There’s some good news and not-so-good news today from Ziff Davis.

Ziff is the publisher of — among other things — PC Magazine, Yahoo Internet Life, and a bunch of gaming titles. I used to work there twice. I don’t anymore. A lot of friends still do. It was a financial pawn for a few years during the boom, and it again (or maybe still) in deep financial trouble. In plain English, it’s borrowed so much money — $250 million at 12 percent — and business is so bad that it doesn’t have the cash to both make its payments and run the business. (Just to put the 12 percent in perspective, you probably are carrying credit cards that have a lower interest rate, though your credit line is probably less than $250 million. If it isn’t, please call me ASAP to discuss some business dealings.)

The company made a fairly big deal yesterday out of saying that the holders of 60 percent of that $250 million in notes  have agreed to a deal. Willis Stein, the investment bank that Ziff’s majority owner, is kicking in another $80 million in cash to Ziff. Of that, $30 million will go to bondholders. The bondholders are also being offered $95 million in what amounts to stock in the company. The theory, I guess, is that $95 million in equity is better than $250 million in debt that wouldn’t be paid if the company goes belly-up.

All this moving around of deck chairs will free up $30 million a year in money that otherwise would have been interest payments.

There are a few rubs. First, the deal requires that 95 percent of the bondholders agree. Sixty percent is nice, but not nearly enough. And second, the company’s banks have to agree to this scheme, and Ziff is already in default to them.

The stakes are high. In Ziff’s SEC filing yesterday, PriceWaterhouseCoopers said that the company may not be able to continue as a going concern unless the finances are straightened out. And even after that $250 million goes away, Ziff still owes another $175 million-plus.

Lyndon B. Johnson. “If two men agree on everything, you may be sure that one of them is doing the thinking.” [Quotes of the Day]

There’s a piece in the USC Annenberg Online Journalism Review, wherein J.D. Lasica interviews John Battelle (former publisher of The Industry Standard), David Talbot (founding editor of Salon) and Josh Quittner (former editor of The Netly News and current editor of Business 2.0). The subject at hand: how anything interesting in the media is happening a) on the West Coast and b) online.

The thing reeks of the attitude, “Well, we went bust but we were right, gosh darn it.” Yeah right.

Lasica makes the perfect point: although the weight of the Internet Media World was in San Francisco, the subject of most of the media was technology itself. This may come as a shock, but most people don’t care about technology. It’s true that many people with computers care about technology, and that the proportion of people on the Net to people with computers is remarkably high. But in many ways, what the West Coast Internet Revolution produced was a Golden Age of Trade Journalism.

What’s worse, they never demonstrated that anyone was willing to pay for it. Some commercial revolution.

 What did Battelle take away from the flame-out of The Standard? Stay small, stay focussed, stay personal. Pretty good advice, actually. Just not exactly new advice, if you get my drift.

So it turns out that the poor schlep at the nursing home didn’t have the winning ticket after all. He bought tickets for the pool, then was out sick for three days after the drawing. Nice friends this guy’s got, huh? Add a bunch of lawyers and a some reporters, and stir well.

After all that, the nurses did actually win some money. Two dollars. Don’t spend it all in one place, OK?

The real winners came forward today: a restaurant manager and his wife of 20 years. The couple had filed for bankruptcy last year, owing nearly $600,000 — including $48,000 to the humor-deprived IRS — but the petition was never finalized so they still owe the money. I think they’ll be able to pay.

Now — no more lottery stories. Unless I win.

I just came across this CNN story from January, but I don’t think it’s gotten the play that it merits.

You probably know that the Internet has its roots in the  Defense Department’s old Advanced Research Projects Agency, known as ARPA. The guy in charge of information processing for ARPA — what became known as ARPANet — was Lawrence Roberts. Roberts said some interesting things in January. Among them:

• Tech slowdown or no tech slowdown, Net traffic has consistently been doubling every year.


• In January, the Net handled 55 petabytes of data. For you English system mavens, that’s 55 quadrillion, or 55,000,000,000,000,000 bytes. In one month.


• The pace will continue to grow for another 10 years, at which point growth will slow. But doubling traffic every year for 10 years means that there will be three more zeros at the end of that already very long number above.

My question: will that kind of traffic allow all the dark fiber that was installed in the 1990s to be turned on?

A couple of years ago, my friend Cia Romano introduced me to Susan Kitchens, whose excellent weblog I check out pretty frequently. Susan has a piece today about the LA Times’s coverage of the entertainment industry’s lobbying of Congress; in short, the entertainment guys want to put some pretty severe restrictions on how consumers use and view their products. Nothing like treating your customers like criminals, guys.

