Seat Pagine Gialle S.p.A.
Seat Pagine Gialle S.p.A.
Seat Pagine Gialle S.p.A.
Sales: EUR 1.96 billion ($1.57 billion) (2001)
Stock Exchanges: Milan
Ticker Symbol: SPG
NAIC: 514191 On-Line Information Services; 511140
Database and Directory Publishers; 323119 Other Commercial Printing
Seat Pagine Gialle S.p.A. bills itself as Italy’s leading “new economy” company—Seat controls Tin.it, the country’s leading Internet Service Provider, as well as Virgilio, the leading Internet portal in Italy. Seat also provides business-to-business (B2B) Internet services through subsidiaries including Mondus, Gialle Viaggi, and Gialle Lavoro. Yet Seat also calls itself a “multi-platform media company” embracing such interests as publishing Yellow Pages, White Pages, and other directories (its historic core), which are available in print and online editions; retail office supplies through its Buffetti stores; call centers and directory assistance, which includes its German subsidiary, telegate, one of Europe’s leading directory assistance companies; direct marketing, through its Gialle [email protected] subsidiary; information marketing and related business services, through NetCreations, an email marketer based in the United States and acquired in 2001; and television broadcasting, through its ownership of La 7, Italy’s third largest and only independent broadcaster, which operates the La 7 and MTV Italy channels. Faced with losses at the beginning of 2002, Seat announced a strategic restructuring of its operations, with plans to shed its Business Information division, including France-based subsidiary Consodata; its B2B Internet branch; and other holdings. The company also expected to reduce its number of subsidiaries—from more than 200 to just 75, including a reduction in the number of its Internet companies from 32 to just five remaining subsidiaries. These cuts also would include the trimming of its workforce, including a 50 percent reduction of its Internet-based staff. The company expects these and additional cost-cutting moves to produce overall profits by as early as 2003. Seat Pagine Gialle trades on the Italian stock exchange and is led by CEO Paolo Dal Pino. In 2001 the company posted sales of EUR 1.6 billion ($1.57 billion).
Telephone Directory Publisher in the 1920s
As Italy’s telephone system developed through the early years of the 20th century, the various telephone companies operating at the time began implementing new services for their customers. The growth in numbers in people possessing telephone services led to the need for directory services to maintain lists of their names, addresses, and telephone numbers. One of the first to offer this service was SIP, the telephone operator serving Turin, which, together with printer Gianni & Cie, began publishing a list of the company’s local subscribers in 1925. That operation later evolved into the Seat Pagine Gialle group.
The company grew quickly over the following decade, gaining the licenses to print telephone directories from four of the five telephone operators of the period. Then, in 1936, the company’s printing operations were taken over by STET (for Società Finanziaria Telefonica). The bombing of Turin during World War II caused heavy damage to the company, which was forced into bankruptcy. Following the war, however, Seat quickly rebuilt and by the end of the 1940s had begun acquiring directory publishing operations throughout Italy.
Seat came to control more and more of the market, and by 1954, the company became the only directory publisher to offer nationwide directory coverage. Soon after, in 1957, the country’s telephone system was reorganized, with the remaining five regional operators bundled into a single government owned and operated entity, STET. STET became the holding company for Italy’s various telecommunications interests, including Telecom Italia, the fixed line operator, and Seat, the directory publishing arm.
Seat had concentrated on publishing “white pages” of subscriber lists. In 1966, the company added a new service that had caught on elsewhere in the world, those of “yellow pages.” Featuring listings of businesses, the yellow pages, known as “Pagine Gialle” in Italy, became an important generator of advertising revenue for the Italian government—and the single largest generators of advertising revenue in all of Italy. In the late 1970s, Seat Pagine Gialle, as it became known, began diversifying beyond telephone directories. The company at first concentrated on print media, such as the “Annuario” (Yearbook) first published in 1977, then later added third-party ad-based media publishing in the 1980s, and electronic media, such as CD-ROMs and online databases, in the 1990s. During this time, STET’s monopoly on the Italian telecommunications market helped it become one of the country’s largest companies; by the 1990s, STET’s market capitalization was estimated to be worth up to $20 billion.
Privatized Multi-Platform Media Company in the New Century
Yet by then, too, the Italian government was under pressure to privatize many of its holdings, including STET, in order to bring the country in line with its European Community partners. At the same time, EC rules also forced the government to attack the mountain of debt piled on top of its IRI holding company, which acted as the immediate parent of STET. The approach of the single currency market at the end of the 1990s placed an additional urgency on the reduction of this debt load, which reached levels of more than $12 billion in the mid-1990s.
