Monday, January 13, 2014

From "google schmoogle" to bargain basement - Telstra finally offloads the one-time "jewel in the crown"

For years, Sensis was regarded as a glittering jewel in Telstra's substantial crown.

And it was such a promising jewel that Telstra's former chief executive Sol Trujillo once dared to compare Sensis to the global seach giant Google when he uttered two now immortal words:

The financial strength and potential of Telstra's directories business was constantly in the news, and at the time of the "google schmoogle" comparison in 2005, Sensis was seen as a key to Telstra's survival before the final T3 float.

During the years when Telstra was run by Sol Trujillo and his predecessor Ziggy Switskowski, speculation that Sensis would be sold in a public float to underpin Telstra's diminishing treasure chest was constant.

The former chief executive of Sensis, Bruce Akhurst, often quipped that no interview I conducted with him would be complete without me asking the "Sensis float" question.

While Sol Trujillo's "google schmoogle" quote was described as arrogant, his faith in the growing Sensis business was underpinned not just by the White and Yellow Pages but once lucrative search brands such as Whereis and Citysearch.

In a sign of its confidence, Telstra splashed out $636 million in 2004to buy The Trading Post to get into the lucrative classified advertising market, outbidding Fairfax Media and Kerry Packer's Publishing and Broadcasting Limited.

Charles Falkiner, who founded The Trading Post with his late wife in 1966 for $24,000, sold the business to a Dutch company for substantially less and described Telstra's 2004 purchase as "mind-boggling".

Fast forward from 2005 to now, and the Sensis business has been overshadowed by the lightning fast expansion of online search engines and dozens of tablet applications where algorithms "do the walking" rather than the Yellow Pages.

Not long ago, offices - like ABC newsrooms around the country - were littered with phone books of the white and yellow variety.

Now, phone books are more often than not used to raise the height of computer monitors but even now that practice is less common as offices "opt-out" of the delivery of hard copy phone directories.

To put it more brutally, Telstra's $636 million purchase of The Trading Post - a single business in the Sensis family -  vastly outweighs the $454 million Platinum Equity paid for Telstra's 70 percent share in the Sensis business.

The demise of the Sensis business once again demonstrates that no company can quarantine itself from rapidly changing technology and consumer tastes that are now determined by an app on a smartphone or tablet.

Telstra is most likely glad to be offloading Sensis for what it sees as a fair price.

But it might well be reflecting on the award winning "Not Happy, Jan" advertisement that once encapsulated the the value and vitality of the Sensis offering a decade ago in a different world.