In This Article
30-Second Summary
Headline Links: CBS Buys CNet
Video: ‘CBS Looking for Clicks in All the Wrong Places’
Background: ‘Supreme Court of Delaware Upholds JANA Partners’ Right to Nominate Directors’
Key Players: CNet CEO Neil Ashe and CBS CEO Leslie Moonves
Opinion & Analysis: Will CBS benefit from the deal?
Related Topics: CNet shares rise, CBS shares fall; NBC’s iVillage purchase
Reference: CNet Networks
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CBS CEO Les Moonves
CBS Buys CNet To Expand Online Reach
May 15, 2008 05:41 PM
by
findingDulcinea Staff
The television network announced Thursday that it is acquiring the troubled online news and information firm for $1.8 billion. Analysts debate whether the marriage will click.
30-Second Summary
The two companies agreed on a buyout price of $11.50 per share—45 percent higher than CNet’s price at the close of trading on Wednesday evening.
CNet’s shares went up $3.49 during Thursday morning trading to $11.43, something that “should make even CNet’s dissidents happy,” writes Fortune magazine.
The deal will also likely resolve an impending proxy battle between CNet and a group of disgruntled investors led by hedge fund Jana Partners LLC.
CNet CEO Neil Ashe communicated his satisfaction with the deal in a staff email: “Together CBS and CNet Networks represent an unbeatable combination of premium content online, premium content on air and premium audiences.”
Among CNET's assets are two of the most valuable, yet under-utilized, Internet domain names: News.com and TV.com.
The move marks yet another step by CBS to expand the audience reach of its Internet properties to appeal to the mass advertisers that already buy on CBS Television. All of the Internet properties owned by CBS and CNET combined reach 54 million Internet users in a full month; by contrast, CBS Television reaches more users over five episodes of 60 Minutes.
And although CBS CEO Les Moonves said the online company “will add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience,” investors appeared unimpressed as CBS shares fell 3.6 percent to $23.93.
Information Week writer Alexander Wolfe is equally skeptical, arguing that it is unclear whether users still want text-based news and reviews with the proliferation of social-networking sites.
“It’s no longer evident that online media companies can support the high costs of creating content (i.e., stories) for the Web,” Wolfe writes.
Nonetheless, CBS isn’t the only television network turning to the Internet. In 2006, NBC purchased the popular women’s Web site iVillage for $600 million. “From this platform, NBC Universal will chart the next generation of digital content development and enhance user experience,” NBC said in a statement.
CNet’s shares went up $3.49 during Thursday morning trading to $11.43, something that “should make even CNet’s dissidents happy,” writes Fortune magazine.
The deal will also likely resolve an impending proxy battle between CNet and a group of disgruntled investors led by hedge fund Jana Partners LLC.
CNet CEO Neil Ashe communicated his satisfaction with the deal in a staff email: “Together CBS and CNet Networks represent an unbeatable combination of premium content online, premium content on air and premium audiences.”
Among CNET's assets are two of the most valuable, yet under-utilized, Internet domain names: News.com and TV.com.
The move marks yet another step by CBS to expand the audience reach of its Internet properties to appeal to the mass advertisers that already buy on CBS Television. All of the Internet properties owned by CBS and CNET combined reach 54 million Internet users in a full month; by contrast, CBS Television reaches more users over five episodes of 60 Minutes.
And although CBS CEO Les Moonves said the online company “will add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience,” investors appeared unimpressed as CBS shares fell 3.6 percent to $23.93.
Information Week writer Alexander Wolfe is equally skeptical, arguing that it is unclear whether users still want text-based news and reviews with the proliferation of social-networking sites.
“It’s no longer evident that online media companies can support the high costs of creating content (i.e., stories) for the Web,” Wolfe writes.
Nonetheless, CBS isn’t the only television network turning to the Internet. In 2006, NBC purchased the popular women’s Web site iVillage for $600 million. “From this platform, NBC Universal will chart the next generation of digital content development and enhance user experience,” NBC said in a statement.
Headline Links: CBS Buys CNet
The deal, which is pending shareholder and regulatory approval, would make CBS one of the 10 most popular Internet companies. CNet was founded in 1992 by Shelby Bonnie and Halsey Minor. Bonnie resigned in 2006 amid a stock option grants scandal.
