A Hispanic Yellow Page Consolidator Speaks-Out

A Q&A with Jonathan Blue, Managing Director of Blue Equity LLC. Blue Equity's subsidiary Cobalt Publishing recently bought two Floridian Spanish-language Yellow Page Directories.

Q: In what way do you think the Florida audience is different from the other
Spanish-language audiences of your directories in other states?

A: Most of our books are located in cities with a predominately Mexican population. South Florida's high percentage of Cuban population is the greatest difference from the other markets. In addition, this is a Hispanic dominated area as far as population mix versus other market where the Hispanic population is not the dominant demographic.

Q: What company do you use to distribute your recently acquired Florida directories?
A:
We are partners with a national distribution company. There has been no decision as to how we are proceeding with distribution in South Florida. We want to be very cautious that we don't want to try to fix something that's not broken in that market.

Q: Do you have an estimate about annual sales of all your "Enlace" books?
A: Approaching US $10 million.

Q: What role does national advertising play? What percentage of
ad-revenues do you currently get from national advertising. At what rate is
national advertising growing in your Hispanic directories?

A: At this time, our national advertising number is under 10percent of total revenues and has seen surging increases of late due to our expansion into markets like Miami. More importantly, the fact that our footprint is the nation's largest for independent Hispanic directories has drawn the attention of the national client. We anticipate this to fuel revenue growth in the immediate future.

Q: In what regions is Enlace going to expand (either by own-start ups or
acquisitions)
?
A: We are in final stage discussions for three additional markets at this time.
We anticipate going from our current 16 market footprint to 25 markets by the end of 2006.

Cobalt Publishing is one of three independent, non utilities company backed, consolidators in the Hispanic Yellow Pages sector. Another consolidator is Hispanic Yellow Pages Network (HYP-Network). HYP-Network is backed by private equity house Abry Partners and publishes 15 Spanish-language directories in 8 markets. HYPA, Hispanic Yellow Pages of America, is the third player. HYPA is backed by Chicago-based private equity house Hispania Capital Partners. These consolidators try to gain economies of scale (technology, purchasing power, etc…). Additionally, they aim to increase national advertising revenues by providing a wide footprint of Yellow Pages publication all over the U.S.

Annual advertising revenues of the independent Spanish-language Yellow Pages Publishing sector are approximately US$ 100 million. There are currently 215 Spanish-language Yellow Pages directories published in the United States (7,000 in the general market). Of those, almost half (83) are published in California, 18 in Texas, 11 in Colorado, 10 in Florida and 9 in New York.


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