Yellow Media Inc. Reports First-Quarter 2012 Financial Results

MONTREAL, QUEBEC, May 07 (MARKET WIRE) --
Yellow Media Inc. (TSX:YLO)

-- Yellow Media focused on execution of its 360 degrees Solution strategy
with digital revenues now representing 30% of total revenues
-- Company recognizes non-cash impairment charge of $2.9 billion
-- Company reports net earnings before the impairment charge of $58 million
-- Company to adjourn Annual Meeting due to a lack of quorum

Yellow Media Inc. (TSX: YLO) released its financial results today for the
first quarter ended March 31, 2012. The Company is focused on and
continues to make progress towards its transformation to a digital media
and marketing solutions company.

For the quarter ending March 31, 2012, the Company recorded a net loss of
$2.9 billion as a result of a goodwill impairment charge net of taxes of
$2.9 billion. Net earnings before this impairment charge were $57.5
million compared to net earnings from continuing operations of $70.5
million in 2011 due to lower revenues and increased income taxes.

The impairment charge is a non-cash item and does not affect the
Company's operations, its liquidity, its cash flow from operating
activities, its bank credit agreement or its note indentures.

During the quarter, we noted changes in our revenue trends affecting our
long-term projections and indicating that the Company's assets may be
impaired. These included lower revenue performance compared to what had
been expected in the review of our operating plans performed during the
third quarter of 2011. The development of a new business plan taking into
account these revised trends in the context of the review of our capital
structure, and a recent third party transaction within our industry
caused the Company to perform an impairment test which resulted in the
recognition of a goodwill impairment charge net of taxes of $2.9 billion
in the three-month period ended March 31, 2012.

Net earnings per share before the goodwill impairment charge (net of
taxes) for the first quarter ending March 31, 2012 were $0.10 compared to
net earnings per share from continuing operations of $0.13 in 2011.
Adjusted earnings per common share for the quarter were $0.13 versus
$0.26 of adjusted earnings per common share from continuing operations
for the same period last year primarily due to lower revenues and
increased cash taxes.

Revenues for the first quarter ended March 31, 2012 were $289.1 million
compared to $349.4 million for the first quarter in 2011. The 17.3%
decrease is due principally to lower print revenues, the discontinuation
of some books published at Canpages, the divestiture of LesPAC on
November 14, 2011 and lower revenues associated with the Company's U.S.
operations. Online revenues were $85.9 million compared to $83.2 million
last year, representing growth of 3.2%. On an organic basis, excluding
the impact of the changes to the Canpages business and the LesPAC
divestiture, online revenues grew 7.8% during the quarter compared to the
first quarter of 2011.

Income from operations before the impairment charge for the quarter was
$115.9 million compared to $136.9 million for the same quarter in 2011.
EBITDA for the quarter declined from $190.0 million to $146.0 million.
The EBITDA margin in the quarter was 50.5% compared to 54.4% last year.
The decrease is mainly attributable to print revenue pressure and
investments in support of the Company's transformation.

"Our industry continues to evolve as it adapts to a new digital reality.
Although the needs of advertisers have not changed, they are seeking
support navigating through this complex market." said Marc P. Tellier,
President and Chief Executive Officer of Yellow Pages Group. "Through our
360 degrees Solution and dedicated sales force, we offer a compelling
value proposition to help Canadian businesses succeed in today's digital
world."

Continued Progress on Yellow Pages' Digital Strategy

Launched in 2011, Yellow Pages 360 degrees Solution marked a key
milestone in the Company's digital transformation. Its value proposition
resides in how customers can access expert support and unprecedented
visibility through online, mobile and print media platforms, and access
services such as managed website services, customized search engine
marketing and search engine optimization, and Yellow Pages Analytics(TM),
all offered through a single point of contact.

Through its 360 degrees Solution YPG is demystifying digital advertising
for Canadian SMEs, helping them make the necessary shift to digital.
Yellow Pages 360 degrees Solution brings relevancy to Yellow Media's
product and service portfolio moving forward, generating growth potential
for the Company.

As of March 31, 2012, the advertiser penetration of YPG's 360 degrees
Solution (defined as advertisers who subscribe to three product
categories or more) was 7.9% compared to 1.9% as at March 31, 2011. In
addition, the Company has also sold approximately 13,000 websites for
SMEs, making it one of the leading website providers in Canada.

In 2012, Yellow Media will expand its product and service offering to
meet the needs of larger advertisers through a High Priority Accounts
Program. This program is aimed at mitigating revenue risk and optimizing
revenue growth of larger advertisers through a differentiated servicing
model. A comprehensive advertiser profiling methodology is now in place
to guide the evaluation of account needs and opportunities through the
review of Yellow Pages Analytics(TM) results, website audits and
competitive rankings, search engine marketing estimates, and social media
and search engine reviews.