Source: San Francisco Chronicle (The Associated Press)
Fortune magazine writes, “CBS is no stranger to the intrigue around high-profile Internet properties.” The network ran the Web site MarketWatch under the auspices of Viacom for many years until selling it to Dow Jones in 2005. A year later, CBS broke from Viacom, after which “Viacom’s chairman and prinicpal shareholder, Sumner Redstone, fired Moonves’ counterpart Tom Freston as CEO of Viacom, after Freston lost out on the bidding for social networking site MySpace” to Rupert Murdoch’s NewsCorp.
Source: Fortune
Last year, CBS introduced the CBS Interactive Audience Network. This product offering enables advertisers to buy advertising across all CBS-owned or managed properties, as well as alongside CBS content that appears on the sites of distribution partners. Among the partners signed up were AOL, Microsoft, Yahoo, Comcast, and CNET. Online publishers face increasing competition from online advertising networks, which aggregate thousands of Web sites into a single buy for an advertiser, resulting in massive audience reach. By creating the Interactive Audience Network and buying CNET and other properties, CBS hopes to create an audience comparable to the largest ad networks and Web portals.
Source: ReadWriteWeb
SEC Investor, a financial Web site, focuses on the value of CNET's domain name portfolio, noting that CNET owns two of the most potentially valuable, yet underexploited, domain names: TV.com and News.com. It notes that "cool.com" sold for $38 million at auction, and surmises that News.com could be worth considerably more.
Source: SEC Investor
Video: ‘CBS Looking for Clicks in All the Wrong Places’
Simon Constable and Kristin “The Talented Blonde” Bentz say on The Street, “Interestingly, CBS sold MarketWatch to NewsCorp to Dow Jones, which is now part of NewsCorp.”
Source: The Street
Background: ‘Supreme Court of Delaware Upholds JANA Partners’ Right to Nominate Directors’
The Supreme Court of Delaware decided on Tuesday that Jana Partners has the right to nominate two candidates to CNet’s board of directors and push to expand the board by five members, a move that the online media company called “improper” under its bylaws. JANA, a hedge fund company, was acting on behalf of Sandell Asset Management Corp, Paul Gardi of Alex Interactive Media, Spark Capital and Velocity Interactive Group, which together control 14 percent of CNet’s stock. “JANA and Sandell also have separate non-voting economic interests of approximately 5% and 3%, respectively,” writes Business Wire.
Source: Business Wire
Key Players: CNet CEO Neil Ashe and CBS CEO Leslie Moonves
CNET CEO Neil Ashe said that “both CBS and CNET Networks share a common vision about interactive media, the importance of category defining brands and how to build online destinations that give people more of what they crave.”
Source: TechCrunch
CBS CEO Leslie Moonves said about CNet: “Number one, I really am impressed with Neil Ashe and Zander (Lurie) and their group. We said, ‘these are guys we can work with.’ You deal with business issues, you also deal with social issues, and everything fell into place.”
Source: The Washington Post (registration may be required)
Opinion & Analysis: Will CBS benefit from the deal?
Alexander Wolfe at Information Week says that CBS may be getting less than it bargained for: “First off, it’s not clear whether readers really want a steady diet of text-based news and reviews when they now have at their disposal video images, and-most important—social-networking sites where they can essentially ‘chat’ with their friends about stuff, as opposed to sitting in front of their laptops reading long streams of text.”
Source: Information Week
Peter Kafka at Silicon Alley Insider asks whether the deal makes sense for CBS: “There’s almost no synergy, operationally or brand-wise … between the two businesses. Despite Quincy’s frenzied deal-making and hand-shaking over the last year or so, CBS doesn’t have much of a digital platform to date.”
Source: Silicon Alley Insider
Related Topics: CNet shares rise, CBS shares fall; NBC’s iVillage purchase
After the deal was announced, CNet’s stock rose $3.43, or 43.1 percent, to $11.38, while CBS’ shares fell $0.60, or 2.4 percent, to $24.22.
Source: CNN
CBS is not the only television network turning its attention to the Internet. In 2006, NBC surprised some analysts by purchasing popular women’s Web site iVillage for $600 million. “From this platform, NBC Universal will chart the next generation of digital content development and enhance user experience,” NBC said in a statement.
Source: Physorg.com
Reference: CNet Networks
The company’s roster includes CNet, GameSpot, BNET and CHOW, and its brands attract over 145 million unique users a month. Billing itself as an interactive media company, it aims to give people the information and entertainment that they want and need.
Source: CNet Networks
On its Web site, CBS describes itself as “a mass media company with constituent parts that reach back to the beginnings of the broadcast industry, as well as newer businesses that operate on the leading edge of the media industry.”
Source: CBS Corp.
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