Ziff Davis Media Files For Bankruptcy Protection
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Ziff Davis Media, publisher of technology magazines such as PC Magazine and Electronic Gaming Monthly, filed for Chapter 11 bankruptcy protection yesterday in New York, citing the need to permanently reorganize its capital structure.
The filing will help Ziff Davis work through the debt it took on following its leveraged buyout seven years ago. Buffeted by declining print subscriptions and advertising revenues, the publisher continues to reshape its business around the Web.
Ziff Davis said it expects to emerge from Chapter 11 protection sometime this summer.
Ziff Davis CEO Jason Young is optimistic about his company's operational prospects and said it would continue to improve its capital position throughout the reorganization.
"As a result of our employees' hard work, we ended 2007 on a strong note," Young said in a statement. "We matched audience growth with impressive digital revenue expansion. And while the print market continued to be challenging, we continue to be print category leaders in the markets we serve."
As part of the restructuring, Ziff Davis will write down the debt it owes its senior creditors from $225 million to $57.5 million. Those creditors will also assume 88.8 percent of the reorganized company's common stock.
Ziff Davis said that it has been unable to strike a similar agreement with junior creditors, to whom the remaining 11.2 percent of its common stock will be distributed if they vote to accept the reorganization plan. The company will continue to negotiate with its junior creditors and other constituencies during the Chapter 11 process.
Creditors will extend Ziff Davis $24.5 million to fund its operations during the reorganization.
The history of Ziff Davis is a complicated one. Launched in 1927 by William Ziff and Bernard Davis, the joint venture became a publishing empire, counting among its portfolio popular titles such as Car And Driver and Modern Bride.
After selling off all its titles save for a handful of computer publications in 1984, the Ziff family then sold a 95 percent stake in the company to Forstmann Little and Co. 10 years later. In 1995 Forstmann sold 70 percent of Ziff Davis to SoftBank Corp.
In 2000, SoftBank sold Ziff Davis to the private equity firm Willis Stein. Throughout the convoluted dispersal of assets, CNET Networks (NASDAQ: CNET) gained control over much of Ziff Davis' Web properties and continues to operate the ZDNet.com site.
And last year Ziff Davis sold its enterprise publications to an affiliate of Insight Venture Partners, a New Yorkbased private equity and venture capital firm.
Ziff Davis Media now operates as a wholly owned subsidiary of Ziff Davis Holdings, which trades as an over-the-counter stock.