Big Corporate Sloth Killed Canpages

Yellow Media sloth | BCBusiness
Lumbering giant Yellow Media spent hundreds of millions buying out competitor Canpages, and is shuttering the asset as its debts mount.

Yellow Media spent $225 million two years ago to take out its hot, Burnaby-based competitor Canpages. But the lumbering giant never could figure out how to use the asset properly and was slow to absorb its best parts. Now it may itself disappear.

In 2005, Canpages, an upstart Burnaby company backed by American venture capital money, decided to take on the Yellow Pages, the elephant that controlled the telephone directory (and subsequent advertising) industry and earned $1.4 billion a year.

Two years later, in a Game Plan column, I raised the fact that the mouse-like Canpages might eventually annoy the lumbering Yellow Pages so much, its parent Yellow Media would buy it to stop the competition. It did in 2010.

Cue last week’s announcement that Canpages was being “integrated” (read, shut down) into Yellow Media’s yellow pages directory.

Was this a surprise? Not to most people.

Yellow Media is a media company, in that it sells advertising to live. As of the last few months, it wasn’t living very well, with revenues falling off 16 per cent in three months and its stock price plummeting into penny stock range.

Now, to stave off a debt crisis – it owes $1.5 billion – it’s frantically trying to pare every expense.

It didn’t have to be this way. Consumers’ appetite for digital may have happened faster than it expected, but I believe Yellow Media could never really figure out how to use Canpages, other than silencing it.

Canpages started with the idea of making the transition from book directories to online. It was more nimble, more web savvy and more digitally adept than Yellow Media.

Obviously Yellow Media wasn’t able to (or didn’t want to) absorb and use Canpages’ knowledge of the digital sphere, even though it now professes to be trying to turn into a digital company.

Now it may be too late.

When you’re this down, you retrench as far as possible including killing the very company you bought to help you reinvent yourself. It’s about throwing stuff out of the boat to keep it from sinking, not planning for the future.

It appears to me that what killed Canpages and may eventually kill Yellow Media was typical Big Corp hubris and sloth.