How an Old Yellow Page Company Scams New Investors

March 30, 2010

Someone recently made a comment to me that sorta bugged me, Bill Brewer, my one week former RVP at SuperMedia, was reported to have said that I am a former disgruntled “fat guy sitting on his couch blogging about the company while eating Cheetos.”

Hey Bill, I am actually in bed at 3:00 a.m. thinking about a meeting for tomorrow and reading a few Google Alerts.

Now that that is out of the way, let’s discuss how Yellow Page companies fraud old and new investors.

Investors of Idearc Media, like JP Morgan Chase, were not fortunate to have assets secured for the Verizon Yellow Pages brand. When the company declared bankruptcy creditors had virtually little assets to pursue or liquidate. The manner of which SuperMedia uses the Verizon brand, an asset, was not something creditors could liquidate to recover compensation from the bad investment. This was something that worked out well for the company and was initially discovered during the bankruptcy pre-planning wheeling and dealing that took place. (Honestly, Idearc was worth very little based on this fact.) Some of the bondholders ended up with a stake in the new company. In my opinion this is a terrible asset if these new creditors again did not secure the brand as an asset, which it likely did not since the value of the brand is more Verizon and not so much a super advertising media and more of a dinosaur method of providing referrals. Lol. Considering the company is just a few more years worth of double digit declines from being bankrupt a second time, it really is not worth much more than the employees and processes.

What investors don’t know is that (IMO) SuperMedia CEO Scott Klein directed sales managers to report cancellations on “good accounts” only to put these customers back in as new revenue to report to investors after bankruptcy. This is fraud. Unless employees take the honest path and report this activity, I am sure the company just might get away with fraud again. SuperMedia is also rumored to be reporting non paying clients in the RDS sales channel who are not paying (no pays is essentially a collections problem) for ads as sales fraud, another way to manipulate investors. It is not sales fraud. It is an attempt at hiding losses, SEC fraud, and further proof of the existance of a failing commission sales model that is the real problem at SuperMedia.

How mujch money did Dave Bethea’s next door neighbor and new Texas Division Sales Manager Lane Siddall make on Idearc stock during the companies “quiet time.” I hear the SEC wants to investigate these “rumors.”

Regardless of whether in, out, or during bankruptcy, SuperMedia has a leadership team committed to doing whatever it can to pump up the companies earnings (and hit a nice payday lick at to boot.) That is what happens when a crony CEO surrounds himself with an old executive team familiar with the companies revenue reporting tricks, the same tricks Ivan at Verizon got sick and tired of by Kathy Harless. Scott Klein just took it to an entirely new level of corruption and greed.

I challenge investors to ask Dee Jones and Scott Klein how much of the latest revenue growth results came from previously cancelled accounts that were reinstated and/or put on a new customer ID?

I also challenge employees to discuss my allegations that Idearc / SuperMedia is manipulating reporting by simply reporting collections challenges as fraud. Rumor is that this is the second time for such a scam, the first time was when they sued a 3rd Party Telemarketing firm for committing the same sales fraud that many reps (particularly the “Spanish Speaking Division Reps in Texas”) have been doing for years (all the while getting paid higher commissions.) They claimed more fraud in the lawsuit with the 3rd Party Telemarketing firm than what actually took place.

Spanish Yellow Pages sales fraud begins at a “day labor center” with an illegal immigrant and a cellphone number. According to former representatives, this activity is something that managers know is going on, including SuperMedia CEO Scott Klein, they just look the other way and ignore what is obvious and will like?y use a similiar excuse as Jeremy the CEO of does when accused of extortion by businesses. CEOs can state all day long to media that they are clueless to the degree of fraud and are not held accountable for the actions of sales consultanrs. I warn investors to take a quick look at the revenue numbers to commission ratios of the Dallas area Spanish Verizon Yellow Pages books. The disproportion is due to fraud. Just because someone signs a contract does not mean it was an ethical business arrangement. Existing clients are impacted by sharing call volume with prepaid cell phones owned by illegals or sales reps.

I am anxious to see if these concerns are investigated. How much revenue will be reported as SuperMedia revenue that was really Idearc revenue cancelled before January 4th? SuperMedia will soon report first quarter 2010 revenues. Might be a goodtime to grab a bag of Cheetos and watch this train wreck of a company unravel on my couch. Maybe Bill Brewer was right? Better to be on the couch providing his former clients advertising for less than so called inflated “market cost” with low overhead and a service approach vs the product focus and trying to convince clients that campaign managers have a clue and/or the time and tools to do the job right the first time. Investors and advertisers need a SuperGuarantee that SuperMedia is not going to rip them off. Good luck getting that one in writing folks!

How about selling the identity bundles and click guarantees as “leads” vs calling them clicks just to make a buck, and management actually knows it is happening. Or avoiding credit policy by putting painters and handyman under non risky headings?

By the way Bill, one of your former clients paid $27.00 per click from Google for “Criminal Defense Attorney” keywords with no calls. Today, quite possibly thanks to my brains and couch, these click thrus only cost him around $11.00 each and he receives many calls …….go tell that to your SMLocal team buddy!

Now this begs the question: How do you manage your companies reputation online when the value proposition takes profit away from the client and into the companies treasury to give to executives, all the while providing a terrible ROI for most clients? Broken business model anyone? Every dollar a client pays into your mandatory SMLocal 85% burn rate requirement, regardless of converting the traffic into phone calls, is another future negative post about your company on

To Bill Brewer, I may not have your big corporate salary anymore, but when I left Idearc I took my ethics with me….something you could learn a thing or two about.