Some of you know that there’s a company — E.Ink — making small quantities of an extremely thin, extremely flexible computer display. The Wall Street Journal carries a story today about the company’s prediction that within five years, people will buy a booklet of this stuff and download a copy of the day’s newspaper to it.

Color me skeptical. This might be fine (for some small value of “fine”) if you’re a subscriber to the paper, but it does kind of kill the newsstand purchase. “That’ll be 50 cents for today’s paper and $1000 for the reader, buddy.”

And like most bad ideas of this ilk, the impetus seems to be publishers’ desire to cut cost, not reader demand for a new service or gadget. Check this quote:

“Delivery and printing makes up well over half the expenses at any newspaper,” says Ken Bronfin, president of Hearst Interactive Media. (Parent Hearst [an investor in E.Ink] publishes the San Francisco Chronicle and other dailies.) “The idea of eliminating that cost, to a degree, is a dream for any company. It’s a big, big idea.”

Remember: publishers were attracted to the Net because they saw it as a way to cut their distribution costs. No one told them that servers, software and bandwidth were expensive, too. Nice to know they were paying attention…

There’s a big lottery mess in New Jersey.

There’s this multistate lottery called The Big Game that operates in eight states. On April 16, there was a drawing for a jackpot of $331 million. As happens, even at odds of 71 million to one against, there were three winners of $59 million each, in Georgia, Illinois and New Jersey.

The winner has come forward in Georgia. The Illinois winner hasn’t manifested himself. But in New Jersey, it’s a little more complicated.

It appears that the winning ticket is held by Angelito Marquez, a 28-year-old nurse’s aide from Newark. The trouble is, he’d been deputized to buy tickets for a pool of 19 co-workers. Just who did what to whom is a little murky because Marquez’s story — well, it wiggles a little in the telling. Nothing especially wrong with that: interviews to newspapers are not conducted under oath.

Props, though, to the Star-Ledger reporters, who got an interview with Marquez by staking out the nursing home where he works before his shift started Friday night. The best the Times could do was three words through a car window on Sunday.

The lack of timeliness in the New York Times’s coverage of cultural trends is a long-standing joke. Today, the Paper of Record has discovered that there are Starbucks everywhere:

In New York, said Alan Hilowitz, a regional Starbucks spokesman, “People literally will not cross the street to get coffee.”

So Starbucks, like Duane Reade, has concentrated stores in key neighborhoods, even if that meant that new stores took some business away from old stores.

There are, for example, two Starbucks shops in Astor Place. Within a small radius of those stores are five other Starbucks (including two on either side of Union Square), as well as two Barnes & Noble bookstores with cafes licensed by Starbucks.

To be fair, the snappily written story points out the somewhat amazing fact that there are now more Starbucks stores in Manhattan than Duane Reade drug stores.

Pretty good Amy Harmon piece in this morning’s New York Times about Bill Gates’s bravura testimony last week in the Microsoft anti-trust trial.

I confess that I was disappointed; I’d so been hoping for something like the last 10 minutes of a classic Perry Mason episode. If we couldn’t have that, maybe a replay of his awful taped deposition from the first phase of the trial. But no, for three days we had the Good Strong Gates, who was more than willing to engage the states’ lawyers and not give an inch on Windows as Windows.

But if the testimony showed anything, it showed that the phrase “spirit of the agreement” isn’t likely to spill freely from Gates’s lips. The courts have said that Microsoft’s market position is monopolistic, and what they’re arguing about now is what everyone should do about it. Any imposed remedy is going to be closely hewed to, and the only people more willing and more able to split hairs than lawyers and 5-year-olds are techies: “But if you didn’t want the software to crash the computer, why wasn’t that in the spec?” 

There’s no contract on Earth that can bind someone who doesn’t want to be bound by it, and remedies for bad faith are ugly and expensive. That’s why I don’t think that anything but a structural remedy — breaking up Microsoft — will work. Microsoft doesn’t think it’s done anything wrong, and insists that any remedy with teeth is unworkable. And its history has amply demonstrated that whatever non-structural remedy is imposed, we’ll be back in court again within five years.

The Microsoft witness after Gates, an executive named Paul Jones, told the court that it is well within Microsoft’s right to design Windows in such a way that other programs won’t work with it. Nothing wrong with cutting out RealAudio or Java or Norton Anti-Virus. It’s Microsoft’s world, after all, and we’re just living in it.