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CBS Interactive has a press release out this morning which shows just how smart the CNET acquisition was. The release shows many of the CNET Web properties and the growth they say is attributed to the new combined CBS Interactive division. The company says that the cross promotional effort is the reason for the surge. It’s good to see that both sides are promoting each other – this is something that most companies don’t handle well.
Here are some of the numbers from the release (the numbers come from comScore):
- CNET.com posted a 22% increase in unique visitors over July 2007, pointing to early success of its beta release, which launched in June and officially launches later this month, as well as the success of early integration programs such as CNET and CBS coverage of the iPhone.
- CHOW’s unique monthly users increased 24% month over month and 256% over the previous year, as more food fans turned to the site for fun, practical advice on cooking and food.
- BNET.com posted a 19% increase in unique visitors over last month, underscoring the success of the recent BNET Industries launch in April, and its overall position as the go-to resource for business managers and one of the most-visited business sites.
Now I’d like to see a smarter, more streamlined CNET property list.
CNET shareholders would receive $11.50 a share if the deal closes. This amount represents a 45% premium to Wednesday’s closing price and above any price at which the stock has traded in about two years. Shares of CNET rose 42% to $11.30 in recent premarket activity, while CBS’ stock fell 3% to $24.10.
This deal would bring more technology content to the airwaves. No, I doubt we will see Rafe Needleman calling the next Giants-49ers game, but what we might see is shows like Natali DelConte’s Loaded appear on any of the CBS television networks. I can see strong online-tv convergence with this deal.
Here’s the release:
CBS to Become a Top Ten U.S. Internet Company with Unparalleled Content and Reach, Boasting Approximately 200 Million Monthly Unique Users Worldwide CNET Networks’ CNET, ZDNet, GameSpot.com, TV.com, CNET News, UrbanBaby, BNET, CHOW and Search.com, Among Others, To Be Combined with CBS Corporation’s National and Local Interactive Businesses
NEW YORK and SAN FRANCISCO, May 15 /PRNewswire-FirstCall/ — CBS Corporation (NYSE: CBS.A and CBS) 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. "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. "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. "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.
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
Natali Del Conte from CNET appeared on Fox and Friends this morning to discuss the Wii and a few other gadgets (Dash GPS and iPhone apps). The Wii discussion was the focus and during the discussion, the host asked Natali how to find a Wii game system. She explained that you could use “rss” and trackers to have availability sent directly to you daily.
Next she went on to explain something that should never be discussed in public. Natali noted, “The way I did it, you know it’s not the most honest thing but if you buy the package and then I returned the games I didn’t want.” Below is the video of her appearance and the rip off segment appears at about the 1:30 mark.
Now Natali, you are here in NYC long enough. You should know that if you go to 101st and Amsterdam, see a guy named Willy, he will hook you up with plastic, a shrink wrap machine, electronic devices for each merchant and pricing stickers. He also sells kits for The Gap and Banana Republic. This makes life easier :)
From Reuters, "CNET expected pre-tax restructuring charges from the job cuts to run between $3.5 million and $4 million, most of which will be taken in the first quarter of 2008. The job cuts are effective immediately."
I sure hope none of my Webware friends were fired! Check out my article from January which looks at one reason CNET is in the mess they are currently. I’ve heard from the Webware team – they are safe.
Update: PaidContent has the memo from CEO Neil Ashe regarding the reorg – it’s quite a lengthy read. It always gets me when CEOs discuss the importance of the team when they just escorted x employees out of the building.
It seems that on-and-off today we’ve seen messaging about CNET acquiring Revision3 for $57 million might not be accurate. I noticed this news on Digg in upcoming early this morning. The link to the blog with the news was only pointing to some random Pownce entry. As of 11pm Eastern, the story has hit the Digg front page. There’s also a discussion thread on the Revision3 forums.
Moments ago, Jay Adelson, Digg CEO has commented on the supposed acquisition:
Normally, we don’t comment on rumors and speculation about acquisition. But no. (What is it with you people? You’re giving me a heart attack.)
What may have prompted this is the news last December of a distribution partnership between Revision3 and CNET. I do not have any further details at this point. Videoblogger Robert Scoble has posted a message that there is no deal.
CNET-owned Webware has opened voting on the Webware 100. Last year they received over 480,000 votes and this year you can select three companies in each category so that there is more chance for some of the smaller players to win. There’s a good mix of companies from around the world. From what I can tell, the winners will be selected by user voting. Vote here
I will post my voting selections later this week. There are 10 categories looking for votes:
- Audio: Music, podcasts, audiobooks.
- Browsing: Browsers, start pages, RSS readers, widgets, runtime engines.
- Commerce and events: Retail, auctions, travel, real estate, concerts, conferences.
- Communications: E-mail, chat, voice.
- Productivity: App suites, to-do lists, groupware.
- Publishing and photography: Blogging, content management, photo sites.
- Search and Reference: Search engines, encyclopedias, mapping.
- Social: Social networking, family sites, recommendations, online worlds, contests.
- Utility and Security: Infrastructure providers, storage, online protection.
- Video: Video storage, playback, streaming, editing, and animation.
Here is a video of Editor Rafe Needleman explaining the Webware 100: