ABM Meeting Buzz: Ziff on the Block
Ziff Davis Media, the beleaguered tech-media company that nearly went bankrupt four years ago, may be on the block, multiple sources have said in recent days.
At American Business Media’s Spring meeting here in Scottsdale, Arizona, and also late last week, industry observers said the company has been reaching out to banks in recent weeks seeking bids for managing a potential sale. Ziff is owned by the private-equity firm Willis Stein & Partners, which bought the company in 2000 for $780 million.
"There are persistent rumors," said bank source. "Private-equity firms are not operators," said another source. "One of the things they spend a lot of time thinking about is how to exit. So that there are rumors is not anything unusual. However, the level is higher than usual for Ziff."
Ziff will not command anywhere near that 2000 price now. And accomplishing a return that even covers Ziff’s debt load of $357 million may be difficult. The company had a poor year in 2005, declining by a staggering 50 percent in EBITDA, from $35 million in 2004 to $17 million last year. It also declined significantly in revenue, from $204 million to $187 million.
A Ziff spokesman declined to comment on what he described as rumors and speculation. Ziff CEO Robert Callahan did not attend the meeting. A Willis Stein spokesman did not return calls. Ziff is scheduled to release first quarter results tomorrow.
The company averted bankruptcy in 2002 by restructuring its debt. The company still has a heavy debt load, with $357 million as of December 31. But Ziff remains a significant technology publisher, publishing some the industry’s best-known brands, including PC Magazine, E-Week, Electronic Gaming Monthly, Computer Gaming World, Baseline, CIO Insight, and Official U.S. Playstation Magazine.
And that, combined with the fact that Willis Stein’s time-horizon for ownership may be close to ending (private-equity firms typically hold properties for three-to-five years), suggests to observes that the Willis Stein may have concluded that the time is right.
"Multiples are good," says one financial and investment specialist from a major publishing company. "There is consolidation. They have a decent position on the enterprise side, and they have built up a good business online. So they have a decision: They can grow or they can sell."
It may be, this source said, that Willis Stein is willing to take a loss now in order to maximize value. "I wouldn’t be surprised to see them push a button in the next three to six months," he said.
Another source noted that Ziff is part of a Willis Stein fund that includes other portfolio companies. "If you have 20 flowers and one dies, you still have 19 flowers," the source said.ABM Meeting Buzz: Ziff on the Block.
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