Switchboard, Viacom Restructure Deal

Partly to diversify its advertising options, online directory Switchboard is restructuring a 2-year-old equity deal with media giant Viacom.

Viacom, which owns media network CBS, would surrender the 7.5 million shares of Switchboard common stock and half the 1.1 million common stock warrants it holds. The transaction would reduce Viacom’s ownership of Switchboard from 32 percent to 3 percent.

In exchange, Switchboard, of Westborough, Mass., would relinquish to Viacom the remaining balance of $72.5 million in advertising credits (minus the cost of a third-quarter campaign) it was to receive. The proposal must pass muster with two-thirds of Switchboard’s stockholders to take effect.

Switchboard CEO Doug Greelaw said the relationship with Viacom has helped the company gain recognition and users but the company needs to expand its advertising presence, something its been loathe to do with millions of dollars of ad credits with Viacom properties.

“It is becoming increasingly important to have the flexibility to extend our marketing messages to more targeted audiences using a variety of media types, including cable television, online and print,” Greenleaf said. “By restructuring our relationship with Viacom, we now can better align our marketing efforts with our business objectives.”

Switchboard us also reworking its business model, emphasizing its directory and marketing software. Currently, the company gets 62 percent of its revenue from technology syndication/licensing and 32 percent from banner and site sponsorship advertising.

“We are focusing our efforts on building our channel partnership strategy — developing and licensing directory solutions for our partners while sharing in their successes as they monetize the emerging online directory opportunity,” said Dean Polnerow, Switchboard’s president.

Shares of SWBD were off $0.04 to $4.75 in morning trading. In the last 52 weeks, the issue has ranged from $2.5 to $9.688.

Colin Haley is managing editor at sister site boston.internet.com.