The leadership of CNET Networks Inc. (“CNET” or the “Company”) has presided over massive value destruction, with CNET’s shares declining (21)%, (52)% and (25)% in the one, two and three year periods ended March 28, 2008, respectively, compared to (1)%, 6% and 39% returns, respectively, for its stated benchmark peer index. CNET has also consistently underperformed numerous peers in profitability and growth, ranking last among these peers in key metrics, as set forth herein. This underperformance comes despite CNET’s premiere assets, including the tenth largest collection of Internet sites in the world and strong brands and content.”
“The Stars’ Address is CBS.” And now it is CNET Networks’ (CNET) as well. CBS this morning said it agreed to buy the Internet news and entertainment laggard for $1.8 billion in cash. The deal values CNET at about $11.50 per share–a 44.6% premium to yesterday’s closing price of $7.95. That’s $.50 more than the $11 Jana Partners, the investment management firm plotting a proxy fight for control of the company’s board, had hoped to squeeze out of CNET, so presumably even dissident investors are glad to see CBS (CBS) stepping in here.
The deal, expected to close in the third quarter, will vault CBS into the top 10 Internet companies in the United States, with a combined 54 million unique visitors monthly, and about 200 million visitors worldwide. CBS CEO Les Moonves says he expects interactive revenues to hit $1 billion by 2010. “I think the ability of this company to grow together with us just made sense for right now,” Moonves told paidContent. “We’ve stated our goals are to expand in three areas: content, Internet and outdoor. This accomplished two of the three.”