On April 27, 2012, Yellow Pages received two Gold Excellence Awards for
its innovative mobile local search placement product and its
MarketProfiler(TM) online evaluation tool from the Local Search
Association. Launched in July 2011, the local search placement product is
YPG's first foray into mobile advertising. This product puts local small
businesses at the top of the list in mobile searches for their products
or services. Six months after its launch, more than 13,000 Canadian SMEs
have invested in mobile placement.

Enhancing the User Experience

In an effort to increase traffic across its network of properties and
provide additional value to Canadian advertisers, Yellow Media continues
to invest in the online and mobile user experience and engagement.

YPG's network of sites currently reaches approximately 8 million unique
visitors, representing approximately 33% of Canada's online population.
During the first quarter of 2012, we improved the search engine
optimization of YellowPages.ca to ensure increased indexation on search
engines.

Yellow Media's business transformation also revolves around the continued
improvement of its mobile applications which have been downloaded more
than 4 million times.

During the first quarter of 2012, Yellow Pages Group launched a
redesigned YellowAPI.com website for the company's public application
programming interface. Through this initiative the Company's main
objective is to generate more business leads for its advertisers.

Since its initial launch in late 2010, YellowAPI.com has gained industry
recognition and has enrolled over 1,700 software developers. These
developers have created numerous digital applications using YPG's
database of 1.5 million business listings, currently the largest in
Canada. The expanding list of applications currently leveraging
YellowAPI.com listings range from leading consumer brands such as Yahoo!
Mobile Canada to innovative creations by local start-ups, such as
Reservely, an app that makes online reservations to any restaurant in
Canada.

Mediative

Through Mediative, Yellow Media is a leader in national digital
advertising. Mediative is one of Canada's largest integrated advertising
and digital marketing companies, holding extensive experience in
developing innovative and unique marketing solutions for national
companies.

In 2011, Mediative was chosen as the top Enterprise SEO Services as well
as Integrated Search Company. With over 12 lifestyle and behaviour based
vertical networks reaching approximately 15 million unique visitors per
month, Mediative matches advertisers with the websites of premium online
brands. During the first quarter of 2012, Mediative welcomed three new
publishers, making it the leading online media sales partner for national
advertisers in the Health and Food sector.

Capital Structure

As at March 31, 2012, the Company had approximately $1.5 billion of net
debt, or $2.1 billion including preferred shares, Series 1 and 2, and
convertible debt instruments. The net debt to Latest Twelve Month EBITDA
ratio as of March 31, 2012 was 2.7 times as compared to 2.5 times as of
December 31, 2011. On April 2, 2012 the company made its second quarterly
mandatory repayment of $25 million on its non-revolving credit facility.

As of May 7, 2012 $155 million was outstanding on the non-revolving
tranche of the credit facility and $239 million drawn on the revolving
facility. The Company has approximately $292 million of cash as at May 7,
2012.

Despite recent progress in its business transformation, the Company
recognizes the importance of aligning its capital structure with its
operational strategy. As a result, Yellow Media has begun evaluating
alternatives to refinance maturities in 2012 and beyond. To oversee this
process, the Board of Directors has established a Financing Committee
with the objective of completing any transactions during the current
fiscal year.

Annual Meeting to be Adjourned Due to Lack of Quorum

Due to low participation levels, the amount of shareholder votes received
will not be sufficient to reach quorum. As such, the Company's Annual
Meeting, scheduled to take place tomorrow at The Montreal Museum of Fine
Arts at 11 a.m. (ET), will be adjourned. The Meeting was called
consistent with the Company's prior practice and in accordance with
applicable laws. The current Board of Directors and Auditors will
continue in office until the election or appointment of their successors.

"The adjournment of the Meeting has no impact on the business and
operations of the Company; the Board of Directors will continue to
oversee the business and affairs of the Company." said Marc L. Reisch,
Chairman of the Board. The Company will notify its shareholders of the
date and time on which the next meeting will be held.

Investor Conference Call

Yellow Media Inc. will hold an analyst and media call at 9:00 a.m.
(Eastern Time) on May 8, 2012 to discuss the first quarter results. The
call may be accessed by dialing (416) 340-2216 within the Toronto area,
or 1 866 226-1792 outside of Toronto. The call will be simultaneously
webcast on the Company's website at

htp://www.ypg.com/en/investors/financial-reports/2012/quarterly-reports/
firstquarter.

The conference call will be archived in the Investor Center of the site
at www.ypg.com. A playback of the call can also be accessed from May 8 to
May 16, 2012 by dialing (905) 694-9451 from within the Toronto area, or 1
800 408-3053 outside Toronto. The conference passcode is 1677943.

About Yellow Media Inc.

