After acquiring Ziff Davis in November 2012 for $167 million in cash, cloud computing services company (the eFax guys) J2 Global Inc. is rumored to be buying IGN Entertainment from News Corp.

Ziff-Davis traces its roots back to 1927. Today its main asset is PC Mag. Since the 1980s, it uqwmfocused on computer and technology magazines.  With the advent of the Web, it tried to walk the line between protecting its traditional business (print) with emerging media (web). The company also had some broadcasting properties such as ZDTV (later renamed TechTV and sold to Vulcan Ventures in 2001).  As an example of the juggling act between print and web, the company’s Electronic Gaming Monthly magazine saw its reach and relevance fade as digital upstarts like GameSpy, IGN and CNET’s Gamespot rose in popularity.

By the time Ziff-Davis launched in 2003, it was too little, too late.

Gamespy and IGN merged in 2004 to create the new media gaming behemoth. Dreams of an IPO faded as IGN sold to Rupert Murdoch for $650 million in October 2005.  Gaming was huge, everyone was told; reminded: bigger than the movie business even.  Audiences were flocking to the Web.  There was nowhere to go but up.  Yet a mere seven years later, IGN couldn’t sell to anyone for $100 million.  No cigar.  Not even close.

So as Rupert Murdoch continues to disband his digital empire (after Photobucket and MySpace), J2 appears to be the knight in shining armour poised to acquire IGN to create a vertical powerhouse through its recently acquired Ziff-Davis unit.

Will it work?  Who knows.  But here’s what makes the possible deal fascinating.

1) If a cat has nine lives, media companies have many more.  After filing for Chapter 11 bankruptcy protection in March 2008, Ziff Davis sold to Hearst’s UGO unit (an IGN competitor that was itself subsequently sold to News Corp.) and ceased publication of Electronic Gaming Monthly magazine in 2009.  Everyone had pretty much written off Ziff-Davis, except former Time Inc. executive Vivek Shah and PE firm Great Hill Partners, which acquired Ziff Davis in June 2010.

2) With a market cap of nearly $1.5 billion, J2 is clearly not your typical buyer.  The company’s eFax service appears to be a cash cow, albeit one with tepid growth.  With over $100 million of net income off $300 million in annual revenues, the company had over $340 million of cash and short-term investment as of September 30 2012.  But even after the November acquisition of Ziff Davis for $167 million  in cash, the company’s balance sheet shows no debt, so it can easily acquire IGN, especially since IGN’s sale will fetch far less than the $100 million that News Corp. was seeking throughout 2012.

3) It’s certainly surprising to see technology company J2 move into content.  However, if there’s one vertical it would be compelled to dive into, it would be technology and gaming, which is increasingly moving to the cloud.  That being said, anyone who will say “I called this” is lying to you.  This is a bold transformation of a company.  If anything, IGN was a more natural initial target given the company’s digital downloads business, but opportunities have a funny way of lining up.

4) The conventional wisdom has been that new-media upstarts will grow while traditional media businesses will falter to the point where — in this scenario — IGN should have bought Ziff Davis.  Technically, it could have, had it pursued the IPO route.  But under Murdoch’s empire, that didn’t happen.  It was Ziff-Davis, apparently, that took the painful decisions to put it in a strong-enough situation to sell to $176 million in 2012 when IGN couldn’t get any compelling bids near $100 million.

5) Using the “News Corp. excuse” is a copout.  In hindsight, IGN missed two opportunities.  While IGN eventually moved to produce enough video content, the reality is that it never matched its industrious publishing (of articles) with enough video production.  Ironically, it suffered from innovator’s dilemma internally (as do all online publishers who fail to get a ROI from video).  But it wasn’t just about video production.  Competing video game network Machinima’s rise highlighted the opportunity in media distribution in the era of YouTube.  Machinima may envy IGN’s own-and-operated property, but its reach on YouTube — and around the Web — is nothing short of amazing.

6) It’s interesting to see J2 embrace content.  On the one hand, all tech companies have Google envy: the dream to leverage one’s technology to build a profitable and scalable ad-supported business.  But therein lies the rub: Google remains the only successful ad-supported tech company.  Everywhere else you see a general retrenchment.  Cisco is getting out of the consumer space, while Microsoft is getting out of the ad-supported business.

7) While print has obviously shrunk, the media industry is larger than ever. Fragmentation explains both IGN and Ziff-Davis’ challenge.

Does J2 have a solution for that? Who knows.