CBS saves CNet from activist investors
Billion dollar buyout
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CBS is buying CNet Networks - the web publisher behind ZDNet, gamespot.com, tv.com, mp3.com, news.com and techrepublic. These sites will now be combined with CBS's websites.
CBS is paying $1.8bn for CNet - a 44 per cent premium on its share price. The combined properties will have 54 million unique users per month in the US and 200 million worldwide.
Quincy Smith, president of CBS Interactive, said: "The core businesses of CNET Networks and CBS Interactive represent near perfect category symmetry in premium online content". He said the deal would allow the two companies to "build new verticals" as well as grow their existing businesses.
The deal is good news for CNet which has been under pressure from shareholders. In January two institutional investors were pushing to get extra people on the board of directors to reverse CNet's falling share price which has been on the slide since January 2006.
CBS has also been criticised for "not getting the net" - its early stategy of driving viewers to one site - CBS.com - were abandoned for a more shotgun approach.
CBS did a round of deals with various web publishers including AOL, Bebo, Comcast, Joost and CNet in 2007 to get its shows distributed more widely online. CBS also bought London based music site last.fm for $280m in 2007.
CNet's board has unanimously approved the offer and recomends CNet shareholders do the same. It is expected to close in the third quarter.
Press release here. ®
COMMENTS
Non-execs are not *necessarily* just noses in the trough
"So how does paying to keep happy more stuffed shirts (fly them around, buy them munchies for meetings, etc.) reverse a slumping stock price exactly?"
The whole point of non-execs is to reign-in the excesses/mis-steps of the executive directors, and get them to run the company for the benefit of the shareholders rather than some pet millenial power trip.
No idea what CNet's strategy is, if they have one, but if their share price is slumping, it patently isn't working, so they need to try something else - the non-execs have a valid role in confirming that whatever they do is going to address this.
Alternately, they might just want a few free lunches.
Not since mp3.com
Meh, CNet are evil, I've avoided them since they killed mp3.com and it's music archive and the huge community that revolved around it.
Good luck CBS!
@AC
"So how does paying to keep happy more stuffed shirts (fly them around, buy them munchies for meetings, etc.) reverse a slumping stock price exactly?"
I was wondering the same thing!
It immediately brought to mind the clamouring of Yahoo! investors to allow the Microhoo deal to go through. (With all due respect to the Yanks) this all is typical of the capitalist (read greedy) mindset of so many individuals in American business and corporate politics.
These investors (and don't get me wrong - they're in this to benefit financially so I don't fully blame them) are ONLY interested in what gains they can make from the sale of the company - as opposed to what is best for the company in the long term. My opinion, and that of many others, is that Microhoo would have led to the death or stifling of creativity and many projects (including perhaps Zimbra which is Linux-based) as they stripped away everything to get to the search and advertising core. Yahoo, I strongly believe, has a MUCH GREATER potential than that!
Their shortcoming has actually been NOT realising that full potential, and effectively leveraging what is a large user-base, and huge potential in search and advertising.
I also agree that maybe we should watch to see if CBS just uses the news.com and tv.com domains to push their content. As a techie and daily visitor of news.com (although I've been quite disappointed with their content - or lack thereof - lately) it would really sadden me to see the site transmogrified :D into a network wasteland.
I'll go have a few drinks now - Verticals anyone???
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