Political battles, and particularly resistance from the government’s Communist Party members, dragged out the privatization process. But by 1996, the government had at last agreed in principle to the privatization of its “jewel in the crown,” STET. A key part of the privatization included the spinoff of a number of STET’s noncore assets, including the Sirti engineering division, the Italtel manufacturing joint venture with Germany’s Siemens, and Seat, the directory publishing division, into separate, government-controlled companies. These companies were then expected to be privatized in their turn.
Seat was spun off at the end of 1996 and began preparing for its transition into the private sector. This, too, became a source of political tension. In 1995, the Italian government had set up a new newspaper advertising subsidiary under Seat, called MMP. That company, however, was an immediate money-loser, with losses ranging from L 25 billion (worth approximately $15 million) in 1995 to more than L 180 billion in 1996. At the same time, a number of the company’s advertising contracts had led some observers to criticize MMP as a funding source for newspapers controlled by the country’s various political newspapers.
In order to proceed with the Seat privatization, the Italian government agreed to shut down MMP and absorb its losses. The government moved to dismantle other roadblocks, including an agreement by Telecom Italia—slated to be merged into STET, which was then to adopt the Telecom Italia name for its overall operations—to acquire at least a 20 percent stake in Seat. By April 1997, the Italian government had narrowed down the bidding pool to three consortiums: one led by the United States’ ITT; a second led by the United States’ GTE; and a third, led by Banco Commerciale Italiana (which later changed its name to IntesaBei) and including publishing company De Agostini and investment group Investimenti Associati. At the same time, Telecom Italia pledged to acquire as much as a 20 percent share of Seat, a condition viewed as a prerequisite for successfully launching Seat as a publicly listed company.
The Banco Commerciale Italiana group won its bid for Seat. By August 1997, the last hurdle in Seat’s privatization was cleared when the acquiring consortium and Telecom Italia reached a two-part agreement. The first part of the agreement gave Seat a ten-year extension on its directory publishing contract with Telecom Italia, maintaining that link between the two companies until at least 2007. The second part included Telecom Italia’s agreement to acquire 20 percent of Seat from the consortium, a move that also gave Telecom Italia two seats on Seat’s board of directors. At that time, Seat was listed on the Italian stock exchange, with a market value of more than L 3.2 trillion. Seat’s primary shareholders now included the Banco Commerciale consortium (which placed its shares under a holding company, Ottobi), Telecom Italia, and the Italian government. The privatization of Telecom Italia followed in October that same year, giving that company a market value of L 24 trillion.
Seat had not been idle while it waited for its ownership structure to be sorted out. The company had been quick to recognize the growing importance of the Internet and other alternative delivery vehicles, such as CD-ROMs, in the mid-1990s. The company placed its Pagine Gialle online in 1996. That service enabled the company to broaden into the portal market, with the acquisition of web-services group Matrix and the launch of Virgilio. That site quickly became the Italian market’s largest Internet portal and helped Seat gain a more than 70 percent share of all of the country’s Internet advertising spending.
Seat reported its first full year of revenues in 1998, topping L 1.7 trillion and producing profits of L 155 billion. By then, Seat had begun to prepare for further growth. In 1999, the company absorbed its holding company, renaming itself Seat Pagine Gialle S.p.a. Seat then began to expand its operations. In that year it acquired a stake in the Buffetti office supply retail chain, in part to expand the company’s electronic commerce offerings.
Mission: Seat is a multi-platform media company providing the audience with information and services and supplying businesses with visibility and communication tools.
After acquiring Buffetti, Seat turned to the Internet provider market, buying up a controlling stake in McLink. At the beginning of 2000, the company added Kompass Italia, part of Kompass International, in keeping with its strategy to boost B2B operations. The company also raised its stake in Buffetti to more than 92 percent in a friendly takeover. By the end of 2000, however, Seat had transformed itself into one of Italy’s most powerful multi-platform media players.
That transformation took place with the merger of Seat with Telecom Italia’s Internet service provider Tin.it, the largest ISP in Italy. The deal, valued at more than $50 billion, gave Telecom Italia control of 61 percent of Seat and created one of Europe’s largest Internet-oriented companies in what many saw as a shrewd marriage of content and access, much in the vein of the larger AOL-Time Warner merger of that same year.
