CNET sniffs Silicon.com

For sale sign in French

CNET is in talks to buy Silicon Media Group, the European online tech publishing business, for up to £30m, Les Echos reports, by way of the FT.

Neither side are talking, the paper reports. No surprise there, and the leak is not particularly surprising - there have been mutterings in the UK about a CNET/Silicon tie-up for a few months now.

The question is: will Silicon go for anything like £30m and will CNET pick up the company or just the assets.

At the peak of the dotcom bubble, Silicon was valued at a heady £800m - only it never made it to IPO. The company was very successfu though in raising funds from private equity sources and venture capitalists - around £27m in three rounds according to our rough estimate (although there may be some double counting with some of round two's £11m paying off some of the private investors who chipped in £5m or £6m in round one).

The company had two big USPs - a broadband TV station (now effectively mothballed) and a personalisation/targeting software platform called Bladerunner. Rumours are that Silicon is preparing to junk this software.

The last financing round in 2000, saw Silicon raise £14m to establish France and German operations, money which with hindsight could have been spent better elsewhere (anywhere but the torched online ad market of Germany). While the UK is profitable - turnover is an estimated £5m a year - Germany and France are not. This puts a strain on finances.

Lack of an exit also puts a strain on the three dozen or so shareholders, many of which are looking for an exit, even one that will see them lose money.

So let's assume that CNET does buy Silicon or its assets. A combination of the firm's ZDNET UK sub and Silicon would be comfortably the UK's biggest online tech publishing operation by turnover. (But not by page impressions or readers - take away ZDNET UK's Gamespot, typically quoted in audience figures, and it looks a whole lot smaller).

Silicon UK has an online events tech directory service and a recruitment business, which would fit neatly enough into ZDNET (although the latter would see ZDNET waving goodbye to TotalJobs, its tech job provider).

As for Silicon France and Germany? Hmm.

CNET is the world's biggest tech publishing outfit, but in corporate finance terms it is a relative minnow, compared with the likes of the traditional media firms.

Last week, it announced 200 job cuts, taking the headcount down to 1,700 in the third round of redundos since its takeover of ZDNET in 2000. ®

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