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Yellow Media Inc. President and Chief Executive Officer Marc Tellier poses for a photograph in this May 6, 2010, file photo.

Graham Hughes/The Canadian Press/Graham Hughes/The Canadian Press

Less than two years after spending $225-million buy its telephone directory maker rival Canpages Inc., Yellow Media Inc. has told employees that it will close the division as it battles shrinking advertising revenues.

Yellow Media shut at least one office in Victoria Tuesday, with about 50 employees being walked out of the building when they arrived.

It is unclear how many of the company's 700 employees could be affected. A notice was on the door of the Victoria office referring reporters to a spokesperson in Montreal, who has not returned calls.

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A manager, who was briefed Monday, said the plan is to keep 3 per cent of the company's staff around to handle client accounts, and that a limited number of salespeople would be transferred to Yellow Media.

This was confirmed by an employee who answered a 1-800 number, who said that customers could expect a call within two days with more details.

"We all knew something was going on because they hadn't finalized our budgets in December and people were starting to leave for odd reasons," said the manager, who didn't want to be identified because he's still working out his severance arrangements.

Montreal-based Yellow Media bought the Vancouver-based Canpages in a $225-million deal in 2010. Canpages publishes telephone directories in Ontario, British Columbia, Quebec, Alberta, Yukon, and the Northwest Territories. It owns and operates Canpages.ca.

When the deal closed, Yellow Media chief executive officer Marc Tellier said the 700-person Canpages would help the company digitize its business.

"Google is a directory. Yahoo and Bing are directories," Mr. Tellier said. "It's a different environment ... 30 years ago, there weren't that many alternatives for local advertising, but in today's digital world, local media fragmentation is alive and well, and as a result there's literally dozens and dozens of choices."

At the time of the deal, Canpages was attracting 3.5 million unique visitors per month.

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Yellow Media is under a great deal of pressure as print advertising wanes. In the three months ended Sept. 30, its print revenue fell 15 per cent.

Total revenue fell 9 per cent, to $323.4-million, compared to $355.9-million in the third quarter last year. EBITDA, or earnings before interest, taxes, depreciation and amortization, also declined to $166-million from $193.2-million last year.

It's due to report quarterly results next week.

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