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You are here: Home / Business Briefing / CBS Acquires Cnet for $1.8 Billion
CBS Acquires Cnet, Extends Reach in Online Ad Market
CBS Acquires Cnet, Extends Reach in Online Ad Market
By Richard Koman / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
MAY
15
2008
CBS Corp. will spend $1.8 billion to purchase Cnet Networks, a technology news site, the broadcaster announced Thursday. CBS will pay $11.50 per share in an all-cash deal that represents its most expensive effort to-date to become a major player in the fast growing world of online advertising.

The acquisition puts CBS on the top 10 list of U.S. Internet sites, the company said, with 54 million unique visitors per month.

Leslie Moonves, president and CEO of CBS, said the Cnet acquisition will add a platform to extend CBS's online content to a "whole new global audience." Moonves said combining the companies gives significant additional exposure to the fastest-growing advertising sector, meaning Internet-based advertising.

Expanded Reach

Cnet's flagship publication is a general tech-news site, but its broader network also offers technical information through its ZDNet and TechRepublic properties. It also owns the MySimon online shopping tool, gaming sites and other sites for the entertainment and lifestyle markets.

Cnet's sites will be integrated into the CBS Interactive Group, which includes mainstream entertainment, news and sports sites, as well as music webcaster last.fm, finance show Wallstrip, and MobLogic.

"The whole thing gives CBS an expanded reach. Cnet is an attractive brand and its ZDNet asset gives it international reach," said Greg Sterling, principal analyst with Sterling Market Research. The acquisition is "consistent with CBS trying to extend its reach online and bolster its traditional media."

Consumer Tech Focus

What does CBS want with a technology-focused brand like Cnet? The key is Cnet's strength in consumer technology. "While its leading brands are very tech-focused, it's a trusted name in consumer technology, which extends to a whole range of things," Sterling said. Indeed, consumer technology is rapidly becoming synonymous with entertainment, as evidenced by the entertainment-fueled growth of Apple.

Still, Cnet comes to CBS with some negatives. Cnet recently laid off 10 percent of its staff in a cost-cutting measure and the company badly squandered an early opportunity with its MySimon price-comparison tool, Sterling said.

Writing in The New York Times, Saul Hansell suggested that Cnet may be forced to hand over its prized News.com domain name to CBS News. In that case, some News.com reporters might find themselves redundant.

What will be the impact of the acquisition on IT readers of Cnet's sites? "I don't think it will have any immediate impact," Sterling said. "If over time CBS diminishes its credibility somehow, that may change. But in a way its good for Cnet to be acquired by an organization with a rich journalistic pedigree. CBS has some some interest in journalistic credibility compared to some other organizations." And, he said, "CBS gets some content [with Cnet] that may be interesting in other ways."

The deal has been approved by Cnet's board and is expected to be completed in the third quarter of this year. If the transaction is executed as announced, analysts for Citigroup estimate that purchase price will amount to a multiple of 18 times Cnet's earnings before interest, taxes, depreciation and amortization.

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