Fake Yellow Pages Ads Hurt Your Business

December 8, 2009

Recently I called a few paving companies in Dallas to inform them of the new ad in the front of the book. I wanted to see if they were aware of what had taken place. I was shocked to find that a large percentage of the numbers in the Paving Contractors heading for new ads either do not work, are not real businesses, or they state wrong number when you call. Is this due to sales fraud at Idearc (which was obvious while I was with the company) or is this just a representation of all the errors in the phone book? Take a moment and make a few calls and find out for yourself.

This practice, from both the sales and advertiser perspective, hurts the perception of the value of the yellow pages as a resource, but advertisers that do not pay for advertising also takes phone calls from local paying clients. The industry needs to look at a method of monetizing all calls as well as reducing the fraud and abuse of “sales reps” vs real media and advertising consultants. I recall while at Idearc in Texas a few Hispanic reps explained a process of working with “day workers” and pre-paid cell phones to place ads under headings that did not have credit restrictions and these individuals basically offered the day workers help in creating a new company with $850.00 per month worth of advertising in the Greater Dallas directory.

Not the direction the industry needs to be heading. With so many issues to deal with, sales fraud and advertisers cheating the company by taking calls from other paying clients is not what they need to succeed.

Crony Capitalism vs Main Street Capitalism, Duopolies of Economics and the future of Yellow Pages Advertising.

November 17, 2009

Our American economy, politics, and consumer spending market have all become a duopoly.

A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market.

The most commonly cited duopoly is that between Visa and MasterCard, who between them control a large proportion of the electronic payment processing market. In 2000 they were the defendants in a US Department of Justice antitrust lawsuit.[1][2] An appeal was upheld in 2004.[3]

Examples where two companies control a large proportion of a market are:

What is most common in all these examples is the fear of competition by the capitalists at the top of these companies.  Regular Americans are not afraid of competition. Competition creates better jobs, better, economics, and better political policy. Competition creates innovation. Google is essentially afraid of it’s competition from Microsoft, Yahoo, and the next greatest internet fad or brand. It is what keeps Google on it’s toes and innovating.

What has contributed to making the above companies successful is creating a duopoly. Duopolies can be very profitable for category leaders. The only thing better for a large company is a monopoly. Take a moment and think of the yellow page advertising industry. For many years the local phone company was the only game in town for local advertisers to reach out to local consumers, essentially a monopoly. In 1984 the AT&T Telephone company was broken up. This essentially created healthy competition in an industry that really did not have competition. It was good for consumers since very few options existed at the time other than printed yellow page phone books, thus creating a duopoly.

Fast forward to the Telecom Act of 1996: It opened up competition and gave consumers more choice. Over the next few years  we saw an increased amount of competition among incumbant and CLEC phone companies in the yellow page advertising industry. No longer did the “phone companies” have a duopoly on the yellow page market. GTE Yellow Pages competed with Southwestern Bell Yellow Pages in the Dallas area market. Then all of a sudden we  saw a few independent phone books pop-up (mostly due to employees of the phone companies leaving and starting yellow page publishing companies with investors who saw the huge profit margins in yellow page advertising sales) over the next few years.

So what really happened to the yellow pages? The birth of the INTERNET. Google. Yahoo. MSN. etc., but most of all……” a huge change in the manner in which consumers find information.” Consider this, the internet has only been around for “Local Search” online since about 1999-2000, that is  just about four years post telecom deregulation.  I can tell you that from 2002-2009 the industry has done very little to compete with Google. While losing business to other forms of advertising media (such as Google and direct mail growth.)

The Yellow Page Duopoly in Media is Over

I witnessed the following questionable practices by executives of major yellow page publishers in order to create new revenues:

  • Dave Bethea at Idearc

and last but not least, what I witnessed first hand:

  • Sporting and Concert Tickets to friends and family vs Clients

Competition is good for all businesses (and in politics.) Competition creates innovation. Competition always offers a better value to consumers in the long run. Competition is bad for Crony Capitalists. Competition could have been good for the yellow pages, but since the Industry apparently disregards the feelings of its end-users by inundating homeowners with yellow page waste, It will eventually become a smaller factor in Local Search. Local search online will continue to outpace printed yellow pages. This is a FACT. The problem for Yellow Pages publishers is that they are not Google. They are not Yahoo. They are not MSN. They are FAR from innovative. They don’t ask the right questions. They do not care about the opinions of those that sale to clients. I was told this first hand.

I would love to conduct a poll among yellow page advertising sales reps about the usage of yellow pages. The company never asked for the information the entire time I was an employee? Why you ask? They don’t want me or 80% of the other 6,000 employees to let them know that we do not use the phone book. This is a fact. I have discussed this very subject with folks in the office while at Idearc Media in Dallas Tx.

Now there is the possibility that I am wrong. Considering that the Dallas-Fort Worth Metroplex has always been the #1 Market for Yellow Pages in the country, I have a feeling that I am correct on my opinions. After almost 10 years at Verizon/Idearc I have come to realize that my employers did not value my opinion or the opinion of sales. Chalk it up to crony capitalism!

Google is currently still a Monopoly in local Search

By the way, be sure to check out the national CMR agency TMP., the largest client for yellow pages companies in the country, on what is happening with phone book usage, advertising rates, and the true value of print yellow pages. You can follow them on Twitter at They are doing a great job of distributing “syndicated” research on the trends of Local Search Marketing. Don’t ever rely on the statistics from the industry. Don’t ever trust a “sales rep” who is not accountable for achieving your results.

So what is the real future?


Mike Stewart


Great video (very long…….) on Duopoly, Capitalism, and Politics…….