Feeds

ZD poison pill blocks dismemberment opportunities

Updated (again) ZDPaper will revive under new leadership, insider reckons...

  • alert
  • submit to reddit

Internet Security Threat Report 2014

So Ziff-Davis has got shot of its print publications (bar Computer Shopper and a minority stake in Red Herring) at last. And a very sweet deal it seems to have cooked up too.

Investment bank Willis Stein & Partners is to pay $780 million for the ZDPaper portfolio - A-brand titles operating in a mature to over-ripe market At the same time, the new owners are swallowing the ZDNet poison pill. ZDNet will retain exclusive online rights - at a knockdown price - to ZDPaper content for five years.

ZDNet has also retained the exclusive rights to the online database for three years, and ZDPaper is not allowed to put up online content during that period. ZD is expected to make about $100 million in the first year from the database, but it will only have to pay $7 million/year in royalties for current material.

That's going to limit the ability to manoeuvre for selling off ZDPaper European editions. Who would want to buy, say, UK's PC Direct without online rights? But then again, who would want to buy PC Direct, rights or no rights. Shorn of the print business (bar etc..), ZDNet's share price, as a pureplay Internet company, should skyrocket. Computer Shopper, we suppose, will be the brand vehicle for ZDNet's e-commerce activities.

At this point we think it's worth adding the views of a US publishing insider who reckons that at some point the "ZDZ tracking stock will be rolled into ZD. ZDInc will shed the Expo group and will become a cash rich owner of ZDNet only - at which time the share price of ZD should start to move towards CNET valuations".

But what about the employees? ZDNet and ZDPaper have 90 days to divvy up staff between them - a surefire recipe for chaos, and plummeting morale, as anyone who saw the carve-up of CMP London can testify How many staff will ZDNet take on from ZDPaper? Not too many, we guess. It is, after all, financially better off paying for heavily discounted product. The staff that get left behind with ZDPaper may have nothing to fear. But then again...

By most accounts, ZD is very nice to its employees: but investment bank balance sheet johnnies are not going to be quite so prepared to support featherbedding. Let's not forget that it is sometimes easier to make money in mature and declining sectors than in emerging markets. It means consolidation and it means paying close attention to costs.

But is Stein & Partners the right company to make this work? There is considerable scepticism on several counts about the deal. First, some financial analysts think the deal may fall through. Second, there is greater uncertainty as to whether Avy Stein, managing partner of Stein & Partners, will be able to resurrect the magazines in view of its failure to secure online rights.

He plans to capture advertising from other sectors such as for cars, to compensate for the advertisement decline resulting from online sales, but there is no evidence that this will work. However, Stein does appear to have come up with a plum with his choice of boss to run operations day to day.

This is James Dunning, who was previously chairman of (now EMAP-owned) Petersen, described as a multimedia marketing solutions and brand development company, and publisher of 110 diverse magazines from Off-Road to Teen.

Previously, Dunning was a VP at Ziff Communications from 1984 to 1986, the predecessor of Ziff-Davis Inc. A US publishing insider adds: "In my one meeting with Jim Dunning - albeit it "town hall" style - I was very impressed and believe he can light a much needed fire under Ziff Davis Publishing. He's a huge supporter of print properties, used to work with ZD (with Bill Ziff) and understands how neglected these brands have been."

Of course, he's going to have to carry the staff, especially the dodgy creative editorial types with him. The sentiment of the editorial staff seems to be that the new moves will not be successful, since the new owners are too clueless about ZD's market sector. What has not yet fully emerged is the extent to which Masayoshi Son, CEO of Softbank (ZD's ultimate owner), was involved in the deal.

In a number of ways it bears his hallmark, especially in the complexity of the deal and the retention of online rights with an associated poison pill that gives ZDNet five years' exclusive online rights on any assets sold. ®

Cont. P.94

ZD target for News Corp
Softbank to dismember ZD empire
Ziff Davis takes questionably strange position
Analyst slams Softbank Yahoo! and ZD dealings

Providing a secure and efficient Helpdesk

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.