Ziff's new operating system - Ziff-Communications Co. Ziff-Davis Publishing Co

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

Its payroll covers more than 4,000 employees in 58 offices worldwide. The combined circulation for its seven largest domestic titles totaled 3.6 million, while advertising revenues topped $480 million in 1993--outpacing both Hearst and Conde Nast.

And for the past decade, Ziff-Davis Publishing has been unchallenged as the nation's leading publisher of computer magazines, one of the few growth areas left in the troubled world of print media. While traditionally strong categories like automotive products and fashion continue to decline, advertising by high-tech suppliers in Ziff's market jumped 13 percent to about $1 billion last year, with almost half of that going to Ziff-Davis titles like PC Magazine, PC/Computing, MacUser and Computer Shopper, according to ad-tracking service Ad-scope, of Goldendale, Washington.

It's a market that the New York City-based publisher came to dominate by providing high-quality, objective editorial (while its competition was often characterized by thinly disguised advertorials) and by engaging in extensive market research that included the construction of multimillion dollar product-testing laboratories. On the advertising side, the company's account reps are expected to understand technology buyers as intimately as they know the manufacturers and agencies they call on. "They do a very good job of researching who their readers are and then marketing that research," says Esther Dyson, editor of the technology newsletter "Release 1.0" and a former editor at Ziff-Davis.

A profound reorganization

Despite its hegemony, the company is in the midst of a profound reorganization more befitting languishing high-tech manufacturers like IBM and Apple. William Ziff Jr., 63, the diffident savant who turned a modest business inherited from his father into a global information giant, surprised the publishing world in November by announcing his retirement. Ziff routinely clocked 16-hour days, but now says his company needs younger blood and fresh ideas. "One must be careful not to overstay one's prime," wrote Ziff (who declined to be interviewed for this article) in the company's in-house newsletter, "particularly in an unusually demanding job. At this point, my help is best offered by yielding power to those more qualified than I."

But Ziff-Davis' remaining executives are facing more than a change in leadership. Falling prices and user-friendly software are revolutionizing the information-technology market. Like the dishwasher in the 1950s and the color television in the 1960s, computers are the hot new consumer appliance. By 1999, according to Dallas-based Channel Marketing, half of all computers shipped in the United States will be for home use, a trend that has manufacturers rushing to establish brand loyalty in a market that is practically virgin. That's leading many of them to shift advertising dollars out of the computer titles and into mass books like the newsweeklies, and to television. "The PC magazines reach a lot of the technical people," says Diane Werner, associate media director at J. Walter Thompson in San Francisco, "but now there are so many other people involved in the buying decisions that you have the opportunity for a Time or a Newsweek to go after them and reach them in a different environment."

It's already happening. A Ziff-Davis rival, the Boston-based International Data Group, recently teamed up with Newsweek to publish editorial supplements in the latter's pages aimed at the latest buzz demographic: SOHO, or small office/home office technology buyer. "IDG provides us with depth and experience in that market," says Newsweek associate publisher Greg Osberg. "What we bring to the party is reach." Osberg adds that "computers will be our number-one growth category now that the technology is entering the market through the home." But while computer advertising in consumer magazines is on the rise, Ziff's ad revenue increased by only 8.3 percent in 1993 after years of double-digit growth.

The job of shoring up these numbers--at least until Ziff's twentysomething sons Dirk and Robert come of age--falls to Eric Hippeau, a Paris-born, Sorbonne graduate whom Ziff in November named his successor as chairman and CEO. Hippeau, 43, has spent his career in publishing and came to Ziff-Davis in 1989 via IDG. "I never thought I would succeed Bill Ziff," says Hippeau, shrugging with what associates say is a characteristic lack of presumption.

Newly competitive arena

Hippeau's challenge will be not only to defend Ziff's legacy against consumer books angling lot a bigger share of the computer advertising market, but to secure what was once Ziff-Davis' exclusive territory. A number of other publishers are beginning to target technology professionals aggressively.

Foremost among them is Manhasset, New York-based CMP Publications, whose titles include Computer Reseller News. Windows Magazine, VARBusiness and the widely respected Information Week. Its $260 million in 1993 revenue represents a 20 percent jump over its take from the previous year, and a 50 percent increase over its 1988 revenues. "We're dedicated to becoming the largest publisher in our market," says CMP president and CEO Michael Leeds. "We expect to pass Ziff." If that sounds like so much bravado, consider that CMP's revenues have increased by over 600 percent from 1983 to 1993, a decade in which it joined IDG and Ziff among the nation's largest computer publishers.