Ziff Davis teetering on the brink of breakup

It's a sad spectacle, the potential dismantling of a magazine publishing company. So it is with Ziff-Davis Media, the company that was founded in 1927 but is best known today for being a major player in the field of computer and internet related publishing. It is publisher of PC Magazine and eWeek as well as being big in broadcasting.

Today, it announced that it wouldn't make a scheduled debt payment and had consulted a well-known firm of bankruptcy advisers but is hoping to restructure its business outside the courts.

According to a story by Matt Kinsman in Folio:, ZD has been carrying US$390 million in long-term debt. Today's announcement leads some industry observers to say it's all over but the shouting:

'This is the first step in the public, ugly dismantling of one of the most storied companies in our business,' says one source, who described Alvarez & Marsal as the 'absolute last ditch in bankruptcy advisors.'

Two weeks ago Ziff Davis closed on its $150 million sale of its Enterprise Group, and named Jason Young as CEO, replacing Robert Callahan, who remained as chairman. Ziff’s Enterprise Group had been characterized as the easier sell among the three Ziff divisions on the block. The $62.3 million Consumer/Small Business Group and the $39.1 million Games Group generate less revenue than the $79.6 million Enterprise Group.

'The debt had actually been holding up during the sales process but now they have to admit they couldn’t sell the business to cover the debt,' says the source. 'They’re now going to enter a process of long negotiation. The distress fund guys are going to come in and buy it at 50 cents on the dollar and try to sell it for 75 cents. [CEO] Jason [Young]is a good guy and he’s done a terrific job operating the business but this is totally outside his realm of expertise.'