Ziff Davis officially on the block

The troubled media company owned by Willis Stein & Partners has disclosed in its latest quarterly report that it is considering a possible sale.

Ziff Davis Media, a New York-based publisher of technology magazines and web sites, has disclosed in its quarterly report that it has brought in Evercore Partners and Lehman Brothers to explore strategic options, “including possible sale of some or all of the company’s groups.”

Ziff Davis, which published the popular PC Magazine and Computer Gaming World, is owned by the Chicago-based private equity firm Willis Stein & Partners. The firm has had a difficult time with the company since it bought Ziff from Japan’s Softbank in 1999 for $780 million (€608 million). At the time, the firm hoped to launch an aggressive plan to acquire and launch additional magazines for the company, placing long-time associate James Dunning Jr. at the helm as Chairman and CEO of the new Ziff Davis Holdings. Dunning had been part of Willis Stein’s successful two-and-a-half year turnaround of Peterson Publishing just a year earlier.

A general decline in the fortunes of publishing companies soon led to trouble at Ziff, however, and in August of 2001 Willis Stein fired Dunning, who responded in September of that year by filing a wrongful dismissal suit seeking $300 million in damages.

Although Willis Stein nursed Ziff Davis through a $15 million bond-interest payment followed by an additional commitment of $80 million in cash in 2002, the company has not been able to fully recover. Since then Ziff Davis has consistently lost money, and as of June 30 the company reported long term debt of $367.3 million. The company closed two of its magazines in the past year. The company now owns 32 web sites and seven publications.

There was good news for the company however. The quarterly report also reported EBITDA grew 84 percent to $.7 million, up from $3.1 million in last year’s second quarter. Online revenue, which has increasingly become the company’s focus, jumped 49 percent.