The deeper pockets of the newly enlarged Seat enabled it to go on a shopping spree, as the company sought to boost a number of existing operations and expand into new territory. One of these new areas was the television broadcasting market, which the company entered with the purchase of TeleMonteCarlo 1 & 2. Following the purchase—which was at first blocked by the Italian government—Seat relaunched its television subsidiary as La 7 and its two stations as news-oriented La 7 and MTV Italia. Other important acquisitions that year included the Thomson Directory publisher TDL Infomedia of the United Kingdom and Germany’s telegate, one of Europe’s leading directory assistance companies, based in Germany.
Seat attempted to acquire its Swedish telephone directory counterpart Eniro in 2001, but the offer of some EUR 3 billion was rejected by Eniro’s parent Telia. Instead, Seat went shopping in the United States, coming up with NetCreations, an email marketing company. The company also took a controlling share of French marketer Consodata.
Seat, however, had started losing money—nearly EUR 1 million on sales of EUR 1.92 billion in 2000. The company’s losses continued through 2001, forcing the company to restructure its operations and adopt a number of new strategie objectives. Among these was a streamlining of its core operations, with planned sales of parts of its Business Information and B2B Internet divisions, its holding in Italian satellite television provider Viasat, and various other Internet-related interests. At the same time, the company announced a series of cost-cutting initiatives, such as the creation of a centralized purchasing system and the reduction of its subsidiaries from 215 to just 75, including a reduction of its Internet-related businesses from 32 to just five. Seat also moved to reduce staff, cutting out half of its Internet-related payroll.
These moves, to be carried out during 2002, were expected to return the company to profitability by 2003. Seat also began a revamp of its television broadcasting unit, including the launch of more competitive programming, to bring that subsidiary into profitability by 2004. Seat Pagine Gialle had nonetheless successfully transformed itself from a publisher of television directories into a multi-platform and Internet-ready media company for the 21st century.
Euredit S.A. (France); Gialle Voice S.p.A; telegate AG (Germany); TDL Infomedia Ltd. (U.K.); Thomson Directories Ltd. (U.K.); Gruppo Buffetti S.p.A. (96%); Gialle Lavoro S.p.A.; Gialle Viaggi.it S.p.A.; Italbiz.com Inc. (U.S.A.; 72%); Matrix S.p.A. (67%); Tin Web S.r.l.; Consodata S.A. (France; 91%); Databank S.p.A. (93%); Kompass Italia S.p.A.; Gialle Professional Publishing S.p.A.; Editoriale Quasar S.r.l. (51%); Gruppo Editoriale Faenza Editrice S.p.A. (60%); Gruppo Editoriale JCE S.p.A. (65%).
Deutsche Telekom AG; DoubleClick Inc.; Infostrada S.p.A.; Mediaset SpA; Omnicom Group Inc.; PubliGroupe Ltd; Tiscali S.p.A.; yesmail.com, inc.
- Turin telephone operator SIP and printer Gianni & Cie publish the first telephone directory.
- STET, or Società Finanziaria Telefonica, takes over the telephone directory publishing business.
- Directory publishing company, later known as Seat, now covers all of Italy.
- Government-controlled STET takes monopoly of Italian telephone market.
- Italian government announces its intention to spin off Seat as part of the privatization of STET; Pagine Gialle is placed online.
- Seat is spun off as a publicly listed company.
- Seat reports first-year profits of L 155 billion on sales of more than L 1.7 trillion.
- Seat acquires Buffetti office supplies company and McLink, an Internet service provider.
- Seat merges with Tin.it, as Telecom Italia acquires a 61 percent controlling share; the company acquires TDL Infomedia (U.K.), Consodata (France), te-legate AG (Germany), and television broadcaster TeleMonteCarlo.
- Seat acquires NetCreations in the United States; the company restructures its operations.
- Seat announces a new strategy, including disposal of parts of its business information and business-to-business services operations.
Levene, Abigail, “T. Italia Internet Plan Stokes Italy E-Fever,” Reuters,February 11, 2000.
Prentice, Heather, “Seat PG to Cut Internet Jobs, Units, Sees Growth,” Reuters,February 14, 2002.
“Seat Pagine Gialle Reports Loss, TeleMonteCarlo Battle Heats Up,” Yellow Pages & Directory Report,March 28, 2001.
Sullivan, Ruth, “Italy’s Telecom Giant to Be Split and Sold,” European,August 8, 1996, p. 18.
“T. Italia Gets the Ball Rolling on Seat Deal,” Reuters,April 7, 2000.