IDG, Ziff-Davis consider public offerings in '98

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High-tech media giants International Data Group and Ziff-Davis are likely to go public next year, following rival CMP Media's stock offering last July.

IDG is considering a series of stock offerings, starting with its book publishing and International Data Corp. research units, said President Kelly Conlin.

SPIN-OFF IN FIRST QUARTER?

Softbank Corp., meanwhile, could announce it is spinning off part or all of Ziff-Davis as a publicly traded company as early as the first quarter, said people familiar with the company.

Ziff-Davis Chairman-CEO Eric Hippeau said Ziff-Davis and Softbank are continually exploring their financial operations but said of a first-quarter stock offering, "That would surprise me." But Softbank President Masayoshi Son admitted to the Financial Times last week that a stock offering is being considered.

The media company is believed to be working with Goldman, Sachs & Co.

A stock sale could resolve some of the tangled financial woes of Softbank and Mr. Son.

Softbank spent $3.1 billion in 1994 and '95 to buy Ziff-Davis' publishing and trade show business and the Comdex computer shows. Softbank leveraged its then-hot Japanese stock to do the deals.

Many felt Softbank overpaid, though one close observer said those assets still conservatively are worth more than $3 billion.

SOFTBANK WOES

The stock of Softbank has tumbled since then, and Mr. Son has been scrambling to secure his empire amid devastating media coverage out of Japan about the financial woes. If there is a stock sale, it's unclear whether Softbank would retain an interest in Ziff-Davis.

Separately, Softbank also is looking for investors for its Softbank Interactive Marketing unit, and could be close to announcing a deal. Softbank Interactive CEO Caroline Vanderlip denied there would be an outright sale, saying, "We're seeking additional investors."

Ziff-Davis, with revenue exceeding $1 billion including trade shows and such valuable brands as PC Magazine and ZDNet, has a strong position overall and a neatly packaged story to pitch to marketers -- and to Wall Street.

This fall, Ziff-Davis took ownership of Softbank's trade shows, including last week's Comdex in Las Vegas, the largest trade show in North America. A cable TV channel devoted to computer topics starts next year.

IDG DECENTRALIZED

IDG currently is owned by Chairman Patrick McGovern and employees; Mr. McGovern first publicly discussed a series of stock offerings earlier this year. Given IDG's high level of decentralization, it's not surprising the company would consider selling stock in operating units rather than in the overall company.

IDG's Mr. Conlin hopes to move ahead with offerings next year. "It's still in the works," he said.

Operating in the spotlight as public companies could change the rules for the top three tech media companies, which as private operations didn't have to worry about quarterly results.

CMP went public at $22 a share in July, climbed to $29.38 and dropped last month to $13.75 after announcing its Internet properties were growing more slowly than expected. The stock quickly climbed back into the high teens, where it was trading last week.

Contributing: Patricia Riedman.

Copyright November 1997, Crain Communications Inc.

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