Ziff-Davis: Sale of Publishing Giant Impacts Online Industry

Article excerpt

When the owners of Ziff-Davis Co., publisher of leading computer magazines and newspapers like PC Magazine, PC Week, PC Computing, Computer Shopper, MacWEEK and others suddenly let it be known in early June that the company was for sale, the announcement not only rocked the publishing industry but the online industry as well. In addition to its magazine empire, Ziff was also owner of one of the largest providers of online information and was poised to make a dramatic entrance into information services and electronic publishing.

Ziff-Davis' pivotal role in the computer magazine industry is widely recognized. PC Magazine is the ninth largest magazine in the U.S. and produces over $200 million in advertising revenue. Ziff-Davis' overall revenues are estimated to be close to a billion dollars, and its publications are read by over three million computer professionals and enthusiasts. It is not an exaggeration to speak of Ziff's influence on the personal computer industry in the same breath with companies like Microsoft or Apple. In many respects, the Ziff-Davis magazines have a greater influence than either of those giants on buyers' choices in the fiercely competitive computer industry.

Ziff's presence in the online industry is less well known, but equally significant. Ziff has been an important force in the online world since 1980, when it acquired Information Access Company, producer of popular online and CD-ROM databases like Magazine Index and Traded and Industry Index. In the months leading up to the surprise announcement in June, the company invested in a series of strategic new acquisitions and product releases that promised to make it a key player in the emerging areas of corporate information retrieval and consumer electronic publishing.

The long-term consequences of the sale are unclear, but there is no doubt that changes will reshape the online industry. With the Ziff sale looming at the same time that Mead Data Central has been put on the block, the future ownership and direction of two major firms are suddenly uncertain. It is possible, however, to make some reasonable guesses about the future of Ziff's online businesses by looking closely at its electronic activities and the way in which they evolved from the company's roots in traditional magazine publishing.

INVENTING SPECIAL INTEREST PUBLISHING--TWICE IN A ROW

The story of Ziff-Davis is, to a large extent, the story of William Ziff Jr., the long-time chairman of the privately-held firm. His history is as well-known in the publishing industry as are the careers of Stephen Jobs or Bill Gates in the computer world. Ziff was a 24-year-old philosophy student at the University of Heidelberg in 1953 when his father's fatal heart attack brought him back to New York to take over the family's modest publishing company.

The early 1950s was the peak moment for the big general-interest magazines like Life, LOOK, and Saturday Evening Post. It required considerable foresight to recognize that television would rapidly become a potent competitor and dramatically reduce their appeal and circulation.

Ziff sensed the trend and countered with the concept of "narrowcasting." TV might grab the mass audience, but it could not compete with magazines for delivering focused content for readers with special interests. Ziff-Davis began to publish titles like Stereo Review, Popular Mechanics, Car and Driver, Popular Photography and Modern Bride. Readers liked the magazines because they contained specialized information. Advertisers liked them because they targeted highly motivated consumers. By strictly adhering to this formula with magazine after magazine, Ziff prospered and, by the mid-'70s, began to branch out into other fields.

Then, in 1982, William Ziff Jr. was diagnosed with prostate cancer. His three sons were too young to take over the business and his advisors recommended he simplify his estate. In 1984 Ziff sold nearly all his publications. …