CBS to buy CNET for $1.8 billion

CBS Corporation has entered into an agreement to acquire CNET Networks, Inc., it was announced today by Leslie Moonves, President and Chief Executive Officer, CBS Corporation. Under the terms of the agreement, CBS will make a cash tender offer for all issued and outstanding shares of CNET Networks for $11.50 per share, representing an equity value of approximately $1.8 billion. The acquisition will make CBS one of the 10 most popular Internet companies in the United States, with a combined 54 million unique users per month, and approximately 200 million users worldwide.

“There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks,” said Moonves inthe press release. “CBS stands for premium content and unparalleled reach, and CNET Networks will add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience. Together, CBS and CNET Networks will have significant additional exposure to the fastest- growing advertising sector and can accelerate our growth through a number of new content, promotion and advertising initiatives. We could not be more pleased with the prospect of adding CNET Networks and its tremendous team of people to the CBS family. I look forward to working with Quincy Smith, Neil Ashe and the considerable combined talent at both companies, as we build upon our success.”

Based in San Francisco, CNET Networks owns many of the Internet’s leading entertainment, news and information sites including CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNET news.com, UrbanBaby, CHOW, Search.com, BNET, MySimon and TechRepublic. The company, which reported significant profits in 2007 on revenues of $406 million, has a large international footprint, particularly in China.

Upon closing, CNET Networks’ sites will be combined with CBS’s stable of dynamic and growing interactive businesses. These include CBS.com, CBSSports.com, CBSCollegeSports.com, MaxPreps.com, CBSNews.com, last.fm, Wallstrip, MobLogic, CBS Radio and CBS Television Stations digital media platforms, and the distribution network of the CBS Audience Network, which is made up of more than 300 partner Web sites and reaches 82% of all online users in the United States.

“The core businesses of CNET Networks and CBS Interactive represent near perfect category symmetry in premium online content,” said Quincy Smith, President, CBS Interactive, in the press release. “Together we will have a terrific opportunity to not only grow our established businesses, but to build new attractive verticals of content as well. This is the beginning of an era for both CBS and CNET Networks; plus, it’s going to be great to work with Neil and his team, many of whom I have known for many years.”

“We’re thrilled to join CBS and combine our interactive media experience with CBS’s world-class content,” said Neil Ashe, Chief Executive Officer, CNET Networks, Inc., in the press release “CNET Networks operates some of the most important premium online brands, serving the most sought after online audiences. Today’s announcement brings together two organizations that complement each other and working with Leslie, Quincy and the talented people at CBS, we look forward to taking our business and our brands to the next level.”

“We look forward to completing the acquisition of CNET Networks and the terrific benefits it brings to CBS as Quincy, Neil and their combined teams build upon our success,” Moonves concluded. “At the same time our strong cash flow allows us to pay among the highest dividends in the industry, and we are committed to continue to pay our attractive dividend to return value to shareholders.”

The Board of Directors of CNET Networks has unanimously approved the merger agreement and unanimously recommends that CNET Networks stockholders accept the tender offer and tender their shares.

The transaction is subject to customary conditions and is expected to be completed in the third quarter of this year.

CBS Corporation is 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. The Company, through its many and varied operations, combines broad reach with well-positioned local businesses, all of which provide it with an extensive distribution network by which it serves audiences and advertisers in all 50 states and key international markets. It has operations in virtually every field of media and entertainment, including broadcast television (CBS and The CW – a joint venture between CBS Corporation and Warner Bros. Entertainment), cable television (Showtime and CBS College Sports Network), local television (CBS Television Stations), television production and syndication (CBS Paramount Network Television and CBS Television Distribution), radio (CBS Radio), advertising on out-of-home media (CBS Outdoor), publishing (Simon & Schuster), interactive media (CBS Interactive), music (CBS Records), licensing and merchandising (CBS Consumer Products), video/DVD (CBS Home Entertainment), in- store media (CBS Outernet) and motion pictures (CBS Films).

CNET Networks, Inc. is a global interactive media company whose leading brands collectively attract more than 160 million people each month, making it the 10th largest Internet network on the Web. The Company builds Web sites focused on the information and entertainment people crave, such as gaming, music, entertainment, technology, business, food, and parenting, and its premier brands include BNET, CNET, GameSpot, TV.com and CHOW. Founded in 1992, CNET Networks is headquartered in San Francisco, California. The Company also operates internationally in countries including Australia, China, Switzerland, and the United Kingdom.

Hopefully CBS can purge CNET of their ingrained anti-Apple / pro-Microsoft bias.

23 Comments

  1. Off topic (From the MDN link) – Re: Matt Asay of C|Net

    Check out Matt’s take on Windows 7 and Vista:

    (May 14, 2008 7:05 AM PDT)

    “Now Bill Gates has declared that Windows 7, the next release of the operating system, won’t be nearly as bad as Vista:

    We’re hard at work, I would say, on the next version, which we call Windows 7. I’m very excited about the work being done there…[which will require] lower power, take less memory [and] be more efficient.

    Great! So…why buy Vista in the interim, which is by all accounts a memory and power hog, and is grossly inefficient? Customers seem to get Gates’ logic, however, and have been buying Macs in droves which requires less power, less memory, is more efficient, and is a heck of a lot nicer to use. Thanks for the advice, Bill!”

  2. Is it me or does anyone else think they could build a network of sites from scratch for less than $1.8billion, which would be better than CNET? Admittedly there would be no archive but still.

    It’s not the just the sites they are buying, but also the regular traffic, brand identity, and goodwill that goes with them. For better or worse, we have heard of CNET, TechRepublic, etc. Building that name recognition and traffic is the hard part, launching the sites is trivial.

    That’s Business 101.

  3. I should have added:

    Consider this:

    Suppose that next week, some guys in a garage roll out a search engine that blows Google away in every regard. It will be a long, hard job for them to overtake Google in the market place. When your name gets used generically for the category (Google, Kleenex), you have a very strong position.

    That’s worth the big bucks, like those paid here.

  4. One asshat buys another. C|Net has been so far up Monkeyboy’s butt you can’t see its feet dangling. Their butthead president, a southern redneck bah thuh nayme of Shelbeh Bonneh iz gonna maake a whole lot o’ moneh frum this. I hate C|Net, ZDNet and TechRepublic with utter disdain. Their prejudice against the Mac is obvious, and they rarely miss a turn to try to undermine Apple with Microsoft-initiated FUD.

    It’s really no surprise that CBS would stoop this low. Sadly, CBS, once a great broadcast network, has been in decline for years. That they would make this acquisition is proof positive that they have lost their direction.

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