Bye Bye EGM

[gekko]

Ziff Davis Is Said to Plan a Bankruptcy
By DAVID CARR


ZIFF DAVIS MEDIA, which was a major player in technology publishing with PC magazine and the now-closed Yahoo Internet Life, has been telling advertisers that it will be forced to enter a prepackaged bankruptcy by the end of this week, according to a major advertiser and two publishing executives who are close to the situation.

Company officials had no comment on the potential bankruptcy, but acknowledged that there would be a financial restructuring by Friday. The company, which is principally owned by the investor group Willis Stein & Partners, had sought approval for a plan, arranged in May with key creditors, that would have cut its $450 million debt by $155 million and cut its annual interest payments $30 million without a bankruptcy proceeding.
But a publishing official close to the situation said that the arrangement had failed to win the approval of 95 percent of the bondholders, as required by the agreement.

The company is restructuring because it cannot meet its current obligations and has little cash on hand, according to public filings. The publishing official said that under the terms of the proposed bankruptcy, a Chapter 11 proceeding, the bondholders would receive new equity in the form of bonds, cash and a percentage of the company. The company has told its advertisers that the bankruptcy will ensure the long-term health of the firm and provide for a stable marketing platform.

Company officials declined to be interviewed but issued a statement:

"Over the past nine months, we have shored up our core properties, invested in our developing assets and exited poorly performing business sectors," said Robert F. Callahan, chairman and chief executive, through a spokesman. "We have almost deployed a financial restructuring plan that significantly reduces our debt. We will emerge stronger and more profitable."

The potential bankruptcy, which will give the company new financing and operational flexibility, could make clients less eager to advertise in Ziff Davis Media's remaining nine magazines.

"This could be the best thing for the company, but it would be difficult for advertisers to swallow in the current environment," said the publishing official. One large advertiser, however, said that he would continue to advertise in the company's computer-game magazines "because they deliver the audience that I need."

The company recently closed Yahoo Internet Life, a 1.1 million circulation magazine that lost $30 million in its seven years of existence, according to the trade magazine Mediaweek. Ad pages dropped 50 percent in each of the last two years.
Six of the company's 15 magazines have been shut in the last six months, including Family PC, Expedia Travels, Interactive Week and eShopper The company reduced Smart Business to a newsletter and laid off most of its staff. The company still publishes PC Magazine, which has a circulation of 1.23 million, three controlled circulation magazines in the technology sector, and five game magazines, including the recently introduced Xbox Nation.

Willis Stein & Partners paid $780 million for the company during the bull market in technology in a deal that closed in April 2000. The company's earnings before interest, taxes, depreciation and amortization are projected to be $6.5 million in 2002, according to security filings, and then are expected to rise to $34.4 million in 2003 if the restructuring goes as planned.

Savings will be gained from the closing of money-losing magazines and the layoff of 700 of the company's 1,150 employees the last year. With its remaining employees, Ziff Davis is trying to diversify out of the technology sector by starting additional computer-game magazines and by tapping into the youth enthusiast markets, like skateboarding magazines, although no specific magazines are in the works.

The previous chairman of the company, Jim Dunning, was replaced in September by Robert Callahan. Mr. Dunning sued and the case was settled in a mediated agreement, with Mr. Dunning receiving $2.6 million and the forgiveness of $4.5 million in loans.
In a previous deal, Willis Stein and Mr. Dunning sold Peterson Publishing, which they bought in 1996 for $460 million, to the British publisher EMAP in 1999 for $1.5 billion. EMAP suffered heavy losses and sold the publishing group last year to Primedia for $515 million.

[Bond]

Why is this in the GameCube forum?

Ziff Davis owns Tech TV doesn't it? But just because Ziff Davis might declare bankruptcy doesn't mean it's gone forever. American Airlines has declared bankrupty 2 or 3 times and it is still up and running.

[Crono]

well if EGM does go down for good...

It would be too bad, because I've always liked EGM. They were the least biased mag out there (IMO).

[gekko]

Originally posted by Bond
Why is this in the GameCube forum?

Ziff Davis owns Tech TV doesn't it? But just because Ziff Davis might declare bankruptcy doesn't mean it's gone forever. American Airlines has declared bankrupty 2 or 3 times and it is still up and running.

1) It's teh most popular, duh! Who reads any other forum?

2) It says in the article the magazines won't be gone. Just the title attracts more attention

[Crono]

Originally posted by gekko



2) It says in the article the magazines won't be gone. Just the title attracts more attention

As long as the magazine isn't gone, I'm happy

[Jonbo298]

"IF" something should happen to EGM. They will get picked up quickly by another company. I mean, they are the #1 Gaming Mag in the country! But I dont see EGM going. Its too popular to just go boom all of a sudden.

[designated_GM3R]

LoL. John Ricciardi had a few words on this subject matter and the fate of EGM. EGM will not be affected. Ziff Davis' gaming publications reap in a hunk of cash for the firm, hence, EGM will not be a sinker.

heh, I subscribe to two mags EGM and computer gaming world so sucks for me if they go down.



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but they won't, the mags wont be affected and even if they were they would get picked back up.

[Mechadragon]

Oh thank god...I thought I was going to have to go with GamePro *shudders*

[Blix]

I like the Magazine. **** you got me scared there, man. So, good to know nothing will (most likely) happen to it. Phew!