEO arrived at Yellow from Denver, Colorado, where he oversaw a restructure of Local Insight Media, an operator of directories in the US and the Americas grappling with Chapter 11 bankruptcy.

Mr Pomeroy replaced ACP veteran Bruce Cotterill, who resigned in February shortly after the February restructure, which saw a consortium of lenders, led by BNZ (and including  ANZ, Westpac, and Deutsche Bank in a syndicate of 40) move in and take control of the company as debt was converted to equity.

The restructure, which included a billion-dollar goodwill write-down, came four years after private equity funds bought Yellow Pages from Telecom for $2.2 billion, funded mainly by bank debt of $1.65 billion.

While a disaster for the original investors (private equity funds Unitas Capital and Ontario Teachers Pension Plan lost all $610 million invested), the debt for equity restructure has freed up management.

Monkey off his back
This time last year, management meetings were dominated by discussion over how to deal with Yellow’s debt mountain, digital media director Peter Crowe told NBR.

In 2009, the company paid $191 million interest on its towering debt. It was not sustainable, Mr Crowe said (overall the company reported an operating loss of $52 million on revenue of $297 million).

Now, it could focus on future strategy.

The debtholders and the shareholders being the same group made life less complicated, added Mr Pomeroy.

The interim CEO said the new shareholders (read: the banks) are behind Yellow’s bid to upgrade its services (its main online search engine was upgraded over the weekend) and expand its digital offerings. Late last year, it was agreed that $8 million would be invested in new projects, which have included the Yellow Local series of sites, which compete against NZ Post’s recently launched Localist.

Yellow has yet to file its result for its year ending June 30, 2011 with the Companies Office – a period overshadowed by the debt restructure and bank takeover.

For current period, Yellow was “very profitable”, Mr Pomeroy said, but would never again enjoy the monopoly margins of its period when it was part of Telecom.

50% of revenue from online
A key goal is for the company to gain 50% of its revenue from online within the next three or four years.

There would be an emphasis on was helping small businesses negotiate the plethora of online options, and educating them about the merits of page impressions and other online metrics versus the phone calls that are the currency of print response.

Yellow’s relationship with Google was also central to the company’s future, Mr Pomeroy said.

He conceded the obvious – that “Google owns the consumer”.

At the moment, Yellow is New Zealand’s largest buyer of Google Ad Words,  giving it profile on the search engine.

In the emerging area of mapping, revenue is less of a one-way street.

Yellow subsidiary Finda is the official supplier of business locations for Google Maps in New Zealand. Mr Pomeroy described this as a “financially neutral” arrangement. Google got data, Yellow got profile.

The network of print and online services offered to Yellow’s customers would only expand, Mr Pomeroy said.

And while online options proliferated, a central element of his philosophy was that “we shouldn’t be precious about Yellow owning every platform” the company’s services are delivered through.