Major Tech Publishing House Declares Bankruptcy

Ziff Davis Media, which rode the computer boom of the Eighties and Nineties to prominence in the world of technology publishing, has filed for bankruptcy protection. In a press release issued yesterday, the company said that it is taking the step voluntarily in order to restructure its debt load and reorganize its operations. It added that it expects to continue producing its line-up of print and online technology publications as usual during the legal proceedings.

Something of a legend in the U.S. publishing industry, Ziff Davis was an example of a private firm that was successfully able to re-invent itself as times changed. The company started out in the 1930s as a publisher of hobbyist titles such as Popular Aviation and Popular Photography, magazines that attracted advertisers of parts and equipment for the avocations of its readers.

In the Fourties and Fifties, Ziff Davis continued to add enthusiast magazines such as Popular Electronics and Car and Driver to its roster. When co-founder William Ziff, Sr., died in 1953 (and co-founder Bernard Davis left), his son William took over the reins of the company and steered it to prosperity for decades. In the Eighties, the younger Ziff caught lightning in a bottle by starting up a number of publications geared to the nascent personal computer phenomenon. Originally considered marginal properties, titles such as PC Magazine and Computer Shopper were dismissed by industry competitors.

So, when Ziff was diagnosed with prostate cancer and he decided to sell his company's assets in 1984, buyers such as CBS Publishing passed on bidding for the new computer publications, settling on purchase of the premier enthusiast magazines for over US $700 million. This turned out to be an historic bit of irony, because Ziff's cancer treatment succeeded and he soon found himself back in the publishing business, running a much leaner company that focused solely on technology publications, exactly at a time when the computer industry was exploding in popularity. Adding new titles in the field as opportunities arose, the entrepreneur quickly had Ziff Davis valued at more than the sum he had been paid by others for its core assets a few years earlier.

In the Nineties, with his publishing empire at its zenith William Ziff, Jr., decided with his family to sell the company for good. With deals in place with private investment firms, Ziff Davis raised nearly $2 billion for its resources in 1994. The publishing portion of the company was subsequently sold by the Forstman Little investment group to the Japanese publisher SoftBank in 1995, which in turn sold it to yet another private firm five years later, when it became Ziff Davis Media to reflect its strong online offerings.

Now, the topsy-turvy tale of Ziff Davis has come full circle. If approved by a federal bankruptcy court, the assets of the famed company will become the property of its creditors and debt holders. They will continue to fund its publications going forward.

In yesterday's announcement, the company's CEO, Jason Young, said: "Through this process, we will improve our capital structure and align it with the size of our current business operations. We have great strength in our industry leading brands and products and we believe that this restructuring will allow us to unlock the underlying value of our businesses and achieve our true growth potential."

In recent years, the transition from a paper-based operation to an electronic one has caused many traditional publishers such as Ziff Davis to re-organize their business models or succumb to financial pressures.

The ultimate irony for this publisher is that it helped create the very revolution that now threatens its existence.

[Full disclosure: The author is a former employee of Ziff Davis Publishing.]

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