News & Analysis

Ziff Davis to sell division to Insight Venture

Publisher Ziff Davis is casting off a $150 million subsidiary in the hopes of recovering its financial equilibrium.

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Ziff Davis Media, a New York-based integrated media company serving the technology and video game markets, announced today it has entered into a definitive agreement to sell its Enterprise Group to New York-based Insight Venture Partners for $150 million (€112 million) in cash.

The deal is subject to certain adjustments in accordance with the purchase and sale agreement, including a potential earn-out of up to $10 million in cash based on the performance of the Enterprise Group in 2007.

The Enterprise Group produces online content, lead generation services, events and publications serving the tech industry. Some of the online properties that will change hands in the deal include eweek.com, webbuyersguide.com, cioinsight.com, baselinemag.com, microsoft-watch.com, channelinsider.com and deviceforge.com. The group also publishes eWEEK, CIO Insight and Baseline magazines.

Insight, a New York-based private equity and venture capital firm, specialises in software and Internet investments. It is currently investing its fifth fund, which closed on $675 million in May 2005. The deal is expected to close in the third quarter of 2007, pending certain closing conditions.

Ziff Davis publishes PC Magazine and Computer Gaming World, and is owned by Chicago-based private equity firm Willis Stein & Partners. The firm has encountered difficulties since it acquired Ziff from Japan’s Softbank in 1999 for $780 million. The firm had planned to launch an aggressive plan to acquire and launch additional magazines, but a general decline in the publishing market soon took its toll.

Although Willis Stein propped Ziff Davis up with a $15 million bond-interest payment followed by an additional commitment of $80 million in cash in 2002, the company has still struggled. As of June 2006, the company reported $367.3 million in long-term debt. The company closed two of its magazines last year.

In August of last year, Ziff Davis disclosed in its quarterly report that it had hired Evercore Partners and Lehman Brothers to explore strategic options, “including possible sale of some or all of the company’s groups.”