Boost for Hibu as ad price controls lifted
Struggling Hibu, the oddly named owner of Yellow Pages, dialled up a rare piece of good news yesterday when the Office of Fair Trading said it should be freed from long-standing price controls.
The move, which needs to be approved by the Competition Commission, means the company would no longer be limited over how much it can charge customers advertising in its declining classified directories.
Since 2008, Yellow Pages has had its price rises pegged to the retail price index, when a restriction of RPI minus 6 per cent was relaxed after Hibu's former management successfully argued that its dominance of the directories market was irrelevant because of competition from online rivals.
Scrapping the rules may not be able to save Hibu which, thanks to an acquisition binge, is buckling under a £2.2 bn debt mountain that it aims to restructure this financial year. In May, new boss Mike Pocock admitted the company had been slow to deliver new digital services that were meant to offset the decline in its advertising businesses.
He is trying to turn Hibu into a firm that helps small businesses market themselves and sell goods locally, as seen by the acquisition of do-it-yourself website designer Moonfruit.
It is tough going. In the last quarter, sales fell by 15 per cent to £331m and underlying earnings slumped by a third to £71m.
"Hibu has consistently maintained that there is a substantial body of evidence that the undertakings are no longer appropriate," the company said in a statement.
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