CBS $1.8 billion offer saves CNet from proxy fight
NEW YORK -- The deal would open the way for CBS to blend its sites — most of which are linked to its TV and radio networks and stations — with CNet properties including TV.com, MP3.com, ZDNet, BNet, GameSpot and MySimon.
"There aren't many (like CNet) around," CBS CEO Leslie Moonves says. "The company makes a profit today. This isn't betting on three to five years from now."
His $11.50-a-share offer is a 45% premium over CNet's closing price Wednesday and sent its stock soaring 44% to $11.41. CBS fell 2% to $24.23.
If approved by CNet shareholders and antitrust officials, CBS' acquisition would save CNet from a proxy fight with Jana Partners and other hedge funds that collectively own about 10.5% of the company.
CNet has lost about half of its market value since the beginning of 2006. Critics say management focused too much on broadening its portfolio of properties and not enough on strategies to make its sites more engaging for consumers and advertisers.
CNet CEO Neil Ashe declined to respond directly when asked if the proxy fight played a role in his decision to sell to CBS or whether he has spoken to Jana about the deal. "I realize that there's drama around the shareholder thing, but there's only so much we can say about this other than that it's a great transaction for all of our shareholders," he said.
Under the deal, Ashe would move to CBS and report to CBS Interactive President Quincy Smith.
Jana did not respond to a call for comment.
CNet's networks collectively attracted 32.4 million unique visitors in April, up 7.1% from April 2007, matching the overall growth in Internet use, according to ComScore. CBS' sites had 25.3 million, up 15.2%.
"CNet's always had trouble attracting non-tech advertisers," says former CBS Digital Media president Larry Kramer, now a senior adviser at investment firm Polaris Ventures. "CBS can bring in the kind of advertisers that the CNet content and audience can support. So there's a potential for a pop there." Another reason for CBS to boost its digital media holdings: "It looks like it's going to be a tough TV season," he says.
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