Live Reporting: CBS/CNET Acquisition Call

Below are our live notes from the conference call regarding CBS’ plan to acquire CNET.

8:57 – call has concluded – read up from the bottom. 

8:55 Doug Mitchelson Deutsche Bank – when you look out 3-5 years, do you think this deal will bring you enough scale? We have just tripled the size of our interactive activity. We look at everything but we have taken a major league step forward to be a leader in the future. To predict what will happen in 5 years from now, it’s hard for me to predict what will happen 5 weeks from now. We are in the top 10 now, maybe we will be in the top 5. At the end of the day, premium content through content distribution is a great step for us.

8:52 Mark Mayne – The revenue growth has been disappointing year over year. What are your strategies for accelerating revenue growth and how do you expect to improve the margins. Fred: We think they have the assets to do that and combined with us we reach a different set of advertisers than we do currently. We will be able to benefit from both companies’ scale.

8:50 Victor Miller Bear Stearns - On a proforma basis what does this new line item look like going forward. And where are CNET vs. CBS growing at the same rate? We will make this a separate segment as we’ve noted and we expect the deal to close in the 3q – there is an outside chance that it will close in 2q.  

8:47 David Miller SMH Capital - Asks about EBITDA growth – how will it be created? If you follow CNET, that’s the guidance they provided for 2008. As you may know they had a number of costs that related to backdating of options and other items out of the ordinary. They are very excited about the agreement they have signed. They announced a reduction in force earlier this year as well.

(why do they allow people to ask 2 or 3 questions – geez, let everyone have a chance!)  

8:40 Lehman Bros - On strategy regarding content and distribution, does this correlate with the strategy of being open and does this fit with your current video strategy or is it a bolt on? Les – this absolutely fits with our strategy of having our content anywhere and everywhere we can. 

8:40 Question time 

8:37 Fred – standard talk about the financial terms and how they will acquire the shares. They hope to close the deal by 3Q 2008. Ad revenues from CNET account for 89% of their total revenue. This transaction will have no effect on the CBS dividend.

8:34 – Les – both companies have complementary online businesses. He talks about the different businesses and how they will combine together. This deal puts us in every media sector in a big way. We can easily launch new and big sites. CNET brings a large, talented online sales team and brings video game inventory. We believe the combined company will see big growth for CNET. We love the international opportunities and having a profitable channel in China. The people from CNET are the key to this deal and we will have some of the best talent in the industry. We are excited about the possibilities going forward. Revenues of $450 million and EBITDA of $92 million in 2008 and the combined companies could see $1 billion in revenue by 2010/2011 and we plan to combine both companies together into a new interactive grouping.

8:32 – Les (CBS CEO) – explains the terms of the deal. CBS will become a top 10 media company with over 54 million unduplicated uniques. CNET will be combined with CBS Interactive once the deal closes including the distribution network. From entertainment to news to music to etc, CBS and CNET will have attractive demographics that fit now and the future. We are always looking for strategic acquisitions particularly in interactive content.

8:30 – hold music