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Ziff Davis' Bankruptcy Filing: Nobody's Fault, But¿

This story was written by Rafat Ali.


Ziff Davis filed for Chapter 11 bankruptcy protection this afternoon, as we reported first here, and a total of 23 documents were filed with U.S. Bankruptcy Court for the Southern District of New York. The two main ones are embedded below as PDFs (after the jump). The company has about 266 employees as of 2007, and has debt
obligations of about $500 million and assets (including goodwill) of approximately $313 million.

The interesting part in the first document is the explanation of why Ziff Davis messed-up the business, which explains everything except the messing-up part:

"8. The publishing business of ZD Inc., the Debtors' predecessor, reached its apex in both size and profitability during the Internet-based business boom of the late 1990s. During this period, those publishing assets generated average annual revenues of approximately $500 million and cash earnings margins in excess of twenty percent.

9. Beginning in 2000, the factors that had caused the growth of Internet-based businesses during the late 1990s deteriorated. Such deteriorating conditions negatively impacted the Debtors' business. As conditions for Internet-based businesses worsened, certain technology firms were not able to remain in business and liquidated. The liquidation of these technology firms reduced the number of actual and potential companies whose products were or could be advertised in the Debtors' magazines and eliminated the market for certain of the Debtors' magazines. As a result, the Debtors experienced declining advertising revenues and were forced to discontinue publishing a number of magazines. The Debtors' print advertising revenues decreased from $215 million in 2001 to $40 million in 2007.

10. In addition, during this period, the Debtors suffered decreasing revenues from subscriptions to their print magazines. As the Internet became a more widely utilized information medium, many of the Debtors' print magazine subscribers began to move away from print, and towards Internet, publications to obtain their technology and videogame purchasing information. The Debtors' highly leveraged capital structure prevented them from developing sufficient Internet publications in a timely manner to satisfy their subscribers' demands.

11. As a result of declining advertising and subscription revenues, the Debtors experienced a decline in total annual revenues from approximately $300 million in 2001 to approximately $76 million in 2007. The cumulative effect is that the Debtors are unable to generate sufficient cash flow to fund their substantial existing debt obligations and, therefore, need to restructure their balance sheet."

Full documents in extended entry....

You can download them as PDFs from here and here.

Read this doc on Scribd: Ziff Davis Bankruptcy Filing 3


Read this doc on Scribd: Ziff Davis Bankruptcy Filing


By Rafat Ali

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