Field of buyers for Ziff empire narrows - Ziff Communications

Folio: The Magazine for Magazine Management, July 1, 1994 by Paul McDougall

When Dirk, Daniel and Robert Ziff, sons of computer publishing magnate William Ziff Jr., announced plans on June 13 to sell the family's billion-dollar Ziff Communications empire, speculation about possible buyers - who could pay between $1.5 billion to $2 billion - ranged from telcos to computer giants to media powerhouses like Time Warner.

Since then, however, the field of potential bidders has narrowed considerably. While Ziff has not explicitly ruled out a sale to smaller competitors, such as San Francisco-based Miller Freeman, the Ziffs have said they will not approve any sale that breaks the company into more than four pieces. And, they insist, the magazine division will not be dismantled, but must go to a single buyer - but not, specifically, to its two archrivals in computer publishing, Manhasset, New York-based CMP and Boston-based International Data Group.

Meanwhile, a number of content-hungry high-tech firms, such as Redmond, Washington-based Microsoft Corp., have appeared on some analysts' lists. But in an interview with FOLIO:, Ziff chairman and CEO Eric Hippeau insisted that the company will not be sold to a computer or software manufacturer, given that its mission is to provide objective analysis of the computer industry. "We will not create a situation where there is a clear conflict of interest," says Hippeau.

Still in the running

Serious candidates - including Hachette-Matra, K-III Holdings and Rupert Murdoch's News Corp. - are drawing closer scrutiny. Two European giants - the Dutch VNU, with revenues of $1.2 billion, and the Anglo-Dutch publishing empire of Reed Elsevier, with revenues of more than $3 billion - are also said to be keenly interested. In a June 16 interview with Reuters, VNU spokesman Lout Schoelvinck confirmed, "If Ziff might be sold in bits and pieces ... then we would of course be interested. We are closely following the Ziff sale because, like us, they publish computer magazines."

Reed Elsevier has been more circumspect. Despite reports last month by the European news agency AFX that Reed Elsevier had offered $1.8 billion for the entire company, a Reed spokeswoman declined comment, as did Ziff executives.

But in late 1992, shortly after the merger of London-based Reed International and Amsterdam-based Elsevier, board member Paul Vlek told Folio: that "an acquisition of $1 billion would be no problem" for the publishing conglomerate. "We want to grow in professional publishing markets and business information markets," said Vlek.

Two frequently mentioned suitors are Time Warner and Times Mirror. But Time Warner, analysts note, still has millions of dollars of debt incurred from its 1990 merger with Warner Communications, and is wary of going further into the red - especially to move into a market in which it has virtually no experience. And while Times Mirror, whose Manhattan headquarters sits squarely across the street from Ziff's Park Avenue suites, recently announced the sale of its cable systems to Cox Enterprises, that deal has become the subject of a shareholders' lawsuit and could be tied up in the courts for years. "For a number of reasons, there are very few players that are really in a position to make an offer," says Peter Craig of Magazine Consulting Group, a Los Angeles - based investment firm.

Locked out for competitive reasons are CMP and IDG, which have gained considerable ground on Ziff in the past two years. According to the AdScope ad tracking service, ad revenues for CMP's Windows grew from about $13 million in 1992 to about $37 million in 1993, while ad revenues at IDG's PC World jumped from about $69 million in 1992 to about $87 million in 1993. And while Ziff's PC Magazine is still the dominant title for personal-computer users, with 1993 ad revenues of $260 million, its growth has slowed in recent years.