Ziff Davis: valuing a digital media business

Excel model available. Version 1.2 · Valuation date: 2026-09-04.

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Start with one piece of the business

Choose one revenue stream and trace why the customer pays. Identify who controls the customer relationship, how the audience arrives, and what could interrupt the path from attention to cash.

Three things to work through

The portfolio that remains

Ask: Do the historical earnings, cash flows, and balance sheet describe the same set of businesses?

Find: Continuing-operation disclosures, disposal notes, segment reporting, and use of sale proceeds.

Then decide: Rebuild the starting point before projecting growth. A sold business cannot keep contributing earnings to the future case.

Quality of the revenue stream

Ask: What is repeatable, and what relies on traffic, advertising demand, or another platform?

Find: Disclosed advertising, subscription, affiliate, and other revenue categories, plus relevant distribution dependencies.

Then decide: Give different revenue streams different assumptions when the evidence supports it. Audience size alone does not establish durable profit.

The cost of maintaining the portfolio

Ask: Which adjusted costs recur as part of owning and renewing these businesses?

Find: Acquisition, restructuring, amortisation, capital spending, and management adjustment reconciliations.

Then decide: Distinguish an accounting charge from the ongoing investment needed to sustain the capability.

Where the valuation can go wrong

Ziff Davis disclosed the sale of its Connectivity business in the second quarter of 2026. The release presents continuing-operation earnings but some cash-flow measures include discontinued operations. Reconcile that difference and sale proceeds before using a multiple or DCF.

Apply Mike’s judgment

Value the seller's sustainable standalone business first. Improvements that only a particular buyer can create belong in a separate synergy case, with the cost and risk of delivering them.

Write down what must be true for the price to make sense. Test lower revenue and lower margins together, including financing and required investment. Keep buyer-created synergies separate from the business’s standalone value.

Open the workbook and try one change

1. Read Start Here, then open Valuation Summary to see the range of methods.
2. Review Assumptions and Sources & Adjustments. Separate reported figures from assumptions before changing the case.
3. Change one operating assumption, then test lower revenue and lower margins together. Follow the effect through Operating Forecast, DCF, and Sensitivities.
4. Read Checks after each change. Resolve a failed check or funding shortfall before relying on the result.

Start with Portfolio & Divestiture to see which businesses remain and how sale proceeds affect cash. Then test ongoing earnings after recurring costs. Do not add sale proceeds again if they are already in the cash balance.

Compare the answers

Use Trading Comps and DCF to compare market pricing with the cash the business can generate. The Transactions and Sum-of-the-Parts sheets add perspectives where the inputs support them; read their assumptions before treating the outputs as evidence. Acquisition Returns is a buyer-affordability exercise, with its own financing and return assumptions.

Check enterprise value (the operating business) separately from equity value (what remains for shareholders after the relevant cash, debt, and other adjustments). If methods disagree, identify the assumption causing the gap before choosing a range.

Choose a valuation method

Copy this assumption note

• Assumption that matters: ___
• Evidence supporting it: ___
• What is still unknown: ___
• What changes in the downside: ___
• Effect on cash, price, or the handover: ___
• Next evidence to obtain and owner: ___

Carry the finding into the deal

Before You Buy: Follow the Work helps test the operating assumptions. After the Deal: Keep the Business Working helps assign the changes and protect continuity.