Yellow Media Inc. (TSX:YLO) is a leading digital company in Canada. The
Company owns and operates some of Canada's leading properties and
publications including Yellow Pages(TM) print directories,
YellowPages.ca(TM), Canada411.ca and RedFlagDeals.com(TM). Its online
destinations reach approximately 8 million unique visitors monthly and
its mobile applications for finding local businesses and deals have been
downloaded more than 4 million times. Yellow Media Inc. is also a leader
in national digital advertising through Mediative, a digital advertising
and marketing solutions provider to national agencies and advertisers.
For more information, visit www.ypg.com.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements about the
objectives, strategies, financial conditions, results of operations and
businesses of the Company.

These statements are forward-looking as they are based on our current
expectations, as at May 7, 2012, about our business and the markets we
operate in, and on various estimates and assumptions. Our actual results
could materially differ from our expectations if known or unknown risks
affect our business, or if our estimates or assumptions turn out to be
inaccurate. As a result, there is no assurance that any forward-looking
statements will materialize. Risks that could cause our results to differ
materially from our current expectations are discussed in section 6 of
our February 9, 2012 Management's Discussion and Analysis. We disclaim
any intention or obligation to update any forward-looking statements,
except as required by law, even if new information becomes available, as
a result of future events or for any other reason.

----------------------------------------------------------------------------
Financial Highlights
(in thousands of Canadian dollars - except
share information)

----------------------------------------------------------------------------
For the three-month periods
ended March 31,
Yellow Media Inc. 2012 2011
----------------------------------------------------------------------------

Revenues $289,073 $349,372
(Loss) income from operations ($2,851,911) $136,864
Net (loss) earnings from continuing operations ($2,869,252) $70,453
Basic (loss) earnings per share from
continuing operations attributable to common
shareholders ($5.61) $0.13
Cash flows from operating activities from
continuing operations $22,407 $111,701
----------------------------------------------------------------------------
EBITDA(1) $146,017 $190,035
EBITDA margin(1) 50.5% 54.4%
Adjusted earnings from continuing
operations(1) $67,272 $133,653
----------------------------------------------------------------------------
Weighted average number of common shares
outstanding 512,595,314 510,404,617
Adjusted earnings per common share from
continuing operations $0.13 $0.26
Dividends on common shares - $83,464
Dividends declared per common share - $0.16
Payout ratio - 62%
----------------------------------------------------------------------------

Non-IFRS Measures(1)

In order to provide a better understanding of the results, the Company
uses the term EBITDA, defined as income from operations before
depreciation and amortization, impairment of goodwill and intangible
assets, acquisition-related costs and restructuring and special charges.
Management believes this measure is reflective of ongoing operations. The
Company also uses the term Adjusted earnings from continuing operations,
defined as net (loss) earnings from continuing operations available to
common shareholders excluding amortization of intangible assets
attributable to shareholders, non-cash financial charges, income taxes
and non-recurring items such as acquisition-related costs, impairment of
goodwill and gain on investment. These terms are not performance measures
defined under IFRS, they do not have any standardized meaning and are
therefore not likely to be comparable with similar measures used by other
publicly traded companies. Management believes EBITDA and Adjusted
earnings from continuing operations to be important measures. The table
below is a reconciliation of Adjusted earnings from continuing operations
to the most comparable IFRS financial measures:

----------------------------------------------------------------------------
Adjusted earnings from continuing operations
(in thousands of Canadian dollars - except
share information)

----------------------------------------------------------------------------
For the three-month periods
ended March 31,

2012 2011
----------------------------------------------------------------------------
Net (loss) earnings from continuing operations ($2,869,252) $70,453
Attributable to non-controlling interest 13 167
Dividends to preferred shareholders (5,584) (5,710)
----------------------------------------------------------------------------
Net (loss) earnings from continuing operations
available to common shareholders of Yellow
Media Inc.
($2,874,823) $64,910
Amortization of intangible assets(1) 24,707 56,218
Impairment of goodwill 2,967,847 -
Acquisition-related costs(2) - 803
Financial charges 32,125 47,142
Interest paid (32,936) (41,807)
Gain on investment (net of income taxes of
$0.1 million) (2,090) -
Income taxes (47,558) 6,387
----------------------------------------------------------------------------
Adjusted earnings from continuing operations $67,272 $133,653
Weighted average number of common shares
outstanding 512,595,314 510,404,617
Adjusted earnings per common share from
continuing operations $0.13 $0.26
Dividends on common shares - $83,464
Dividends declared per common share - $0.16
Payout ratio - 62%
----------------------------------------------------------------------------

(1)Represents amortization of intangible assets attributable
to shareholders.
(2)Acquisition-related costs are excluded from the calculation as they do
not reflect the ongoing operations of the business.

Contacts:
Investor Relations
Anne-Sophie Roy
(514) 934-2828
anne-sophie.roy@ypg.com

Media
Andre Leblanc
Director, Marketing Communications
(514) 934-7359
andre.leblanc@ypg.com

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