Ziff Davis Sheds Enterprise Group, Revamps as Web-Focused Publisher

Information and technology publisher Ziff Davis is continuing to divest itself of some titles, with the sale of its Enterprise Group. In addition to print properties eWeek, CIO and Baseline magazine, it also sold online ones: eweek.com, webbuyersguide.com, cioinsight.com, baselinemag.com, Microsoft-watch.com, channelinsider.com and deviceforge.com. Plus, it included a valuable database of 3.5 million business technology users in the sale.

The Enterprise Group is being sold to an affiliate of Insight Venture Partners, a private-equity and venture-capital firm, for about $150 million. Ziff Davis CEO Robert Callahan observed: "Insight Venture Partners has exciting plans to continue to pursue growth opportunities in this rapidly transforming technology media environment."

The sale of the division is, in part, a continuation of earlier sales and closures of print and online properties Ziff Davis deemed less profitable or peripheral to its mission.

During the last five years, the company has cut costs and reformulated itself as a Web-focused publisher. In the last year, it has finally returned to profitability after enduring a several-year slump. The Internet's impact on publishing hit the company earlier than many consumer magazines because of its tech-savvy audience.

In the first quarter of 2007, Ziff Davis saw a 15% increase in earnings to $3.1 million. Earnings increased despite a total revenue decline of 12%, or $4.3 million, as the company wrapped up a period when it shed a number of unprofitable print publications. This is the fourth quarter in which revenue fell, but profitability increased.

The curious phenomenon of falling revenues paired with increasing earnings may be indicative of a general trend. Magazine companies that move aggressively to online-centered business models are likely to be smaller, but also more profitable, after the transition.