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By contrast, ever since his painful return from that 1960s trip, McGovern has pushed decision-making down to his subordinates. In 1994, McGovern told Kilcullen that the board thought that it was a good time for the profitable book division to go public. Kilcullen disagreed; he argued that IDG Books was still immature and that it needed a more consistent financial record, as well as the management team and systems to help achieve it.

McGovern supported his lieutenant. He let Kilcullen keep growing the business unit within IDG until Kilcullen told McGovern in 1997 that IDG Books was ready for the investment bankers. Last July, it successfully spun out of the company, raising $49 million.

That sale has become a model for McGovern. He says he now plans on selling off the IDC research arm, The Industry Standard along with its Web site and conferences, and his collection of Web-only companies and Web publications. He's chosen these three groups because of the high multiples he expects for them: six to seven times revenue for IDC and, in his words, "a few hundred times revenue" for the Internet-related companies. Such a move would leave IDG holding the print titles and a few online assets associated with the magazines, like PC World Online, as well as the trade-show business.

If he was ahead of the pack in thinking about an IPO for a division of his company in 1994, he's in the middle of it in 1999. When CBS successfully spun out MarketWatch.com in February, Manhattan's media barons took notice. Among others, the New York Times is reported to be considering an IPO for its Electronic Media Company.

Although McGovern's forthcoming offerings will be entering a more crowded IPO field for publishing spinoffs than he faced last year (not to mention a humbled Internet sector), Goldman Sachs & Co. publishing analyst Michael Beebe feels that IDG is on solid footing. McGovern will have a lot more credibility in the market because of IDG Books' successful IPO, says Beebe, whose firm shepherded McGovern’s first IPO to market and will help him on future offerings.

But what does floating these three divisions mean for the rest of the company, beyond additional money for McGovern to invest in new ventures? "I think it's telling to watch McGovern's approach to a divisional IPO," says competitor Uphoff. "That may say more about the lack of profitability in his print divisions than anything else."

Asked what impresses him most about working with McGovern, Conlin cites a consistency of vision. Specifically, he mentions that since he joined the company, it has reduced its dependency on print advertising from 80 percent of revenues to less than 50 percent of revenues. Given Forrester Research's projections of an impending print-media crunch from online ad competition, this was a prescient move. But the sale of the research wing and two strong Internet components could very well increase that dependence -- even if temporarily.

McGovern concedes that PC World's ad revenue has dropped 5 percent (the San Francisco Chronicle recently reported that the number of PC World's ad pages is down 11 percent). He insists, however, that the current slump -- which, along with the distractions of their various sales, have hurt Ziff and CMP -- is cyclical. He maintains that technology ad revenue has alternately flown to computer publications and general interest media in three-to-four-year periods throughout the past 20 years.

Unlike his former competitors at Ziff and CMP, McGovern will not be floating the heart of his business. By spinning off the divisions before taking them public, McGovern will elude the fate of running a public company and avoid Wall Street's harping about his existing business while he builds a new one. McGovern has a history of creating flexible organizations that pounce on market opportunities. He claims to have no interest in retiring; he wants to go on investing in new companies. Perhaps the revenue from the IPOs will fund ventures that can replace IDG's prime non-print revenue streams. It's definitely a time-will-tell story.
salon.com | Sept. 24, 1999

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